Lecture16 F&A2011

1. Baruch College/Mount Sinai School of Medicine Program in Health Care Administration and Policy BUS9100 Lecture 16 Health Care Fraud and AbuseRaymond R. Arons, Dr. P.H, M.P.H

2. Lecture 16 2 Baruch College/Mount Sinai School of Medicine Program In Health Care Administration and Policy BUS 9100: The Social and Governmental Environment of the Business of Health Care Lecture 16 Health Care Fraud and Abuse Raymond R. Arons, Dr. P.H, M.P.H Health Care Fraud and Abuse The detection and elimination of health care fraud and abuse is a top priority of federal law enforcement. Our efforts to combat fraud were consolidated and strengthened considerably by the Health Insurance Portability and Accountability Act of 1996 (HIPAA). HIPAA established a national Health Care Fraud and Abuse Control Program (the Program), under the joint direction of the Attorney General and the Secretary of the Department of Health and Human Services (HHS), acting through the Departments Inspector General (HHS/OIG), designed to coordinate federal, state and local law enforcement activities with respect to health care fraud and abuse. 2 continued...Copyright 2011 Raymond R. Arons, Teaneck, NJ, USA

3. Lecture 16 3 Health Care Fraud and Abuse During FY 2010, the Federal government won or negotiated approximately $2.5 billion in judgments and settlements, and it attained additional administrative impositions in health care fraud cases and proceedings. The Medicare Trust Fund received transfers of approximately $2.86 billion during this period as a result of these efforts, as well as those of preceding years; and another $683 million in Federal Medicaid money was transferred to the Treasury separately The HCFAC account has returned over $18.0 billion to the Medicare Trust Fund since the inception of the program in 1997. 3 Health Care Fraud and Abuse In FY 2010, the Department of Justice (DOJ) opened 1,116 new criminal health care fraud investigations involving 2,095 potential defendants. Federal prosecutors had 1,787 health care fraud criminal investigations pending, involving 2,977 potential defendants, and filed criminal charges in 488 cases involving 931 defendants. A total of 726 defendants were convicted for health care fraud-related crimes during the year. Also in FY 2010, DOJ opened 942 new civil health care fraud investigations and had 1,290 civil health care fraud matters pending at the end of the fiscal year. 4The Department of Health and Human Services and the Department of Justice Health Care Fraud andAbuse Control Program Annual Report For FY 2000http://www.usdoj.gov/dag/pubdoc/hipaa00ar21.htmCopyright 2011 Raymond R. Arons, Teaneck, NJ, USA

5. Lecture 16 5 Case 1 Durable Medical Equipment Fraud After a five-week trial, a Federal jury in Miami convicted three owners of two DME companies, a home health agency and an assisted living facility which conspired to defraud Medicare of more than $14 million for unnecessary medicine, DME, and home health care services. Two defendants were sentenced to 51-month terms of imprisonment, and the third was sentenced to a 31-month prison term. Patients testified at trial that they took kickbacks, were falsely diagnosed with chronic obstructive pulmonary disease and prescribed unnecessary aerosol medications, including commercially unavailable compounds. A fourth co-defendant who was a dermatologist, was also convicted in a separate jury trial and was sentenced to prison for 41 months 5Medicare Fraud Convictions Result in Prison Terms for Mother and Two DaughtersWASHINGTON The owners of four Miami-based healthcare corporations were sentenced andremanded to prison yesterday for their roles in schemes to defraud the Medicare program, ActingAssistant Attorney General Matthew Friedrich of the Criminal Division and U.S. Attorney R.Alexander Acosta of the Southern District of Florida announced today. Collectively, the threedefendants through their companies collected more than $14 million from the Medicare programfor unnecessary medicine, durable medical equipment (DME) and home health care services.U.S. District Judge Cecilia M. Altonaga sentenced Maria T. Hernandez (Mayte), 50, to 51months in prison; Marta F. Jimenez, 67, to 31 months in prison; and Maivi Rodriguez, 34, to 51months in prison. All three were remanded into federal custody at the conclusion of thesentencing. Hernandez and Rodriguez are the daughters of Jimenez. On March 7, 2008, after afive week trial, a jury convicted Hernandez, Jimenez and Rodriguez on all charged counts,including conspiracy to defraud the U.S. government, to cause the submission of false claims toMedicare, and to solicit and receive kickbacks; and conspiracy to commit health care fraud.Additionally, the defendants were found guilty of multiple counts of receiving kickbacks inexchange for referring Medicare patients.At trial, the jury heard testimony that Hernandez, Jimenez and Rodriguez controlled more than60 Medicare beneficiaries for the sole purpose of defrauding Medicare through the businessesthey owned. Hernandez owned Action Best Medical Supplies Inc., a DME company. Jimenezand Rodriguez owned Esmar Medical Equipment Inc., a DME company; A & A MedicalServices Inc., a home health care company; and M & M Comprehensive Inc., an assisted livingfacility.Copyright 2011 Raymond R. Arons, Teaneck, NJ, USA

6. Lecture 16 6Patients testified at trial that they were paid cash kickbacks in exchange for use of their Medicarecards. Several of the patients lived in the assisted living facility owned by Jimenez andRodriguez. Patients testified that they knowingly took cash kickbacks, were falsely diagnosedwith chronic obstructive pulmonary disease and prescribed unnecessary aerosol medications,including commercially unavailable compounds. Compounding refers to the process of apharmacist mixing the medication in the pharmacy, instead of purchasing it from apharmaceutical manufacturer. Trial testimony revealed that one of the men making the medicinewas trained as an auto mechanic without any education, training or experience manufacturingmedicine. In total, the co-conspirator pharmacies associated with Hernandez, Jimenez andRodriguez were paid more than $14 million between 2000 and 2003 based on the submission ofclaims for medically unnecessary aerosols.The case was prosecuted by Deputy Chief Kirk Ogrosky and Senior Trial Attorney John S.Darden of the Criminal Divisions Fraud Section in Washington, D.C., with the investigativeassistance of the Department of Health and Human Services, Office of Inspector General and theFBI. The case was brought as part of the Medicare Fraud Strike Force, supervised by the FraudSection of the Criminal Division and U.S. Attorney Acosta of the Southern District of Florida.From investigations opened during the period of strike force operations between March andOctober of 2007, federal prosecutors have indicted 82 cases with 142 defendants in SouthFlorida. Collectively, these defendants billed the Medicare program for more than $492 million.Copyright 2011 Raymond R. Arons, Teaneck, NJ, USA

