5 Antikickback Cases Making Headlines

Here are five antikickback cases making headlines this summer. The situations involve physicians, hospitals, device makers and pharmaceutical companies.

1. University of Medicine and Dentistry of New Jersey cardiologists.
The United States Department of Justice recently brought civil cases against 11 cardiologists employed by the University of Medicine and Dentistry of New Jersey for allegedly receiving kickbacks to refer cardiology patients to UMDNJ's University Hospital, which caused the submission of false claims to Medicare. Nine of the physicians involved settled the suits, agreeing to repay at least the full amount of the salaries they received from UMDNJ, with several physicians paying twice the amount of the salaries received. UMDNJ allegedly paid part-time salaries to several cardiologists in return for referrals to the hospital while they remained in private practice. Authorities from the federal government claim that the salaries were only used as kickbacks for referrals and not for the performance of any other services to the UMDNJ or the hospital.

2. Covenant Medical Center.
In August, Covenant Medical Center in Waterloo, Iowa, agreed to pay $4.5 million to resolve allegations that it violated the False Claims Act. The government alleged that Covenant submitted false claims to Medicare by having financial relationships with five physicians that violated the Stark Law, which prohibits a hospital from profiting from referrals of patients made by a physician with whom the hospital has an improper compensation arrangement. The DOJ claims that the hospital compensated the physicians at rates above fair-market value in return for referrals. Although the names and compensation levels of the physicians involved were not released, the DOJ said they were some of the highest paid hospital-employed physicians in the nation.

3. Tulare Regional Medical Center. In July, Tulare Regional Medical Center in Visalia, Calif., part of Tulare District Health System, agreed to pay $2.4 million to settle a federal whistleblower case alleging that the health system offered commercial real estate and rent at rates below fair-market value to physicians in return for referring patients to the system. The whistleblower case was filed by Maria Lucy, CFO of Tulare District Health System in 2008.

4. Endoscopic Technologies.
In July, San Ramon, Calif.-based Endoscopic Technologies, which manufactures devices for surgical ablation, agreed to pay a $1.4 million to settle allegations that the company paid kickbacks to healthcare providers who used the devices. The company also allegedly participated in false marketing and encouraged false Medicare claims in order to promote the use of its products. The DOJ claims that the company marketed its medical devices to treat atrial fibrillation, a use that is not approved by the U.S. Food and Drug Administration. The government also alleged that the company promoted expensive heart surgeries using its devices when less invasive alternatives were appropriate and advised hospitals to up-code surgical procedures using the company's devices to inflate Medicare reimbursements, thereby causing the submission of false and fraudulent claims in violation of the False Claims Act. Details of the kickback arrangements were not released. The suit was filed by an unidentified whistleblower, who will receive $210,000 as part of the settlement.

5. Pfizer.
Pfizer agreed to pay $2.3 billion in September to settle allegations that it illegally promoted certain pharmaceuticals and provided kickbacks to physicians for using its products. The settlement is the largest healthcare fraud settlement in the history of the Department of Justice and resolves Pfizer of both criminal and civil liability arising from the illegal promotion allegations. As part of the agreement, Pfizer will pay $1 billion to resolve allegations under the civil False Claims Act that the company illegally promoted four drugs — Bextra, an anti-inflamatory; Geodon, an anti-psychotic drug; Zyvox, an antibiotic; and Lyrica, an anti-epileptic drug — and caused false claims to be submitted to government healthcare programs for uses that were not covered by those programs. The civil settlement also resolves allegations that Pfizer paid kickbacks to healthcare providers to induce them to prescribe these, as well as other, drugs. No further detail on the types of kickbacks provided were offered by the DOJ.

Additionally, Pfizer subsidiaries Pharmacia and Upjohn pleaded guilty to a felony violation of the Food, Drug and Cosmetic Act for misbranding Bextra with the intent to defraud or mislead. Pfizer will pay a criminal fine of nearly $1.2 billion for the misbranding, which allegedly promoted off-label use of the drug for uses specifically not approved by the FDA. Pharmacia and Upjohn will also forfeit $105 million for the Bextra charges, bringing the total criminal resolution of $1.3 billion. The case was brought forth by an unidentified whistleblower who will received $102 million from the settlement.

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