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Whistleblower News Update – June 17, 2013

Several doctors, executives, and the owner of Chicago’s Sacred Heart Hospital were arrested and charged earlier this year with a health care scandal that involved a massive kickback scheme and the administering of unnecessary medical treatments. Most of the unnecessary medical procedures involved unnecessary tracheotomies. According to this Bloomberg article, one doctor even cut a patient’s throat the day before he died – without any clear medical reason for doing so.

Following a three year investigation, the government alleges that the hospital and its doctors often kept patients too sedated to breathe on their own and then ordered unnecessary tracheotomies for them – all to obtain revenue of as much as $160,000 per case. In addition to the unnecessary medical procedures, the government alleges that Sacred Heart’s owner Edward Novak, his chief financial officer, and five physicians committed Medicare fraud by giving or receiving kickbacks in return for patient referrals.

Whistleblowers proved to be an invaluable part of the government’s investigation, with a physician and two Sacred Heart administrators secretly taping conversations with other hospital staff members.

A jury recently found four former executives of WellCare guilty of various medical fraud charges, although the jury was deadlocked on the charge of conspiracy to commit medical fraud for each defendant. As a managed health care corporation that processes Medicare and Medicaid claims, WellCare was allowed to keep 20 percent of its claims for administrative costs and profit, with the remaining 80 percent going to pay providers for the health care services. Prosecutors alleged that the defendants had defrauded the government out of more than $30 million by creating fake expenses to make it look as if the company were spending all or nearly all of the 80 percent when, in fact, expenditures were far less. As a result, company profits were higher than they should have been and stock prices increased based on this fraudulent information.

The executives were charged with multiple counts of medical fraud, conspiracy and making false statements. Former WellCare Chief Executive Officer Todd Farha was found guilty of two counts of health care fraud, and acquitted of six other charges including giving false statements. Chief Financial Officer Paul Behrens was found guilty of two counts of health care fraud and two counts of making false statements, but was acquitted of other two other false statement charges. William Kale, vice president of Harmony Behavioral Health, a WellCare subsidiary, was found guilty of two counts of health care fraud and Peter Clay, vice president of medical operations was found guilty of two counts of making false statements.

After determining that one of its published studies contained fraudulent data, GlaxoSmithKline has fired Jingwu Zang, a senior VP and head of R&D in Shanghai, China, who authored the scientific paper that contained the fabricated data. Amidst the scandal, the company also placed three other employees on administrative leave pending a final review, and a fifth employee has resigned. The fraudulent paper, which was published three years ago in Nature Medicine, examined the role of a protein called Interleukin-7 receptor in treating autoimmune disease.

Science Applications International Corporation (SAIC) – a Virginia corporation that provides scientific, engineering, and technical services to commercial and government customers – recently paid $11.75 million to settle charges pending in New Mexico federal court that it violated the False Claims Act by charging inflated prices under grants to train first responder personnel to prevent and respond to terrorism attacks. 

The initial lawsuit was filed by Richard Priem, SAIC’s former project manager for the first responder training program, whose whistleblower share of the settlement has not yet been disclosed.

Statistics from the Department of Health and Human Services (DHHS) show that Medicare fraud enforcement has increased considerably over the past two years. According to DHHS statistics, the government has revoked the ability of 14,663 providers and suppliers to bill Medicare over the past two years — an amount that is almost two and a half times the number that had been revoked in the previous two years. In some states, the number of revocations has quadrupled.

According to this USA Today article, during the past four years, the government has recovered $14.9 billion in Medicare fraud money.

Please contact us at (312) 863-7222 if you would like to learn more about any of the aforementioned whistleblower news updates or would like to schedule a free, confidential appointment with one of our nationally-recognized whistleblower attorneys.

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