8. Lecture 16 8 Case 2 - Physician Fraud and Abuse A physician and the administrator of an HIV infusion clinic pleaded guilty for their roles in a $37 million infusion fraud scheme. The physician, who was sentenced to 84 months in prison, admitted to approving approximately $26 million worth of fraudulent medical bills, signing documents containing false information about treatments purportedly provided to HIV patients, and approving medically unnecessary treatments. The clinic administrator, who was sentenced to serve 70 months in prison, admitted to causing the submission of approximately $11 million in false claims to the Medicare program, paying health care kickbacks, and committing health care fraud. 6Miami Physician and HIV Clinic Administrator Plead Guilty for Their Roles in a $37Million Medicare Fraud SchemeMiami physician Ronald Harris, M.D., and Miami resident Mariela Rodriguez each pleadedguilty today to defrauding the Medicare program in connection with a $37 million HIV infusionfraud scheme, Acting Assistant Attorney General Matthew Friedrich of the Criminal Divisionand U.S. Attorney R. Alexander Acosta of the Southern District of Florida announced.Harris pleaded guilty to conspiracy to commit healthcare fraud and three counts of submittingfalse claims to the Medicare program before U.S. District Judge Cecilia M. Altonaga. In his plea,Harris admitted that he wrote false prescriptions for HIV infusion treatments while serving as themedical director for two medical clinics, Physicians Med-Care and Physicians Health. Bothclinics purported to provide HIV infusion services to Medicare beneficiaries. Harris admittedthat beginning in August 2002 and continuing through March 2004, he conspired with others todefraud the United States, to cause the submission of false claims to the Medicare program, topay health care kickbacks and to commit health care fraud. Harris also admitted to submittingfalse claims.According to information contained in plea documents, Harris admitted that between August2002 and March 2004 he served as the medical director of Physicians Med-Care and PhysiciansHealth, two Miami HIV infusion clinics that were owned and controlled by Carlos and LuisBenitez, and that were operated for the purpose of committing Medicare fraud. Prior to August2002, Harris had no prior experience with infusion therapy for HIV patients. During hisemployment with Physicians Med-Care and Physicians Health, Harris admitted he approvedapproximately $26.2 million worth of fraudulent medical bills, signed documents containingCopyright 2011 Raymond R. Arons, Teaneck, NJ, USA

9. Lecture 16 9false information about treatments purportedly provided to HIV patients and approved medicallyunnecessary treatments. According to information in the plea documents, the Medicare programpaid approximately $17.5 million in fraudulent bills as a result of Harris conduct.Rodriguez pleaded guilty before U.S. District Judge Federico Moreno to conspiracy to commithealth care fraud and one count of making false declarations to a federal grand jury. In her plea,Rodriguez admitted that she administered an HIV infusion clinic named Saint Jude RehabCenter, a Miami HIV infusion clinic that was owned and controlled by Carlos and Luis Benitez,and that was operated for the purpose of committing Medicare fraud. Similar to Physicians Med-Care and Physicians Health, Saint Jude purported to provide HIV infusion services to Medicarebeneficiaries.Rodriguez admitted that she served as an administrator of Saint Jude between June 2003 andNovember 2003, during which time she submitted false claims to the Medicare program for HIVinfusion treatments. Rodriguez further admitted that beginning in June 2003 and continuingthrough November 2003, she conspired with others to defraud the United States, to cause thesubmission of false claims to the Medicare program, to pay health care kickbacks and to commithealth care fraud. Rodriguez also admitted to making false statements in her testimony before afederal grand jury. Between June 2003 and November 2003, Saint Jude submitted approximately$11.3 million worth of fraudulent bills to the Medicare program for HIV infusion services thatwere never provided and services that were medically unnecessary. As a result of this conduct,the Medicare program paid approximately $8.2 million in fraudulent bills. Sentencing for bothRodriguez and Harris has been scheduled for Nov. 4, 2008.In a related case, Carlos and Luis Benitez, as well as their brother Jose Benitez, were indicted onJune 11, 2008, for their role in a $110 million HIV infusion fraud and money laundering scheme.The indictment alleges that Carlos, Luis and Jose Benitez were the masterminds of a massiveHIV infusion fraud operation throughout south Florida involving at least 11 clinics and that theylaundered the proceeds of their crimes. Also according the indictment, Carlos and Luis Benitezwere the true owners of Physicians Med-Care, Physicians Health and Saint Jude. All threeBenitez brothers remain fugitives.The cases were prosecuted by Hank Bond Walther, John K. Neal and Nathan Dimock of theCriminal Divisions Fraud Section, and investigated by the FBI and the Department of Healthand Human Services, Office of Inspector General. The cases were brought as part of theMedicare Fraud Strike Force, supervised by Deputy Chief Kirk Ogrosky of the CriminalDivisions Fraud Section and U.S. Attorney Acosta of the Southern District of Florida. StrikeForce prosecutors have indicted 82 cases involving 142 defendants since Strike Force operationsbegan in March 2007. Collectively, these defendants committed more than $492 million inMedicare fraud.Copyright 2011 Raymond R. Arons, Teaneck, NJ, USA

11. Lecture 16 11 Case 3 - Physician Fraud and Abuse A Michigan dermatologist was sentenced to 10 years and 6 months in prison and ordered to pay $1.3 million in restitution and a $175,000 fine following a jury trial conviction for health care fraud. The dermatologist falsely informed patients that they had cancer and performed unnecessary procedures when, in fact, laboratory results indicated that their tissue specimens were benign. In addition, the defendant billed for unnecessary follow-up office visits, claiming that beneficiaries had developed postoperative infections, such as impetigo, a disease rarely seen in adults. Finally, the dermatologist reused single-use needles and sutures without proper sterilization and failed to properly sterilize surgical equipment used in procedures. HHS/OIG assisted the local health department in informing patients of their possible risk of contracting a blood-borne pathogen, such as hepatitis B or C or HIV, because of his 7 unsanitary medical practices.GRAND RAPIDS -- When they found out a Grand Rapids doctor might have exposed them to hepatitis and HIV,many of his patients were scared. When they learned Dr. Robert Stokes habit of reusing sutures, hypodermic needlesand other instruments without proper sterilization did not violate any criminal law, their fear turned to anger. PressPhoto / Adam BirdSupporting the drive: Hastings Mayor Bob May endorses criminal sanctions."Somethings got to be done," said Bob May, the mayor of Hastings who was treated by Stokes for skin cancer. "It should be legally improper todo what he did, as well as morally. We cannot allow these doctors to do this to the public." Stokes, a dermatologist, was sentenced last Decemberto 10 1/2 years in federal prison for insurance fraud, not for potentially exposing thousands of patients to life-threatening infections. Investigatorscould find no federal law against his practice of reusing surgical materials and instruments intended for one-time use. State law provides onlycivil, not criminal, penalties. The state board that licenses osteopathic physicians revoked Stokes license in March, the strongest penalty availableunder current law, said Ray Garza, director of the health regulatory division of the state Department of Community Health. Stokes can apply forreinstatement in five years, Garza said, although, barring a successful appeal, he likely will still be in prison.Continue reading "Patients of jailed doctor Robert Stokes join push for dirty-needle penalties" Dr. Robert Stokes, a licensed and board-certified dermatologist, was sentenced to 10 years and 6 months in prison and ordered to pay $1,315,682in restitution and a $175,000 fine following his jury trial conviction for health care fraud. The evidence at trial showed that Dr. Stokes falselyinformed patients that they had cancer and performed unnecessary procedures when, in fact, laboratory results indicated that their tissuespecimens were benign. In addition, he used fraudulent billing schemes, including upcoding surgical procedures to receive higher reimbursementrates and billing for follow-up office visits for which he was not entitled to reimbursement. Dr. Stokes justified the unnecessary office visits byclaiming that beneficiaries had developed postoperative infections, such as impetigo, a disease rarely seen in adults. During trial preparation, itwas discovered that Dr. Stokes reused single use needles and sutures without proper sterilization and failed to properly sterilize surgicalequipment used in procedures. OIG assisted the local health department in informing patients of their possible risk of contracting a blood-bornepathogen, such as hepatitis B or C or HIV, because of his unsanitary medical practices.Copyright 2011 Raymond R. Arons, Teaneck, NJ, USA

