LONDON—Saint Joseph Health System Inc., d/b/a Saint Joseph London Hospital (Saint Joseph) has agreed to pay the U.S. government $16.5 million to resolve civil allegations that it submitted false or fraudulent claims to the Medicare and Kentucky Medicaid programs for a variety of medically unnecessary heart procedures.
“We all rely on health care providers to make treatment decisions based on clinical, not financial, considerations,” said U.S. Attorney Kerry B. Harvey. “The conduct alleged in this case violates that fundamental trust and squanders scarce public resources set aside for legitimate health care needs. We will use every available tool to protect our federal health care programs and the patients who they serve.”
According to the settlement agreement, the U.S. government contends that from January 1, 2008 until August 31, 2011, several doctors working at the hospital performed numerous invasive cardiac procedures on Medicare and Medicaid patients who did not need them. The hospital then billed the federal programs for these unnecessary procedures, which include coronary stents, pacemakers, coronary artery bypass graft surgeries (CABGS), and diagnostic catheterizations. The claims seeking reimbursement allegedly violated the False Claims Act because under federal law, Medicare and Medicaid programs only reimburse health care providers for operations that are deemed medically necessary. Hospitals generally receive between $10,000 and $15,000 for medical procedures such as heart stents.
These doctors were affiliated with Cumberland Clinic, a physician group that entered an exclusive arrangement with Saint Joseph in 2008 to provide cardiology services to the hospital’s patients.
The settlement also resolves allegations that Saint Joseph violated the federal Stark Law and Anti-Kickback Statute by entering into sham management agreements with doctors at the Cumberland Clinic. These agreements served as an inducement for the doctors to refer patients to Saint Joseph. Therefore, the government contends that Medicare and Medicaid are not responsible to pay claims that resulted from this improper financial relationship between the doctors and the hospital.
In connection with this settlement, Saint Joseph has agreed to enter into a Corporate Integrity Agreement with the Department of Health and Human Services, Office of Inspector General (HHS-OIG), which obligates the hospital to undertake substantial internal compliance reforms and commit to a third-party review of its claims to federal health care programs for the next five years.
“Cases such as this threaten both the health of patients and the financial integrity of the Medicare and Medicaid programs,” said Derrick L. Jackson, Special Agent in Charge at the U.S. Department of Health and Human Services, Office of Inspector General in Atlanta. “This settlement is another example of the OIG’s commitment to protecting our beneficiaries and to recovering any money that has been improperly paid as a result of medically unnecessary procedures.”
Today’s agreement represents the second largest health care fraud settlement in the Eastern District of Kentucky (district includes 67 counties).
The settlement stems in large part from a whistleblower complaint that was filed by three Lexington cardiologists pursuant to the qui tam provisions of the False Claims Act. That law allows the whistleblowers, also known as relators, to share in settlement proceeds that result from their bringing claims of fraud to the government’s attention. In this case, Doctors Michael Jones, Paula Hollingsworth, and Michael Rukavina will receive $2,458,810 of the $16.5 million settlement. Prior to the relators filing their complaint, Saint Joseph voluntarily disclosed to the government that one of its cardiologists, Dr. Sandesh Patil, had performed medically unnecessary coronary stents. Dr. Patil previously pleaded guilty to a federal health care fraud offense and was sentenced to 30 months’ imprisonment.
“Hospitals that place their financial interests above the well-being of their patients will be held accountable,” said Stuart Delery, Assistant Attorney General for the Civil Division of the United States Department of Justice. “The Department of Justice will not tolerate those who abuse the public health care programs to which we all contribute and on which we all depend.”
“The criminal investigation and civil settlements are excellent examples of the importance of whistleblower complaints,” said Perry K. Turner, Special Agent in Charge of the FBI in Kentucky. “This result would not be possible without the commitment of private citizens exposing this type of egregious fraud.”
The Commonwealth of Kentucky is also a party to the agreement and will receive approximately $365,851, which represents the state’s share of the government’s recovery of Medicaid funds. The Medicaid program is funded jointly by the federal and state governments.
“I applaud the hard work of my Medicaid Fraud Unit and all of the agencies involved in this case,” said Kentucky Attorney General Jack Conway. “I am pleased that we have reached this settlement and are recovering thousands of dollars for a vital state program and for taxpayers.”
While the settlement resolves claims against Saint Joseph London, the U.S. government will intervene in the case initiated by the whistleblowers and continue litigating allegations of False Claims Act violations arising out of unnecessary cardiac procedures against most of the other defendants named in the qui tam. It will also continue a related criminal investigation.
The investigation was conducted by the FBI, HHS-OIG, Kentucky Office of Attorney General, Medicaid Fraud and Abuse Control Unit (MFCU), the Civil Frauds Section of the Department of Justice in Washington, D.C., and the U.S. Attorney’s Office.
