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Lecture16 F&A2011
 

Lecture16 F&A2011

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Fraud and Abuse in Health Care

Fraud and Abuse in Health Care

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    Lecture16 F&A2011 Lecture16 F&A2011 Document Transcript

    • Baruch College/Mount Sinai School of Medicine Program in Health Care Administration and Policy BUS9100 Lecture 16 Health Care Fraud and AbuseRaymond R. Arons, Dr. P.H, M.P.H
    • Lecture 16 2 Baruch College/Mount Sinai School of Medicine Program In Health Care Administration and Policy BUS 9100: The Social and Governmental Environment of the Business of Health Care Lecture 16 Health Care Fraud and Abuse Raymond R. Arons, Dr. P.H, M.P.H Health Care Fraud and Abuse The detection and elimination of health care fraud and abuse is a top priority of federal law enforcement. Our efforts to combat fraud were consolidated and strengthened considerably by the Health Insurance Portability and Accountability Act of 1996 (HIPAA). HIPAA established a national Health Care Fraud and Abuse Control Program (the Program), under the joint direction of the Attorney General and the Secretary of the Department of Health and Human Services (HHS), acting through the Departments Inspector General (HHS/OIG), designed to coordinate federal, state and local law enforcement activities with respect to health care fraud and abuse. 2 continued...Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 3 Health Care Fraud and Abuse During FY 2010, the Federal government won or negotiated approximately $2.5 billion in judgments and settlements, and it attained additional administrative impositions in health care fraud cases and proceedings. The Medicare Trust Fund received transfers of approximately $2.86 billion during this period as a result of these efforts, as well as those of preceding years; and another $683 million in Federal Medicaid money was transferred to the Treasury separately The HCFAC account has returned over $18.0 billion to the Medicare Trust Fund since the inception of the program in 1997. 3 Health Care Fraud and Abuse In FY 2010, the Department of Justice (DOJ) opened 1,116 new criminal health care fraud investigations involving 2,095 potential defendants. Federal prosecutors had 1,787 health care fraud criminal investigations pending, involving 2,977 potential defendants, and filed criminal charges in 488 cases involving 931 defendants. A total of 726 defendants were convicted for health care fraud-related crimes during the year. Also in FY 2010, DOJ opened 942 new civil health care fraud investigations and had 1,290 civil health care fraud matters pending at the end of the fiscal year. 4The Department of Health and Human Services and the Department of Justice Health Care Fraud andAbuse Control Program Annual Report For FY 2000http://www.usdoj.gov/dag/pubdoc/hipaa00ar21.htmCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 4 Case 2009-1Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 5 Case 1 Durable Medical Equipment Fraud After a five-week trial, a Federal jury in Miami convicted three owners of two DME companies, a home health agency and an assisted living facility which conspired to defraud Medicare of more than $14 million for unnecessary medicine, DME, and home health care services. Two defendants were sentenced to 51-month terms of imprisonment, and the third was sentenced to a 31-month prison term. Patients testified at trial that they took kickbacks, were falsely diagnosed with chronic obstructive pulmonary disease and prescribed unnecessary aerosol medications, including commercially unavailable compounds. A fourth co-defendant who was a dermatologist, was also convicted in a separate jury trial and was sentenced to prison for 41 months 5Medicare Fraud Convictions Result in Prison Terms for Mother and Two DaughtersWASHINGTON – The owners of four Miami-based healthcare corporations were sentenced andremanded to prison yesterday for their roles in schemes to defraud the Medicare program, ActingAssistant Attorney General Matthew Friedrich of the Criminal Division and U.S. Attorney R.Alexander Acosta of the Southern District of Florida announced today. Collectively, the threedefendants through their companies collected more than $14 million from the Medicare programfor unnecessary medicine, durable medical equipment (DME) and home health care services.U.S. District Judge Cecilia M. Altonaga sentenced Maria T. Hernandez (Mayte), 50, to 51months in prison; Marta F. Jimenez, 67, to 31 months in prison; and Maivi Rodriguez, 34, to 51months in prison. All three were remanded into federal custody at the conclusion of thesentencing. Hernandez and Rodriguez are the daughters of Jimenez. On March 7, 2008, after afive week trial, a jury convicted Hernandez, Jimenez and Rodriguez on all charged counts,including conspiracy to defraud the U.S. government, to cause the submission of false claims toMedicare, and to solicit and receive kickbacks; and conspiracy to commit health care fraud.Additionally, the defendants were found guilty of multiple counts of receiving kickbacks inexchange for referring Medicare patients.At trial, the jury heard testimony that Hernandez, Jimenez and Rodriguez controlled more than60 Medicare beneficiaries for the sole purpose of defrauding Medicare through the businessesthey owned. Hernandez owned Action Best Medical Supplies Inc., a DME company. Jimenezand Rodriguez owned Esmar Medical Equipment Inc., a DME company; A & A MedicalServices Inc., a home health care company; and M & M Comprehensive Inc., an assisted livingfacility.Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 6Patients testified at trial that they were paid cash kickbacks in exchange for use of their Medicarecards. Several of the patients lived in the assisted living facility owned by Jimenez andRodriguez. Patients testified that they knowingly took cash kickbacks, were falsely diagnosedwith chronic obstructive pulmonary disease and prescribed unnecessary aerosol medications,including commercially unavailable compounds. Compounding refers to the process of apharmacist mixing the medication in the pharmacy, instead of purchasing it from apharmaceutical manufacturer. Trial testimony revealed that one of the men making the medicinewas trained as an auto mechanic without any education, training or experience manufacturingmedicine. In total, the co-conspirator pharmacies associated with Hernandez, Jimenez andRodriguez were paid more than $14 million between 2000 and 2003 based on the submission ofclaims for medically unnecessary aerosols.The case was prosecuted by Deputy Chief Kirk Ogrosky and Senior Trial Attorney John S.Darden of the Criminal Division’s Fraud Section in Washington, D.C., with the investigativeassistance of the Department of Health and Human Services, Office of Inspector General and theFBI. The case was brought as part of the Medicare Fraud Strike Force, supervised by the FraudSection of the Criminal Division and U.S. Attorney Acosta of the Southern District of Florida.From investigations opened during the period of strike force operations between March andOctober of 2007, federal prosecutors have indicted 82 cases with 142 defendants in SouthFlorida. Collectively, these defendants billed the Medicare program for more than $492 million.Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 7 Case 2009-2Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 8 Case 2 - Physician Fraud and Abuse A physician and the administrator of an HIV infusion clinic pleaded guilty for their roles in a $37 million infusion fraud scheme. The physician, who was sentenced to 84 months in prison, admitted to approving approximately $26 million worth of fraudulent medical bills, signing documents containing false information about treatments purportedly provided to HIV patients, and approving medically unnecessary treatments. The clinic administrator, who was sentenced to serve 70 months in prison, admitted to causing the submission of approximately $11 million in false claims to the Medicare program, paying health care kickbacks, and committing health care fraud. 6Miami Physician and HIV Clinic Administrator Plead Guilty for Their Roles in a $37Million Medicare Fraud SchemeMiami physician Ronald Harris, M.D., and Miami resident Mariela Rodriguez each pleadedguilty today to defrauding the Medicare program in connection with a $37 million HIV infusionfraud scheme, Acting Assistant Attorney General Matthew Friedrich of the Criminal Divisionand U.S. Attorney R. Alexander Acosta of the Southern District of Florida announced.Harris pleaded guilty to conspiracy to commit healthcare fraud and three counts of submittingfalse claims to the Medicare program before U.S. District Judge Cecilia M. Altonaga. In his plea,Harris admitted that he wrote false prescriptions for HIV infusion treatments while serving as themedical director for two medical clinics, Physicians Med-Care and Physicians Health. Bothclinics purported to provide HIV infusion services to Medicare beneficiaries. Harris admittedthat beginning in August 2002 and continuing through March 2004, he conspired with others todefraud the United States, to cause the submission of false claims to the Medicare program, topay health care kickbacks and to commit health care fraud. Harris also admitted to submittingfalse claims.According to information contained in plea documents, Harris admitted that between August2002 and March 2004 he served as the medical director of Physicians Med-Care and PhysiciansHealth, two Miami HIV infusion clinics that were owned and controlled by Carlos and LuisBenitez, and that were operated for the purpose of committing Medicare fraud. Prior to August2002, Harris had no prior experience with infusion therapy for HIV patients. During hisemployment with Physicians Med-Care and Physicians Health, Harris admitted he approvedapproximately $26.2 million worth of fraudulent medical bills, signed documents containingCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 9false information about treatments purportedly provided to HIV patients and approved medicallyunnecessary treatments. According to information in the plea documents, the Medicare programpaid approximately $17.5 million in fraudulent bills as a result of Harris conduct.Rodriguez pleaded guilty before U.S. District Judge Federico Moreno to conspiracy to commithealth care fraud and one count of making false declarations to a federal grand jury. In her plea,Rodriguez admitted that she administered an HIV infusion clinic named Saint Jude RehabCenter, a Miami HIV infusion clinic that was owned and controlled by Carlos and Luis Benitez,and that was operated for the purpose of committing Medicare fraud. Similar to Physicians Med-Care and Physicians Health, Saint Jude purported to provide HIV infusion services to Medicarebeneficiaries.Rodriguez admitted that she served as an administrator of Saint Jude between June 2003 andNovember 2003, during which time she submitted false claims to the Medicare program for HIVinfusion treatments. Rodriguez further admitted that beginning in June 2003 and continuingthrough November 2003, she conspired with others to defraud the United States, to cause thesubmission of false claims to the Medicare program, to pay health care kickbacks and to commithealth care fraud. Rodriguez also admitted to making false statements in her testimony before afederal grand jury. Between June 2003 and November 2003, Saint Jude submitted approximately$11.3 million worth of fraudulent bills to the Medicare program for HIV infusion services thatwere never provided and services that were medically unnecessary. As a result of this conduct,the Medicare program paid approximately $8.2 million in fraudulent bills. Sentencing for bothRodriguez and Harris has been scheduled for Nov. 4, 2008.In a related case, Carlos and Luis Benitez, as well as their brother Jose Benitez, were indicted onJune 11, 2008, for their role in a $110 million HIV infusion fraud and money laundering scheme.The indictment alleges that Carlos, Luis and Jose Benitez were the masterminds of a massiveHIV infusion fraud operation throughout south Florida involving at least 11 clinics and that theylaundered the proceeds of their crimes. Also according the indictment, Carlos and Luis Benitezwere the true owners of Physicians Med-Care, Physicians Health and Saint Jude. All threeBenitez brothers remain fugitives.The cases were prosecuted by Hank Bond Walther, John K. Neal and Nathan Dimock of theCriminal Divisions Fraud Section, and investigated by the FBI and the Department of Healthand Human Services, Office of Inspector General. The cases were brought as part of theMedicare Fraud Strike Force, supervised by Deputy Chief Kirk Ogrosky of the CriminalDivisions Fraud Section and U.S. Attorney Acosta of the Southern District of Florida. StrikeForce prosecutors have indicted 82 cases involving 142 defendants since Strike Force operationsbegan in March 2007. Collectively, these defendants committed more than $492 million inMedicare fraud.Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 10 Case 2009-3Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 11 Case 3 - Physician Fraud and Abuse A Michigan dermatologist was sentenced to 10 years and 6 months in prison and ordered to pay $1.3 million in restitution and a $175,000 fine following a jury trial conviction for health care fraud. The dermatologist falsely informed patients that they had cancer and performed unnecessary procedures when, in fact, laboratory results indicated that their tissue specimens were benign. In addition, the defendant billed for unnecessary follow-up office visits, claiming that beneficiaries had developed postoperative infections, such as impetigo, a disease rarely seen in adults. Finally, the dermatologist reused single-use needles and sutures without proper sterilization and failed to properly sterilize surgical equipment used in procedures. HHS/OIG assisted the local health department in informing patients of their possible risk of contracting a blood-borne pathogen, such as hepatitis B or C or HIV, because of his 7 unsanitary medical practices.GRAND RAPIDS -- When they found out a Grand Rapids doctor might have exposed them to hepatitis and HIV,many of his patients were scared. When they learned Dr. Robert Stokes habit of reusing sutures, hypodermic needlesand other instruments without proper sterilization did not violate any criminal law, their fear turned to anger. PressPhoto / Adam BirdSupporting the drive: Hastings Mayor Bob May endorses criminal sanctions."Somethings got to be done," said Bob May, the mayor of Hastings who was treated by Stokes for skin cancer. "It should be legally improper todo what he did, as well as morally. We cannot allow these doctors to do this to the public." Stokes, a dermatologist, was sentenced last Decemberto 10 1/2 years in federal prison for insurance fraud, not for potentially exposing thousands of patients to life-threatening infections. Investigatorscould find no federal law against his practice of reusing surgical materials and instruments intended for one-time use. State law provides onlycivil, not criminal, penalties. The state board that licenses osteopathic physicians revoked Stokes license in March, the strongest penalty availableunder current law, said Ray Garza, director of the health regulatory division of the state Department of Community Health. Stokes can apply forreinstatement in five years, Garza said, although, barring a successful appeal, he likely will still be in prison.Continue reading "Patients of jailed doctor Robert Stokes join push for dirty-needle penalties" »Dr. Robert Stokes, a licensed and board-certified dermatologist, was sentenced to 10 years and 6 months in prison and ordered to pay $1,315,682in restitution and a $175,000 fine following his jury trial conviction for health care fraud. The evidence at trial showed that Dr. Stokes falselyinformed patients that they had cancer and performed unnecessary procedures when, in fact, laboratory results indicated that their tissuespecimens were benign. In addition, he used fraudulent billing schemes, including upcoding surgical procedures to receive higher reimbursementrates and billing for follow-up office visits for which he was not entitled to reimbursement. Dr. Stokes justified the unnecessary office visits byclaiming that beneficiaries had developed postoperative infections, such as impetigo, a disease rarely seen in adults. During trial preparation, itwas discovered that Dr. Stokes reused single use needles and sutures without proper sterilization and failed to properly sterilize surgicalequipment used in procedures. OIG assisted the local health department in informing patients of their possible risk of contracting a blood-bornepathogen, such as hepatitis B or C or HIV, because of his unsanitary medical practices.Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 12 8EAST GRAND RAPIDS -- The expansive estate of Dr. Robert Stokes finally has sold, but the new owners wont be moving in. The five-acreReeds Lake property, 2905 Bonnell Ave. SE, is in foreclosure. It was purchased at a Kent County sheriffs sale by mortgage-holder Fifth ThirdBank for $1.39 million, according to county records. That rock-bottom price is only slightly more than its state equalized value, which is abouthalf of market value. The price also is more than 80 percent lower than its original record-breaking asking price of $7.7 million.The foreclosure is yet another chapter in the saga of the mansion and the man who owned it. The former dermatologist now sits in federalprison, convicted in 2007 of health care fraud. It was the most expensive listing in Kent County ever when it hit the market in November 2007.After it failed to sell at two auctions, earlier this year the price was dropped to $2 million. There is more than $40,000 in unpaid property taxesand the federal government has a lien on the property connected to Stokes legal issues. Joe Schmitt, auctioneer for Masterbid Inc., said he neverworked harder to sell a property only to lose money on the deal. He launched an international marketing effort and held live and silent auctions-- all fruitless. "We really overextended ourselves, and we were unable to sell it," he said. "A lot of it had to do with the Dr. Stokes relationshipwith the community. It was horrible." The 14,000-square-foot home now sits vacant. A Consumers Energy shut-off notice is tucked in the frontdoor. Spring landscaping is yet to be done. Alicia Beyer, the real-estate agent who first listed the property in 2007, is working with the bank to sellit. "We have it listed on 149 different Web sites -- national as well as international," she said. While traffic remains strong, the voyeuristic interestis still so prevalent prospective buyers must be approved for a minimum $2 million purchase price, said Beyer, who owns Beyer Realty. "Theycan offer less, but they must be approved for $2 million," she said. Businessman J.C. Huizenga was one of the bidders at the live auction lastFebruary, but he said he is not interested anymore. "I wasnt looking for a place to live in," Huizenga said. "I was looking for an opportunity. "Anytime there is an auction, sometimes there is an opportunity." He would not reveal how much he bid, but did say it was "much less than $3 million."Neighbors expressed surprise the home was in foreclosure, but they hope someone moves in. It has been "kind of a circus," said Mike Redman,who lives across the street. "It will be nice to get it behind us and get some good neighbors and just get it going. Well be happy when its done."Beyer said marketing the property has been her "most complicated deal," but she remains optimistic. "Flowers are starting to blossom. The budsare coming out on the trees," she said. "Well get the property spiffed back up, and well keep our fingers crossed."Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 13 Case 2009-4Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 14 Case 4-Phamacutical Fraud Cephalon, Inc., entered a global criminal, civil, and administrative settlement under which the company agreed to pay a total of $425 million plus interest; plead guilty to a misdemeanor violation of the Federal Food, Drug and Cosmetic Act; and enter into a comprehensive 5-year CIA with HHS/OIG. The civil settlement resolves allegations filed in four separate qui tam cases, which alleged that Cephalon promoted the drugs Actiq, Gabitril, and Provigil for “off-label” uses (that is, uses other than those approved by FDA). Cephalon’s off-label promotional practices involved a variety of techniques, including training its sales force to disregard restrictions of the FDA-approved label and promote the drugs for off-label uses. In addition to the $375 million civil settlement, Cephalon entered into a criminal plea agreement with the United States under which it will pay $50 million. 9 Board of Directors of Cephalon, Inc. 10Board of directors Dennis L. Winger, Frank Baldino, Vaugn M. Kailian, William P. Egan, Charles, A. Sanders.Kevin E. Moley, Gail R. Wilensky, PhD, Marilyn GreeacreCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 15Attorney Generals News Release September 30, 2008 Nixon will recover $3.8 million inMedicaid fraud case against Pennsylvania pharmaceutical company.Jefferson City, Mo. - Attorney General Jay Nixon today said his Medicaid Fraud Control Unitwill recover more than $3.8 million for taxpayers under an agreement with a Pennsylvaniapharmaceutical company that marketed three of its drugs for uses not approved by the Food andDrug Administration and rewarded some doctors who frequently prescribed the drugs. As a resultof the scheme, Nixon said, the three drugs made by Cephalon Inc. were prescribed more oftenthan they normally would have been, and Medicaid programs in Missouri and the other statespaid too much in reimbursement for the drugs. Under an agreement in principle that resolvesallegations of off-label marketing, Cephalon will pay a total of $375 million in damages andpenalties to Missouri, the federal government and the 49 other states. The company also agreedto plead guilty to a criminal charge in federal court in Pennsylvania and pay a $50 millioncriminal fine. Nixon said the Missouri share of the settlement is $3,813,757. With this recovery,Nixons Medicaid Fraud Control Unit will have recovered more than $120 million for taxpayersin Medicaid fraud cases. "Working in concert with the Attorneys General of other states and withthe federal government has enabled us to ensure that Missouri taxpayers are not shortchanged byfraudulent practices," Nixon said. "This case was another example of stopping fraud and abuseagainst Medicaid and taxpayers." Cephalon, based in West Chester, Penn., engaged in the off-label marketing of these drugs: Actiq, approved by the FDA to treat severe pain from cancer.Cephalon marketed the highly addictive narcotic beyond oncologists to general practitioners andinternists. Gabitril, approved as an anti-epileptic drug to treat seizures. Cephalon marketed it forconditions including depression, anxiety, Tourettes syndrome and chronic pain. Patients whowere not suffering from seizures subsequently experienced seizures as a result of taking the drugto treat other conditions. Provigil, approved to treat narcolepsy and sleep disorders. Cephalonmarketed it for a wide variety of other conditions including fatigue, depression, multiplesclerosis, schizophrenia, Parkinsons disease, chronic fatigue syndrome, anxiety, neuropathicpain, and attention deficit/hyperactivity disorder in children. Provigil became one of Cephalonsbest-selling drugs.Cephalons off-label marketing campaign included subsidizing the production and disseminationof reports favorable to off-label uses, having a sale program with incentives to sales staff topromote off-label uses, and rewarding high-prescribing doctors with grants, speakerships andperceptorships. Cephalon also sponsored Continuing Medical Education (CME) programs tofund expensive vacations for physicians, and disseminated off-label promotional literature tophysicians at these CMEs. In addition, Cephalon has entered into a Corporate IntegrityAgreement with the U.S. Department of Health and Human Services, Office of InspectorGeneral, to ensure its compliance in the future. The Missouri case was brought by the AttorneyGenerals Medicaid Fraud Control Unit, which Nixon established in 1994. The unit has authorityunder state law to investigate and prosecute, both civilly and criminally, allegations of fraudagainst Missouris Medicaid program.Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 16 Gail Wilensky, Director, Cephalon, Inc 11GAIL WILENSKY is an economist and a senior fellow at project HOPE, an international healthfoundation. Dr. Wilensky serves as a trustee of the Combined Benefits Fund of the United Mine Workersof America and the National Opinion Research Center, is on the Board of Regents of the UniformedServices University of the Health sciences (USUHS) and the Visiting Committee of the Harvard Medicaland Dental Schools. She recently served as president of the Defense Health Board, a Federal advisory tothe Secretary of Defense, was a commissioner on the World Health Organization’s Commission on theSocial Determinants of Health and co-chaired the Dept. of Defense Task Force on the Future of MilitaryHealth Care. She is an elected member of the Institute of Medicine and has served two terms on itsgoverning council. She is a former chair of the board of directors of Academy Health, a former trustee ofthe American Heart Association and a current or former director of numerous other non-profitorganizations. She is also a director on several corporate boards.Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 17 Case 2009-5Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 18 Case 5-Phamacutical Fraud Merck and Company (Merck), Inc., agreed to pay $399 million plus interest to resolve allegations that Merck failed to properly include discounts on Vioxx (no longer marketed), Zocor, and Mevacorin in the “best prices” reported to CMS under the Medicaid drug rebate program and, as a result, underpaid rebates owed to the States and overcharged entities that purchased Merck products under the 340B Drug Pricing Program. The United States alleged that Merck sales representatives induced physicians to use its drug products by making, among other forms of illegal remuneration, payments that were disguised as fees for training, consultation, or market research. Merck agreed to this settlement at the same time it settled a matter in Louisiana, involving similar discounted pricing programs offered to hospitals for another Merck drug, Pepcid. Through both settlements, Merck agreed to pay a total of $649 million plus interest. Merck further agreed to enter into a 5-year CIA with HHS/OIG that includes corrective measures to address its conduct in both cases. 12 Richard T. Clark, CEO & President, Merck & Co 13Merck CEO Richard Clark says company plans to keep N.J. research facilitiesBy Susan Todd/The Star-LedgerNovember 04, 2009, 5:18PMCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 19 AP FILE PHOTOIn a 2005 file photo Richard T. Clark, CEO & President, Merck & Co., speaksduring an interview at the corporate headquarters in Whitehouse Station.There was somethinglike awe in Merck Chief Executive Officer Richard Clark’s tone as he talked about thecompletion of his company’s mega merger with Schering-Plough. The merger, which combinedtwo of the state’s most venerable drugmakers, officially propelled Clark to the helm of thesecond-largest pharmaceutical company in the world this morning. "It was just incrediblebringing these two companies together,’’ Clark said during a telephone interview. "I think thismerger will be unlike any others in the industry based on that synergy and communality of ourcultures.’’In March, Merck stunned the pharmaceutical industry when it announced plans to buy Schering-Plough for $41.1 billion. The deal came on the heels of another mega-merger: Pfizer’s plan tobuy Madison-based Wyeth for $68 billion. Pfizer completed its acquisition of Wyeth last month.With Schering-Plough incorporated into its folds, Merck has 106,000 employees — roughly14,000 of them are in New Jersey — in more than 140 countries. The company has 15 drugs inlate-stage development — it was Schering-Plough’s rich pipeline that drove Merck’s ambitionsfrom the start.Clark said the company intends to keep the research facilities in Rahway and Kenilworth. "Theyare very important research sites,’’ Clark said of the two locations. "There is very specificresearch work that we need to keep in place." The Whitehouse Station corporate campus willcontinue serving as the company’s global headquarters. Clark said early on he set a strategy tomeld the best of the two companies together. "I hand-picked the integration leaders to make surethey believed in my objectives,’’ he said. "I rolled up my sleeves every day and worked with myleadership team to ensure that we actually kept to the standards.’’Merck & Company has agreed to pay more than $650 million to resolve allegations that thepharmaceutical manufacturer failed to pay proper rebates to Medicaid and othergovernment health care programs and paid illegal remuneration to health care providers toinduce them to prescribe the companys products, the Justice Department has announced.The allegations were brought in two