12. Lecture 16 12 8EAST GRAND RAPIDS -- The expansive estate of Dr. Robert Stokes finally has sold, but the new owners wont be moving in. The five-acreReeds Lake property, 2905 Bonnell Ave. SE, is in foreclosure. It was purchased at a Kent County sheriffs sale by mortgage-holder Fifth ThirdBank for $1.39 million, according to county records. That rock-bottom price is only slightly more than its state equalized value, which is abouthalf of market value. The price also is more than 80 percent lower than its original record-breaking asking price of $7.7 million.The foreclosure is yet another chapter in the saga of the mansion and the man who owned it. The former dermatologist now sits in federalprison, convicted in 2007 of health care fraud. It was the most expensive listing in Kent County ever when it hit the market in November 2007.After it failed to sell at two auctions, earlier this year the price was dropped to $2 million. There is more than $40,000 in unpaid property taxesand the federal government has a lien on the property connected to Stokes legal issues. Joe Schmitt, auctioneer for Masterbid Inc., said he neverworked harder to sell a property only to lose money on the deal. He launched an international marketing effort and held live and silent auctions-- all fruitless. "We really overextended ourselves, and we were unable to sell it," he said. "A lot of it had to do with the Dr. Stokes relationshipwith the community. It was horrible." The 14,000-square-foot home now sits vacant. A Consumers Energy shut-off notice is tucked in the frontdoor. Spring landscaping is yet to be done. Alicia Beyer, the real-estate agent who first listed the property in 2007, is working with the bank to sellit. "We have it listed on 149 different Web sites -- national as well as international," she said. While traffic remains strong, the voyeuristic interestis still so prevalent prospective buyers must be approved for a minimum $2 million purchase price, said Beyer, who owns Beyer Realty. "Theycan offer less, but they must be approved for $2 million," she said. Businessman J.C. Huizenga was one of the bidders at the live auction lastFebruary, but he said he is not interested anymore. "I wasnt looking for a place to live in," Huizenga said. "I was looking for an opportunity. "Anytime there is an auction, sometimes there is an opportunity." He would not reveal how much he bid, but did say it was "much less than $3 million."Neighbors expressed surprise the home was in foreclosure, but they hope someone moves in. It has been "kind of a circus," said Mike Redman,who lives across the street. "It will be nice to get it behind us and get some good neighbors and just get it going. Well be happy when its done."Beyer said marketing the property has been her "most complicated deal," but she remains optimistic. "Flowers are starting to blossom. The budsare coming out on the trees," she said. "Well get the property spiffed back up, and well keep our fingers crossed."Copyright 2011 Raymond R. Arons, Teaneck, NJ, USA

14. Lecture 16 14 Case 4-Phamacutical Fraud Cephalon, Inc., entered a global criminal, civil, and administrative settlement under which the company agreed to pay a total of $425 million plus interest; plead guilty to a misdemeanor violation of the Federal Food, Drug and Cosmetic Act; and enter into a comprehensive 5-year CIA with HHS/OIG. The civil settlement resolves allegations filed in four separate qui tam cases, which alleged that Cephalon promoted the drugs Actiq, Gabitril, and Provigil for off-label uses (that is, uses other than those approved by FDA). Cephalons off-label promotional practices involved a variety of techniques, including training its sales force to disregard restrictions of the FDA-approved label and promote the drugs for off-label uses. In addition to the $375 million civil settlement, Cephalon entered into a criminal plea agreement with the United States under which it will pay $50 million. 9 Board of Directors of Cephalon, Inc. 10Board of directors Dennis L. Winger, Frank Baldino, Vaugn M. Kailian, William P. Egan, Charles, A. Sanders.Kevin E. Moley, Gail R. Wilensky, PhD, Marilyn GreeacreCopyright 2011 Raymond R. Arons, Teaneck, NJ, USA

15. Lecture 16 15Attorney Generals News Release September 30, 2008 Nixon will recover $3.8 million inMedicaid fraud case against Pennsylvania pharmaceutical company.Jefferson City, Mo. - Attorney General Jay Nixon today said his Medicaid Fraud Control Unitwill recover more than $3.8 million for taxpayers under an agreement with a Pennsylvaniapharmaceutical company that marketed three of its drugs for uses not approved by the Food andDrug Administration and rewarded some doctors who frequently prescribed the drugs. As a resultof the scheme, Nixon said, the three drugs made by Cephalon Inc. were prescribed more oftenthan they normally would have been, and Medicaid programs in Missouri and the other statespaid too much in reimbursement for the drugs. Under an agreement in principle that resolvesallegations of off-label marketing, Cephalon will pay a total of $375 million in damages andpenalties to Missouri, the federal government and the 49 other states. The company also agreedto plead guilty to a criminal charge in federal court in Pennsylvania and pay a $50 millioncriminal fine. Nixon said the Missouri share of the settlement is $3,813,757. With this recovery,Nixons Medicaid Fraud Control Unit will have recovered more than $120 million for taxpayersin Medicaid fraud cases. "Working in concert with the Attorneys General of other states and withthe federal government has enabled us to ensure that Missouri taxpayers are not shortchanged byfraudulent practices," Nixon said. "This case was another example of stopping fraud and abuseagainst Medicaid and taxpayers." Cephalon, based in West Chester, Penn., engaged in the off-label marketing of these drugs: Actiq, approved by the FDA to treat severe pain from cancer.Cephalon marketed the highly addictive narcotic beyond oncologists to general practitioners andinternists. Gabitril, approved as an anti-epileptic drug to treat seizures. Cephalon marketed it forconditions including depression, anxiety, Tourettes syndrome and chronic pain. Patients whowere not suffering from seizures subsequently experienced seizures as a result of taking the drugto treat other conditions. Provigil, approved to treat narcolepsy and sleep disorders. Cephalonmarketed it for a wide variety of other conditions including fatigue, depression, multiplesclerosis, schizophrenia, Parkinsons disease, chronic fatigue syndrome, anxiety, neuropathicpain, and attention deficit/hyperactivity disorder in children. Provigil became one of Cephalonsbest-selling drugs.Cephalons off-label marketing campaign included subsidizing the production and disseminationof reports favorable to off-label uses, having a sale program with incentives to sales staff topromote off-label uses, and rewarding high-prescribing doctors with grants, speakerships andperceptorships. Cephalon also sponsored Continuing Medical Education (CME) programs tofund expensive vacations for physicians, and disseminated off-label promotional literature tophysicians at these CMEs. In addition, Cephalon has entered into a Corporate IntegrityAgreement with the U.S. Department of Health and Human Services, Office of InspectorGeneral, to ensure its compliance in the future. The Missouri case was brought by the AttorneyGenerals Medicaid Fraud Control Unit, which Nixon established in 1994. The unit has authorityunder state law to investigate and prosecute, both civilly and criminally, allegations of fraudagainst Missouris Medicaid program.Copyright 2011 Raymond R. Arons, Teaneck, NJ, USA

