3 Whistleblower Suits Net over $60 Million in Medicare Fraud
Two diagnostic companies settle Medicare fraud suits over unneeded tests and kickbacks to providers, and a California dermatologist bills Medicare for unnecessary surgeries.
Source: Thinkstock
By - Whistleblower lawsuits alleging Medicare fraud have been settled against two diagnostic testing companies, and a California doctor who was alleged to have falsely diagnosed cancer as a means to bill Medicare for expensive surgeries.
Medicare fraud remains a prominent issue that has recently garnered renewed calls for increased federal audits and investigation. A key factor for the prosecution of these suits comes from the involvement of whistleblowers, who were central to these three recent settlements.
National diagnostic testing company settles $54 million for billing on unapproved tests
A $54 million settlement in New York federal court was reached against CareCore National LLC . The DOJ lawsuit was joined by several state Attorneys' General Medicaid Fraud Units in the recently-unsealed healthcare fraud whistleblower action.
READ MORE: DOJ Sues UnitedHealth over Alleged $1B Medicare Fraud
CareCore, headquartered in Blufton, SC, is a pre-authorization/pre-certification service for diagnostic testing. The company sold its medical test monitoring services, designed to control costs and reduce unneeded procedures, to managed care organizations and payers.
Of the $54 million recovery, $45 million will go to the federal government and $9 million will go to various states which participated in the lawsuit.
The whistleblower lawsuit was brought by a Licensed Practical Nurse, who alleged that CareCore had trained its nursing staff to conduct diagnostic testing that was not medically warranted on patients.
The allegations claimed that CareCore required nurses to "Process As Directed" (PAD) pre-authorization requests, even though the set criteria had not been achieved and doctors had not conducted the required review.
This resulted in managed care organizations and other providers paying for diagnostic tests, such as MRIs and PET scans, that were not properly authorized as being medically necessary.
READ MORE: Senator Calls for Scrutiny of Health Payers, Medicare Fraud
CareCore stated this PAD directive was due in part to time constraints it was under to process the testing authorizations.
Managed care organizations and other payers who bill federal services, such as Medicare and Medicaid, require the pre-authorized requests from companies like CareCore.
"The brazenness of this company's actions—even using the acronym "PAD" —is appalling. At a time when healthcare costs are spiraling out of control, it is vital that whistleblowers like our client come forward to prevent this type of abuse," added co-counsel Anna C. Dover.
The whistleblower will be awarded approximately $10.5 million, plus interest, from the Government's combined federal and state recovery.
READ MORE: Two Payers Liable for $32.5M in Medicare Advantage Fraud Suit
Quest Diagnostics pays $6 million over allegations of kickbacks and fraudulent billing
Quest Diagnostics has agreed to pay $6 million to the federal government over a whistleblower lawsuit which alleged the medical testing giant was involved in fraudulent billing and kickbacks to providers.
The lawsuit alleged that Berkeley HeartLab, acquired by Quest in 2011, was involved in a kickback scheme that was paying physicians "process and handling fees" to influence their decisions to order medically unnecessary and expensive cardiovascular blood tests.
"The money Berkeley offered was hard for most doctors to resist," said Peter Chatfield, attorney for whistleblower Dr. Michael Mayes. "But once our client realized that the tests didn't help with treatment decisions and were very expensive, he refused to participate. He saw those 'process and handling fees' for what they were: illegal kickbacks."
In a further attempt to secure business from physicians, Berkeley also waived copayments for the tests, which allowed referred patients to participate with no out-of-pocket costs.
This practice of eliminating copayments is also illegal. Certain patients are required to be charged copays as a financial incentive to refuse unnecessary tests.
Quest ended up paying most of the $6 million settlement, due to claims by Berkeley that the company was insolvent. Quest was also deemed liable for the alleged illegal activities that occurred when it first purchased Berkeley HeartLab.
Quest is the third medical testing lab to settle fraud charges stemming from the whistleblower case of Dr. Mayes. Health Diagnostics Laboratory of Richmond, Virginia, paid over $50 million in 2015, and Singulex Inc., based in Alameda, California, agreed to a $1.5 million settlement for similar charges against them.
The lawsuit alleges violations of two federal laws: the False Claims Act, for submitting claims for unnecessary medical services for government reimbursement, and the Stark Act, which prohibits referrals for medical services when a financial link exists between the provider making the referral and the service provider.
California skin doctor settles $2.6 million suit over claims of unnecessary surgeries
A false claims settlement of $2.6 million was reached with Dr. Norman A. Brooks, a dermatologist, surgeon and owner of the Skin Cancer Medical Center in Encino, California.
Brooks is alleged to have falsely diagnosed skin cancer in patients and then performed a high cost surgery as a treatment.
The suit was brought by former employee, Janet Burke, who accused Brooks of falsely diagnosing skin cancer in some patents.
Brooks used the phony skin cancer diagnoses to perform unnecessary Mohs micrographic surgeries on patients.
The Mohs surgery is a complex procedure to remove certain forms of skin cancer, and results in a higher Medicare reimbursement rate that other similar skin cancer removal treatments.
"We are proud to have represented the whistleblower Janet Burke, a former employee of the defendant, in this False Claims Act case,” said lead attorney Shauna Itri.
