Monthly Archives: June 2015

DaVita to Pay $450 Million to Resolve Allegations that It Sought Reimbursement for Unnecessary Drug Wastage

Written June 29, 2015 by Robert Lu

On Wednesday, June 24, 2015, the U.S. Justice Department announced that DaVita Healthcare Partners Inc., the largest provider of dialysis services in the United States, has agreed to pay $450 million to resolve claims that it violated the False Claims Act.

The settlement resolves allegations brought by a whistleblower action, which said that DaVita devised and employed dosing grids and/or protocols specifically designed to create unnecessary waste of the drugs Venofer and Zemplar. These drugs are typically packaged in single-use vials, which are intended for one-time use by patients. Sometimes, the amount of the drug in the vials does not match the dosage specified by the physician, resulting in the remainder of the drug in the vial being discarded.

At the time of the alleged scheme, Medicare would reimburse a dialysis provider for certain waste if the dialysis provider – acting in good faith – discarded the remainder of the drug contained in a single-use vial after administering the requisite dose and/or quantity of the drug to a Medicare patient. According to the scheme alleged by the whistleblower action, DaVita instructed its employees to provide Zemplar to dialysis patients pursuant to mandatory and wasteful “dosing grids,” in order to maximize the amount of dosage prescribed to patients, thus maximizing Medicare reimbursements for DaVita.

The allegations resolved in the settlement arose from a lawsuit filed by two whistleblowers, Dr. Alon Vanier and nurse Daniel Barbir, under the qui tam provisions of the False Claims Act. Under the Act, private citizens can bring suit on behalf of the government for false claims and share in any recovery.

The lawsuit is captioned United States ex rel. Alon J. Vainer, M.D., F.A.C.P. and Daniel D. Barbir, R.N., Plaintiffs v. DaVita, Inc. and Gambro Healthcare, Inc., and their respective subsidiaries and affiliated companies, Defendants, No. 1:07-cv-2509-CAP (N.D. Ga.). The claims settled by this agreement are allegations only; there has been no determination of liability.

For additional information about the False Claims Act, and the Firm’s services and resources for whistleblowers in general, please visit the Robbins Geller Rudman & Dowd LLP whistleblower site.

First Tennessee Bank N.A. Agrees to Pay $212.5 Million to Resolve False Claims Act Liability Arising from FHA-Insured Mortgage Lending

Written June 11, 2015 by Robert Lu

On June 1, 2015, the Department of Justice announced that First Tennessee Bank N.A., headquartered in Memphis, Tennessee, has agreed to pay the U.S. Government $212.5 million to resolve allegations that it violated the False Claims Act by certifying mortgage loans insured by the U.S. Department of Housing and Urban Development (HUD) Federal Housing Administration (FHA) that did not meet HUD’s underwriting requirements.

The settlement resolves allegations that First Tennessee, through its subsidiary First Horizon Home Loans Corporation, failed to comply with FHA origination, underwriting and quality control requirements. According to the lawsuit filed by the Government, between January 2006 and October 2008, First Horizon allegedly claimed that mortgage loans it had approved qualified for FHA insurance coverage, when in fact these loans did not meet FHA’s guidelines. Because First Horizon is a Direct Endorsement Lender, it has the authority to originate, underwrite and endorse mortgages for FHA insurance and these loans are not reviewed by either FHA or HUD. As a result, according to the lawsuit, First Horizon created mortgages that it knew were high risk, submitted claims for reimbursement when these loans failed, and received insurance payments from HUD for these defaulted loans.

This alleged practice by First Horizon violated the False Claims Act. First Tennessee’s conduct (through its subsidiary First Horizon) caused FHA to insure hundreds of loans that were not eligible for insurance and, as a result, FHA suffered substantial losses when it later paid insurance claims on those loans.

For additional information about the False Claims Act and the Firm’s resources and services for whistleblowers in general, please visit the Robbins Geller Rudman & Dowd LLP whistleblower site.

Durable Medical Equipment Suppliers to Pay $7.5 Million to Resolve False Claims Act Allegations

Written June 2, 2015 by Robert Lu

The U.S. Justice Department announced Wednesday, May 27, 2015, that it had reached a $7.5 million settlement with two medical equipment suppliers, Orbit Medical Inc. and its partial successor Rehab Medical Inc., over allegations that the businesses filed false claims for power wheelchairs and accessories to federal health care programs.

Orbit Medical and Rehab Medical are durable medical equipment suppliers based in Salt Lake City and Indianapolis, respectively.

Medicare will only pay for power wheelchairs for individuals who cannot use other forms of equipment, such as a cane, walker or power scooter, to move around their homes and perform daily activities. Physicians must meet with individuals face-to-face, examine the person and provide a power wheelchair prescription within 45 days of the examination. The treating physician is also required to give documentation that shows the power wheelchair is medically necessary. In the complaint against Orbit, representatives were accused of altering prescriptions by physicians in order to get power wheelchairs paid for by Medicare.

The allegations resolved by the settlement with Orbit and Rehab were filed under the False Claims Act by two former Orbit employees, Dustin Clyde and Tyler Jackson. Under the False Claims Act, a private party can sue for false claims on behalf of the government and share in any recovery. Clyde and Jackson will receive approximately $1.5 million. The United States intervened in the suit on April 2, 2014.

The lawsuit is captioned United States ex rel. Clyde et al. v. Orbit Medical et al., No. 2:10-CV-00297 (D. Utah). The claims settled by the government are allegations only; there has been no determination of liability.

For additional information about the False Claims Act, and the Firm’s resources and services for whistleblowers, please visit the Robbins Geller Rudman & Dowd LLP whistleblower site.