16. Lecture 16 16 Gail Wilensky, Director, Cephalon, Inc 11GAIL WILENSKY is an economist and a senior fellow at project HOPE, an international healthfoundation. Dr. Wilensky serves as a trustee of the Combined Benefits Fund of the United Mine Workersof America and the National Opinion Research Center, is on the Board of Regents of the UniformedServices University of the Health sciences (USUHS) and the Visiting Committee of the Harvard Medicaland Dental Schools. She recently served as president of the Defense Health Board, a Federal advisory tothe Secretary of Defense, was a commissioner on the World Health Organizations Commission on theSocial Determinants of Health and co-chaired the Dept. of Defense Task Force on the Future of MilitaryHealth Care. She is an elected member of the Institute of Medicine and has served two terms on itsgoverning council. She is a former chair of the board of directors of Academy Health, a former trustee ofthe American Heart Association and a current or former director of numerous other non-profitorganizations. She is also a director on several corporate boards.Copyright 2011 Raymond R. Arons, Teaneck, NJ, USA

18. Lecture 16 18 Case 5-Phamacutical Fraud Merck and Company (Merck), Inc., agreed to pay $399 million plus interest to resolve allegations that Merck failed to properly include discounts on Vioxx (no longer marketed), Zocor, and Mevacorin in the best prices reported to CMS under the Medicaid drug rebate program and, as a result, underpaid rebates owed to the States and overcharged entities that purchased Merck products under the 340B Drug Pricing Program. The United States alleged that Merck sales representatives induced physicians to use its drug products by making, among other forms of illegal remuneration, payments that were disguised as fees for training, consultation, or market research. Merck agreed to this settlement at the same time it settled a matter in Louisiana, involving similar discounted pricing programs offered to hospitals for another Merck drug, Pepcid. Through both settlements, Merck agreed to pay a total of $649 million plus interest. Merck further agreed to enter into a 5-year CIA with HHS/OIG that includes corrective measures to address its conduct in both cases. 12 Richard T. Clark, CEO & President, Merck & Co 13Merck CEO Richard Clark says company plans to keep N.J. research facilitiesBy Susan Todd/The Star-LedgerNovember 04, 2009, 5:18PMCopyright 2011 Raymond R. Arons, Teaneck, NJ, USA

19. Lecture 16 19 AP FILE PHOTOIn a 2005 file photo Richard T. Clark, CEO & President, Merck & Co., speaksduring an interview at the corporate headquarters in Whitehouse Station.There was somethinglike awe in Merck Chief Executive Officer Richard Clarks tone as he talked about thecompletion of his companys mega merger with Schering-Plough. The merger, which combinedtwo of the states most venerable drugmakers, officially propelled Clark to the helm of thesecond-largest pharmaceutical company in the world this morning. "It was just incrediblebringing these two companies together, Clark said during a telephone interview. "I think thismerger will be unlike any others in the industry based on that synergy and communality of ourcultures.In March, Merck stunned the pharmaceutical industry when it announced plans to buy Schering-Plough for $41.1 billion. The deal came on the heels of another mega-merger: Pfizers plan tobuy Madison-based Wyeth for $68 billion. Pfizer completed its acquisition of Wyeth last month.With Schering-Plough incorporated into its folds, Merck has 106,000 employees roughly14,000 of them are in New Jersey in more than 140 countries. The company has 15 drugs inlate-stage development it was Schering-Ploughs rich pipeline that drove Mercks ambitionsfrom the start.Clark said the company intends to keep the research facilities in Rahway and Kenilworth. "Theyare very important research sites, Clark said of the two locations. "There is very specificresearch work that we need to keep in place." The Whitehouse Station corporate campus willcontinue serving as the companys global headquarters. Clark said early on he set a strategy tomeld the best of the two companies together. "I hand-picked the integration leaders to make surethey believed in my objectives, he said. "I rolled up my sleeves every day and worked with myleadership team to ensure that we actually kept to the standards.Merck & Company has agreed to pay more than $650 million to resolve allegations that thepharmaceutical manufacturer failed to pay proper rebates to Medicaid and othergovernment health care programs and paid illegal remuneration to health care providers toinduce them to prescribe the companys products, the Justice Department has announced.The allegations were brought in two separate lawsuits filed by whistleblowers under the qui tam,or whistleblower, provisions of the False Claims Act. Not only is the combined recovery in thesetwo cases one of the largest healthcare fraud settlements ever achieved by the JusticeDepartment," said Attorney General Michael B. Mukasey, "it reflects our continuing effort tohold drug companies accountable for devising pricing schemes that deliberately seek to denyfederal health care programs the same lower prices for drugs that are available to othercommercial customers." H. Dean Steinke, a former Merck employee, alleged in his suit filed inPhiladelphia that Merck violated the Medicaid Rebate Statute in connection with its marketing ofits drugs Zocor and Vioxx. (Zocor is a cholesterol lowering drug and Vioxx, pulled from themarket by Merck in September of 2004, was used for the treatment of acute pain and in thetreatment of arthritis.) Merck allegedly offered deep discounts for the two drugs if hospitals usedlarge quantities of those drugs in place of competitors brands.The Medicaid Rebate Statute requires that drug manufacturers report their "best prices" and othercost information to the government in order to ensure that Medicaid obtains the benefit of thesame discounts and price concessions that other purchasers enjoy. An exception to this ruleallows manufacturers to exclude from the prices they report any discounted prices that areCopyright 2011 Raymond R. Arons, Teaneck, NJ, USA

20. Lecture 16 20"nominal" in amount. Merck improperly termed as "nominal" the prices it offered to hospitals toboost their sales and excluded those discounts from the prices it reported to the government.Steinkes suit further alleged that from 1997-2001, Merck had approximately fifteen differentprograms used by its sales representatives to induce physicians to use its many products. Theseprograms primarily consisted of excess payments to physicians that were disguised as fees paidto them for "training," "consultation" or "market research." In fact, the government alleged thatthese fees were illegal kickbacks intended to induce the purchase of Merck products. Merckagreed today to pay $399 million plus interest to settle the Medicaid Rebate as well as thekickback allegations.In a separate suit filed by physician William St. John LaCorte in New Orleans, its alleged thatMerck had established a marketing scheme in which it provided substantially reduced prices forits Pepcid products once the hospitals agreed to primarily use the drug instead of a competitors.(Pepcid is used to reduce stomach acid and to treat heartburn and acid reflux.) Merck allegedlyoffered these incentives to hospitals in order to obtain the benefit of spillover business whenpatients would continue to purchase Pepcid once he or she was discharged. Merck improperlytermed as "nominal" the prices it offered to hospitals to boost the sales of Pepcid, excluded thosediscounts from the prices it reported to the government, and thus effectively denied thegovernment the benefit of these lower prices. Merck agreed today to pay $250 million plusinterest to settle these allegations. Under the two settlement agreements, the federal governmentwill receive more than $360 million, and forty-nine states and the District of Columbia over$290 million. In addition, Mr. Steinke will receive $44,690,000 from the federal share of thesettlement amount and an additional $23.5 million from the states. Similarly, Dr. LaCorte willreceive a share of the proceeds from the federal and state settlement amounts under theirrespective qui tam statutes."Our health insurance programs rely upon the integrity of health providers, includingpharmaceutical manufacturers, when they report to the government programs which reimbursetheir products and services with scarce funds," said Patrick L. Meehan, U.S. Attorney for theEastern District of Pennsylvania, whose office led the investigation of the Steinke matter."Particularly in the wake of Hurricane Katrina, it is critical that precious government resourcesnot be lost to fraud and abuse," said Jim Letten, the U.S. Attorney for the Eastern District ofLouisiana, whose office led the investigation of the LaCorte matter. "This office is dedicated toprosecuting pricing fraud so that healthcare dollars go to help the most vulnerable of our citizens-- the disabled and the poor." "The Office of Inspector General has a strong record of pursuingviolations in the Medicaid drug rebate program and is working closely with Federal and Statelaw enforcement to hold accountable pharmaceutical companies engaged in illegal practicesresulting in Medicaid fraud," said Daniel R. Levinson, Inspector General of the Department ofHealth and Human Services. Todays settlement was the result of close cooperation between theJustice Department, state attorneys general and other law enforcement entities includingMedicaid Fraud Control Units, and the Office of Inspector General of the Department of Healthand Human Services. As part of the resolution of these two cases, the Department of Health andHuman Services Office of Inspector General (HHS-OIG) and Merck have entered into a five-year Corporate Integrity Agreement to ensure that such improper conduct does not occur in thefuture.Merck Board of DirectorsCopyright 2011 Raymond R. Arons, Teaneck, NJ, USA