Showing posts with label Medicaid fraud. Show all posts
Showing posts with label Medicaid fraud. Show all posts
Wednesday, January 29, 2014
Monday, December 16, 2013
Manhattan U.S. Attorney, FBI, and IRS Announce Charges Against Pharmacy Owner in Multi-Million-Dollar Medicare, Medicaid Fraud Scheme
Preet Bharara, the United States Attorney for the Southern District of New York; George Venizelos, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (FBI); and Toni Weirauch, the Special Agent in Charge of the New York Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI), announced that Purna Chandra Aramalla was arrested yesterday for engaging in a scheme to defraud Medicaid and Medicare through the sale of illegally diverted prescription drugs. Aramalla was also charged with a related money laundering offense. Aramalla was arrested yesterday morning and was presented in Manhattan federal court before U.S. Magistrate Judge Debra Freeman yesterday afternoon. A preliminary hearing is scheduled for January 13, 2014.
Manhattan U.S. Attorney Preet Bharara said, “The illegal diversion of prescription medications threatens the health of those induced to sell their medication rather than take it. It threatens the health of those who unwittingly purchase the repackaged drugs believing them to be factory-fresh. And, as alleged here, Purna Aramalla’s diversion scheme defrauded millions of dollars from Medicare and Medicaid, taxpayer-funded programs established to provide health care assistance for the elderly and indigent. This office is committed not only to punishing and preventing fraud, and safeguarding Medicare and Medicaid, but also to protecting the public.”
FBI Assistant Director in Charge Venizelos said, “As alleged in the complaint, Aramalla conspired to defraud our government health care programs and profit from the illness and misfortune of others. Aramalla treated our American health care system as a vehicle to fuel his greed and line his own pockets. The FBI, in conjunction with our law enforcement partners, will continue to investigate and bring to justice criminals who bilk the system and defraud the American taxpayer.”
IRS-CI Special Agent in Charge Weirauch said, “The illegal sale of prescription drugs by pharmaceutical professionals is an escalating problem. Not only does it put potentially dangerous medications in the wrong hands, but fraudulent Medicare and Medicaid reimbursements divert resources from the government. The money laundering statutes have always been effective tools in the fight against illegal drugs. We are now applying these same laws to the illegal prescription drug business, tracing the lucrative proceeds that the sales of these drugs generate.”
According to the allegations contained in the criminal complaint unsealed today:
Aramalla operates A Fair Deal Pharmacy Inc. in Queens, New York, and Quality Health Drug Inc. in Bronx, New York. Using these pharmacies, Aramalla allegedly carried out a multi-million-dollar scheme to defraud New York State Medicaid and Medicare programs through the sale of diverted pharmaceutical drugs, that is, drugs not obtained from legitimate sources.
As part of the scheme, Aramalla purchased pharmaceuticals, including high-cost medications used to treat HIV, that were obtained from patients who sold the pharmaceuticals rather than use them to treat their illnesses. Aramalla then repackaged and resold those pharmaceuticals to his customers, as if the pharmaceuticals were new drugs obtained from legitimate sources. Aramalla requested and received reimbursement from Medicaid and Medicare in connection with these sales, even though Medicaid and Medicare would not have been willing to reimburse the cost of second-hand drugs. In addition, in some cases, Medicaid or Medicare had already paid for the pharmaceuticals when they were initially dispensed. In order to make the diverted pharmaceuticals appear to be new pharmaceuticals from legitimate sources, Aramalla and his co-conspirators used lighter fluid and other means to dissolve the adhesive on the patient labels on prescription bottles so that they could be removed and replaced with new labels.
Aramalla also sought and obtained reimbursement for pharmaceuticals that were never actually dispensed to patients. Instead, customers with prescriptions for pharmaceuticals essentially “sold” their prescriptions to Aramalla, agreeing not to take delivery of the pharmaceuticals in exchange for a share of the reimbursed proceeds.
From October 2010 to August 2012, Aramalla purchased approximately $1.7 million of certain branded HIV medications from two legitimate, licensed wholesalers that were his primary sources of legitimate drugs. During that same period, he received approximately $4.3 million in reimbursements from Medicare and Medicaid for those same drugs, an amount far in excess of what he would have been entitled to had he only sought reimbursement for the legitimately obtained drugs.
Mr. Bharara praised the outstanding investigative work of the FBI and the IRS. He also thanked the U.S. Department of Health and Human Services, Office of Inspector General; the New York State Office of Medicaid Inspector General; and the New York City Human Resources Administration.
The New York FBI Health Care Fraud Task Force was formed in 2007 in an effort to combat health care fraud in the greater New York City area. The task force comprises agents, officers, and investigators from the FBI, NYPD, the New York State Insurance Fraud Bureau, U.S. Department of Labor, U.S. Office of Personnel Management-Inspector General, U.S. Food and Drug Administration, New York State Attorney General’s Office, New York State Office of Medicaid Inspector General, New York State Health and Hospitals Inspector General, and the National Insurance Crime Bureau.
