Latest news with #Anti-KickbackStatute
Yahoo
17-05-2025
- Business
- Yahoo
Fresno hospital kickback scheme was fueled by wine, cigars and Vegas strip clubs
In the Spotlight is a Fresno Bee series that digs into the high-profile local issues that readers care most about. Story idea? Email tips@ One of the most brazen — and costliest — hospital kickback schemes involving the region's largest hospital group took place inside a nondescript, palm tree-lined medical plaza in north Fresno. That's where a healthcare technology company founded with money from Community Regional Medical Center built an exclusive wine and cigar lounge, complete with private humidor lockers for cigar storage, a state-of-the-art smoke ventilation system, and luxury wines and liquors valued at about $1 million. Only a select few executives and physicians had access to the office-turned-lounge near First Street and Alluvial Avenue, known as 'HQ2.' It was a place where doctors, healthcare executives and physician group leaders were generously rewarded for using the company's electronic health record system and fraudulently referring patients in violation of several federal laws, according to a 2019 unsealed federal whistleblower lawsuit. The alleged conspirators planned to build a grander 'ranch' luxury retreat using funds generated from the kickback scheme, according to the complaint, which was unsealed Wednesday. The scheme came to light only after a 2017 building fire at the medical plaza revealed a cache of a thousand bottles of wine,arousing suspicions from the whistleblower, an accountant, of improper spending. The U.S. Attorney's Office announced Wednesday that Community Health System and healthcare technology affiliate Physician Network Advantage Inc. (PNA) have agreed to pay $31 million to the federal government to settle allegations that it violated the False Claim Act. Community Health System (CHS), Fresno's largest healthcare group, owns downtown Fresno's Community Regional Medical Center and the Clovis Community Medical Center, as well as a health plan and physician network. Community Medical Centers (CMC) is the name of the group that includes the hospitals and clinics under the CHS umbrella. PNA is a health care technology business founded and funded by CMC to support Fresno-area physicians' adoption of the electronic health records platform used by Community, according to federal prosecutors. PNA's CEO Chris Roggenstein is a 'longtime friend' of former CHS CEO Craig Castro, according to the lawsuit. At the heart of the complaint is a scheme that PNA provided lavish benefits to doctors and physician group executives in exchange for enrolling in CMC's electronic health record technology known as 'Epic EHR.' The lawsuit also alleges physicians and medical groups who joined the network made fraudulent referrals to CMC facilities in violation of the Anti-Kickback Statute. The kickback scheme involves several major players in Fresno's medical system, from hospital executives to medical records companies to some of the largest physician groups in the Central Valley. Some of the 17 luxury gifts, trips and donations listed in the lawsuit included: A trip to Paris, France for Castro and his family totaling approximately $63,000. A private plane for Timothy Joslin, former CEO of CRMC, to go to Las Vegas. Strip clubs and meals for CMC executives and physicians during a Las Vegas medical conference in January 2016. A $9,400 trip to Spain for Scott Wells, president of Santé Health and Santé Foundation, as well as Joyce Fields-Keene CEO of Central California Faculty Medical Group, or CCFMG (now known as Inspire Health Medical Group). 'The whistleblower lawsuit makes claims regarding personal choices that don't reflect our high standards as a non-profit health system, or the values of our current leadership team and board. And a number of elements in the 2019 lawsuit reflect either inaccurate or incomplete information,' said Michelle Von Tersch, senior vice president and chief of staff for CHS. In a statement, PNA said it cooperated with the Civil Division of the U.S. Attorney's Office in Sacramento in its review of Community Health System's electronic medical records program that began nearly 15 years ago. 'The settlement brings this matter to a conclusion without any determination or admission of legal liability for PNA,' the statement said. Thirty-five doctors were known to have received payment from CHS, according to the settlement agreement. According to the complaint, CMC embarked on the seven-year, $75 million quality improvement initiative in or around 2010 to replace their business and clinical data system with new technology — the Epic EHR system. CHS Board Chair Roger Sturdevant said that, in 2009, the federal government directed the healthcare industry to transition to electronic health records, which CHS did to provide patients with a 'robust, consistent, and secure electronic health records system.' 