21. Lecture 16 21 Richard T. Clark Chairman of the Board, president and chief executive officer, Merck & Co., Inc. New Merck director since November 3, 2009 Leslie A. Brun Chairman and chief executive officer, Sarr Group, LLC (investment holding company). Non-executive chairman, Automatic Data Processing, Inc. Director, Philadelphia Media Holdings, LLC, and Broadridge Financial Solutions, Inc. New Merck director since November 3, 2009 Thomas R. Cech, Ph.D. Director, Colorado Institute for Molecular Biotechnology, University of Colorado. New Merck director since November 3, 2009 Thomas H. Glocer Chief executive officer, Thomson Reuters Corporation (information and services company for businesses and professionals). Director, Thomson Reuters Corporation, Partnership for New York City. New Merck director since November 3, 2009 Steven F. Goldstone Retired chairman and chief executive officer, RJR Nabisco, Inc. Managing partner, Silver Spring Group (private investment firm). Non-executive chairman, ConAgra Foods, Inc. Director, Greenhill & Co., Inc. New Merck director since November 3, 2009Copyright 2011 Raymond R. Arons, Teaneck, NJ, USA

22. Lecture 16 22 William B. Harrison, Jr. Retired chairman of the board, JPMorgan Chase & Co. (financial services). Director, Cousins Properties Incorporated and Lincoln Center for the Performing Arts. New Merck director since November 3, 2009 Harry R. Jacobson, M.D. Vice chancellor, Health Affairs, Emeritus (since June 2009), Vanderbilt University. Non-executive chairman, CeloNova BioSciences, Inc. Director, HealthGate Data Corporation, Ingram Industries, Inc. and Kinetic Concepts, Inc. New Merck director since November 3, 2009 William N. Kelley, M.D. Professor of Medicine, Biochemistry and Biophysics, University of Pennsylvania School of Medicine. Director, Beckman Coulter, Inc., GenVec, Inc., and Polymedix, Inc. New Merck director since November 3, 2009 C. Robert Kidder Chief executive officer, 3Stone Advisors LLC (private investment firm). Director, Chrysler Group LLC and Morgan Stanley. New Merck director since 2005Copyright 2011 Raymond R. Arons, Teaneck, NJ, USA

23. Lecture 16 23 Rochelle B. Lazarus Chairman, Ogilvy & Mather Worldwide (advertising and marketing communication company). Director, General Electric, New York Presbyterian Hospital, American Museum of Natural History and World Wildlife Fund. New Merck director since November 3, 2009 Carlos E. Represas Chairman, Nestle Group Mexico. Director, Bombardier Inc. and Vitro S.A. de C.V. New Merck director since November 3, 2009 Patricia F. Russo Former chief executive officer and director, Alcatel-Lucent. Director, Alcoa, Inc., and General Motors. New Merck director since 1995 Thomas E. Shenk, Ph.D. Elkins Professor, Department of Molecular Biology, Princeton University. Director, Cell Genesys, Inc., and CV Therapeutics, Inc. New Merck director since November 3, 2009 Anne M. Tatlock Retired chairman of the board and chief executive officer, Fiduciary Trust Company International (global asset management services). Director, Fortune Brands, Inc., and Franklin Resources, Inc. New Merck director since November 3, 2009Copyright 2011 Raymond R. Arons, Teaneck, NJ, USA

24. Lecture 16 24 Samuel O. Thier, M.D. Lead director of the board. Professor of Medicine and Health Care Policy, Emeritus, Harvard Medical School. Director, Charles River Laboratories, Inc. New Merck director since November 3, 2009 Craig B. Thompson, M.D. Director, Abramson Cancer Center and Professor of Medicine, University of Pennsylvania School of Medicine. Chairman of the Medical Advisory Board, Howard Hughes Medical Institute. Member of the Advisory Board, M.D. Anderson Cancer Center. New Merck director since 2008 Wendell P. Weeks Chairman and chief executive officer, Corning Incorporated (technology company in telecommunications, information display and advanced materials industries). Director, Corning Incorporated. New Merck director since November 3, 2009 Peter C. Wendell Managing director, Sierra Ventures (technology-oriented venture capital firm). Chairman, Princeton University Investment Company. New Merck director since November 3, 2009Copyright 2011 Raymond R. Arons, Teaneck, NJ, USA

26. Lecture 16 26 Case 6-Phamacy Fraud CVS Caremark Corporation (CVS) agreed to pay $36.7 million and enter into a 5-year CIA with HHS/OIG to resolve its liability based on allegations that it fraudulently overcharged Medicaid programs in 23 States by improperly switching drugs it dispensed. Specifically, the Government and relator alleged that CVS dispensed ranitidine (generic Zantac) capsules rather than tablets in order to increase its reimbursement from Medicaid. As a result of dispensing and billing Medicaid for capsules, CVS was reimbursed, on average, four times what it would have been reimbursed had it dispensed tablets. 14 CVS Caremark President and CEO Thomas M. Ryan. 15Board of DirectorsEdwin M. BanksFounder and Managing Partner of Washington Corner Capital Management, L.L.C. C.David Brown IIChairman of the Firm of Broad and Cassel, a Florida law firm David W. DormanNon-Executive Chairman of the Board of Motorola, Inc. Kristen E. Gibney WilliamsFormer executive of thePrescription Benefits Management Division of Caremark International, Inc. Marian L. HeardPresidentand Chief Executive Officer of Oxen Hill Partners William H. JoyceFormer Chairman of the Board andCopyright 2011 Raymond R. Arons, Teaneck, NJ, USA

