Wisconsin Pain Management Companies Agree to Settle False Claims Act Allegations

On October 1, 2020, the US Department of Justice reported that Advanced Pain Management Holdings Inc. (APMH), its wholly-owned subsidiaries, APM Wisconsin MSO (“APM MSO”) and Advanced Pain Management LLC (APM LLC); and Advanced Pain Management S.C. (APMSC) (collectively the “APM Entities”) settled charges that they violated the federal False Claims Act. The False Claims Act authorizes the government to file claims against defendants that submit false bills to government agencies or obtain money from federal agencies through false pretenses.

The amount of the settlement is $885,452. The defendants were essentially charged with performing laboratory tests that were unnecessary and then billing the government for those tests. The defendants are based in Milwaukee, Wisconsin.

Acting Assistant Attorney General Jeffrey Bossert Clark for the Department of Justice’s Civil Division stated that “healthcare providers must make recommendations about their patients’ health without respect to their own financial interests.” said. 

The False Claims Act was enacted back during the administration of President Abraham Lincoln. The law has been amended several times. The FCA is a law that the DOJ uses to:

  • Help protect the integrity of the federal healthcare system
  • Help ensure that doctors and healthcare provide compete with each other fairly

Most importantly, the False Claims Act helps to ensure that patients get the best treatment available by forcing physicians and other health providers to advise patients based on what is in the best interests of the patient – and not the financial interests of the healthcare providers. The False Claims Act (FCA) also helps to ensure that the tax payments that are paid into the American government are used in the best way possible.

“The financial arrangements pursued by APMH wrongly gave physicians an incentive to make medical decisions based on their own financial interests, rather than their patients’ interests,” said U.S. Attorney Matthew D. Krueger for the Eastern District of Wisconsin. 

In this case, the federal agencies that the defendants are accused of trying to defraud were Medicare and Medicaid. These healthcare agencies should only pay for medical procedures that are reasonably medically necessary – and not “tainted by kickbacks.”

The Anti-Kickback Statute

The False Claims Act charges were based on the Anti-Kickback Statute (AKS). The AKS is another federal law that specifically prohibits healthcare companies, such as laboratories, drug makers, and healthcare providers from inducing physicians to make referrals or recommendations based on incentives. Illegal incentives include cash payments. They also include vacations, sham directorships, and other financial benefits. Generally, violations of the AKS will also qualify as a False Claims Act violation. In AKS/FCA cases, the damages are often more than if just one law (for example, just the FCA) is used as the authority for the claim against a defendant.

Lamont Pugh III, Special Agent in Charge, U.S. Department of Health & Human Services, Office of Inspector General – Chicago Region stated that, “it is imperative that the public has faith and trust that the decisions made by medical providers are based upon the best interests of their patients” “The specter of a payment of a kickback in any form or fashion diminishes that faith and trust and can lead to the improper payment and wasting of limited taxpayer dollars. The OIG (Office of Inspector General) will continue to work with our investigative partners to ensure the continued integrity of federally funded health care programs.”

The AKS “prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by federally funded programs.” The Anti-Kickback Statute was enacted to help make sure that a doctor’s medical judgment isn’t affected by improper financial incentives instead of doing what is in the best interests of the patient.”

The claims against AMPH

The DOJ claimed that AMPH “improperly gifted shares of incentive stock to non-employee APMSC physicians who performed pain management procedures at APMH’s ambulatory surgical centers.” The stock could then be “redeemed upon a sale of APMH and was dependent on the profitability of APMH.” The profitability, in turn, was determined largely by non-employee physician referrals. “The incentive stock was allegedly given as a reward for past and anticipated referrals to APMH’s ambulatory service centers.”

The government also claimed that AMPH paid “non-employee APMSC physicians” by allowing these doctors “to serve as medical directors in a manner that was tied to the volume of procedures at APMH’s ambulatory surgery centers.” These medical directorships were questionable (as to whether they were necessary) because there wasn’t a written agreement which detailed the services the medical directors had to provide. The medical directors weren’t even required to report or record any medical director duties.

The US DOJ further asserted that APM Entities performed urine drug tests which weren’t medically necessary. The US DOJ also asserted that, for some claims which were submitted to Medicare and Medicaid, that the health providers “failed to customize orders for confirmatory urine drug tests” based on the individual risk assessments of the patients – which resulted in more testing being done than was supported by the patient’s medical record. The APM Entities did reveal “these improper urine drug test claims to the Department of Health and Human Services. “

The whistleblower claim

In this case, the whistleblower was awarded $142,152 for her contributions.

Settlements in False Claims Act are made based on the ability of the defendants to make payments. The case was filed by the U.S. Attorney’s Office for the Eastern District of Wisconsin – with help from the Justice Department’s Civil Division, and the U.S. Department of Health and Human Services Office of Inspector General. 

The lawsuit is captioned United States, et al. ex rel. Hedstrom v. Advanced Pain Mgmt., et al., Case No. 13-C-556 (E.D. Wisc.). The settlement is not an admission of liability. 

This False Claims Act case was initiated by a whistleblower. A whistleblower claim is brought under the qui tam provisions of the False Claims Act. Whistleblowers who initiate lawsuits against defendants are entitled to a percentage of the recovery. That’s where the Law Offices of Stephen Danz can help. Our California False Claims Act lawyers help ensure the disclosure/lawsuit is filed correctly and will help try to persuade the DOJ to intervene – to accept the case. To discuss a whistleblower claim, call us at 877-789-9707 or use our online contact form to make an appointment. Se habla espanol.