'However, it is clear we needed stronger oversight measures to assure that both Community and our vendor partner maintained appropriate compliance at all times.' Sturdevant told The Bee in a statement. 'While we are confident that physician referrals were driven by Community Health System's position as a leading provider of hospital-based and specialty services, we recognize that even the appearance of inappropriate incentives must be addressed.' In 2010, Physician Network Alliance, Inc. was formed with the sole purpose and business function of expanding defendant CMC's Epic EHR network of Fresno area medical practices — and to shelter the illegal kickback payments and elaborate gifts, the lawsuit says. According to the complaint, as early as 2011 CMC and PNA started giving kickbacks to Fresno-area physicians in the form of cash, expensive wine, strip-clubs, trips with private planes, and free or heavily discounted access to the Epic EHR software. PNA would bring in physicians and doctors groups into the network, all of which were subject to approval by CMC. In or around 2014 and 2015, CMC and PNA changed their building model so that PNA could retain some of the money received from the physician group, licensing fees and other monthly fees for maintenance and support of the Epic EHR system. Defendant PNA was able to retain a cash surplus from the Epic EHR client fees, so PNA began to use the excess cash for extra gifts and travel for CMC executives and CMC network physicians, such as the European and Vegas trips. PNA allegedly provided jobs to family members of CMC executives at the request of CMC. The HQ2 cigar lounge was constructed sometime after 2014 with an estimated $1.1 million of CMC funds, the complaint said. Michael Terpening, the former controller for PNA, discovered the 'illegal activity' after a fire at PNA's headquarters in 2017, in which 40 to 50 boxes of wine — totaling 1,000 bottles — were found in a storage room. When Terpening approached his boss Roggenstein about the wine, he was told it was 'leftover from the holiday party.' Terpening and his attorney could not be reached for comment. Discovery of the wine surplus led Terpening to become suspicious of other large expenditures submitted as deductible 'business expenses' for PNA, the complaint said. But, according to the complaint, Roggenstein ignored Terpening's advice to cease the illegal activity, and instead 'redoubled his criminal efforts.' Roggenstein and CMC had plans to build out the 'HQ Ranch,' a luxury retreat for CMC executives and physician practices that would include a cigar and wine lounge 'large and grander in scale than HQ2,' a skeet shooting range and a small off-road vehicle course. 'Once he realized that neither Defendant Mr. Roggenstein, Defendant PNA, nor Defendant CMC had any intention of remedying the above conduct, and in an effort to quit the illegal conspiracy, Mr. Terpening resigned from his position as a Controller for Defendant PNA,' the complaint said. The lawsuit alleged the defendants violated three federal laws through its kickback scheme: the Anti-Kickback Statute, the False Claims Act and the Stark Law. The Anti-Kickback Statute makes it a crime to knowingly and willingly offer, pay, solicit or receive any remuneration to induce a person to refer to an individual for the furnishing of any item or service covered under federal healthcare program. Claims submitted knowingly and in violation of the Anti-Kickback Statute constitute a 'false or fraudulent' claim under the False Claims Act, according to the lawsuit. The Stark Law prohibits a physician or medical provider from referring Medicare patients for certain services to an entity with which a physician's immediate family has a financial relationship. The 2019 complaint lists several defendants, including: Fresno Community Hospital and Medical Center; Physician Network Advantage, Inc.; Santé Health System; Santé Health Foundation; Berj Apkarian; Craig Castro; Central California Faculty Medical Group; Timothy Joslin; Michael Muruyama; Grant Nakamura; Patrick Rafferty; Christopher Roggenstein; and Michael Synn. On Tuesday, summons were issued to the defendants. In court filings, the U.S. The Attorney's Office said it chose not to intervene at this time given the settlement with defendants Santé Health System, Inc., Santé Health Foundation, Central California Faculty Medical Group, Grant Nakamura and Michael Synn. But it has left open the possibility that it may take action pending further investigation. A scheduling conference is set for Aug. 21 at 11:30 am in the Yosemite Federal Courthouse with Magistrate Judge Helena M. Barch-Kuchta.