27. Lecture 16 27Chief Executive Officer of Nalco Company Jean-Pierre MillonFormer President and Chief ExecutiveOfficer of PCS Health Services, Inc. Terrence MurrayFormer Chairman of the Board and ChiefExecutive Officer of FleetBoston Financial Corporation C.A. Lance PiccoloChief Executive Officer ofHealthPic Consultants, Inc. Sheli Z. RosenbergFormer President, Chief Executive Officer and ViceChairwoman of Equity Group Investments, L.L.C. Thomas M. RyanChairman of the Board, Presidentand Chief Executive Officer of CVS Caremark Corporation and CVS Pharmacy, Inc. Richard J. SwiftFormer Chairman of the Board, President and Chief Executive Officer of Foster Wheeler Ltd.In March 2008, CVS Caremark Corporation agreed to pay $36.7 million ($21.1 million to the federalgovernment and $15.6 million to 23 states) to settle claims that from 2000-2006, the company illegallyswitched patients from the tablet form of the drug Ranitidine (generic Zantac) to a capsule form in orderto increase Medicaid reimbursement. A whistleblower initiated the lawsuit in 2003 and received morethan $4.3 million as his share of the settlement.[14] In its press release, the Government announced,"[s]witching medication from tablets to capsules might seem harmless, but when that is done solely toincrease profit and in violation of federal and state regulations that are designed to protect patients,pharmacies must know that they are subjecting themselves to the possibility of triple damages, civilpenalties and attorney fees. . . . These penalties, coupled with the willingness of insiders to report fraud,should deter such misconduct, but when it doesnt, the result in this case and others serve notice that wewill aggressively pursue all available legal remedies."[15]United States et al., ex rel. Bernard Lisitza v. CVS Caremark Corp. (N.D. Ill.)March18, 2008Retail pharmacy corporation CVS Caremark agreed to pay $36.7 million to the U.S., the Medicaidparticipating states, and the District of Columbia to settle allegations that it overbilled Medicaid for awidely used antacid drug, by switching patients from the standard generic drug for a more expensiveversion. According to allegations made in a qui tam suit filed in 2003 by relator Bernard Lisitza,CVS had purposefully and unlawfully switched patients from the tablet form of Ranitidine, which isgeneric Zantac, to a much more expensive capsule version in order to increase its reimbursementfrom Medicaid. Because the capsule version costs two to four times more than the tablet form of thedrug, CVS was able to bill Medicaid for millions more than it was eligible to receive. RelatorBernard Lisitza learned of this fraudulent scheme while working as a temporary receiving pharmacistin Illinois. Of the $36.7 million recovered in the settlement, $21,060,535 will go to the federalgovernment and $15,639,464 will go to the Medicaid participating states, including Illinois,California, Delaware, Florida, Hawaii, Louisiana, Massachusetts, Nevada, Tennessee, Texas,Virginia, and the District of Columbia. As his share of the recovery, Lisitza will receive $3,580,291.TAF members Michael Behn and Linda Wyetzner of Behn & Wyetzner represented Lisitza. AssistantU.S. Attorney Linda A. Wawzenski represented theCopyright 2011 Raymond R. Arons, Teaneck, NJ, USA

29. Lecture 16 29 Case 7- Hospital Fraud Staten Island University Hospital (SIUH) paid nearly $89 million in a global settlement resolving allegations that it defrauded Medicare, Medicaid, and TRICARE. The global settlement resolves two separate qui tam lawsuits and two Government investigations. As part of the global settlement, SIUH also entered into a 5-year CIA with HHS/OIG In the first lawsuit, the Governments investigation alleged that SIUH submitted claims for payment for treatment provided to patients in beds for which SIUH had received no certificate of operation from the New York State Office of Alcoholism and Substance Abuse Services and concealed the existence of those beds from that office. SIUH paid nearly $12 million to the United States and nearly $15 million to the State of New York. 16 Staten Island University Hospital (SIUH) In the second lawsuit, the investigation alleged that SIUH knowingly used incorrect billing codes for certain cancer treatments performed at the hospital, and thus obtained reimbursement for treatment that was not covered by Medicare or TRICARE. SIUH will pay $25 million to settle this lawsuit. Additional conduct self-disclosed by SIUH was resolved prior to the filing of the lawsuits. Pursuant to HHS/OIGs Self-Disclosure Protocol, SIUH agreed to nearly $36 million for reporting 17Copyright 2011 Raymond R. Arons, Teaneck, NJ, USA

30. Lecture 16 30Staten Island hosp to repay 89M in fraud caseinvovling doctor who coerced George HarrisonBY GLENN BLAINDAILY NEWS ALBANY BUREAUMonday, September 15th 2008, 11:31 PMALBANY - A cancer doctor accused of forcing ex-Beatle George Harrison to sign a guitar on hisdeathbed left Staten Island University Hospital a costly legacy.In a mammoth settlement of Medicaid andMedicare fraud charges, the hospital Monday agreedto repay state and federal governments $88.9 million. Part of the settlement covers work doneby Dr. Gilbert Ledermans radiation oncology department. "This was a hospital that sought toexploit the Medicare program and obtain millions of dollars in payments that it was not entitledto," said Richard Reich, lawyer for federal whistleblower Elizabeth Ryan, who brought the firstcase against Lederman and the hospital. In a statement, the hospital said the settlement "closesthe chapter" on several ongoing investigations and that funds are budgeted to pay for it. "Wewant to assure our patients and the communities we serve that SIUH will continue to deliver thesame high-quality care that has enabled us to win coveted national awards," the statement said.Of the $88.9 million, $25 million is to settle claims that the hospital fraudulently billed Medicarefor stereotactic body radiosurgery cancer treatments, which are not covered by Medicare. Ryan,the widow of a Staten Island University cancer patient, brought the case under the federal FalseClaims Act. She got $3.75 million. Federal prosecutors are still pursuing a case againstLederman. Telephone calls to Ledermans lawyer were not returned. Lederman, who no longerworks at Staten Island University, treated Harrison there before he died of brain cancer inNovember 2001. Olivia Harrison, the ex-Beatles widow, accused him of coercing Harrison intoautographing his sons guitar and signing autographs for his two daughters. Olivia Harrisondropped a suit against Lederman after he agreed to destroy the guitar and the autographs.Read more: http://www.nydailynews.com/news/2008/09/15/2008-09-15_staten_island_hosp_to_repay_89m_in_fraud.html#ixzz0heF48682The Doctor Cant Help HimselfWhen the notorious cancer doctor Gil Lederman cadged an autograph from a dyingGeorge Harrison, the world was appalled.But as Lederman scrambles to salvage hisreputation, the very nature of his experimental practice has come under attack. By Andrew Goldman Published May 21, 2005Copyright 2011 Raymond R. Arons, Teaneck, NJ, USA

