In Illinois, major healthcare fraud is civilly and criminally prosecuted by the Northern, Central and Southern United States Attorney’s Offices and the State’s own Medicaid Fraud Control Unit.
The federal government sometimes accomplishes this task with the assistance of the Illinois Medicaid Fraud Control Unit (MFCU). The MFCU takes the responsibility of stopping fraud very seriously and is often assisted in its efforts by the bravery and actions of whistleblowers.
Modeled after the federal False Claims Act, the Illinois False Claims Act permits private citizens to bring qui tam actions on behalf of the State of Illinois to recover treble damages and civil penalties. 740 Ill. Comp. Stat. 175 et seq.
Nolan Auerbach & White represents whistleblowers in federal court only. We will bring cases on behalf of whistleblowers under the Illinois qui tam statute as part of an action under the federal False Claims Act. We do so under the Court’s pendent jurisdiction.
The liability provisions of the Illinois Whistleblower Reward and Protection Act, 214.740 Ill. Comp. Stat. 175/3(a), provides liability for any person who:
(1) knowingly presents, or causes to be presented, to an officer or employee of the State of a member of the Guard a false or fraudulent claim for payment or approval;
(2) knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the State;
(3) conspires to defraud the State by getting a false or fraudulent claim allowed or paid.
Cases completed in Illinois that were originally brought in an Illinois federal court include:
Medline Industries, Inc. and The Medline Foundation agreed to pay the United States $85 million to settle allegations that they violated the False Claims Act by paying kickbacks to hospitals and other health care providers that purchased company products under Medicare and Medicaid. This settlement resolves a qui tam action filed by Sean Mason, a former company employee.
Blue Cross Blue Shield of Illinois agreed to pay the United States and the State of Illinois $25 million to settle False Claims Act allegations that the company denied nursing care coverage for sick children and fraudulently shifted the cost of such care to the state and federal Medicaid programs. Under the settlement agreement, the company will pay the State of Illinois $14.25 million and the United States $9.5 million. The company also agreed to pay $1.25 million to the State of Illinois to resolve consumer fraud allegations.
U.S. Judge Harry Leinenweber (N.D. IL) pronounced a $190 million civil penalty on Amerigroup Corporation and Amerigroup Illinois, to bring the total judgment against the HMO to more than $334 million. This judgment came after an October verdict in which a federal jury found Amerigroup liable for 18,130 false claims and $144 million in damages to the U.S. government and the State of Illinois under the False Claims Act. The jury found that Amerigroup deliberately avoided insuring late-term pregnant women and other people with a high health-risk status to inflate its profits. As a result, less than half of the $243 million dollars it received from its managed care contract with Medicaid was used to provide health services to low-income people in Illinois, despite its promise to provide services to all indigent persons regardless of health-status. Judge Leinenweber assessed a $10,500 penalty for each false claim by Amerigroup, bringing the total civil penalties to $190,365,000 and the total judgment to $334,365,000. The judgment stemmed from a qui tam suit filed in 2002 by Cleveland Tyson, a former vice president of governmental relations with Amerigroup.
Judge John W. Darrah of the U.S. Northern District Court of Illinois ruled against Edgewater Hospital owner Peter Rogan, ordering him to pay more than $64 million in damages to the federal government for submitting false claims of reimbursement to Medicare and Medicaid in violation of the Stark law and Anti-Kickback Statute. Darrah found Rogan guilty of giving kickbacks and bribes to physicians in exchange for referrals to his hospital and of disguising these kickbacks as legitimate payments eligible for reimbursement under Medicare and Medicaid. Additionally, Rogan engaged in the practice of hospitalizing patients without medical necessity and charging for medically unnecessary services to increase the amount of reimbursement he would be eligible to receive from Medicare and Medicaid.
Omnicare Inc., a company that specializes in providing pharmacy services to long term care facilities, agreed to pay $21.1 million to settle a qui tam action alleging the company defrauded the Medicaid programs in Michigan and Massachusetts. The states alleged that Omnicare defrauded the Medicaid programs by knowingly charging the agencies as much as four times the amount charged private healthcare insurers for the same drugs.
In February 2005, the DOJ announced that pharmaceutical manufacturer Novartis Nutrition Corp. (NNC), a wholly owned subsidiary of Novartis Finance Corporation, had agreed to pay $44.7 million to settle allegations of fraud in the marketing of its feeding tube nutritional products. The government alleged that NNC caused others to submit false claims for enteral pumps and agreed to provide enteral nutrition infusion pumps to suppliers for free in exchange for the suppliers’ agreements to buy related enteral therapy products from NNC. As part of the settlement agreement, NNC has entered into a five-year corporate integrity agreement to reform the sales and marketing practices of its enteral feeding operations.
In July 2003, DOJ announced that Abbott Laboratories agreed to pay $600 million to settle civil and criminal allegations that its subsidiary CG Nutritionals, Inc. engaged in price bundling in sales of its feeding pumps. The civil portion of the settlement totaled $400 million. During the period of January 1, 1992 to December 1, 2001, feeding pumps and tubing were sold together at a higher price than would have been charged if they were purchased separately. The claims scheme perpetrated by the company left Medicare administrators unable to discern the true prices for the products.
Walgreens, one of the nation’s largest pharmacies, agreed to pay $35 million to settle allegations that it defrauded both federal and state Medicaid programs in violation of the False Claims Act. According to allegations made in a qui tam suit filed by pharmacist Bernard Lisitza, Walgreens fraudulently caused its pharmacies to switch patients between tablet and capsule forms for ranitidine (generic Zantac) and fluoxetine (generic Prozac) to receive a higher reimbursement from Medicaid. Because Medicaid set the price ceiling for the frequently used form of the drug but did not cap the price of the infrequent form, Walgreens purposefully advised its pharmacists to switch patients to the more expensive form regardless of the prescription, in order to bill Medicaid at a higher rate. Specifically, Walgreens switched patients from the frequently used fluoxetine capsules to the more expensive tablets and from the commonly prescribed tablet form of ranitidine to the more expensive capsule form. The result was the loss of millions of federal and state taxpayer dollars.
Retail pharmacy corporation, CVS Caremark, agreed to pay $36.7 million to the United States, the Medicaid participating states, and the District of Columbia to settle allegations that it overbilled Medicaid for a widely used antacid drug, by switching patients from the standard generic drug for a more expensive version. According to allegations made in a qui tam suit filed in 2003 by relator Bernard Lisitza, CVS had purposefully and unlawfully switched patients from the tablet form of Ranitidine, which is generic Zantac, to a much more expensive capsule version in order to increase its reimbursement from Medicaid. Because the capsule version cost two to four times more than the tablet form of the drug, CVS was able to bill Medicaid for millions more than it was eligible to receive. Relator Bernard Lisitza learned of this fraudulent scheme while working as a temporary receiving pharmacist in Illinois.
Between 2002 and 2007, cardiologist Sushil Sheth sought payment from Medicare and Medicaid for services that were not performed. He pled guilty to healthcare fraud and was sentenced to five years in prison for criminal claims. He also agreed to pay the United States $20 million to settle the criminal and civil allegations, as well as an additional payment of $13 million in restitution. Moreover, he agreed to forfeit property and funds totaling more than $11.3 million.