Friday Enforcement Wrap: Medical Device Company Agrees to Pay Over $17 Million to Resolve FCA Allegations

Headlines that Matter for Companies and Executives in Regulated Industries

DOJ News

Covidien Agrees to Pay Over $17 Million to Resolve FCA Allegations of Providing Remuneration to Physicians

Covidien LP, a medical device company, will pay over $17 million to resolve False Claims Act allegations that it provided free or discounted marketing and physician practice development support to physician groups for the purpose of inducing the purchase of its catheter products. The government alleged that purchases made in exchange for the free or discounted support were billed to Medicare and to the California and Florida Medicaid programs. The support provided came in the form of detailed and customized marketing plans for specific physician practices. Under the settlement agreement, Covidien’s payment will be shared among Florida Medicaid, California Medicaid, the federal government, and the relators who brought the qui tam actions at issue. Two relators will share over $3 million in recovery.

Read the DOJ press release here.

Chicago-Area Man Sentenced to 60 Months in Prison for $1.6 Million Fake Pharmacy Scheme

A Chicago-area man was sentenced to 60 months in prison for his role in a fraudulent scheme worth $1.6 million. As part of a guilty plea, the man admitted to creating a fictional pharmacy that he used to process hundreds of prescription drug claims that were never actually dispensed to patients. He also admitted to submitting fake prescription claims not only for himself, but for three other people including his wife. When certain of the claims were denied, the man submitted appeals of the denials that included the submission of fabricated checks in support of his appeals. 

Read the DOJ press release here.

Unsealed Indictment Alleges a $2 Billion Fraud and Money Laundering Scheme by Former Government Officials in Mozambique to Defraud US Investors

A federal grand jury in the Eastern District of New York returned a four-count indictment that charged two shipbuilding company executives, three investment bankers, and three former Mozambican government officials in a fraudulent scheme that caused harm to investors in the United States and elsewhere. The alleged scheme involved $200 million in bribes and kickback payments to government officials in Mozambique used to help organize three loans totaling $2 billion that were made to companies controlled by the Mozambican government. Those loans were then marketed and sold to investors. The investment bankers were charged with violations of the Foreign Corrupt Practices Act in connection to the facilitation of bribe payments to government officials. Other charges include conspiracy to commit wire fraud, securities fraud, and money laundering. Further investigation is ongoing and is being conducted by the FBI’s New York Field Office.

Read the DOJ press release here.

Lumber Liquidators Agrees to Pay $33 Million Penalty to Resolve Securities Fraud Allegations

As part of a deferred prosecution agreement, Lumber Liquidators Holdings Inc. (“Lumber Liquidators”) agreed to pay a penalty for filing a false and misleading statement to investors in a public filing with the Securities and Exchange Commission. In a March 2015 episode of the television program “60 Minutes,” the program accused the company of selling laminate flooring in the United States that did not meet certain emission standards for formaldehyde. The program aired undercover video and test results that were previously shown to the company. The next day the company made a public filing denying the allegations. As part of its agreement with the government, Lumber Liquidators agreed to pay a $33 million penalty, to implement strict internal controls, and to cooperate with the Department of Justice’s ongoing investigation. Assistant Attorney General Benczkowski noted that “False and misleading financial reports undermine the integrity of our securities markets and harm investors. The Department and our law enforcement partners are committed to doing everything we can to ensure that those who commit securities fraud are held accountable.”

Read the DOJ press release here.

Durable Medical Equipment Company Owner Sentenced to Prison for Involvement in Nearly $10 Million Medicaid Fraud Scheme

A Washington DC durable medical equipment company owner received a 42 month prison sentence for billing wound care products to Medicaid that were never actually purchased or provided to customers.  The scheme defrauded Medicaid of nearly $10 million. The owner pled guilty to using her company, WaveCare Health Services of Washington, DC, to submit false and fraudulent claims to Medicaid for the products that were never purchased or provided. The government traced her profits of over $9 million to a Mercedes vehicle, seven real properties, and two bank accounts – all of these were seized by the government during the summer of 2018.

Read the DOJ press release here.

Our Recent Alerts

Beware of Your Medicare Advantage Capitated Arrangements – False Claims Act Exposure Lurks in Your Diagnosis Coding

The US Department of Justice filed its complaint-in-intervention in the Northern District of California on March 4, 2019 against Sutter Health and Palo Alto Medical Foundation. The complaint alleges that Sutter Health, a major California health system, and PAMF, its affiliated physician practice, violated the False Claims Act by submitting unsupported diagnosis codes to Medicare Advantage plans to increase Medicare reimbursement. The allegations against Sutter and PAMF are similar to those alleged against DaVita and its former corporate affiliate, HealthCare Partners, a large independent physician association. The DaVita case, also originating out of California, settled in October 2018 for $270 million.

See the full article here.


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