Business Wire
05-05-2025
- Business
- Business Wire
Former Justice Department Litigator Aleza Remis Joins Hicks Thomas
HOUSTON--(BUSINESS WIRE)--Hicks Thomas LLP announced today that , former assistant deputy chief of the Department of Justice Health Care Fraud Unit, has joined the firm's Houston office as senior counsel. 'We are thrilled to welcome Aleza to the firm,' said Hicks Thomas partner John B. Thomas. 'She is an experienced and talented trial lawyer. Given her Department of Justice background, not only will she be a great resource to our managed care practice, but her standup trial experience will be in great demand given our firm's active civil trial docket.' During nearly 10 years at the Department of Justice, Ms. Remis investigated and prosecuted white-collar crime within the health care industry. In her role as assistant deputy chief of the Health Care Fraud Unit, she led the Texas Strike Force, which targets fraudulent providers and works to combat the opioid crisis. In addition to trying multiple federal criminal trials, her litigation experience includes countless investigations and securing trial convictions and guilty pleas against medical professionals, executives and company owners involved in fraud, Anti-Kickback Statute violations and pharmaceutical drug crimes. 'I am looking forward to this next stage of my career,' said Ms. Remis. 'Joining a firm with such an active trial docket will allow me to keep my trial skills sharp as I apply my litigation experience to the civil trial arena.' Before joining the Justice Department, Ms. Remis clerked for the Honorable Gregg J. Costa on the U.S. Court of Appeals for the Fifth Circuit. She also served as an adjunct professor at The University of Texas School of Law, her alma mater. Ms. Remis received her undergraduate degree from Vanderbilt University. Founded in 1997, Texas-based Hicks Thomas LLP is a premier litigation firm representing plaintiffs and defendants across the nation. With offices in Houston, Austin, Beaumont, Amarillo, and Sacramento, California, the firm provides in-depth experience in cases involving oil and gas (upstream, midstream and downstream), construction, environmental, complex commercial, toxic tort, products liability, corporate governance, securities, banking, insurance coverage, transportation, trade secrets and general business litigation. Learn more:
Yahoo
25-03-2025
- Yahoo
Wisconsin man ordered to pay $2.2 million in restitution to Medicaid/Medicare and 21 month prison sentence
(WFRV) – A Wisconsin man was sentenced on March 21 to 21 months in prison for paying healthcare kickbacks in violation of the Anti-Kickback Statute, as well as a restitution payment of over $2 million to Medicaid and Medicare with a $75,000 fine. According to a release from Richard G. Frohling, Acting United States Attorney for the Eastern District of Wisconsin, Justin Drew Hanson and his co-defendant, in prison on similar charges, owned a Milwaukee-area clinical labratory called 'Noah Associates.' Suspect arrested after fleeing and threatening Green Bay police with a knife In 2017, the two worked on a three-year scheme to pay kickpacks to a Milwaukee substance use treatment clinic owner in return for referrals of Medicaid and Medicare patients for urine drug testing. 'The Anti-Kickback Statute 'prohibits the knowing and willful payment of 'remuneration' to induce or reward patient referrals or the generation of business involving any item or service payable by the Federal health care programs.' United States Department of Health and Human Services The duo produced false agreements to conceal the fraud, paying about $400,000 in kickpacks for these tests, which weren't ordered by any physician and unnecessary for treatment. Medicaid and Medicare paid Noah Associates over $2.2 million for these tests. Hanson received several hundred thousand dollars during this scheme. United States District Judge J.P. Stadtmueller emphasized that Hanson manipulated and breached the trust of two important programs to receieve millions of dollars he didn't earn. Judge Stadtmueller specifically noted that he stole from 'every taxpayer in the country.' Allong with the prison sentence, fines and $2.2 million in restitution, Hanson will no longer be allowed to participate in either Medicaid and Medicare; in addition, Noah Associates has been shut down. Police in Wisconsin clear driveway of snow following welfare check 'Rather than bill the government for tests that patients truly needed, Hanson abused the Medicaid and Medicare programs for his own benefit,' Acting U.S. Attorney Frohling said via the release. 'The United States Attorney's Office is committed to working with its law enforcement partners to hold individuals who engage in these schemes accountable for their actions.' No additional details were provided. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Reuters
18-03-2025
- Business
- Reuters
DOJ enforcement outlook in health care compliance for 2025
