Tag Archives: Medicaid

U.S. AND NINE STATES WILL SHARE WELLCARE SETTLEMENT MONEY

The U.S. Department of Justice announced settlement of its claims against healthcare insurer, WellCare Health Plans, Inc., on April 3.  The federal government and nine other states, including Georgia, will share in penalty payments of $137.5 million to as much as $252.5 million.  The company will also bear the costs of implementing a Corporate Integrity Agreement and repairing the damage to its reputation damage inside and outside the company. Yes, compliance failures are always expensive.

These days there seems to be growing demand for accommodations in white-collar jails, too.  Several corporate officers were indicted, as has been the case with a number of healthcare fraud investigations in recent years.   This is also another case in which a company lawyer, this time the general counsel, was among those indicted for criminal conduct.  This is a trend that is of great interest to healthcare lawyers, for obvious reasons.  It is further confirmation that the days of the company lawyer being completely insulated from responsibility for the actions of his or her corporate clients are over.

RETURN TO HOME

Here are excerpts from the press release:

WASHINGTON – WellCare Health Plans Inc. will pay $137.5 million to the federal government and nine states to resolve four lawsuits alleging violations of the False Claims Act, the Justice Department announced today. WellCare, based in Tampa, Fla., provides managed health care services for approximately 2.6 million Medicare and Medicaid beneficiaries nationwide.

     The lawsuits alleged a number of schemes to submit false claims to Medicare and various Medicaid programs, including allegations that WellCare falsely inflated the amount it claimed to be spending on medical care in order to avoid returning money to Medicaid and other programs in various states…  knowingly retained overpayments it had received from Florida Medicaid for infant care; and falsified data that misrepresented the medical conditions of patients and the treatments they received.

Additionally, it was alleged that WellCare engaged in certain marketing abuses, including the “cherrypicking” of healthy patients in order to avoid future costs; manipulated “grades of service” or other performance metrics regarding its call center; and operated a sham special investigations unit.

The settlement requires that WellCare pay the United States and nine states – Connecticut, Florida, Georgia, Hawaii, Illinois, Indiana, Missouri, New York and Ohio ….

Read the entire press release.

Baxam Law Group is an Atlanta area law firm that serves clients in intellectual property and healthcare law matters. Connect with Baxam Law on Facebook or on Twitter @innovationlawyr.

RETURN TO HOME.

Advertisements

Whistleblower Claims – Corporate Land Mines

From that delicate balance between preserving the public good and the right of private action has emerged that most persuasive, and potent, moderator – the whistleblower claim.  In our laws, the purpose of whistleblower provisions has been to enable employees, representatives and even business partners to report behavior that has harmed or could potentially cause harm to the interests of the government or the public it serves.  The underlying rationale is that reporting this behavior removes the potential harm,  punishes the offenders and makes an example of their behavior as a deterrent against future bad acts, therefore “blowing the whistle” should be encouraged and the person or persons who do it should be rewarded.  Over the years, several well-recognized statutory programs based on federal law have included whistleblower provisions. These include the Occupational Health and Safety Act, the Internal Revenue Service Code and the Fair Labor Standards Act.  State laws are also armed to respond to whistleblower complaints.

For example, a $327 million judgment against drugmaker, Johnson & Johnson, under the South Carolina Unfair Trade Practices Act was just reported to have been upheld.  A whistleblower claim triggered this case, which has so far led to lawsuits by multiple states alleging that their Medicare and Medicaid programs have been defrauded.  The South Carolina  fine was calculated by assessing $4,000 for every “Dear Doctor” letter the company sent to physicians claiming that the drug was better than the competition and $300 for every sample it gave away to healthcare professionals.

But it’s not just big pharmaceutical companies that have been caught in the dragnet of a whistleblower complaint.  In the healthcare arena, the threat is very real for distributors of durable medical equipment and for physicians, physician assistants and nurse practitioners who participate in treating patients and reporting the services provided.  Outside of healthcare, recent whistleblower claims were filed by Alcohol, Tobacco and Firearms (ATF) agents (click link for story), to report violations of the Occupational Health and Safety Act, the Internal Revenue Service Code and the Fair Labor Standards Act.

Here are some useful tips for handling whistleblower scenarios.  For employers:

  • Develop and communicate a procedure for reporting potential compliance violations that is confidential, responsive and can be accessed by employees outside the regular chain of command. Maintain confidentiality as much as possible, and inform the employee of the outcome of your investigation.
  • Carefully address any complaints raised by employees that involve potential violations of federal or state law, and document the resolution.
  • Often, companies do not know the identity of the whistleblower until the indictment as been unsealed.  Even if you receive this information, do not take any personnel action against an employee or business partner because they filed a whistleblower complaint.

