Healthcare, Pharmaceutical and Medical Device Fraud
Berger Montague’s Whistleblower, Qui Tam & False Claims Act Group represents Whistleblowers alleging fraud against the government in the healthcare, pharmaceutical and medical device industries.
State and federal governments pay hundreds of billions of dollars each year for pharmaceutical drugs, medical devices, hospital care, outpatient services, physician visits and nursing home care. In making payments for these services, the Government relies on companies and individuals to abide by the law and to submit accurate reimbursement requests.
Unfortunately, experience has shown that some companies and individuals violate this “honor system” and submit false or fraudulent requests for payment. Indeed, whistleblower lawsuits in the healthcare, pharmaceutical and medical device industries have resulted in tens of billions of dollars in recoveries. Below are some examples of the types of fraud against the government that occur in the healthcare, pharmaceutical and medical device industries.
False claims involving hospitals and physicians include:
- Billing for Services Not Rendered — This is obvious fraud: billing the Government for a service that was not provided to the patient.
- Billing for Unnecessary Services — This scheme involves providing a service and billing for that service, even though the patient did not need that type or quantity of care. For example, a patient only needs a basic eye exam which costs $75, but the physician orders a CAT scan and related testing which costs hundreds of dollars more.
- Kickbacks — Kickbacks are items of value (money, gifts, trips, meals, etc.) provided by one party (often the hospital) in exchange for referrals or business from the other party (usually the physician). For example, a hospital reimburses a neurologist at twice the “going rate” for his services in exchange for the neurologist referring all of his patients to the hospital.
- Stark Violations — There are complex rules regarding the ownership interests that doctors and hospitals have and the making of referrals. It is generally illegal for a doctor to make a referral to a business which he owns or in which he has a vested interest. For example, unless a “Safe Harbor” applies, a doctor may not refer one of his patients to a physical therapy business that the doctor also owns.
- Upcoding — All medical procedures and diagnoses have an assigned “code” which determines how much the physician or hospital is going to get paid by the government. If a doctor or hospital knowingly bills for a higher “code” — and thus is paid more by the government than the government intended to pay for the service provided — fraud has been committed. For example, a patient is seen for a short time in the Emergency Room, but the hospital issues a bill for a complex medical visit.
- Fraudulent Cost Reporting — Hospitals are reimbursed based in part on how much it costs to run the medical facility. Cost reporting fraud occurs when a hospital knowingly inflates its cost report so that it receives extra money from the government, or where the hospital mischaracterizes the nature of those costs by reporting that a false percentage of its medical care was provided to Medicaid or Medicare patients. Click here to read more about Reporting Medicaid and Medicare Fraud.
- False Certifications — Many government reimbursement systems require doctors and/or hospitals to “certify” that the healthcare services for which reimbursement is sought were provided in a lawful manner, e.g., in compliance with state and/or federal law. If a hospital certifies that it provided radiology services to a patient in compliance with the law, and it is later revealed that provision of the service was involved payment of a kickback, fraud has occurred.
- “Unbundling” or “Fragmented” Billing — Some medical events that commonly occur at or near the same time, such as the various medical procedures involved in the birth of a child, are billed under one code. Fraud occurs when a physician or hospital knowingly seeks to maximize profit by “unbundling” or “fragmenting” that code and instead bills for each procedure individually.
False claims involving pharmaceutical companies include:
- “Off-Label” Marketing or Promotion — This occurs when a company, in an effort to increase sales, markets its drug for uses not approved by the FDA. There are various methods that pharmaceutical companies have used to commit this fraud, including the distribution of medical articles describing off-label uses, creating speaker bureaus of physicians that tout off-label uses, utilizing “advisory boards” to promote off-label messages while providing kickbacks to physicians, and hosting “Continuing Medical Education” seminars which involve off-label messages and information. Many of these allegedly legitimate business practices involve the unlawful provision of items of value (money, gifts, trips, meals, etc.) to induce increased sales, i.e., many of these practices can constitute an illegal “kickback” to the physician.
- “Best Price” Fraud — Under United States law governing the Medicaid program, pharmaceutical manufacturers are required to give the government the lowest or “best” price paid for a drug by a commercial customer. An example of Best Price fraud is when a drug manufacturer provides an unrestricted educational grant, for instance, of $100,000, to a hospital that purchases its drug, but in fact, the hospital does not conduct any research, and the drug manufacturer does not factor the “grant” money into its best price calculations for that drug.
- “Nominal Price” Fraud — This occurs when a company provides a drug at a steeply discounted rate (less than 10% of the average manufacturer’s price), but ties the price to certain conditions, such as market share or formulary position and yet excludes that discounted rate from the Best Price reported to the government.
False claims involving medical device companies include:
- “Off-Label” Marketing or Promotion — The FDA regulates the use of medical devices in a variety of ways, including their approved uses which often are very narrow in scope. Medical device companies, many of which are relatively new companies without established compliance programs, may be tempted to market their products for off-label uses. Off-label marketing is often combined with kickbacks, i.e., the unlawful provision of items of value (money, gifts, trips, meals, etc.) to induce increased sales of the device.
- Defective Medical Devices — If a medical device is defective yet the company, knowing about the defect, nonetheless bills and is reimbursed for same, the government has been defrauded.
Berger Montague’s Whistleblower, Qui Tam & False Claims Act Group is familiar with the types of complex government fraud schemes like those described above and has the experience and resources necessary to investigate and pursue virtually any type of fraud against the government arising in the healthcare, pharmaceutical and medical device industries.
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