separate lawsuits filed by whistleblowers under the qui tam,or whistleblower, provisions of the False Claims Act. Not only is the combined recovery in thesetwo cases one of the largest healthcare fraud settlements ever achieved by the JusticeDepartment," said Attorney General Michael B. Mukasey, "it reflects our continuing effort tohold drug companies accountable for devising pricing schemes that deliberately seek to denyfederal health care programs the same lower prices for drugs that are available to othercommercial customers." H. Dean Steinke, a former Merck employee, alleged in his suit filed inPhiladelphia that Merck violated the Medicaid Rebate Statute in connection with its marketing ofits drugs Zocor and Vioxx. (Zocor is a cholesterol lowering drug and Vioxx, pulled from themarket by Merck in September of 2004, was used for the treatment of acute pain and in thetreatment of arthritis.) Merck allegedly offered deep discounts for the two drugs if hospitals usedlarge quantities of those drugs in place of competitors brands.The Medicaid Rebate Statute requires that drug manufacturers report their "best prices" and othercost information to the government in order to ensure that Medicaid obtains the benefit of thesame discounts and price concessions that other purchasers enjoy. An exception to this ruleallows manufacturers to exclude from the prices they report any discounted prices that areCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 20"nominal" in amount. Merck improperly termed as "nominal" the prices it offered to hospitals toboost their sales and excluded those discounts from the prices it reported to the government.Steinkes suit further alleged that from 1997-2001, Merck had approximately fifteen differentprograms used by its sales representatives to induce physicians to use its many products. Theseprograms primarily consisted of excess payments to physicians that were disguised as fees paidto them for "training," "consultation" or "market research." In fact, the government alleged thatthese fees were illegal kickbacks intended to induce the purchase of Merck products. Merckagreed today to pay $399 million plus interest to settle the Medicaid Rebate as well as thekickback allegations.In a separate suit filed by physician William St. John LaCorte in New Orleans, its alleged thatMerck had established a marketing scheme in which it provided substantially reduced prices forits Pepcid products once the hospitals agreed to primarily use the drug instead of a competitors.(Pepcid is used to reduce stomach acid and to treat heartburn and acid reflux.) Merck allegedlyoffered these incentives to hospitals in order to obtain the benefit of spillover business whenpatients would continue to purchase Pepcid once he or she was discharged. Merck improperlytermed as "nominal" the prices it offered to hospitals to boost the sales of Pepcid, excluded thosediscounts from the prices it reported to the government, and thus effectively denied thegovernment the benefit of these lower prices. Merck agreed today to pay $250 million plusinterest to settle these allegations. Under the two settlement agreements, the federal governmentwill receive more than $360 million, and forty-nine states and the District of Columbia over$290 million. In addition, Mr. Steinke will receive $44,690,000 from the federal share of thesettlement amount and an additional $23.5 million from the states. Similarly, Dr. LaCorte willreceive a share of the proceeds from the federal and state settlement amounts under theirrespective qui tam statutes."Our health insurance programs rely upon the integrity of health providers, includingpharmaceutical manufacturers, when they report to the government programs which reimbursetheir products and services with scarce funds," said Patrick L. Meehan, U.S. Attorney for theEastern District of Pennsylvania, whose office led the investigation of the Steinke matter."Particularly in the wake of Hurricane Katrina, it is critical that precious government resourcesnot be lost to fraud and abuse," said Jim Letten, the U.S. Attorney for the Eastern District ofLouisiana, whose office led the investigation of the LaCorte matter. "This office is dedicated toprosecuting pricing fraud so that healthcare dollars go to help the most vulnerable of our citizens-- the disabled and the poor." "The Office of Inspector General has a strong record of pursuingviolations in the Medicaid drug rebate program and is working closely with Federal and Statelaw enforcement to hold accountable pharmaceutical companies engaged in illegal practicesresulting in Medicaid fraud," said Daniel R. Levinson, Inspector General of the Department ofHealth and Human Services. Todays settlement was the result of close cooperation between theJustice Department, state attorneys general and other law enforcement entities includingMedicaid Fraud Control Units, and the Office of Inspector General of the Department of Healthand Human Services. As part of the resolution of these two cases, the Department of Health andHuman Services Office of Inspector General (HHS-OIG) and Merck have entered into a five-year Corporate Integrity Agreement to ensure that such improper conduct does not occur in thefuture.Merck Board of DirectorsCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 21 Richard T. Clark Chairman of the Board, president and chief executive officer, Merck & Co., Inc. New Merck director since November 3, 2009 Leslie A. Brun Chairman and chief executive officer, Sarr Group, LLC (investment holding company). Non-executive chairman, Automatic Data Processing, Inc. Director, Philadelphia Media Holdings, LLC, and Broadridge Financial Solutions, Inc. New Merck director since November 3, 2009 Thomas R. Cech, Ph.D. Director, Colorado Institute for Molecular Biotechnology, University of Colorado. New Merck director since November 3, 2009 Thomas H. Glocer Chief executive officer, Thomson Reuters Corporation (information and services company for businesses and professionals). Director, Thomson Reuters Corporation, Partnership for New York City. New Merck director since November 3, 2009 Steven F. Goldstone Retired chairman and chief executive officer, RJR Nabisco, Inc. Managing partner, Silver Spring Group (private investment firm). Non-executive chairman, ConAgra Foods, Inc. Director, Greenhill & Co., Inc. New Merck director since November 3, 2009Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 22 William B. Harrison, Jr. Retired chairman of the board, JPMorgan Chase & Co. (financial services). Director, Cousins Properties Incorporated and Lincoln Center for the Performing Arts. New Merck director since November 3, 2009 Harry R. Jacobson, M.D. Vice chancellor, Health Affairs, Emeritus (since June 2009), Vanderbilt University. Non-executive chairman, CeloNova BioSciences, Inc. Director, HealthGate Data Corporation, Ingram Industries, Inc. and Kinetic Concepts, Inc. New Merck director since November 3, 2009 William N. Kelley, M.D. Professor of Medicine, Biochemistry and Biophysics, University of Pennsylvania School of Medicine. Director, Beckman Coulter, Inc., GenVec, Inc., and Polymedix, Inc. New Merck director since November 3, 2009 C. Robert Kidder Chief executive officer, 3Stone Advisors LLC (private investment firm). Director, Chrysler Group LLC and Morgan Stanley. New Merck director since 2005Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 23 Rochelle B. Lazarus Chairman, Ogilvy & Mather Worldwide (advertising and marketing communication company). Director, General Electric, New York Presbyterian Hospital, American Museum of Natural History and World Wildlife Fund. New Merck director since November 3, 2009 Carlos E. Represas Chairman, Nestle Group Mexico. Director, Bombardier Inc. and Vitro S.A. de C.V. New Merck director since November 3, 2009 Patricia F. Russo Former chief executive officer and director, Alcatel-Lucent. Director, Alcoa, Inc., and General Motors. New Merck director since 1995 Thomas E. Shenk, Ph.D. Elkins Professor, Department of Molecular Biology, Princeton University. Director, Cell Genesys, Inc., and CV Therapeutics, Inc. New Merck director since November 3, 2009 Anne M. Tatlock Retired chairman of the board and chief executive officer, Fiduciary Trust Company International (global asset management services). Director, Fortune Brands, Inc., and Franklin Resources, Inc. New Merck director since November 3, 2009Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 24 Samuel O. Thier, M.D. Lead director of the board. Professor of Medicine and Health Care Policy, Emeritus, Harvard Medical School. Director, Charles River Laboratories, Inc. New Merck director since November 3, 2009 Craig B. Thompson, M.D. Director, Abramson Cancer Center and Professor of Medicine, University of Pennsylvania School of Medicine. Chairman of the Medical Advisory Board, Howard Hughes Medical Institute. Member of the Advisory Board, M.D. Anderson Cancer Center. New Merck director since 2008 Wendell P. Weeks Chairman and chief executive officer, Corning Incorporated (technology company in telecommunications, information display and advanced materials industries). Director, Corning Incorporated. New Merck director since November 3, 2009 Peter C. Wendell Managing director, Sierra Ventures (technology-oriented venture capital firm). Chairman, Princeton University Investment Company. New Merck director since November 3, 2009Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 25 Case 2009-6.Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 26 Case 6-Phamacy Fraud CVS Caremark Corporation (CVS) agreed to pay $36.7 million and enter into a 5-year CIA with HHS/OIG to resolve its liability based on allegations that it fraudulently overcharged Medicaid programs in 23 States by improperly switching drugs it dispensed. Specifically, the Government and relator alleged that CVS dispensed ranitidine (generic Zantac) capsules rather than tablets in order to increase its reimbursement from Medicaid. As a result of dispensing and billing Medicaid for capsules, CVS was reimbursed, on average, four times what it would have been reimbursed had it dispensed tablets. 14 CVS Caremark President and CEO Thomas M. Ryan. 15Board of DirectorsEdwin M. BanksFounder and Managing Partner of Washington Corner Capital Management, L.L.C. C.David Brown IIChairman of the Firm of Broad and Cassel, a Florida law firm David W. DormanNon-Executive Chairman of the Board of Motorola, Inc. Kristen E. Gibney WilliamsFormer executive of thePrescription Benefits Management Division of Caremark International, Inc. Marian L. HeardPresidentand Chief Executive Officer of Oxen Hill Partners William H. JoyceFormer Chairman of the Board andCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 27Chief Executive Officer of Nalco Company Jean-Pierre MillonFormer President and Chief ExecutiveOfficer of PCS Health Services, Inc. Terrence MurrayFormer Chairman of the Board and ChiefExecutive Officer of FleetBoston Financial Corporation C.A. Lance PiccoloChief Executive Officer ofHealthPic Consultants, Inc. Sheli Z. RosenbergFormer President, Chief Executive Officer and ViceChairwoman of Equity Group Investments, L.L.C. Thomas M. RyanChairman of the Board, Presidentand Chief Executive Officer of CVS Caremark Corporation and CVS Pharmacy, Inc. Richard J. SwiftFormer Chairman of the Board, President and Chief Executive Officer of Foster Wheeler Ltd.In March 2008, CVS Caremark Corporation agreed to pay $36.7 million ($21.1 million to the federalgovernment and $15.6 million to 23 states) to settle claims that from 2000-2006, the company illegallyswitched patients from the tablet form of the drug Ranitidine (generic Zantac) to a capsule form in orderto increase Medicaid reimbursement. A whistleblower initiated the lawsuit in 2003 and received morethan $4.3 million as his share of the settlement.[14] In its press release, the Government announced,"[s]witching medication from tablets to capsules might seem harmless, but when that is done solely toincrease profit and in violation of federal and state regulations that are designed to protect patients,pharmacies must know that they are subjecting themselves to the possibility of triple damages, civilpenalties and attorney fees. . . . These penalties, coupled with the willingness of insiders to report fraud,should deter such misconduct, but when it doesnt, the result in this case and others serve notice that wewill aggressively pursue all available legal remedies."[15]United States et al., ex rel. Bernard Lisitza v. CVS Caremark Corp. (N.D. Ill.)—March18, 2008Retail pharmacy corporation CVS Caremark agreed to pay $36.7 million to the U.S., the Medicaidparticipating states, and the District of Columbia to settle allegations that it overbilled Medicaid for awidely used antacid drug, by switching patients from the standard generic drug for a more expensiveversion. 