31. Lecture 16 31(Photo credit: Eugene Richards)On an evening in mid-November 2001, Gil Lederman made a judgment call that would bringhim the kind of fame that even he had never dreamed possible. A bespectacled cancer doctorwith an Alfred Kinsey fade haircut, Lederman was already something of a local celebrity; hisdistinctive nasal monotone had been heard for years on New York talk-radio stations, promotinghis revolutionary cancer treatment, fractionated stereotactic radiosurgery, at Staten IslandUniversity Hospital. But Ledermans fameas a kind of Dr. Zizmor of radiation oncologypaled in comparison with that of his patient, George Harrison, who was lying in a rented housenear the hospital, dying of lung cancer that had invaded his brain.Though hed been treating Harrison for only about a month, Lederman thought they had bondedenough to warrant an unconventional house call. I feel like a brother to him, the doctorconfided to another physician at his hospital. So, as any man with an ailing sibling would do,Lederman showed up that night on Harrisons doorstep with his three children in tow, so thatthey might say hello and good-bye to Uncle George, who was leaving the next morning forCalifornia, where he would die two weeks later.That night has become something of an outer-borough Rashomon. Depending on whose versionyou believe, Lederman either had a touching visit with Harrison or bullied a dying man in adeclining mental state into creating a valuable piece of rock-and-roll memorabilia. The Harrisoncamp claimed as follows: Lederman showed up uninvited and instructed his 13-year-old son,Ariel, to strum a song on his Yamaha electric guitar. When the performance was over, Ledermanput the guitar in Harrisons lap and asked him to sign it. I do not even know if I know how tospell my name anymore, responded an exhausted Harrison. Cmon, you can do this, saidLederman, guiding his hand and spelling his name aloud: G-E-O-R-G-E H-A-R-R-I-S-O-N.Lederman insisted to friends that Harrison invited the children over and happily signed theguitar. The shaky scrawl of the signature itself is inconclusiveit could have been written underduress or simply signed by a willing star on a great deal of medication. Nevertheless, once theHarrison estate sued the doctor for $10 million and the press got their mitts on the legalCopyright 2011 Raymond R. Arons, Teaneck, NJ, USA

32. Lecture 16 32complaint, Lederman became a popular tabloid target. At the peak of the frenzy, he was labeled aghoul and a scumbag. Page Six even ran a cartoon depicting him chasing Keith Richardswith a pen and guitar. Im not on my deathbed! Richards yells.It seemed like the ultimate disgrace for a Harvard-trained, triple board-certified physician whoshould have been amassing yacht money or doing Lasker Awardquality research at that point inhis life. Then again, Ledermans behavior at Harrisons deathbed wasnt a complete surprise tothose whod been watching his curious approach to his career. My sense of the guy is that hesjust somebody who doesnt get it, says a prominent radiation oncologist whos met him onseveral occasions. His social skills arent there. But it turns out that questionable manners maybe the least pernicious of Ledermans sins. The doctor is now facing half a dozen multi-million-dollar civil suits, some of which accuse him of bilking terminal cancer patients by luring themwith promises of a miracle cure.As Dr. Lederman waxed on about his mother, George Harrison, according to a source, spokethree measured words: Please...stop...talking.Ledermans defenders claim that the Harrison matter has turned a caring, innovative physicianinto the kind of wounded game that trial lawyers love to hunt. Lederman prides himself ontaking the most challenging cases that nobody else wants, cases where patients have not beengiven any hope whatsoever. Hes not offering them a cure but an option, says Andrew Garson,an attorney who defended Lederman in two previous malpractice cases and believes the recentspate of lawsuits stems from his clients bad press. Even a judge weighing a recent change-of-venue request acknowledged that Lederman had been through the ringer. His decision played offHarrisons Something: Something in the folks he treats / Attracts bad press like no otherdoctor.But others contend that the Harrison case was just a symptom of Ledermans larger pathology ofbeing singularly unable to grasp right and wrong when dealing with the fragile emotions ofdesperately ill people. The real issue with Gil is the following, says Jay Loeffler, chief ofradiation oncology at Massachusetts General Hospital. Is he a genius, far ahead of his time? Oris he a scoundrel?Lederman grew up a bookish Jew surrounded by the flinty Protestants of Waterloo, Iowa. HisUkrainian-immigrant grandfather had started a small clothing concern called LedermansWestern Outfitters, where young Gil earned a nickel an hour. (This explains the geeky scientistsincongruous fondness for Western shirts and ornate cowboy boots.) He decided he wanted to bea doctor when he was 12 years old. It was 1966, the year the Beatles released Revolver, and hisolder brother was nearly killed by a drunk driver. At that moment I decided that I wanted tohelp people, he says.He trained in three specialtiesinternal medicine at the University of ChicagoMichael ReeseHospital, then medical oncology and radiation oncology at Harvardand at the age of 34became the director of Staten Island University Hospitals radiation oncology department.Though its rare for a doctor whos never practiced full-time to be the director of a program, itwasnt exactly a prestige post. Before Ledermans arrival in 1987, the radiation oncologyCopyright 2011 Raymond R. Arons, Teaneck, NJ, USA

33. Lecture 16 33department was just what youd find in most community hospitals; that is, if you lived on StatenIsland and your kid needed radiation, youd wait about five seconds before driving to Sloan-Kettering or New York-Presbyterian. The department had a single aging cobalt machine and sawonly eleven patients a day.The ambitious new director set out to change that. Lederman forged a close relationship withthenhospital CEO Rick Varone, and, over the next decade, persuaded the administration to buyfive linear accelerators, at $1.8 million a pop. In 1991, Lederman became the first doctor in NewYork to offer brain radiosurgery. Unlike standard radiation treatment, which irradiates a largefield around a cancer, exposing healthy tissue to low doses of toxic radiation, radiosurgery isdesigned to zero in on the tumor. Finely shaped radiation beams are sent into the head frommany different directions, with the full dose concentrated where they intersect. The upshot is thatlarger doses can be trained on the cancer, while healthy tissue is minimally affected. Ledermandescribes it with an elegantly simple metaphor: Imagine a plum in a bread box . . . Radiosurgerycan hit the plum without attacking the bread box.Still, the machines were worth nothing unless they had bodies to aim at, so Lederman startedspreading the gospel of radiosurgery, for which he charged about $18,000 per round oftreatment. My feeling was, if you have a new treatment, then people should learn about it, hesays. We were educating people. There were radio ads, cable-television spots, Internetadvertising, and presentations at the hospital. Lederman also went on tour, traveling to Italy,England, Israel, and many other countries to speak to prospective patients and examine their CTscans on the spot. CEO Staten Island Hospital-Anthony Ferreri 18Heart Societys annual Wine Festival & Casino NightCopyright 2011 Raymond R. Arons, Teaneck, NJ, USA

34. Lecture 16 34Added by Melinda Gottlieb on September 17, 2009 at 9:48 AMDr. Dennis Bloomfield, left, Angelina Malerba, owner of Angelinas Ristorante, and Staten IslandUniversity Hospital CEO Anthony Ferreri share a moment at the Staten Island Heart Societys annualWine Festival and Casino Night at Angelinas in Tottenville. The event was presented by Aidas World ofLiquors. STATEN ISLAND ADVANCE/HILTON FLORES ----- Dr. Dennis Bloomfield, AngelinaMalerba (Angelinas Ristorante), SIUH CEO Anthony Ferreri. The Staten Island Heart Societys annualWine Festival & Casino Night at Angelinas Ristorante...presented by Aidas World of Liquors.Read more: Gil Ledermans DubiousCareer http://nymag.com/nymetro/health/features/10817/#ixzz0heGUavhfCopyright 2011 Raymond R. Arons, Teaneck, NJ, USA