March 18, 2025 - Some predicted a drop in False Claims Act ("FCA") enforcement during the first Trump administration, but setting aside a likely pandemic-related slowdown during 2020–2022, FCA cases — both DOJ-initiated and qui tam — during the early part of the first Trump administration were consistent with the volume in the later part of the Biden FCA Statistics. All signs point to continued robust FCA enforcement, particularly in light of Attorney General Pam Bondi's commitment during her confirmation hearing to support vigorous enforcement of the FCA, including through whistleblowers. The healthcare and life sciences industry, which has long dominated FCA enforcement activity, will remain a focus as DOJ looks to continue to prioritize traditional areas of enforcement, such as alleged violations of the Anti-Kickback Statute ("AKS"), as well as more recent areas of interest, including private equity investment in healthcare and the use of artificial intelligence. In 2025, industry can also expect DOJ and the whistleblowers' bar to explore new theories of liability building from the new administration's focus on eliminating Diversity, Equity, and Inclusion ("DEI") programs. New administration initiatives The new administration has championed a pro-business approach and ordered all agencies to "de-prioritize actions to enforce regulations that ... impose undue burdens on small business and impede private enterprise and entrepreneurship." See Executive Order No. 14219. Indeed, Attorney General Bondi issued an internal memo on Feb. 5, 2025, calling for the Criminal Division's Foreign Corrupt Practices Act ("FCPA") Unit to prioritize investigations related to foreign bribery that facilitate cartels and transnational criminal organizations, and to de-emphasize other types of FCPA cases. However, all signs suggest that corporate enforcement activity through the FCA will remain active, particularly where leveraging the FCA will help achieve the new administration's goals. During her confirmation hearing, now-Attorney General Bondi stated she would "defend the constitutionality, of course, of the False Claims Act" and noted the importance of both the FCA and "the money it brings back" to the treasury. These statements were made in response to questions posed by Senator Chuck Grassley, a long-time proponent of the FCA, who sought assurances that Bondi, if confirmed, would not undermine FCA enforcement. The exchange also comes in the wake of a recent district court decision, United States ex rel. Zafirov v. Florida Medical Associates, LLC, dismissing a qui tam suit on constitutional grounds under the Appointments Clause. While some speculated that a Trump Administration DOJ might support this reading, Bondi did not suggest any sympathy to the Zafirov position in her confirmation hearing. In a Feb. 20, 2025, speech, Deputy Assistant Attorney General Michael Granston, a career lawyer who supervises the division of DOJ that enforces the FCA, proclaimed DOJ would "aggressively" enforce the FCA "consistent with the new administration's stated focus on achieving governmental efficiency and rooting out waste, fraud and abuse." (See DOJ Official Flags 'Aggressive' FCA Approach Under Trump," Law360, Feb. 20, 2025) Granston also warned "it would be a mistake to view the False Claims Act as just a healthcare fraud statute" and cited "illegal foreign trade practices" as one potential target under the FCA. One way the Trump administration may use the FCA to advance its objectives is to target federal contractor DEI programs. On Jan. 21, 2025, President Trump issued an executive order titled " Ending Illegal Discrimination and Restoring Merit-Based Opportunity," ending affirmative action programs in federal government programs and giving federal agencies and contractors 90 days to come into compliance. Among other elements, this executive order requires federal agencies to incorporate into all federal contracts or grant agreements a clause requiring the contractor or grantee to acknowledge that compliance with federal anti-discrimination laws is "material" for purposes of the FCA. The cross-reference in this executive order to an element of FCA liability suggests DOJ is gearing up to file new FCA cases against federal funding recipients that engage in DEI programs the administration concludes are unlawful, and inviting whistleblowers to pursue such cases as well. Continued FCA priority enforcement areas The Anti-Kickback Statute The AKS remains one of DOJ's most common drivers of FCA enforcement and recoveries. Unlike the FCPA, the AKS focuses on domestic business relationships in the healthcare industry, and changes in FCPA enforcement should not be taken as a signal that enforcement of domestic kickback concerns through the AKS will diminish. In particular, DOJ has recently used financial arrangements that cannot satisfy an AKS safe harbor as a vehicle for attacking arrangements it views more broadly as problematic because they are designed to drive referrals, particularly where the referrals relate to use of Durable Medical Equipment ("DME"), laboratory testing, or other items or services that are alleged to be medically unnecessary. For example, compliance with an AKS safe harbor may not be achieved where an independent contractor arrangement is commission-based (i.e., such an agreement could be interpreted as varying with the volume or value of referrals), and over the past few years DOJ and whistleblowers have begun to more aggressively pursue such arrangements in the clinical laboratory context as AKS violations, alongside allegations that federal healthcare programs were billed for medically unnecessary tests. In the past year, DOJ entered into an AKS settlement with a genetic testing provider on a theory that the provider paid commissions to independent contractors so they recommended the provider's genetic tests to prescribers. Against the backdrop of rising criticism of pharmacy benefit managers ("PBMs"), including by President Trump, DOJ may explore AKS-based theories of liability to target practices it views as unreasonably raising drug prices. Some defendants may argue that certain arrangements implicating the AKS's broad prohibitions should not be pursued where they represent common business practices and do not pose harm to federal healthcare programs, including beneficiaries. Such arguments could potentially appeal to those in the administration who hope to use the FCA as a scalpel against harmful