Update on recent whistleblower False Claims Act settlements

Duke University, Raleigh, NC

On March 21, 2014, Duke University Health System, Inc. of Raleigh, North Carolina, agreed to pay $1 million to the United States Department of Justice (DOJ) to resolve alleged false claims under the North Carolina and federal False Claims Acts. Allegedly, Duke submitted false claims to federal health care programs by billing for services provided by physician assistants (PAs) during coronary bypass surgeries when the PAs and graduate medical trainees were acting as surgical assistants, which is not permitted under the federal programs. In addition, Duke allegedly improperly unbundled certain claims in connection with cardiac and anesthesia services when unbundling was not permitted. According to the complaint in the case, Duke improperly attached modifier 59 -- used to indicate a separately billable service -- to claims that were not separately billable. The allegations arose from a whistleblower suit brought by a former employee of a Duke affiliate that provides billing, collection and administrative services.

Astellas Pharma US Inc., Pennsylvania

On April 16, 2014, Astellas Pharma US Inc. entered into a $7.3 million settlement with the DOJ to resolve False Claims Act allegations arising from a whistleblower suit brought by a former Astellas sales representative. The complaint alleged that Astellas engaged in off-label marketing and promotion of its drug Mycamine, an injectable drug used to treat serious fungal infections, by promoting it for pediatric use when the FDA had only approved the drug for adults. FDA regulations prohibit marketing drugs for any use not approved by the FDA. The former sales representative turned whistleblower alleged that Astellas was involved in a nationwide sales program to promote Mycamine for pediatric use, which included pressuring salespeople to promote the drug to children's hospitals and to make specific claims about the drug's efficacy for pediatric patients versus a competing drug, Cancidas, manufactured by Merck & Co. In addition, the whistleblower alleged that Astellas promised children's hospitals that switching to Mycamine would save them money and required them to sign exclusive contracts giving the children's hospitals deep discounts if they used Mycamine 80 percent of the time. Allegedly, the discounts were given to the children's hospitals but not passed on to federal health care programs. Finally, the whistleblower alleged that Astellas paid kickbacks to physicians by paying outside physicians to speak with other doctors and pharmacists about the benefits of using Mycamine for children.

Amedisys Home Health Companies, Louisiana-based, operating in 37 states, the District of Columbia and Puerto Rico

On April 23, 2014, Amedisys, Inc. and its affiliates entered into a $150 million settlement with the DOJ to settle false claims act allegations that Amedisys improperly billed federal health care programs for medically unnecessary services and services furnished to ineligible patients who were not homebound or otherwise misrepresented patients' conditions to increase reimbursement. In addition, Amedisys allegedly maintained improper financial relationships with referring physicians in violation of the federal Stark and Anti-Kickback statutes. In particular, the suit alleged that Amedisys' employees provided patient care coordination services to oncology practices at below market prices. The settlement resolves seven separate lawsuits against Amedisys (six in the Eastern District of Pennsylvania and one in the Northern District of Georgia) all originating from whistleblowers who are expected to receive $26 million as a result of the settlement.

CRC Health Corporation, Tennessee

On April 28, 2014, CRC Health Corporation agreed to pay the federal government and the state of Tennessee $9.25 million to resolve False Claims Act allegations arising from a whistleblower suit brought by a former employee who handled billing services. The former employee alleged that CRC submitted false claims by furnishing substandard alcohol and drug addiction services to Medicaid patients at its facility in Burns, Tennessee, and possibly other locations. In particular, he alleged that CRC billed for services that were not rendered, such as by billing counseling services as services provided by licensed counselors when they were provided by technicians or not provided at all. In addition, CRC allegedly billed for services for dates after patients left its program, changed internal records to match dates for services approved (versus actual dates of services), fraudulently obtained national accreditation and generally maintained insufficient staffing levels.