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 isgeneric Zantac, to a much more expensive capsule version in order to increase its reimbursementfrom Medicaid. Because the capsule version costs two to four times more than the tablet form of thedrug, CVS was able to bill Medicaid for millions more than it was eligible to receive. RelatorBernard Lisitza learned of this fraudulent scheme while working as a temporary receiving pharmacistin Illinois. Of the $36.7 million recovered in the settlement, $21,060,535 will go to the federalgovernment and $15,639,464 will go to the Medicaid participating states, including Illinois,California, Delaware, Florida, Hawaii, Louisiana, Massachusetts, Nevada, Tennessee, Texas,Virginia, and the District of Columbia. As his share of the recovery, Lisitza will receive $3,580,291.TAF members Michael Behn and Linda Wyetzner of Behn & Wyetzner represented Lisitza. AssistantU.S. Attorney Linda A. Wawzenski represented theCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 28 Case 2009-7Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 29 Case 7- Hospital Fraud Staten Island University Hospital (SIUH) paid nearly $89 million in a global settlement resolving allegations that it defrauded Medicare, Medicaid, and TRICARE. The global settlement resolves two separate qui tam lawsuits and two Government investigations. As part of the global settlement, SIUH also entered into a 5-year CIA with HHS/OIG In the first lawsuit, the Government’s investigation alleged that SIUH submitted claims for payment for treatment provided to patients in beds for which SIUH had received no certificate of operation from the New York State Office of Alcoholism and Substance Abuse Services and concealed the existence of those beds from that office. SIUH paid nearly $12 million to the United States and nearly $15 million to the State of New York. 16 Staten Island University Hospital (SIUH) In the second lawsuit, the investigation alleged that SIUH knowingly used incorrect billing codes for certain cancer treatments performed at the hospital, and thus obtained reimbursement for treatment that was not covered by Medicare or TRICARE. SIUH will pay $25 million to settle this lawsuit. Additional conduct self-disclosed by SIUH was resolved prior to the filing of the lawsuits. Pursuant to HHS/OIG’s Self-Disclosure Protocol, SIUH agreed to nearly $36 million for reporting 17Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 30Staten Island hosp to repay 89M in fraud caseinvovling doctor who coerced George HarrisonBY GLENN BLAINDAILY NEWS ALBANY BUREAUMonday, September 15th 2008, 11:31 PMALBANY - A cancer doctor accused of forcing ex-Beatle George Harrison to sign a guitar on hisdeathbed left Staten Island University Hospital a costly legacy.In a mammoth settlement of Medicaid andMedicare fraud charges, the hospital Monday agreedto repay state and federal governments $88.9 million. Part of the settlement covers work doneby Dr. Gilbert Ledermans radiation oncology department. "This was a hospital that sought toexploit the Medicare program and obtain millions of dollars in payments that it was not entitledto," said Richard Reich, lawyer for federal whistleblower Elizabeth Ryan, who brought the firstcase against Lederman and the hospital. In a statement, the hospital said the settlement "closesthe chapter" on several ongoing investigations and that funds are budgeted to pay for it. "Wewant to assure our patients and the communities we serve that SIUH will continue to deliver thesame high-quality care that has enabled us to win coveted national awards," the statement said.Of the $88.9 million, $25 million is to settle claims that the hospital fraudulently billed Medicarefor stereotactic body radiosurgery cancer treatments, which are not covered by Medicare. Ryan,the widow of a Staten Island University cancer patient, brought the case under the federal FalseClaims Act. She got $3.75 million. Federal prosecutors are still pursuing a case againstLederman. Telephone calls to Ledermans lawyer were not returned. Lederman, who no longerworks at Staten Island University, treated Harrison there before he died of brain cancer inNovember 2001. Olivia Harrison, the ex-Beatles widow, accused him of coercing Harrison intoautographing his sons guitar and signing autographs for his two daughters. Olivia Harrisondropped a suit against Lederman after he agreed to destroy the guitar and the autographs.Read more: http://www.nydailynews.com/news/2008/09/15/2008-09-15_staten_island_hosp_to_repay_89m_in_fraud.html#ixzz0heF48682The Doctor Cant Help HimselfWhen the notorious cancer doctor Gil Lederman cadged an autograph from a dyingGeorge Harrison, the world was appalled.But as Lederman scrambles to salvage hisreputation, the very nature of his experimental practice has come under attack. • By Andrew Goldman • Published May 21, 2005Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 31(Photo credit: Eugene Richards)On an evening in mid-November 2001, Gil Lederman made a judgment call that would bringhim the kind of fame that even he had never dreamed possible. A bespectacled cancer doctorwith an Alfred Kinsey fade haircut, Lederman was already something of a local celebrity; hisdistinctive nasal monotone had been heard for years on New York talk-radio stations, promotinghis revolutionary cancer treatment, fractionated stereotactic radiosurgery, at Staten IslandUniversity Hospital. But Lederman’s fame—as a kind of Dr. Zizmor of radiation oncology—paled in comparison with that of his patient, George Harrison, who was lying in a rented housenear the hospital, dying of lung cancer that had invaded his brain.Though he’d been treating Harrison for only about a month, Lederman thought they had bondedenough to warrant an unconventional house call. “I feel like a brother to him,” the doctorconfided to another physician at his hospital. So, as any man with an ailing sibling would do,Lederman showed up that night on Harrison’s doorstep with his three children in tow, so thatthey might say hello and good-bye to Uncle George, who was leaving the next morning forCalifornia, where he would die two weeks later.That night has become something of an outer-borough Rashomon. Depending on whose versionyou believe, Lederman either had a touching visit with Harrison or bullied a dying man in adeclining mental state into creating a valuable piece of rock-and-roll memorabilia. The Harrisoncamp claimed as follows: Lederman showed up uninvited and instructed his 13-year-old son,Ariel, to strum a song on his Yamaha electric guitar. When the performance was over, Ledermanput the guitar in Harrison’s lap and asked him to sign it. “I do not even know if I know how tospell my name anymore,” responded an exhausted Harrison. “C’mon, you can do this,” saidLederman, guiding his hand and spelling his name aloud: G-E-O-R-G-E H-A-R-R-I-S-O-N.Lederman insisted to friends that Harrison invited the children over and happily signed theguitar. The shaky scrawl of the signature itself is inconclusive—it could have been written underduress or simply signed by a willing star on a great deal of medication. Nevertheless, once theHarrison estate sued the doctor for $10 million and the press got their mitts on the legalCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 32complaint, Lederman became a popular tabloid target. At the peak of the frenzy, he was labeled a“ghoul” and a “scumbag.” “Page Six” even ran a cartoon depicting him chasing Keith Richardswith a pen and guitar. “I’m not on my deathbed!” Richards yells.It seemed like the ultimate disgrace for a Harvard-trained, triple board-certified physician whoshould have been amassing yacht money or doing Lasker Award–quality research at that point inhis life. Then again, Lederman’s behavior at Harrison’s deathbed wasn’t a complete surprise tothose who’d been watching his curious approach to his career. “My sense of the guy is that he’sjust somebody who doesn’t get it,” says a prominent radiation oncologist who’s met him onseveral occasions. “His social skills aren’t there.” But it turns out that questionable manners maybe the least pernicious of Lederman’s sins. The doctor is now facing half a dozen multi-million-dollar civil suits, some of which accuse him of bilking terminal cancer patients by luring themwith promises of a miracle cure.As Dr. Lederman waxed on about his mother, George Harrison, according to a source, spokethree measured words: “Please...stop...talking.”Lederman’s defenders claim that the Harrison matter has turned a caring, innovative physicianinto the kind of wounded game that trial lawyers love to hunt. “Lederman prides himself ontaking the most challenging cases that nobody else wants, cases where patients have not beengiven any hope whatsoever. He’s not offering them a cure but an option,” says Andrew Garson,an attorney who defended Lederman in two previous malpractice cases and believes the recentspate of lawsuits stems from his client’s bad press. Even a judge weighing a recent change-of-venue request acknowledged that Lederman had been through the ringer. His decision played offHarrison’s “Something”: “Something in the folks he treats / Attracts bad press like no otherdoctor.”But others contend that the Harrison case was just a symptom of Lederman’s larger pathology ofbeing singularly unable to grasp right and wrong when dealing with the fragile emotions ofdesperately ill people. “The real issue with Gil is the following,” says Jay Loeffler, chief ofradiation oncology at Massachusetts General Hospital. “Is he a genius, far ahead of his time? Oris he a scoundrel?”Lederman grew up a bookish Jew surrounded by the flinty Protestants of Waterloo, Iowa. HisUkrainian-immigrant grandfather had started a small clothing concern called Lederman’sWestern Outfitters, where young Gil earned a nickel an hour. (This explains the geeky scientist’sincongruous fondness for Western shirts and ornate cowboy boots.) He decided he wanted to bea doctor when he was 12 years old. It was 1966, the year the Beatles released Revolver, and hisolder brother was nearly killed by a drunk driver. “At that moment I decided that I wanted tohelp people,” he says.He trained in three specialties—internal medicine at the University of Chicago–Michael ReeseHospital, then medical oncology and radiation oncology at Harvard—and at the age of 34became the director of Staten Island University Hospital’s radiation oncology department.Though it’s rare for a doctor who’s never practiced full-time to be the director of a program, itwasn’t exactly a prestige post. Before Lederman’s arrival in 1987, the radiation oncologyCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 33department was just what you’d find in most community hospitals; that is, if you lived on StatenIsland and your kid needed radiation, you’d wait about five seconds before driving to Sloan-Kettering or New York-Presbyterian. The department had a single aging cobalt machine and sawonly eleven patients a day.The ambitious new director set out to change that. Lederman forged a close relationship withthen–hospital CEO Rick Varone, and, over the next decade, persuaded the administration to buyfive linear accelerators, at $1.8 million a pop. In 1991, Lederman became the first doctor in NewYork to offer brain radiosurgery. Unlike standard radiation treatment, which irradiates a largefield around a cancer, exposing healthy tissue to low doses of toxic radiation, radiosurgery isdesigned to zero in on the tumor. Finely shaped radiation beams are sent into the head frommany different directions, with the full dose concentrated where they intersect. The upshot is thatlarger doses can be trained on the cancer, while healthy tissue is minimally affected. Ledermandescribes it with an elegantly simple metaphor: “Imagine a plum in a bread box . . . Radiosurgerycan hit the plum without attacking the bread box.”Still, the machines were worth nothing unless they had bodies to aim at, so Lederman startedspreading the gospel of radiosurgery, for which he charged about $18,000 per round oftreatment. “My feeling was, if you have a new treatment, then people should learn about it,” hesays. “We were educating people.” There were radio ads, cable-television spots, Internetadvertising, and presentations at the hospital. Lederman also went on tour, traveling to Italy,England, Israel, and many other countries to speak to prospective patients and examine their CTscans on the spot. CEO Staten Island Hospital-Anthony Ferreri 18Heart Societys annual Wine Festival & Casino NightCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 34Added by Melinda Gottlieb on September 17, 2009 at 9:48 AMDr. Dennis Bloomfield, left, Angelina Malerba, owner of Angelina’s Ristorante, and Staten IslandUniversity Hospital CEO Anthony Ferreri share a moment at the Staten Island Heart Society’s annualWine Festival and Casino Night at Angelina’s in Tottenville. The event was presented by Aida’s World ofLiquors. STATEN ISLAND ADVANCE/HILTON FLORES ----- Dr. Dennis Bloomfield, AngelinaMalerba (Angelinas Ristorante), SIUH CEO Anthony Ferreri. The Staten Island Heart Societys annualWine Festival & Casino Night at Angelinas Ristorante...presented by Aidas World of Liquors.Read more: Gil Ledermans DubiousCareer http://nymag.com/nymetro/health/features/10817/#ixzz0heGUavhfCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 35 Case 2009-8Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 36 Case 8- Hospital Fraud In Connecticut, Yale-New Haven Hospital entered into a civil settlement agreement with the Government in which it will pay approximately $3.8 million to resolve allegations that it violated the FCA. These allegations involved charges to Medicare for infusion therapy, chemotherapy administration and blood transfusion services. During the time-period at issue, Medicare only allowed payment for one unit of infusion therapy and chemotherapy administration per patient visit, and one unit of blood transfusion services per day. 19To set forth the commitment of the University of Miami to compliance with (1) the federalFalse Claims Act, 31 U.S.C. § 3729, et seq.; (2) the Florida False Claims Act, Fla. Stat. §§ 68.081– 68.092; and (3) state Medicaid plan amendments promulgated to comply with Section 6032(Employee Education About False Claims Case 8- Hospital Fraud Yale University has entered into a civil settlement agreement with the federal government in which it will pay $7.6 million to resolve allegations that it violated the False Claims Act and the common law in the management of federally-funded research grants awarded to the university between January 2000 and December 2006. The grant awards were made by approximately 30 federal agencies and entities, including NIH, NSF, DOE, DOD, and NASA. 20 continued...Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 37 Case 8- Hospital Fraud The investigation focused on allegations involving two types of mischarges to federal grants. Both types of mischarges arose as violations of the basic principle that recipients of federal grants are allowed to charge to each grant account only “allocable” costs, which are costs that relate to the specific objectives of that grant project. The first allegation involved cost transfers and the requirement that costs transferred to a federal grant account must be allocable to that particular grant account. The settlement resolves allegations that some Yale researchers at times improperly transferred charges to a federal grant account to which those charges were not allocable. Researchers allegedly were motivated to carry out these wrongful transfers when the federal grant was near its expiration date and they needed to spend down the remaining grant funds. Federal regulations require that unspent grant funds be returned to the government. 