A Historic Year: 2014’s Top 10 Healthcare Fraud Settlements, Pt. I

Fiscal year 2014 has been a historic one for the False Claims Act. According to a recent announcement by the Department of Justice, this past year has seen the recovery of more taxpayer dollars than any other year – with over $2 billion recovered from healthcare fraud alone. Bank and mortgage fraud also contributed to the problem in a big way, as did military contractor fraud. In a two-part series, we look at the top ten largest healthcare fraud settlements occurring in fiscal year 2014, including a brief description of the facts leading up to the historic settlement amounts.

In most of these cases, courageous whistleblowers came forward with allegations of fraud and abuse – resulting in lucrative rewards of up to 30 percent.

#10 – $15.5 Million from the Seaford, New York-based Diagnostic Imaging Group: As you may recall, this settlement occurred following allegations involving the submission of claims to Medicare and Medicaid for reimbursement for diagnostic imaging services that were not medically necessary. The case was commenced by three whistleblowers – all former employees – who earned $2.77 million together.

#9 – $16.5 Million from Kentucky’s Saint Joseph Health System: In another healthcare fraud case, several London, Kentucky-based cardiologists were alleged to have accepted kickbacks and other unlawful financial incentives in exchange for sending patients to certain cardiology centers. The case was brought to light by three other cardiologists who blew the whistle on the “sham” financial arrangements.

#8 – $22.8 Million from Massachusetts-based Genzyme Corporation: In this case, Genzyme – a manufacturer of post-surgical adhesive – is alleged to have trained doctors and nurses on how to create an adhesive “slurry,” which was then suggested for use in laparoscopic and minimally invasive surgeries. This created problems under the False Claims Act as the adhesive product is only approved for use in open abdominal surgery. Information about the whistleblower’s role – or ultimate reward – was not readily available in the government’s press release.

#7 – $27.6 Million from Israeli company Teva Pharmaceuticals: You may remember the Teva Pharmaceuticals case involving the powerful antipsychotic drug Clozapine. According to allegations, the company encouraged doctors and healthcare professionals to widely disburse this drug in exchange for generous kickbacks, vacations, and professional sports tickets. The drug is approved for use in patients suffering from schizophrenia, but was routinely prescribed to patients suffering from the effects of advanced-stage dementia.

#6 – $30 Million from Missouri’s RehabCare Group: The whistleblower lawsuit against RehabCare involved extensive allegations of massive six-figure kickbacks for healthcare providers agreeing to exclusively refer rehabilitation patients to RehabGroup facilities. The whistleblower in this case received $700,000 due to her willingness to report the ongoing fraud.

Stay tuned for tomorrow’s post, where we review the top five healthcare fraud False Claims Act settlements in fiscal year 2014.

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