fraud, rather than a bludgeon that may discourage the private sector from engaging in industry-standard business activities. Private equity As private equity investment in the healthcare industry increased, so too did DOJ scrutiny. In the past five years, DOJ has announced multiple FCA settlements with private equity firms, deeming them responsible for allegedly causing the submission of false claims by their portfolio companies. Although DOJ has not clearly articulated the metes and bounds of its theory of liability, the history of prior settlement agreements suggests DOJ is at least focused on private equity firms that were aware of the alleged misconduct, had a management services agreement or other active role in management that would have given the private equity firm an opportunity to remedy the known misconduct, and who failed to do so. It remains to be seen if the Trump administration DOJ will be as critical of private equity healthcare investment as that of the Biden administration. Even if there is a de-escalation, state FCA enforcement may pick up the torch. Recently, Massachusetts amended its state FCA to require investors in Massachusetts health care companies to disclose any investment entity's FCA violations "within 60 days of identifying the violation." The law does not define what it means for an investor to "identify" a violation, and similar language in the Affordable Care Act imposing reverse false claims liability under the federal FCA has spawned significant litigation. Use of artificial intelligence ("AI") in federal healthcare programs As AI has grown more prevalent across all aspects of the healthcare industry, questions and concerns have been raised about the misuse of AI, including through the use of algorithms to inappropriately deny claims. Although the focus of President Trump's Jan. 23, 2025, AI executive order is primarily on removing barriers that inhibit AI growth — some had criticized these Biden administration rules as "barriers to innovation disguised as safety measures" — DOJ and whistleblowers can be expected to monitor at least for traditional concerns that AI is resulting in over-billing. For example, DOJ recently negotiated a $23 million settlement with an academic medical center to resolve claims that it violated the FCA when an automated coding system improperly assigned CPT codes to emergency department claims, resulting in federal healthcare programs overpaying for services. The Centers for Medicare and Medicaid Services have issued regulations over the past two years addressing use of AI by health insurers, including Medicare Advantage plans, which may create new avenues for FCA liability. Conclusion The second Trump administration has already announced a slew of new policy changes across healthcare and non-healthcare industries and publicly expressed not only support for FCA enforcement and whistleblowers but also an interest in using the FCA as a tool to advance administration objectives, including in areas that have not traditionally experienced significant FCA risk. Recipients of federal funding, particularly in areas top of mind for the new administration, should consider the potential for new FCA risk. Jaime L.M. Jones and Brenna E. Jenny are regular contributing columnists on health care compliance and enforcement for Reuters Legal News and Westlaw Today.
Yahoo
27-02-2025
- Health
- Yahoo
Company sales director to plead guilty in Boston to offering kickbacks to doctors for brain scans
The sales director for a New York company has agreed to plead guilty to conspiring to offer and pay millions in kickbacks to doctors in exchange for ordering medically unnecessary brain scans, the U.S. Attorney said this week. David Fuhrmann, 59, of Port Jefferson, N.Y. was charged Thursday in federal court in Boston, U.S. Attorney Leah Foley said in a statement. Fuhrmann has agreed to plead guilty to one count of conspiracy to violate the Anti-Kickback Statute, Foley said. A plea hearing has not yet been scheduled. The scheme resulted in fraudulent bills of approximately $70.6 million to Medicare, according to the charging documents. Prosecutors allege that from June 2013 through at least September 2020, Fuhrmann conspired with others, including two managers for a mobile medical diagnostics company that performed transcranial doppler or TCD scans, to enter into kickback agreements with various doctors. Fuhrmann and his co-conspirators allegedly 'agreed to offer and pay doctors kickbacks based on the number of TCD ultrasounds the doctors ordered,' Foley said in her statement. It was unclear Wednesday if any of the doctors allegedly involved in the kickback scheme are from Massachusetts or New England, and whether the doctors would also face charges in connection with the kickback scheme. Some doctors were paid in cash and others by check, prosecutors allege. Fuhrmann and others allegedly created rental and administrative service agreements. 'On paper, these agreements made it appear as if doctors were compensated for the TCD company's use of space and administrative resources based on fair market value and not based on the volume or value of referrals,' the U.S. Attorney's statement said. 'These agreements were allegedly shams that hid the true nature of the arrangement of paying per test,' prosecutors said. If convicted on the charge of conspiracy to violate the Anti-Kickback Statute, Fuhrmann faces a sentence of up to five years in prison, three years of supervised release and a fine of up to $250,000. This is a developing story. Check back for updates as more information becomes available. Download the FREE Boston 25 News app for breaking news alerts. Follow Boston 25 News on Facebook and Twitter. | Watch Boston 25 News NOW