21 Case 8- Hospital Fraud The second allegation involved salary charges and the requirement that charges to federal grant accounts for researcher time and effort must reflect actual time and effort spent on a particular grant. It was alleged that some Yale researchers submitted time and effort reports, for summer salary paid from federal grants, that wrongfully charged 100 percent of their summer effort to federal grants when, in fact, the researchers expended significant effort on unrelated work. Researchers allegedly were motivated to carry out these wrongful salary charges by the fact that they are not paid their academic- year salary by Yale during the summer. The only salary received by these researchers during the summer was the result of the effort they charged to federal grants. Absent the alleged grant mischarges, the researchers would not have been paid. The $7.6 million payment comprises two components: $3.8 million in actual damages for the false claims, and $3.8 million assessed as penalties for the false claims 22Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 38 Yale-New Haven Hospital 20 21Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 39 President and CEO of Yale New Haven Hospital 22Marna P. Borgstrom, of Guilford, has been named president and chief executive officer of Yale-New Haven Hospital and Yale New Haven Health Systemsucceeding Joseph A. Zaccagnino who will retire on September 30 after a distinguished 35-year career.Borgstrom, a 26-year employee of Yale-New Haven Hospital, has served as thehospitals executive vice president and chief operating officer since 1993. Herappointment is effective October 1, 2005."Marna Borgstrom has been a dedicated and talented leader at Yale-New Haven Hospital for more than 25 years," said Marvin K. Lender, chairman of theYale-New Haven Hospital board of trustees. "Her leadership skills and commitment are evident to all who meet her. She was the unanimous choice of boththe search committee and the full board of trustees."Prior to being named executive vice president and chief operating officer, Borgstrom served as the senior vice president of administration from 1992-1993.From 1985 to 1992, she served as vice president of administration. Borgstrom joined Yale-New Haven Hospital in 1979 as an administrative fellow. Shealso served in a number of administrative roles during her career at Yale-New Haven Hospital. She is the first woman to be named as president and CEO ofthe hospital and the health system."We have great confidence in Marnas leadership," said Julia M. McNamara, chair of the Yale New Haven Health System board of directors. "Her talentand personal qualities, as well as her experience and knowledge of this health system will allow for a seamless transition and her vision will set the stagefor a strong future."As executive vice president and chief operating officer of Yale-New Haven Hospital, Borgstrom has been responsible for the systems $850 millionoperating budget and she has served as the primary liaison with the Yale University School of Medicine. During her career, Borgstrom directed thecompletion of the $51 million South Pavilion renovation and the construction of the $156 million Yale-New Haven Childrens Hospital, as well as theopening of the Shoreline Medical Center in Guilford.In her role as executive vice president of the Yale New Haven Health System, Borgstrom has overseen a system with more than 1,500 licensed beds and acombined operating budget of more than $1.3 billion at Yale-New Haven, Bridgeport and Greenwich hospitals. The largest health system in the state ofConnecticut, Yale New Haven Health System was created in 1995 and in addition to its three primary members, maintains a contractual relationship withWesterly Hospital in Rhode Island.Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 40"Yale University enjoys a strong and mutually beneficial relationship with the entire Yale New Haven Health System," said Richard Levin, president ofYale University. "We have the utmost confidence in Marna Borgstroms ability to bring together the resources in all of our institutions to advance ourmission as one of the nations premiere academic medical centers and health care systems."Borgstrom received a Master of Public Health degree in hospital administration from the Yale University School of Medicine and a bachelors degree inhuman biology from Stanford University. She and her husband, Eric, have two sons.Yale New Haven Health System (YNHHS) is the leading health care system in Connecticut with approximately 12,000 employees. YNHHS - through Yale-New Haven, Bridgeport and Greenwich hospitals and their affiliated organizations - provides comprehensive, cost effective, advanced patient carecharacterized by safety, quality and service.Yale-New Haven Hospital is a 944-bed, not-for-profit hospital serving as the primary teaching hospital for the Yale School of Medicine. Yale-New Havenwas founded as the fourth voluntary hospital in the U.S. in 1826 and today, the hospital complex includes Yale-New Haven Childrens Hospital and Yale-New Haven Psychiatric Hospital, with a combined medical staff of about 2,400 university and community physicians practicing in more than 100specialties.Reporters: For more information on this release, contact Vin Petrini, (203) 688-2612.Return to: News Release IndexCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 41 Case 2009-9Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 42 Case 9- Hospital Fraud Lester E. Cox Medical Centers, a health care system headquartered in Missouri, has paid $60 million and entered into a 5-year CIA with HHS/OIG to settle allegations that it paid doctors at a local physician group for referrals, and billed Medicare for the services resulting from those referrals, in violation of the Anti-Kickback and Physician Self-Referral statutes 20 PUTATIVE CLASS ACTION AGAINST LESTER E. COX MEDICAL CENTER PURSUANT TO FAIR DEBT COLLECTION PRACTICES ACTIf you received a letter or telephone call from Ozark Professional Collections after August 10,2002 attempting to collect a debt you may be part of a potential class action against Lester E.Cox Medical Center (also known as Cox Hospital). During this time period, Lester E. CoxMedical Center attempted to collect its debts under the registered fictitious name “OzarkProfessional Collections”. In doing so, Cox Hospital failed to disclose that no such entityexisted, but instead Ozark Professional Collections was merely a division of Lester E. CoxMedical Center. Cox misled its patients so they would assume that their account was beingturned over to an independent “collection agency.” This is a clear violation of the Fair DebtCollection Practices Act, 15 U.S.C. §1692 K.CLICK HERE TO READ THE LAW .Cox told patients with accounts due that unless payment was received they would be turned overto a “collection agency.” If no payment was made, Cox stopped writing or calling people underits own name and instead did so as Ozark Professional Collections. If a debtor asked who ownedor operated Ozark Professional Collections, the debt collectors refused to answer thesequestions. In fact, the employee manual for Ozark Professional Collections specifically told itscustomer service representatives not to answer questions regarding the nature, ownership oroperation of Ozark Professional Collections. As a result, the patients who owed debts to LesterE. Cox Medical Center assumed that they had been turned over to an independent collectionagency rather than merely another division of Cox Hospital to collect its debt.In a similar case, United States District Judge, Dean Whipple, has held that this constitutes aclear violation of the Fair Debt Collection Practices Act. Judge Whipple stated:Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 43“In the present case it is painfully obvious from the record that Cox Medical Centers is a creditorwho, in the process of collecting its own debts, uses a name other than its usual business name—namely “Ozark Professional Collections”—to indicate that a third party is attempting to collectits debt. Indeed, OPC deliberately tries to avoid telling consumers that it is a division of CoxMedical Centers. Consequently, Cox Medical Centers is a debt collector in the eyes of thestatute. Daley v. Povena Hospital, 88 F.Supp. 2d 881 (N.D.Ill 2000) (holding hospitals using itsown employees for in-house collection under a misleading “doing business as” designation liableunder the FDCPA).”“The Court now turns to whether Cox violated the FDCPA’s provisions. Naturally, in light of theabove ruling and the facts, the Court finds that by sending two collection letters to theHuntsman’s on OPC letterhead, Cox committed two violations of §1692e(14). Therefore, theCourt grants Defendants summary judgment on Count IV.” CLICK HERE TO READ THECOURT JUDGMENTSo, if you have received a collection letter or telephone call from Ozark Professional Collectionson or after August 11, 2002, you have a claim against Lester E. Cox Medical Center for violatingthe Fair Debt Collection Practices Act.A potential class action lawsuit has been filed on behalf of all individuals who received acollection communication from Ozark Professional Collections on or after August 11, 2002. CLICK HERE TO READ THE CLASS ACTION COMPLAINT . While the court has notyet been asked to certify the lawsuit as a class action, we are registering potential class membersso that if and when the court does certify the class to proceed we will have already begun theprocess of identifying class members. If you would like to register as a potential class memberplease use the CONTACT US form on this website. CLICK HERE TO CONTACT US . Itasks for basic information such as your name, address, telephone number, e-mail address, andaccount information with Cox Medical Center. It also asks for the date of any communicationswith Ozark Professional Collections (OPC) requests that you send us a copy of anycommunications you have had with Ozark Professional Collections and any related bills fromLester E. Cox Medical Center, if you have them.There is no cost or obligation to register as a class member or to participate in the class action, ifand when it is certified. In turn, if the class is not certified we may pursue certain individualclaims at our option, but reserve the right not to proceed with other claims if we determine it isnot feasible to do so. If you have any questions regarding this matter, you may contact us at ourtoll free number 1/800-444-7552. For further information regarding the law firms and thelawyers who are pursuing this potential class action, please click below to be connected to theirrespective websites. Thank you for your interest and we look forward toCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 44Hospitals/Facilities Clinics & PhysiciansCox South Find a Physician/Clinic3801 S. National Ave. Search by region, specialty or physician name toSpringfield, MO 65807 find the physician that best meets your health care needs.563-bed hospital, full-service care facility at theheart of the "Medical Mile" in south Springfield. CoxHealth owned and operated clinics A directory of clinics organized by clinic name.Cox North1423 N. Jefferson Ferrell-Duncan ClinicSpringfield, MO 65802 A directory of physicians organized by specialty72-bed facility, and the original site of the 1906 The Clinic at Walmartopening of Burge Hospital, which has become Walk-in services for basic care is available throughCoxHealth. CoxHealth at local Walmart stores.Cox Monett Helpful Information801 Lincoln Ave.Monett, MO 65708 Maps, Directions & Parking Easy-to-use maps and directions to get you where25-bed critical access hospital serving Monett, Mo., you need to be in the city, on our campuses orand the surrounding counties. inside a specific building.Cox Walnut Lawn Construction Updates1000 E. Walnut Lawn Please check here for current and futureSpringfield, MO 65807 construction projects at CoxHealth, as well as updates to parking, building entry and navigationA 102-bed extension of the Cox South campus that related to these projects.offers Rehabilitation Services, Wound Healing andUrgent Care. Phone Numbers Frequently called phone numbers for CoxHealth.Cox Surgery Center960 E. Walnut LawnSpringfield, MO 65807New facility that provides a centralized location formost outpatient surgeries.Urgent Care1000 E. PrimroseSpringfield, MO 65807CoxHealth Adult and Pediatric Urgent Carelocations are your one-stop facilities for non life-threatening illnesses and injuries.Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 45 Case 2009-10Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 46 Case 10- Hospital Fraud The University of Pennsylvania Health System (UPHS) paid $3.5 million to resolve allegations that UPHS had erroneously submitted separate and distinct Medicaid payment claims for blood transfusions on bills that had more than one unit per day. Further, UPHS allegedly submitted fraudulent claims associated with office visits for new patients, as well as fraudulent claims for infusion therapy. UPHS is the 20th hospital to settle under the 3-year-long “Operation Vampire” project, aimed at uncovering hospitals erroneous Medicare claims associated with blood transfusions. Including this case, Operation Vampire recoveries total approximately $12.5 million. 30 University of Pennsylvania Health System 31Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 47 CEO Pennsylvania Health System 32Left to Right: Ralph Muller, CEO of the University of Pennsylvania Health System; Penn President AmyGutmann; and Raymond and Ruth Perelman cut the ribbon to mark the official opening of the PerelmanCenter for Advanced Medicine at Penn while Dr. Arthur Rubenstein, Executive Vice President of theUniversity of Pennsylvania for the Health System and Dean of the School of Medicine looks on.Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 48Case 2009-11Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 49 Case 11- Hospital Fraud Lester E. Cox Medical Centers, a health care system headquartered in Missouri, has paid $60 million and entered into a 5-year CIA with HHS/OIG to settle allegations that it paid doctors at a local physician group for referrals, and billed Medicare for the services resulting from those referrals, in violation of the Anti- Kickback and Physician Self-Referral statutes 22 Lester E. Cox Medical Centers Our MissionAbout CoxHealth CoxHealths Mission is to improve the health of the communities we serve through quality health care, education and research. and Cox Medical Centers Lester E. Cox Medical Centers’ Mission is to provide compassionate, quality health care, health education and research consistent with available financial resources. Health care will be provided without prejudice and regardless of the patient’s ability to pay. and Cox Monett Cox Monetts mission is to improve the health status of our community by providing high quality health care, education and wellness, through value and convenience with a personal touch. 27Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 50 Robert H. Bezanson President and CEO 28For 28 years, I have been fortunate to be a part of the legacy and the vision of CoxHealth. As COO, myperspective has been one concerned with operations and tactical decisions. Now, as president and CEO,my view has expanded to include an even larger focus, including strategic planning and how CoxHealthcan better serve you – our valued customer.One of the many ways in which CoxHealth is working to achieve this goal, is by offering you healthinformation in real time with coxhealth.com. If you are new to the community, or are unfamiliar with allCoxHealth has to offer, I know you’ll enjoy our Web site.At coxhealth.com you’ll find the latest information available in both national and local health care news,useful information about virtually any health topic or disease, and details about the services CoxHealthcan provide you.We welcome your feedback! If you have questions, don’t hesitate to Contact Us, and we’ll do our best toserve you.Robert H. BezansonPresident and CEOCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 51 Case 2009-12Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 52 Case 12- Hospital Fraud HealthSouth and two physicians paid $14.9 million to settle allegations that they submitted false claims to Medicare and paid illegal kickbacks to physicians who referred patients for care in HealthSouth hospitals, outpatient rehabilitation clinics, and ambulatory surgery centers. HealthSouth paid $14.2 million and agreed to amend its CIA with the HHS/OIG to address kickback issues. Two orthopedic surgeons paid $450,000 and $250,000 respectively to resolve the Government’s claims against them. The settlement resolves claims made by HealthSouth to Medicare for patients referred by the two surgeons when the company had financial relationships with the physicians, their former sports medicine and orthopaedic clinic, and their research and training foundation, that violated the Anti-Kickback and Physician Self- Referral Statutes.. 23Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 53 Case 2009-13Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 54 Case 13- Hospital Fraud Amerigroup Corporation paid $225 million, and entered into a 5-year CIA with HHS/OIG, to resolve False Claims Act claims that it systematically avoided enrolling pregnant women and unhealthy patients in their Medicaid managed care program in Illinois. Amerigroup was paid by the United States and the State of Illinois to operate a Medicaid managed care health plan to provide health care to low income people. Amerigroup was required by law to enroll all eligible beneficiaries. As reported last year, a federal Court in Chicago entered a judgment in 2007 against Amerigroup for $144 million in damages and $190 million in penalties. Amerigroup appealed that judgment and this settlement resolves that appeal 24Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 55 Case 2009-14Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 56 Case 14- Medical Device Fraud Medtronic Spine LLC, the corporate successor to Kyphon Inc., paid the United States $75 million and entered into a 5-year CIA with HHS/OIG to settle FCA allegations that it, through a seven-year marketing scheme, caused hospitals to bill Medicare for certain kyphoplasties performed on an inpatient basis rather than less costly and clinically appropriate outpatient kyphoplasty treatment. The kyphoplasty procedure is a minimally-invasive surgery used to treat compression fractures of the spine caused by osteoporosis, cancer or benign lesions. 25Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 57 Case 2009-15Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 58 Case 15-Nursing Home Fraud In Pennsylvania, the Court approved a Consent Order resolving a Complaint for Injunctive Relief against Holland Glen, a residential treatment nursing facility for respirator dependent children. I n that complaint, the United States alleged that Holland Glen, which was licensed only as a community group home for mentally disabled persons, not as a nursing facility, defrauded the United States by providing substandard nursing care or failing to provide nursing care, including failure to respond to respiratory alarms, failure to comply with physician orders for pulse oximeters, failure to prevent severe bed sores, and failure to administer medications properly. 26 continued... Case 15-Nursing Home Fraud According to the complaint, Holland-Glen’s services substantially departed from generally accepted professional standards of care, thereby exposing patients to significant risk and, in some cases, to actual harm. Many of the 20 to 30 residents at the facility require ventilators and are fed through feeding tubes. Most of the child-residents require around-the-clock medical attention. The Consent Order granted permanent injunctive relief including: the appointment of an independent manager of all facilities owned by Holland Glen; that Holland Glen will comply with the quality of care standards contained in the federal nursing home facility regulations (never before applicable to a children’s facility); and that the temporary monitors would continue to monitor the care. The Consent Order also barred Holland Glen’s President/CEO and Board of Directors from any management or oversight roles. 27Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 59 Cases 2009-16-25Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 60 Tenet Healthcare Corporation Tenet Healthcare Corporation, operator of the nation’s second largest hospital chain, agreed to pay the United States more than $900 million for billing practices that were alleged to be unlawful in lawsuits filed by whistleblowers. Under the agreement, Tenet, which is headquartered in Dallas but operates dozens of hospitals throughout the United States, will pay a total of $900 million over a 4-year period, plus interest, to resolve various types of civil allegations involving Tenet’s billings to Medicare and other Federal health care programs. 5 continued...http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdf Tenet Healthcare Corporation Edward Kangas, Tenet, Chairman of the Board, Retired Chairman and Chief Executive Officer Deloitte Touche Tohmatsu. Mr. Kangas served as Global Chairman and Chief Executive Officer of Deloitte from 1989 to 2000. Mr. Kangas is a director of four other public companies, Eclipsys Corporation, Electronic Data Systems Corporation, Hovnanian Enterprises, Inc., and Intuit, Inc. In addition, he is a board member of the National Multiple Sclerosis Society and serves as a trustee of the Committee for Economic Development. Mr. Kangas is currently a member of the board of trustees of the University of Kansas Endowment Association and a member of the University of Kansas Business School Board of Advisors. 6 continued...Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 61 Tenet Healthcare Corporation Trevor Fetter, President and Chief Executive Officer Fetter, has served as President and Chief Executive Officer of Tenet Healthcare Corporation since September 2003. Fetter received his bachelor’s degree in economics in 1982 from Stanford University and a master’s degree in business administration in 1986 from the Harvard Business School. He began his career with Merrill Lynch Capital Markets, where he concentrated on corporate finance and advisory services for the entertainment and health care industries. In 1988 he joined Metro-Goldwyn-Mayer, Inc., where he had a broad range of corporate and operating responsibilities, rising to Executive Vice President and Chief Financial Officer. 7 continued...20 months ago: This undated photo released by Tenet Healthcare Corporation shows chief executiveofficer Trevor Fetter. Fetter got compensation the company valued at $9.8 million last year, according toan analysis of a regulatory filing Monday, April 2, 2007. The bulk of compensation for Trevor Fettercame in stock and options awards, which had an estimated value of $7.4 million when they were granted.Fetter was paid a salary of nearly $1.1 million, non-equity incentives of about the same size, and$276,596 in other compensation, mostly use of companys aircraft. :www.daylife.com/photo/01S60aK3dd3nICopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 62 Tenet Healthcare Corporation J. Robert Kerrey, Tenet Director President, New School University former United States Senator. Mr. Kerrey has been President of New School University in New York City since January 2001. Prior to becoming President of New School University, Mr. Kerrey served as a U.S. Senator from the State of Nebraska from 1989 to 2000. Prior to his election to the U.S. Senate, Mr. Kerrey was Governor of the State of Nebraska from 1982 to 1987 Prior to entering public service, Mr. Kerrey founded and operated a chain of restaurants and health clubs. He is also a director of the Concord Coalition. Mr. Kerrey holds a degree in Pharmacy from the University of Nebraska. 8 continued...http://people.forbes.com/profile/j-robert-bob-kerrey/36557 Tenet Healthcare Corporation Floyd D. Loop, M.D. Tenet Director Former Chairman and Chief Executive Officer The Cleveland Clinic Foundation. Dr. Loop retired as the Chief Executive Officer and Chairman of the Board of Governors of The Cleveland Clinic Foundation in October 2004, a position he held for fifteen years. He currently serves as a consultant to the Foundation. Before becoming the Foundation’s Chief Executive Officer in 1989, Dr. Loop was an internationally recognized cardiac surgeon. He practiced cardiothoracic surgery for 30 years and headed the Department of Thoracic and Cardiovascular Surgery at The Cleveland Clinic from 1975 to 1989. Dr. Loop is a director of one other public company, Intuitive Surgical, Inc. He is also a director of Noteworthy Medical Systems, Inc., Passport Health Communications, Inc. and Visible Assets Inc . 9www.science.purdue.edu/.../2005/FLoop.aspCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 63 Hospital Fraud St. Barnabas Health Care System, the largest health care system in New Jersey, paid $265 million to resolve allegations that nine of its hospitals fraudulently increased charges to elderly patients to obtain enhanced Medicare reimbursement for outlier claims. The United States alleged that between October 1995 and August 2003, Saint Barnabas and nine of its hospitals purposefully inflated charges for inpatient and outpatient care to make these cases appear more costly than they actually were, and thereby obtained outlier payments from Medicare that they were not entitled to receive. 10 continued...http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdf St. Barnabas Health Care System 11Attending the Monmouth Medical Center capital campaign donor thank your reception included (fromleft to right): Frank J. Vozos, MD, executive director of Monmouth Medical Center; Tammy SnyderMurphy, chair of the Monmouth Medical Center Foundation Board of Trustees; Judi Dawkins, past chairof the Foundation Board; Ronald J. Del Mauro, president and CEO of the Saint Barnabas Health CareCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 64System; Lucia Baratta, vice president of the Monmouth Medical Center Foundation; and Alan Davis,Esq., chairman of the Monmouth Medical Center Board of Trustees.www.saintbarnabas.com/.../2006/capital.html Hospital Fraud Our Lady of Lourdes Regional Medical Center agreed to pay the United States $3.8 million to settle claims that they defrauded Medicare, TRICARE, and Medicaid from 1999 to 2003. The civil settlement resolves allegations that the Lafayette, Louisiana, facility submitted claims for medically unnecessary angiogram, angioplasty, and stenting procedures that were performed at the hospital from 1999 to 2003. The allegations arose from a lawsuit filed by a whistleblower at the hospital. 12 continued...http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdf Our Lady of Lourdes Regional Medical Center William F. "Bud" Barrow President & Chief Executive Officer We are very honored to have you as our guest. As stewards of Christ’s call to serve, our professional staff stands ready to care for you and your loved ones in the tradition of the Franciscan healing mission. As a member of the Franciscan Missionaries of Our Lady Health System (FMOLHS), we are dedicated to providing world-class, mission- driven healthcare as we embrace the fast-paced changes in the medical field. Our Lady of Lourdes continues to offer healthcare services worthy of our healing mission and of our commitment to personal and organizational excellence. 13Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 65www.lourdes.net/Default.asp?PAGE_ID=6 Hospital Fraud Beth Israel Medical Center in New York City paid $73 million to resolve allegations that it submitted false claims for Medicare reimbursement in cost reports from 1992 to 2001. The Government alleged that Beth Israel misrepresented information related to the operating costs of its Kings Highway Division in Brooklyn and improperly claimed certain nonreimbursable costs. These costs included the costs of private offices for Beth Israel’s faculty physicians, overhead for its methadone maintenance treatment program, fund-raising and marketing costs, and staff living quarters already paid for through rent collected from Beth Israel employees. The settlement resulted in part from a voluntary disclosure by Beth Israel and in part from a qui tam suit filed by a relator. 14 continued...http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdf Beth Israel Medical Center Beth Israel Medical Center - Petrie and Kings Highway Divisions and Phillips Ambulatory Care Center President/Chief Executive Officer David J. Shulkin, MD Chief Medical Officer and Medical Director and Senior VP, Medical Affairs David B. Bernard, MD Associate Medical Director, Kings Highway Division Chaim J. Bernstein, MD Chief Academic Affairs/Graduate Medical Education Harris M. Nagler, MD 15 continued...Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 66 Beth Israel Medical Center David J. Shulkin, MD, President and Chief Executive Officer of Beth Israel Medical Center, is a nationally regarded internist and physician executive. He is board certified in internal medicine and a fellow of the American College of Physicians. Before joining Beth Israel, Dr. Shulkin was Chief Medical Officer at Temple University School of Medicine, where he also served as Professor of Medicine. Prior to Temple, he was on the faculty at the University of Pennsylvania School of Medicine for 10 years, while acting as the Chief Medical Officer of the Penn system. Dr. Shulkin also served as Chairman of the Department of Medicine at Drexel University School of Medicine, where he was Professor of Medicine, and as Vice Dean of the Medical College of Pennsylvania. 16www.healthgrades.com/.../appointment Hospital Fraud Following a three-week trial, the former owner and chief executive officer of the now defunct Edgewater Hospital in Chicago, was found liable under the FCA for engaging in an illegal kickback scheme at Edgewater. The court found that the defendant paid physicians for Medicare and Medicaid patient referrals in violation of federal law. The court held that the hospital’s cost reports and individual patient claims for patients referred in connection with the scheme were false claims, and awarded treble damages and penalties on just over 1,800 claims. 