California’s Most Notable False Claims Act Whistleblower Cases of 2015

In 2015, California accounted for approximately 25% of all healthcare related False Claim Act (FCA) cases.  From the ones unsealed, the average settlement amount recorded is approximately $6 million per case.  With increasing and more frequent monetary awards, relators are increasingly emboldened to continue reporting their employer’s misdeeds and indirectly save the taxpayers millions of dollars that would otherwise illegally end up with corrupt companies.  See our dedicated blog page for other whistleblower information.  The following are the most notable cases of 2015.

In March, several Orange County surgery centers settled for $71 million after allegations that the clinics entered into a scheme where beneficiaries underwent unnecessary medical procedures in return for receiving free cosmetic surgeries.  The clinics also billed the cosmetic surgeries such as liposuction and breast augmentation as medically necessary procedures.

In June, a large skilled nursing facility (SNF) chain named Hebrew Homes Health Network reached a $17 million dollar settlement with the government when the former CFO was the whistleblower who alleged that the SNF paid kickbacks to several individuals for hiring sham medical directors.  The scheme involved the employment of several physicians as medical directors where they barely performed medical director duties.  Instead, these physicians referred Medicare and MediCal patients to the SNFs.   Some additional laws implicated in this case were the Anti-Kickback Statute and Stark Law.  The Anti-Kickback Statute prohibits the exchange of anything of value for inducing the referral of federal health care program business whereas the Stark Law forbids compensating physicians for referrals to entities with which the physicians or their immediate family members have a financial interest.

In October, Millennium Health of San Diego settled FCA allegations by agreeing to pay $256 million to the federal government.  The whistleblower allegations included claims that Millennium billed Medicare and MediCal for medically unnecessary urine, drug, and genetic testing, provided physicians free urine drug test cups, and had standing orders to physicians to authorize excessive tests.  As a result, the whistleblowers net around $30 million in recovery.

Another recent case against a SNF chain in California, Ensign, Inc., resulted in the SNF operating company settling with the Department of Justice for $48 million for submitting false billing to Medicare where the underlying therapies were not medically necessary.  Specifically, the Complaint alleged that the SNFs inflated billing such as speech, occupational and physical therapy for services that were not medically necessary or even provided altogether.  These types of “upcoding” patterns have faced increased scrutiny by Medicare contractors who are entrusted in reviewing, auditing and reporting the practices by SNFs.    See a list of our specialized FCA attorneys here.

If you witnessed any potential fraudulent activity where there is underpayment to the government or non-refunded payments to the government upon overpayment, prompt action is vital.  Contact the experienced employment law attorneys at Stephen Danz & Associates for a free consultation to discuss your circumstances and legal options.