If you think you may have purchased second-hand prescription drugs or were otherwise victimized by this scheme, you can call the FBI Hotline at 212-384-3555.
The case is being prosecuted by the Office’s Complex Frauds Unit. Assistant U.S. Attorney Niketh Velamoor is in charge of the prosecution.
The charges contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Manhattan U.S. Attorney Preet Bharara said, “The illegal diversion of prescription medications threatens the health of those induced to sell their medication rather than take it. It threatens the health of those who unwittingly purchase the repackaged drugs believing them to be factory-fresh. And, as alleged here, Purna Aramalla’s diversion scheme defrauded millions of dollars from Medicare and Medicaid, taxpayer-funded programs established to provide health care assistance for the elderly and indigent. This office is committed not only to punishing and preventing fraud, and safeguarding Medicare and Medicaid, but also to protecting the public.”
FBI Assistant Director in Charge Venizelos said, “As alleged in the complaint, Aramalla conspired to defraud our government health care programs and profit from the illness and misfortune of others. Aramalla treated our American health care system as a vehicle to fuel his greed and line his own pockets. The FBI, in conjunction with our law enforcement partners, will continue to investigate and bring to justice criminals who bilk the system and defraud the American taxpayer.”
IRS-CI Special Agent in Charge Weirauch said, “The illegal sale of prescription drugs by pharmaceutical professionals is an escalating problem. Not only does it put potentially dangerous medications in the wrong hands, but fraudulent Medicare and Medicaid reimbursements divert resources from the government. The money laundering statutes have always been effective tools in the fight against illegal drugs. We are now applying these same laws to the illegal prescription drug business, tracing the lucrative proceeds that the sales of these drugs generate.”
According to the allegations contained in the criminal complaint unsealed today:
Aramalla operates A Fair Deal Pharmacy Inc. in Queens, New York, and Quality Health Drug Inc. in Bronx, New York. Using these pharmacies, Aramalla allegedly carried out a multi-million-dollar scheme to defraud New York State Medicaid and Medicare programs through the sale of diverted pharmaceutical drugs, that is, drugs not obtained from legitimate sources.
As part of the scheme, Aramalla purchased pharmaceuticals, including high-cost medications used to treat HIV, that were obtained from patients who sold the pharmaceuticals rather than use them to treat their illnesses. Aramalla then repackaged and resold those pharmaceuticals to his customers, as if the pharmaceuticals were new drugs obtained from legitimate sources. Aramalla requested and received reimbursement from Medicaid and Medicare in connection with these sales, even though Medicaid and Medicare would not have been willing to reimburse the cost of second-hand drugs. In addition, in some cases, Medicaid or Medicare had already paid for the pharmaceuticals when they were initially dispensed. In order to make the diverted pharmaceuticals appear to be new pharmaceuticals from legitimate sources, Aramalla and his co-conspirators used lighter fluid and other means to dissolve the adhesive on the patient labels on prescription bottles so that they could be removed and replaced with new labels.
Aramalla also sought and obtained reimbursement for pharmaceuticals that were never actually dispensed to patients. Instead, customers with prescriptions for pharmaceuticals essentially “sold” their prescriptions to Aramalla, agreeing not to take delivery of the pharmaceuticals in exchange for a share of the reimbursed proceeds.
From October 2010 to August 2012, Aramalla purchased approximately $1.7 million of certain branded HIV medications from two legitimate, licensed wholesalers that were his primary sources of legitimate drugs. During that same period, he received approximately $4.3 million in reimbursements from Medicare and Medicaid for those same drugs, an amount far in excess of what he would have been entitled to had he only sought reimbursement for the legitimately obtained drugs.
* * *
Aramalla, 65, of Port Washington, New York, is charged with one count of conspiracy to commit health care fraud and wire fraud, which carries a maximum term of 20 years in prison, and one count of money laundering, which also carries a maximum term of 20 years in prison. He was ordered detained pending satisfaction of bail conditions, including a $2 million personal recognizance bond.Mr. Bharara praised the outstanding investigative work of the FBI and the IRS. He also thanked the U.S. Department of Health and Human Services, Office of Inspector General; the New York State Office of Medicaid Inspector General; and the New York City Human Resources Administration.
The New York FBI Health Care Fraud Task Force was formed in 2007 in an effort to combat health care fraud in the greater New York City area. The task force comprises agents, officers, and investigators from the FBI, NYPD, the New York State Insurance Fraud Bureau, U.S. Department of Labor, U.S. Office of Personnel Management-Inspector General, U.S. Food and Drug Administration, New York State Attorney General’s Office, New York State Office of Medicaid Inspector General, New York State Health and Hospitals Inspector General, and the National Insurance Crime Bureau.
If you think you may have purchased second-hand prescription drugs or were otherwise victimized by this scheme, you can call the FBI Hotline at 212-384-3555.
The case is being prosecuted by the Office’s Complex Frauds Unit. Assistant U.S. Attorney Niketh Velamoor is in charge of the prosecution.
The charges contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
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