17 continued...http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdfCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 67 EDGEWATER MEDICAL CENTER EDGEWATER MEDICAL CENTER 5700 N ASHLAND AVENUE CHICAGO, IL 60660 Institutions representative submitted the following: Edgewater Hospital in Chicago is closed & will never reopen as a hospital. It is/was the center of a billing fraud against Medicare. The parking lots have all been developed as new homes. 18 continued...U.S. Attorney Patrick Fitzgerald, of Plamegate fame, said the government had criminally charged PeterRogan, once the CEO of Edgewater Medical Center, with perjury and obstructing the government’sefforts to collect $64 million in civil penalties he owes. The Tribune said neither Rogan nor his lawyercould be reached from comment yesterday.Edgewater closed its doors in late 2001 and entered bankruptcy in 2002. Four doctors and an EdgewaterVP wound up in prison after pleading guilty to federal charges over the payment of kickbacks for patientreferrals and medically unnecessary hospital admissions, tests, and services.http://www.hospital-data.com/hospitals/EDGEWATER-MEDICAL-CENTER-CHICAGO.htmlblogs.wsj.com/health/2008/05/Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 68 EDGEWATER MEDICAL CENTER Estate of Albert Okaro v. Edgewater Medical Center, Dr. Andrew Cubria, Bainbridge Management, L.P., Bainbridge Management, Inc., Braddock Management, L.P, and Braddock Management, Inc. Cook County Circuit Court, Law Division, 00L14772. On October 20, 2004, a Cook County jury in Judge Tom Chiolas courtroom rendered a verdict in favor of the Estate of Albert Okaro for $9,346,933.64 after a three-day trial. Bruce Pfaff and Matthew Ports of Pfaff & Gill, Ltd., Chicago, tried the case for the Okaro family. The case concerned treatment at Edgewater Medical Center on 4/6/00 by Dr. Andrew Cubria. Dr. Cubria, then a Chicago cardiologist, performed an angiogram and angioplasty on Mr. Okaro that was medically unnecessary. Dr. Cubria was careless in doing the procedure, causing a dissection of one of the major vessels of Mr. Okaros heart. Dr. Cubrias negligent care led to Mr. Okaros death in the cardiac cath lab at Edgewater at 4 p.m. on 4/6/00. Mr. Okaro, 42 at death, leaves surviving his wife of 13 ½ years and their four minor children. Mr. Okaro had been an auto mechanic, and operated Okaro Auto Service on the north side of Chicago. 19 continued...http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdf EDGEWATER MEDICAL CENTER The suit named Dr. Cubria, along with Edgewater Medical Center and four entities that managed the hospital, Bainbridge Management, L.P., Bainbridge Management, Inc., Braddock Management, L.P., and Braddock Management, Inc. The Okaro family claimed that Edgewater and the management companies were negligent because: They failed to supervise the activities carried out in the cardiac catheterization laboratory and operating rooms, including those activities of Dr. Cubria, when they should have known such supervision was necessary to prevent patient injury or death. Dr. Andrew Cubria performed more than 750 worthless and painful heart operations on homeless people and addicts to illegally bill taxpayer- supported Medicaid more than $2 million. He also coached many patients how to fake symptoms to justify medical tests he billed to insurers before the operations. Cubria received 12 1/2 years in federal prison in June 2002. 20http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdfCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 69 Hospital Fraud Two owners of a former San Diego Psychiatric Hospital were found liable after trial for more than $15.7 million in damages and penalties for having included false claims in the hospital’s cost report submitted to the Medicare program. Those cost reports sought reimbursement from the Medicare program for a variety of false costs, such as amounts for a fictitious lease, reimbursement for unused hospital space, and millions of dollars in costs that were actually attributable to the defendants’ business enterprises unrelated to that hospital. The court awarded the United States $15.7 million for treble damages and $31,000 in civil penalties. Robert I. Bourseau, Dr. Rudra Sabaratnam, and their corporations, RIB Medical Management Services Inc. and Navatkuda Inc., were charged. 21 continued...http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdf San Diego Psychiatric Hospital Just in case you think the FBI is not on the job, I have received a true intercept (and this is not made up...it is not Saturday Night Live) that the FBI made of itself while conducting an investigation in San Diego. It was sent to me by a friend of mine who used to be with counter intelligence in Washington. It is called "The FBI Pizza Call.“ FBI agents conducted a raid of a San Diego psychiatric hospital that was under investigation for medical insurance fraud. After hours of reviewing thousands of medical records, the dozens of agents worked up quite an appetite. The agent in charge of the investigation called a nearby pizza parlor to order a quick dinner for his colleagues. The following telephone conversation took place and was recorded by the FBI because they were taping the hospital. 22Agent: "Hello. I would like to order 19 large pizzas and 67 cans of soda."Pizza Man: "And where would you like them delivered?"Agent: "Were over at the psychiatric hospital."Pizza Man: "To the psychiatric hospital?"Agent: "Thats right. Im an FBI agent."Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 70Pizza Man: "Youre an FBI agent?"Agent: "Thats correct. Just about everybody here is."Pizza Man: "And youre at the psychiatric hospital?"Agent: "Thats correct. And make sure you dont go through thefront doors.We have them locked. You will have to goaround the back to the service entrance to deliver the pizzas."Pizza Man: "And you say youre all FBI agents?"Agent: "Thats right. How soon can you have them here?"Pizza Man: "And everyone at the psychiatric hospital is an FBI agent?"Agent: "Thats right. Weve been here all day, and were starving."Pizza Man: "How are you going to pay for all of this?"Agent: "I have my checkbook right here."Pizza Man: "And youre all FBI agents?"Agent: "Thats right. Everyone here is an FBI agent. Can youremember to bring the pizzas and sodas to the serviceentrance in the rear? We have the front doors locked."Pizza Man: "I dont think so."[Click] Hospital Fraud The Milton S. Hershey Medical Center paid the United States $2.9 million to settle allegations that it improperly submitted infusion therapy claims despite having been notified on five separate occasions that it was submitting its bills for these services improperly. This settlement was part of a joint project in Pennsylvania between the United States Attorney’s Offices and the HHS/OIG to investigate whether Pennsylvania hospitals submitted erroneous infusion therapy and/or blood transfusion claims to the Medicare Program which has resulted in numerous settlements and the return of over $8 million to the Medicare Program. 23 continued...http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdfCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 71 Milton S. Hershey Medical Center 24 Milton S. Hershey Medical Center Harold L. Paz, M.D. M.S., began his tenure as Penn State’s Senior Vice President for Health Affairs, Dean of Penn State College of Medicine, and Chief Executive Officer of Penn State Hershey on Monday, April 24, 2006. He is the fifth individual to serve as Dean and CEO of Penn State’s medical school and teaching hospital since its founding nearly 40 years ago. Most recently, Paz served as Dean of the UMDNJ-Robert Wood Johnson Medical School and CEO of Robert Wood Johnson University Medical Group (RWJUMG), the multispecialty group practice of the medical school. As Dean, Dr. Paz was responsible for all academic, research and clinical activities of the medical school. In his role as CEO of RWJUMG, Dr. Paz was responsible for a region-wide integrated physician delivery system that includes approximately 600 physicians, a dozen ambulatory care sites and is affiliated with 34 hospitals throughout central and southern New Jersey. 25www.hmc.psu.edu/college/about/leadership.htmCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 72 Milton S. Hershey Medical Center Governor Ed Rendell of Pennsylvania, by virtue of his position, serves as an ex officio member of the Board of Trustees. Graham B. Spanier, President of The Pennsylvania State University , by virtue of his position, serves as an ex officio member of the Board of Trustees. 26www.bucknell.edu/x17248.xmllive.psu.edu/image/21425 Hospital Fraud University Hospitals Health System (UH) in Ohio paid the United States $13.8 million to resolve allegations that UH violated the FCA. The payment resolved a qui tam suit brought by a physician formerly affiliated with UH, who alleged that UH entered into illegal financial arrangements with physicians in order to induce referrals to UH for services reimbursable by Medicare. 27http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdfCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 73 University Hospitals Health System Thomas F. Zenty III, President and Chief Executive Officer, University Hospitals With our affiliated hospitals, physicians, and caregivers, we are privileged to serve the needs of patients and families at more than 150 locations in Northeast Ohio. This year, we celebrate 140 years of service to the Greater Cleveland community. Founded in 1866, University Hospitals enjoys a rich history of excellence in clinical innovation, leading-edge medical research and teaching, and the distinction of providing the highest quality patient care to those who turn to us in their time of need. At the core of our Health System is University Hospitals Case Medical Center (UH CMC). Ranked by U.S. News & World Report as one of Americas best hospitals in 14 medical and surgical specialties, UH CMC is home to some of the most prestigious clinical and research centers of excellence in the nation and the 28www.uhhospitals.org University Hospitals Health System (UH) 29www.uhgiving.org/.../Page.aspx?pid=257&srcid=292Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 74 Pharmaceutical Fraud The Swiss corporation Serono, S.A., one of the world’s largest biotech manufacturers, paid $704 million to resolve criminal charges and civil liabilities in connection with several illegal schemes to promote and sell its drug, Serostim, that resulted in the submission of false claims to Medicaid and other federally funded health care programs. The Food and Drug Administration (FDA) had granted accelerated approval for Serostim in 1996 to treat Auto-Immune Deficiency Syndrome (AIDS) wasting, a condition involving profound involuntary weight loss in AIDS patients, then a leading cause of death in AIDS patients. Following the advent of protease inhibitor drugs, the incidence of AIDS wasting markedly declined, and Serono launched a campaign to redefine AIDS wasting to create a market for Serostim. 30 continued...http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdf 31Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 75 Pharmaceutical Fraud The $704 million Serono settlement consisted of $305 million (plus accrued interest) paid by Serono to resolve FCA allegations that it knowingly caused the submission of claims for Serostim that were not eligible for reimbursement because they were for unnecessary or unapproved uses and because the claims were for prescriptions induced by kickbacks to physicians and pharmacies. It also included $262 million plus interest paid to state Medicaid programs, as well as $136.9 million in criminal fines. 32 continued...http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdf Ernesto Bertarelli, CEO, Serono SA 33Ernesto Bertarelli is a successful business executive, passionate yachtsman, generous philanthropist anddevoted family man. In 1996 Bertarelli became CEO and deputy chairman of Serono SA, a globalbiotechnology firm that he inherited from his father.www.harbus.org/news/2008/04/07/Features/Bertarelli led Serono through a significant period of growth before selling to Merck KGaA of Germany inCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 762006 for $13.3 billion. In 2003, Bertarellis yachting syndicate, Team Alinghi, won the Louis Vuitton Cupand beat Team New Zealand to win the Americas Cup. Bertarelli served as navigator aboard Alinghi in2003 and as an afterguard runner and grinder on the boat in 2007, when Team Alinghi secured anotherAmericas Cup victory over New Zealand in Valencia, Spain. According to Forbes, Bertarelli ranks as the75th wealthiest person in the world and the wealthiest in Switzerland. He currently serves as Chairman ofKedge Capital Partners Ltd., an investment management firm specializing in hedge funds and privateequity portfolios. Since 2002, he has served as a director of UBS AG. Pharmaceutical Fraud Schering-Plough Corporation, together with its subsidiary, Schering Sales Corporation, agreed to pay a total of $435 million to resolve criminal charges and civil liabilities in connection with illegal sales and marketing programs for its drugs Temador, used in the treatment of brain tumors and metastasis, and Intron A, used in the treatment of superficial bladder cancer and hepatitis C. 34 continued...http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdfCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 77 35http://www.bloomberg.com/apps/data?pid=avimage&iid=iGy9Tdfz.iZw Fred Hassan, Chairman of the Board and CEO of Schering-Plough Corporation, 36“We can’t just demand trust – first we have to earn it.”http://www.ezifocus.com/data/files/fred_hassan.jpgCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 78 Pharmaceutical Fraud Schering Sales Corporation agreed to plead guilty to charges that it conspired with others to make false statements to the FDA in response to the FDA’s inquiry concerning certain illegal promotional activities by the company’s sales representatives at a national conference for oncologists. Schering Sales also agreed to plead guilty to charges that it conspired with others to give free Claritin Redi- Tabs to a major health maintenance organization (HMO) to disguise a new lower price being offered to the HMO to obtain its business. 