DOJ Recovers $2.6B in Healthcare Fraud Settlements, Judgments in 2019

The federal government said it was making healthcare fraud a priority, and from the numbers just released by the U.S. Department of Justice, it appears to be bearing fruit.

The DOJ announced last week that it recovered more than $3 billion in settlements and judgments from civil cases involving fraud and false claims in the fiscal year ending Sept. 30, 2019. Out of that total, healthcare made up the bulk, with $2.6 billion recovered from drug and medical device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories and physicians. It is the tenth consecutive year the department’s civil healthcare fraud settlements and judgments exceeded $2 billion.

The $2.6 billion figure does not include the millions of dollars recovered for state Medicaid programs.

Whistleblowers continued to play a big role in recoveries, with 633 qui tam suits filed this past year – an average of more than 12 new cases every week, according to DOJ. Of the $3 billion recovered, more than $2.1 billion grew out of lawsuits filed under the qui tam provisions of the False Claims Act. During the same period, the government paid out $265 million to the individuals who exposed fraud and false claims by filing these actions, according to DOJ.

Two of the largest recoveries involving the healthcare industry came from opioid manufacturers Insys Therapeutics and Reckitt Benckiser Group plc.

In the case of Insys, the company agreed to pay $195 million to settle allegations it paid kickbacks to induce doctors and nurses to prescribe Subsys (an opioid used to manage pain for cancer patients). Those kickbacks came in the form of sham speaker events, meals and entertainment. Insys also was alleged to have encouraged providers to prescribe the drug for patients who did not have cancer and lied to insurers about patients’ diagnosis to ensure payment.

Reckitt Benckiser Group plc, meantime, paid $1.4 billion to resolve criminal and civil liability related to the marketing of the opioid addiction treatment drug Suboxone. As part of the agreementm RB Group paid $500 million to the federal government to resolve civil allegations that it directly, or through subsidiaries, promoted Suboxone to physicians who were writing prescriptions for uses that were unsafe, ineffective and medically unnecessary; promoted Suboxone Film using false and misleading claims that it was less susceptible to diversion, abuse, and accidental pediatric exposure than other buprenorphine products; and took steps to delay the entry of generic competition in order to improperly control pricing of Suboxone.

Other pharmaceutical companies that made payments included Avanir Pharmaceuticals, which paid $95 million to resolve allegations that it paid kickbacks and engaged in false and misleading marketing to induce healthcare providers in long term-care facilities to prescribe the drug Neudexta for behaviors commonly associated with dementia patients, which is not an approved use of the drug. 

In addition, seven drug manufacturers – Actelion Pharmaceuticals US Inc., Amgen Inc., Astellas Pharma US Inc., Alexion Pharmaceuticals, Inc., Jazz Pharmacueticals Inc., Lundbeck LLC, and US Worldmeds LLC – paid a combined total of more than $624 million to resolve claims that they illegally paid patient copays for their own drugs through purportedly independent foundations that the companies actually treated as mere conduits.

As we wrote about last month, Congress is looking to crack down on such arrangements. Massachusetts Sen. and presidential candidate Elizabeth Warren, and Sen. Sheldon Whitehouse of Rhode Island, recently asked HHS to revise its guidance on the proper administration of patient assistance charities.

Other big recoveries in the healthcare field included:

• Pathology laboratory company Inform Diagnostics, formerly Miraca Life Sciences Inc., paid $63.5 million to resolve allegations that it paid kickbacks to referring physicians in the form of subsidies for electronic health records (EHR) systems and free or discounted technology consulting services.
• Greenway Health LLC, an EHR software vendor, paid more than $57 million to resolve allegations that it misrepresented the capabilities of its EHR product “Prime Suite†and provided unlawful remuneration to users to induce them to recommend Prime Suite to prospective new customers. 
• Encompass Health Corporation (formerly known as HealthSouth Corporation), the nation’s largest operator of inpatient rehabilitation facilities, paid $48 million to resolve allegations that some of its inpatient rehab facilities provided inaccurate information to Medicare to maintain their status and to earn a higher rate of reimbursement, and that some admissions to its inpatient rehab facilities were not medically necessary.

The government has made it clear that targeting healthcare fraud is a top priority. For more than 25 years, The Health Law Offices of Anthony C. Vitale has been representing clients under investigation by local, state and federal agencies. For more information you can contact us at 305-358-4500 or send us an email to info@vitalehealthlaw.com and let’s discuss how we might be able to assist you.