In Texas, major healthcare fraud is civilly and criminally prosecuted by 3 separate United States Attorney’s Offices — the Southern, Northern, and Middle Districts of Florida.
The federal government sometimes accomplishes this task with the assistance of the Florida 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 Florida False Claims Act permits private citizens to bring qui tam actions on behalf of the State of Texas to recover treble damages and civil penalties. Tex. Hum. Res. Code § 36.001 et seq.
Nolan Auerbach & White represents whistleblowers in federal court only. We will bring cases on behalf of whistleblowers under the Texas 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 Tex. Hum. Res. Code § 36.002 provide liability for any person who:
(1) knowingly or intentionally makes or causes to be made a false statement or misrepresentation of a material fact:
(a) on an application for a contract, benefit, or payment under the Medicaid program; or
(b) that is intended to be used to determine its eligibility for a benefit
(2) knowingly or intentionally concealing or failing to disclose an event:
(A) that the person knows affects the initial or continued right to a benefit or payment under the Medicaid program of.
(i) the person, or
(ii) another person on whose behalf the person has applied for a benefit or payment or is receiving a benefit or payment; and
(B) to permit a person to receive a benefit or payment that is not authorized or that is greater than the payment or benefit that is authorized;
(4) knowingly or intentionally makes, causes to be made, induces, or seeks to induce the making of a false statement or misrepresentation of material fact concerning:
(B) information required to be provided by a federal or state law, rule, regulation, or provider agreement pertaining to the Medicaid program;
(5) … knowingly or intentionally charges, solicits, accepts, or receives, in addition to an amount paid under the Medicaid program, a gift, money, a donation, or other consideration as a condition to the provision of a service or continued service to a Medicaid recipient if the cost of the service provided to the Medicaid recipient is paid for, in whole or in part, under the Medicaid program.
Cases completed in Texas that were originally brought in a Texas federal court include:
The Methodist Hospital, located in Houston, TX, recently settled allegations of Medicare fraud by agreeing to pay the federal government a $9.9 million settlement. The False Claims Act violations were alleged to have taken place between January 2001 and August 2003 and involved inflated billing by improperly claiming outlier payments. When Medicare beneficiary treatment and care costs are unusually high, the typical Medicare reimbursement to the care provider can be supplemented by outlier payments. This category of payments was established to ensure that care providers would treat Medicare patients with exorbitantly high care costs. The complaint alleged that Methodist Hospital knowingly and erroneously elevated charges Medicare patients , often for services that were not rendered, resulting in higher reimbursement rates from the federal government.
Infusion Management Systems, Inc. agreed to pay the Government $10 million to settle two qui tam suits alleging that the company falsified Medicare reports, billed Medicare for services not rendered, and sought reimbursement for unallowable services. Infusion, purchased in June 1996 by HomeCare Concepts of America Inc., is one of the largest home health care companies operating in Texas.
McAllen Hospitals L.P., d/b/a/ South Texas Health System (a subsidiary of Universal Health Services Inc.) agreed to pay the United States $27.5 million to settle claims that it violated the False Claims Act, the Anti-Kickback Statute and the Stark Law between 1999 and 2006, by paying illegal compensation to doctors in order to induce them to refer patients to hospitals within the group. The government alleged that these payments were disguised through a series of sham contracts, including medical directorships and lease agreements. $25,208,333 of the settlement went to the federal government and $2,291,667 went to the Texas Medicaid program. The hospital also agreed to enter a 5-year Corporate Integrity Agreement. Former McAllen employee Bruce Moilan filed the qui tam action in 2005, and the settlement provided $5.5 million for him as a relator’s share.
Harris County Hospital District in Texas agreed to pay almost $15.5 million to settle charges that it defrauded Medicare/Medicaid by knowingly submitting ineligible reimbursment claims. Relator Robert McCaslin, a former patient-account representative with Harris County Hospital District (HCHD), filed a qui tam suit in 2003, upon learning that his division had been routinely submitting claims which were not allowed under Medicare/Medicaid regulations. Specifically, McCaslin recognized that HCHD had failed to comply with the Medicare as Secondary Payer (MSP) regulation which requires health care providers to bill private insurance coverage before it seeks restitution from Medicare/Medicaid. Additionally, HCHD would bill Medicare/Medicaid for medical servies provided to patients who were in the custody of law enforcement, an unlawful practice under Medicare/Medicaid regulations.
DOJ announced that HealthSouth Corp. had agreed to pay $325 million to settle allegations of Medicare fraud involving outpatient physical therapy services. The Government alleged that HealthSouth, the country’s largest provider of outpatient surgery, submitted claims to Medicare, TRICARE, and the Department of Labor Federal Employees’ Compensation Act program for outpatient physical therapy services that lacked a properly certified plan of care, were rendered by persons other than licensed physical therapists, or were billed as one-on-one services when the services were not provided. HealthSouth agreed to pay $169 million for seeking reimbursement on such claims. The Government also alleged that HealthSouth submitted Medicare reimbursement claims for unallowable health costs like entertainment and travel costs for the HealthSouth administrators’ annual meeting at Disney World. HealthSouth agreed to pay $89 million for seeking reimbursement on such claims. The Government also alleged that HealthSouth submitted reimbursement claims for falsified hospital cost reports and false inpatient discharges. HealthSouth agreed to pay $66 million for seeking reimbursement on such claims.
Driscoll Children’s Hospital (Driscoll) agreed to pay the U.S. Government and the State of Texas a total of $14.5 million to settle a qui tam lawsuit alleging false claims under the Disproportionate Share Hospital (DSH) program for uncompensated care. Driscoll received large DSH payments from Medicaid because it serves a disproportionate number of low-income patients. The complaint alleged that Driscoll falsified data in order to increase Medicaid reimbursements under the DSH program. In addition, Driscoll is alleged to have claimed reimbursement for unallowable lobbying expenses, and provided kickbacks to physicians for patient referrals. The Federal Government’s share of the settlement is $7.64 million and the state’s share is $4.68 million. The relator, William Goodwin, is the former CFO of Driscoll. The relator’s share of the federal settlement is 27 percent or $2.06 million.
Schwarz Pharma Inc. agreed to pay the United States $22 million to settle allegations that the company misrepresented the regulatory status of two unapproved drugs— Deponit and Hyoscyamine Sulfate Extended Release—that did not qualify for coverage under federal health care programs and that the company failed to advise the Centers for Medicare and Medicaid Services that these unapproved drugs did not qualify for coverage under federal health care programs.
The settlement resolves allegations raised against Schwarz in two separate multidefendant whistleblower actions: United States ex rel. Constance Conrad v. Schwarz Pharma, et al. (D. Mass.) and United States ex rel. James Conrad v. Schwarz Pharma et al., (S.D. Tex.). The federal government will receive $12,243,836. The two relators, Constance Conrad and James Conrad will receive a total award of $1,836,575.
The Pfizer Corporation agreed to pay $49 million to settle allegations that it defrauded Medicaid. The Government will receive $27,913,300 plus accrued interest. The remainder of the settlement is to be divided among 40 states. The Government alleged that Pfizer fraudulently avoided fully paying the rebates owed to the states and federal government for the cholesterol-lowering drug Lipitor. The Medicaid Rebate program requires drug manufacturers to report to CMS the best price they offer to any commercial, for-profit customer, and to pay a quarterly rebate based on that best price. Pfizer failed to disclose $250,000 of cash discounts given to a managed care customer in Louisiana, which allowed Pfizer to retain over $20 million in Medicaid Rebates owed to Medicaid.