37 continued...http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdf Pharmaceutical Fraud Eli Lilly and Company agreed to plead guilty and to pay $36 million in connection with its illegal promotion of its pharmaceutical drug Evista. In addition to the criminal plea, Lilly agreed to settle civil Food, Drug, and Cosmetic Act liabilities by entering into a consent decree of permanent injunction and paying the United States $24 million in equitable disgorgement. 38 continued...http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdfCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 79 39The Eli Lilly and Company headquarters in pictured in Indianapolis, in this Jan. 25, 2006 file photo. EliLilly & Co. said Thursday, Jan. 11, 2007, it will halt construction of a Virginia-based insulin plant as partof a shift in the drugmakers focus toward biotech products. Lilly said it will stop building the PrinceWilliam County, Va.-based center because production can be handled by existing plants and a centerbeing built in Italy. (AP Photo/Darron Cummings, file) www.daylife.com/photo/05bF17i3wq92a Sidney Taurel, CEO of Eli Lilly and Co. 40www.daylife.com/photo/0bwReQB6hhffpCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 80 Pharmaceutical Fraud Doing business as Glaxo SmithKline, SmithKline Beecham Corporation agreed to pay the Government $149 million plus interest and enter into a 5-year addendum to its existing CIA with the HHS/OIG. The settlement resolved allegations that the pharmaceutical manufacturer engaged in certain improper pricing and marketing practices for Zofran and Kytril, two antiemetic drugs used primarily in conjunction with oncology and radiation treatment. 41 continued...http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdf 42http://www.topnews.in/files/glaxo_0.jpgCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 81 JP Garnier, CEO of GlaxoSmithKline 43 Nursing Home Fraud Horizon West, Inc., and its wholly owned subsidiary, Horizon West Healthcare, Inc., have agreed to pay the United States $14.7 million to settle allegations that the companies violated the civil FCA by falsely inflating the number of nursing hours spent on Medicare patients. Horizon West runs a nursing home chain with approximately 30 facilities in California and Utah. 44 continued...http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdfCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 82 Nursing Home Fraud and Abuse American Healthcare Management, Inc., (AHM), its individual owners, and three affiliated nursing homes agreed to pay $1.25 million to settle allegations of submitting false and fraudulent nursing home billings to Medicare and Medicaid for poor quality of care. The United States alleged that due to staffing limitations, numerous residents of the nursing homes suffered from dehydration and malnutrition, went for extended periods of time without cleaning or bathing, and contracted preventable pressure sores. In addition, instances of elopements of residents from the facilities occurred, a resident was found covered with ants, and a resident was physically abused by a staff member. 45 continued...http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdf Nursing Home Fraud and Abuse Life Care Centers of America, Inc., (LCCA) the operator of a Georgia-based skilled nursing facility known as Life Care Center of Lawrenceville (Lawrenceville), along with Lawenceville’s owners Gwinnett Medical Investors Limited Partnership, Developers Investment Company, Inc., and the founder of LCCA, agreed to pay a total of $2.5 million to resolve multiple allegations of FCA violations for billing for services that either were not provided to the Lawrenceville residents or were deficient. The complaint, originally filed by five whistleblowers in November 2002, alleged a systemic failure by Lawrenceville to provide appropriate nursing care to its residents and also alleged that such failure resulted in the premature deaths of several residents. 46 continued...http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdfCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 83 Durable Medical Equipment Fraud In Houston, a jury convicted a Texas osteopath on 13 counts related to health care fraud. The osteopath was sentenced to 10 years in prison, and ordered to pay $7.9 million in restitution to Medicare and Medicaid. The osteopath never obtained a license to practice in Texas. Nevertheless, over a 2-year period beginning in 2002, the osteopath signed pre-printed prescriptions and certificates of medical necessity (CMNs) for motorized wheelchairs in exchange for payments from marketers of durable medical equipment (DMEs). The osteopath rarely examined the Medicare and Medicaid beneficiaries in whose names the prescriptions and CMNs were prepared. The marketers, in turn, sold the signed documents to DME suppliers in Texas and elsewhere. The osteopath’s fraudulent activity has been linked to nearly $8 million in Medicare and Medicaid payments. 47 continued...http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdf Durable Medical Equipment Fraud In Tennessee, an individual was sentenced to 23 months in prison and ordered to pay $1.8 million in restitution for his role in a scheme to defraud Medicare. As the self-described “ring leader,” the defendant recruited friends and family members to establish DME suppliers with different names. These suppliers billed Medicare for enteral nutrition products that were never actually provided to any beneficiaries. In some instances, the suppliers provided only flavored milk products to the elderly but billed Medicare as if the companies were providing enteral nutrition. This defendant was the seventh co- conspirator to be convicted as a part of “Project Milk Man.” 48 continued...http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdfCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 84 Durable Medical Equipment Fraud In Florida, a licensed orthotist and a patient recruiter were sentenced for conspiring to commit health care fraud involving eight Miami-based medical organizations. The orthotist was sentenced to 28 months in prison and ordered to pay $1.8 million in restitution for providing DME suppliers with signed CMNs and prescriptions for orthotic devices without having examined the named Medicare beneficiaries. He paid the beneficiaries for the misuse of their personal information. The DME companies then billed for expensive custom-fitted devices, but provided only prefabricated devices. The patient recruiter was sentenced to 22 months in prison and ordered to pay approximately $4.2 million in restitution. 49 continued...http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdf Durable Medical Equipment Fraud In the Southern District of Texas, a physician was sentenced to 10 years in prison for conspiring to defraud Medicare of $30 million in a wheelchair scam. The physician and the physician’s office manager sold CMNs and prescriptions for motorized wheelchairs and other durable medical equipment to certain marketers and suppliers for approximately $200 each. Nearly all of the physician’s “patients” were ineligible for these items. They also sold prescriptions for controlled substances that were outside the normal course of medical practice and were not medically necessary. They wrote 17,086 such prescriptions and received no less than $1.7 million in cash. 50http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdfCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 85 Ambulance Services Fraud In North Carolina, an ambulance company and its owner were convicted of billing Medicare and Medicaid for dialysis patient transports that were not medically necessary. The owner was sentenced to 120 months in jail for health care fraud and to an additional 31 months in jail for obstruction. The company and the owner were also ordered to pay $604,000 in joint-and-several restitution. The company owner instructed emergency medical technicians to enter information on ambulance reports that falsely indicated that patients required transportation by ambulance when, in fact, they could have been transported by other means. To conceal this activity, the owner and the billing manager altered records to indicate medical necessity. The billing manager was previously sentenced and was ordered to pay $30,000, a portion of the joint-and-several restitution amount 51http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdf Chiropractic Fraud A former Indiana chiropractor was sentenced to 12 years and 6 months in prison, and ordered to pay $1.5 million in restitution, for billing Medicare, Medicaid, and private insurers for medically unnecessary back braces. The former chiropractor would arrange for presentations at senior citizens centers and other locations, often recruiting children to distribute flyers advertising the presentation in return for movie tickets. At the presentations, the chiropractor would distribute the back braces, valued at less than $100 each, to senior citizens and the indigent irrespective of need. The chiropractor would then bill government or private health insurers $1,300 for each brace. 52http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdfCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 86 Podiatry Fraud An Illinois podiatrist was sentenced to death for the murder of a grand jury witness, sentenced to 78 months in prison for health care fraud, and ordered to pay $1.8 million in restitution. A jury convicted and condemned the podiatrist to death for murdering a woman days before she was expected to testify before the grand jury about the more than 70 foot surgeries that were not performed that the podiatrist billed to Medicare 53http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdf Dr. Jorge Martinez has blazed a path of death, addiction, and fraud, say the feds. 54http://www.clevescene.com/cleveland/on-pills--needles/Content?oid=1493133Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 87 Fraud by Physicians An Ohio pain management physician, Dr. Jorge Martinez was convicted in 2006 on 56 criminal counts was sentenced to life in prison, plus an additional 20 years, for two charges of health care fraud resulting in death in addition to other charges of health care fraud. Martinez administered to all his patients unnecessary and painful “trigger-point” injections of Schedule II and III narcotics. Once addicted, his patients would return for weekly injections, and were often forced to contribute to a “malpractice insurance fund.” In two instances, the injections lead to fatal drug overdoses. 55 continued...http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdf Jorge A. Martinez, M.D. Martinez submitted $60 million in fraudulent bills to health care benefit programs, claiming he was performing multiple, complex epidural and nerve block injections when, in fact, he performed crude versions of lower cost trigger-point injections. In addition to the prison sentence, he was ordered to pay $14.3 million in restitution to Medicare, Medicaid, and the Ohio Bureau of Workers Compensation. The health care fraud resulting in death case was recognized as the Investigation of the Year for 2006 by the National Health Care Anti-Fraud Association. 56 continued...http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdfCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 88 Dr. Young J. Moon, MD 322 South Main Street Suite 101 Crossville, TN, 38555 Phone: (931) 456-3636 57 Dr. Young J. Moon, MD Moon a Tennessee oncologist was sentenced to over 15 years imprisonment for defrauding Medicare, TennCare and BlueCross BlueShield at the expense of cancer patients. Moon administered diluted versions of chemotherapy medications to patients, and instructed nurses to draw up partial doses of other medications to administer to patients 58 continued...http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdfCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 89 Dr. Young J. Moon, MD Nashville doctor gets 15 years for diluting cancer drugs Prosecutors said oncologist Dr. Young Moon shortchanged her patients’ chemotherapy drugs from 1999 to 2002 and then billed Medicare, TennCare and BlueCross BlueShield of Tennessee for the full amount. Moon blames it on staff for not supervising them 59 Dr. David Wexler 5 East 76th Street, New York, NY 10075 60Copyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 90 David Wexler A jury convicted a David Wexler a Manhattan dermatologist for unlawfully distributing prescription narcotics and for health care fraud. Wexler was sentenced to 20 years imprisonment and was ordered to pay $880,000 in restitution. From 1992 to 2002, the Wexler engaged in a pattern of fraudulent behavior that ultimately lead to the death of one individual. The dermatologist paid kickbacks, often in the form of medically unnecessary prescriptions for controlled or addictive substances, to induce beneficiaries to continue returning to his office. 61http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdf David Wexler Wexler would then bill Federal or private health plans for the visit and for services not provided. The dermatologist filed almost 2,000 claims for surgeries allegedly performed on a single patient, ultimately receiving $425,000 in reimbursements. By submitting these claims, the dermatologist certified that, among other procedures, 1,300 4 centimeter incisions were performed in this one patient’s face. Ultimately, this individual’s participation in the scheme proved fatal, as the patient overdosed on Dilaudid and Carisprodol, which were regularly obtained from the dermatologist. 62http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdfCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA
    • Lecture 16 91 David Wexler For example, from 1992 until Barry Abler’s death in May 2001, Wexler allegedly submitted to Medicare almost 2,000 claims for surgeries that he allegedly performed on Abler, and was paid over $425,000. Over 1,300 of these 4 cm excisions were supposedly performed by Wexler on Abler’s face alone. According to the testimony at trial, it was impossible for even a fraction of those surgeries to have been performed, since there is not enough skin on the body for even a small number of those procedures. The evidence demonstrated that all of these claims were fraudulent. 63 Dentist Fraud The owner of Indiana-based dental practice, The Smile Center, and the owner’s mother pled guilty to health care fraud. It was alleged that The Smile Center defrauded the Indiana Medicaid Program by billing for services that were either not medically necessary or were not provided at all, and for coding services to appear as if they were covered by Medicaid when they were not. Their scheme resulted in losses of over $1.8 million which the defendants agreed to repay in a related civil settlement. 64 continued...http://www.usdoj.gov/dag/pubdoc/hcfacreport2006.pdfCopyright © 2011 Raymond R. Arons, Teaneck, NJ, USA