For employees:

  • If possible, discuss your concerns with your managers, or if you feel uncomfortable about doing so, with your company’s compliance officer.
  • Continue to observe the rules and requirements of which you are aware while the investigation is progressing, and to do your job.
  • You may choose not to raise the issue internally and report it directly to the government, usually with the assistance of a qui tam lawyer. Supporting facts are very important to substantiate a whistleblower complaint, so be prepared to present information that would adequately support your case in court.

Federal and state whistleblower cases may request civil and/or criminal penalties and often disqualify companies or persons found guilty from participating in government fee-for-service or procurement programs.  The fines are usually high and are a significant source of revenue for cash-strapped government agencies as well.   The number of these cases, especially in the healthcare field, has been increasing and the trend is expected to continue.

Additional links: http://www.whistleblowers.gov/, http://bit.ly/sxFL6V , http://www.irs.gov/compliance/article/0,,id=180171,00.html,

Baxam Law Group, LLC advises clients on business, intellectual property and healthcare law matters. Visit us on FacebookFollow us on Twitter.

A Billion Dollar Plan to Reduce Hospital Errors, Infections and Repeat Admissions

Today, the Department of Health and Human Services quietly hosted (if that’s possible) a conference call to unveil its new Partnership for Patients initiative.  This initiative promised $1B in cash to hospitals, who eagerly participated in the call.  HHS says the purpose of this initiative is to find ways to reduce hospital infections and medication errors, and to prevent repeat admission of patients caused by lack of continuity in their care after they are discharged from the hospital environment.

According to HHS Secretary Kathleen Sebelius, “Americans go the hospital to get well, but millions of patients are injured because of preventable complications and accidents.”  On this basis, the Partnership for Patients is poised to spend $500M to fund research on best practices and model systems that reduce the occurrence of hospital-acquired infections and hospital errors by 40% by 2013. 

The initiative will also provide $500M for the Community-Based Care Transitions Program.  Hospitals are expected to use this money to develop ways in which patients can transition from a hospital to other patient care settings in ways that reduce the risk of readmission.  The goal is a 20% reduction in the number of patient readmissions by 2013.

Pragmatic hospital administrators who may see this initiative as an oasis of encouragement in the increasingly arid healthcare environment, but they might not have much choice but to do so.  What will probably happen somewhere down the road is that hospitals which cannot meet the standards for reduced errors will have to worry about the risk of cuts to their federal healthcare reimbursements.

 

Read today’s press release here.

Baxam Law Group serves entrepreneurs in healthcare.  Visit us at www.baxamlaw.com.

Forest Laboratories Signs on the Dotted Line… with Feds

More than 6 years of pre-penalty discussions between Forest Laboratories (“Forest”) and the U.S. Attorney’s Office for the District of Massachusetts culminated September 15  in an agreement that settles criminal and civil investigations by the government into the company’s activities.  Forest agreed to plead guilty to a single felony charge of misrepresentations to FDA inspectors during a 2003 plant visit, and two misdemeanor violations of the Food, Drug and Cosmetic Act.  The first misdemeanor charge was for distributing Levothroid® after the FDA told the company an NDA would have to be filed for the drug; and the second related to off-label promotion of Celexa® for treating pediatric patients.  The fines for these charges cost Forest $150 million, and the company also forfeited another $14 million in revenues.

On the civil side, Forest also settled claims under the False Claims Act and several whistleblower (qui tam) claims relating to distribution of Levothroid® and several years of off-label promotion of Celexa® and Lexapro® for pediatric uses.  The off-label promotion in this case related to an earlier formulation of Lexapro®; Forest later requested and received approval to promote a later formulation for pediatric use.  The total payout under these civil claims, including to the feds and state Medicaid programs, was $149 million.

As a commitment to future good behavior, the government also required that Forest operate under a Corporate Integrity Agreement for five years.  Nowadays, these agreements not only call for a compliance program to be put in place, but the government also wants key senior managers, not just the CEO, to monitor and oversee activities within their scope of responsibility, and to certify they have done what is required every year.  These leaders include the heads of Marketing, R&D and Human Resources, to name a few.   The Board of Directors is also required to retain an independent Compliance Expert to review and report on the effectiveness of the Compliance Program annually.

Interestingly, news that this drawn-out investigation has come to a point of resolution seems to have helped the company’s stock performance today.  Forest closed up 2.02% from yesterday’s trading at a respectable $31.27 per share.  This might have been helped by the news that the fines were well within the reserves the company had set aside to cover the financial damage from the legal proceedings.

Learn more about Baxam Law Group at www.baxamlaw.com.