Watchdog Agency Details Enforcement Activities During Six-Month Period

The Department of Health and Human Services Office of the Inspector General (HHS-OIG) expects to make nearly $3 billion in recoveries resulting from the agency’s audits and investigations, according to its Semiannual Report to Congress released earlier this month. The semiannual reporting period runs from Oct. 1, 2021, through March 31, 2022.

The watchdog agency reported 320 criminal enforcement actions against individuals or entities that engaged in crimes affecting HHS programs. HHS-OIG also reported 320 civil actions, which include false claims and unjust-enrichment lawsuits filed in federal district court, civil monetary penalty settlements, and administrative recoveries related to provider self-disclosure matters.

In addition, the agency also excluded 1,043 individuals and entities from participation in federal healthcare programs. OIG also imposed 1,122 administrative sanctions in the form of program exclusions or administrative actions for alleged fraud or abuse or other activities that posed a risk to federal healthcare programs and their beneficiaries.

During this semiannual reporting period HHS-OIG issued 47 audit reports and 14 evaluation reports which identified $1.14 billion in expected recoveries, as well as $1.6 billion in questioned costs (costs questioned by OIG because of an alleged violation, costs not supported by adequate documentation, or the expenditure of funds where the intended purpose is unnecessary or unreasonable). The audit work also identified $162.1 million in potential savings for HHS (funds that could be saved if HHS implemented all of OIG’s audit recommendations).

Provider self-disclosure cases resulted in more than $26.6 million in HHS receivables during the six-month period.

During this semiannual reporting period, OIG concluded cases involving more than $32 million in Civil Monetary Penalties Law (CMPL) and assessments. The CMPL authorizes OIG to impose administrative penalties, assessments, and exclusions against a person who, among other things, submits, or causes to be submitted, claims to a federal healthcare program that the person knows, or should know, are false or fraudulent.

OIG continued to prioritize oversight and enforcement activities to protect beneficiaries from prescription drug abuse and improve access to medication-assisted treatment. Among them:

• A former doctor was sentenced to 20 years in prison for unlawful drug distribution and maintaining a drug-involved premises. Patrick Titus unlawfully distributed or dispensed a variety of powerful opioids outside the usual scope of professional practice and for illegitimate medical purposes.

• A former doctor was sentenced to 24 months in federal prison for conspiring to violate the federal anti-kickback statute. Jeffrey Kesten conspired to take approximately $344,000 in bribes and kickbacks from a pharmaceutical company in exchange for prescribing a powerful fentanyl spray to his chronic pain patients.

Significant OIG work completed during this semiannual reporting period related to Medicare enforcement includes the following:

• The former owner of a home healthcare firm was extradited from the Republic of Cameroon to Texas after fleeing to avoid an 80-year prison sentence. Between 2006 and 2015, Ebong Aloysius Tilong, a Top 10 most wanted fugitive; his wife, Marie Neba; and their co-conspirators used their company, Fiango Home Healthcare Inc., to obtain more than $13 million by submitting false and fraudulent claims to Medicare for home healthcare services that Fiango’s patients did not need or receive.

• A home healthcare worker was sentenced to 56 months in prison and ordered to pay $6.3 million in restitution for her participation in a conspiracy to commit healthcare and wire fraud. Angelita Newton falsified patient visit records that were used to support claims billed to Medicare. Between 2011 and 2017, Care Specialists, a home healthcare company fraudulently billed Medicare at least $6.3 million.

• As we wrote about last July, the co-owners of a durable medical equipment (DME) company were sentenced to 151 months in prison and were ordered to pay more than $27 million in restitution for a Medicare kickback conspiracy. Leah and Michael Hagen owned and operated two DME companies. From March 2016 to January 2019, the defendants paid kickbacks and bribes to their co-conspirator’s call center in the Philippines in exchange for signed doctors’ orders for DME that were used to submit more than $59 million in false claims to Medicare. As a result of those false claims, Medicare paid the defendants more than $27 million.

• A medical device company agreed to pay $16 million to resolve allegations that it violated the False Claims Act by paying kickbacks that caused the submission of false claims to the Medicare program. The settlement resolved allegations that Arthrex agreed to provide remuneration to an orthopedic surgeon in the form of royalty payments purportedly for the surgeon’s contributions to Arthrex’s products when the remuneration was in fact intended to induce the surgeon’s use and recommendation of Arthrex‘s products.

• Telemarketing executives were sentenced for their roles in a conspiracy to defraud federal health benefit programs. Michael Nolan was sentenced to 78 months in prison and Richard Epstein was sentenced to 63 months in prison as a result of their scheme as executives of REMN Management that targeted the elderly to generate thousands of medically unnecessary physicians’ orders for DME and cancer genetic testing.

• A laboratory owner was sentenced to 82 months in federal prison and ordered to pay more than $61 million in restitution for his role in a $73 million conspiracy to defraud Medicare. Leonel Palatnik’ admitted that, as a co-owner of Panda Conservation Group, he conspired with other co-owners and with Michael Stein to pay kickbacks to Stein in exchange for his work arranging for telemedicine providers to authorize genetic testing orders for Panda’s laboratories.

• On November 9, 2021, kaléo Inc., a Virginia-based pharmaceutical manufacturer, agreed to pay the United States $12.7 million to resolve allegations that it caused the submission of false claims to the Medicare program and other federal healthcare programs for the drug Evzio, an injectable form of naloxone hydrochloride used to reverse opioid overdose.

• On December 10, 2021, Matthew Hogan Peters, who owned and operated two compounding pharmacies, was sentenced to 3 years in federal prison and ordered to pay more than $3 million in restitution to the IRS for evading the payment of approximately $5.5 million in personal income taxes and submitting false reimbursement claims to CVS Caremark, a national pharmacy benefit manager.

The Health Law Offices of Anthony C. Vitale has more than 30 years of experience representing clients under investigation. We also can help you set up a compliance program so that you don’t find yourself the target of an investigation. Contact us for additional information 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.