36. Lecture 16 36 Case 8- Hospital Fraud In Connecticut, Yale-New Haven Hospital entered into a civil settlement agreement with the Government in which it will pay approximately $3.8 million to resolve allegations that it violated the FCA. These allegations involved charges to Medicare for infusion therapy, chemotherapy administration and blood transfusion services. During the time-period at issue, Medicare only allowed payment for one unit of infusion therapy and chemotherapy administration per patient visit, and one unit of blood transfusion services per day. 19To set forth the commitment of the University of Miami to compliance with (1) the federalFalse Claims Act, 31 U.S.C. 3729, et seq.; (2) the Florida False Claims Act, Fla. Stat. 68.081 68.092; and (3) state Medicaid plan amendments promulgated to comply with Section 6032(Employee Education About False Claims Case 8- Hospital Fraud Yale University has entered into a civil settlement agreement with the federal government in which it will pay $7.6 million to resolve allegations that it violated the False Claims Act and the common law in the management of federally-funded research grants awarded to the university between January 2000 and December 2006. The grant awards were made by approximately 30 federal agencies and entities, including NIH, NSF, DOE, DOD, and NASA. 20 continued...Copyright 2011 Raymond R. Arons, Teaneck, NJ, USA

37. Lecture 16 37 Case 8- Hospital Fraud The investigation focused on allegations involving two types of mischarges to federal grants. Both types of mischarges arose as violations of the basic principle that recipients of federal grants are allowed to charge to each grant account only allocable costs, which are costs that relate to the specific objectives of that grant project. The first allegation involved cost transfers and the requirement that costs transferred to a federal grant account must be allocable to that particular grant account. The settlement resolves allegations that some Yale researchers at times improperly transferred charges to a federal grant account to which those charges were not allocable. Researchers allegedly were motivated to carry out these wrongful transfers when the federal grant was near its expiration date and they needed to spend down the remaining grant funds. Federal regulations require that unspent grant funds be returned to the government. 21 Case 8- Hospital Fraud The second allegation involved salary charges and the requirement that charges to federal grant accounts for researcher time and effort must reflect actual time and effort spent on a particular grant. It was alleged that some Yale researchers submitted time and effort reports, for summer salary paid from federal grants, that wrongfully charged 100 percent of their summer effort to federal grants when, in fact, the researchers expended significant effort on unrelated work. Researchers allegedly were motivated to carry out these wrongful salary charges by the fact that they are not paid their academic- year salary by Yale during the summer. The only salary received by these researchers during the summer was the result of the effort they charged to federal grants. Absent the alleged grant mischarges, the researchers would not have been paid. The $7.6 million payment comprises two components: $3.8 million in actual damages for the false claims, and $3.8 million assessed as penalties for the false claims 22Copyright 2011 Raymond R. Arons, Teaneck, NJ, USA

39. Lecture 16 39 President and CEO of Yale New Haven Hospital 22Marna P. Borgstrom, of Guilford, has been named president and chief executive officer of Yale-New Haven Hospital and Yale New Haven Health Systemsucceeding Joseph A. Zaccagnino who will retire on September 30 after a distinguished 35-year career.Borgstrom, a 26-year employee of Yale-New Haven Hospital, has served as thehospitals executive vice president and chief operating officer since 1993. Herappointment is effective October 1, 2005."Marna Borgstrom has been a dedicated and talented leader at Yale-New Haven Hospital for more than 25 years," said Marvin K. Lender, chairman of theYale-New Haven Hospital board of trustees. "Her leadership skills and commitment are evident to all who meet her. She was the unanimous choice of boththe search committee and the full board of trustees."Prior to being named executive vice president and chief operating officer, Borgstrom served as the senior vice president of administration from 1992-1993.From 1985 to 1992, she served as vice president of administration. Borgstrom joined Yale-New Haven Hospital in 1979 as an administrative fellow. Shealso served in a number of administrative roles during her career at Yale-New Haven Hospital. She is the first woman to be named as president and CEO ofthe hospital and the health system."We have great confidence in Marnas leadership," said Julia M. McNamara, chair of the Yale New Haven Health System board of directors. "Her talentand personal qualities, as well as her experience and knowledge of this health system will allow for a seamless transition and her vision will set the stagefor a strong future."As executive vice president and chief operating officer of Yale-New Haven Hospital, Borgstrom has been responsible for the systems $850 millionoperating budget and she has served as the primary liaison with the Yale University School of Medicine. During her career, Borgstrom directed thecompletion of the $51 million South Pavilion renovation and the construction of the $156 million Yale-New Haven Childrens Hospital, as well as theopening of the Shoreline Medical Center in Guilford.In her role as executive vice president of the Yale New Haven Health System, Borgstrom has overseen a system with more than 1,500 licensed beds and acombined operating budget of more than $1.3 billion at Yale-New Haven, Bridgeport and Greenwich hospitals. The largest health system in the state ofConnecticut, Yale New Haven Health System was created in 1995 and in addition to its three primary members, maintains a contractual relationship withWesterly Hospital in Rhode Island.Copyright 2011 Raymond R. Arons, Teaneck, NJ, USA

40. Lecture 16 40"Yale University enjoys a strong and mutually beneficial relationship with the entire Yale New Haven Health System," said Richard Levin, president ofYale University. "We have the utmost confidence in Marna Borgstroms ability to bring together the resources in all of our institutions to advance ourmission as one of the nations premiere academic medical centers and health care systems."Borgstrom received a Master of Public Health degree in hospital administration from the Yale University School of Medicine and a bachelors degree inhuman biology from Stanford University. She and her husband, Eric, have two sons.Yale New Haven Health System (YNHHS) is the leading health care system in Connecticut with approximately 12,000 employees. YNHHS - through Yale-New Haven, Bridgeport and Greenwich hospitals and their affiliated organizations - provides comprehensive, cost effective, advanced patient carecharacterized by safety, quality and service.Yale-New Haven Hospital is a 944-bed, not-for-profit hospital serving as the primary teaching hospital for the Yale School of Medicine. Yale-New Havenwas founded as the fourth voluntary hospital in the U.S. in 1826 and today, the hospital complex includes Yale-New Haven Childrens Hospital and Yale-New Haven Psychiatric Hospital, with a combined medical staff of about 2,400 university and community physicians practicing in more than 100specialties.Reporters: For more information on this release, contact Vin Petrini, (203) 688-2612.Return to: News Release IndexCopyright 2011 Raymond R. Arons, Teaneck, NJ, USA

42. Lecture 16 42 Case 9- Hospital Fraud Lester E. Cox Medical Centers, a health care system headquartered in Missouri, has paid $60 million and entered into a 5-year CIA with HHS/OIG to settle allegations that it paid doctors at a local physician group for referrals, and billed Medicare for the services resulting from those referrals, in violation of the Anti-Kickback and Physician Self-Referral statutes 20 PUTATIVE CLASS ACTION AGAINST LESTER E. COX MEDICAL CENTER PURSUANT TO FAIR DEBT COLLECTION PRACTICES ACTIf you received a letter or telephone call from Ozark Professional Collections after August 10,2002 attempting to collect a debt you may be part of a potential class action against Lester E.Cox Medical Center (also known as Cox Hospital). During this time period, Lester E. CoxMedical Center attempted to collect its debts under the registered fictitious name OzarkProfessional Collections. In doing so, Cox Hospital failed to disclose that no such entityexisted, but instead Ozark Professional Collections was merely a division of Lester E. CoxMedical Center. Cox misled its patients so they would assume that their account was beingturned over to an independent collection agency. This is a clear violation of the Fair DebtCollection Practices Act, 15 U.S.C. 1692 K.CLICK HERE TO READ THE LAW .Cox told patients with accounts due that unless payment was received they would be turned overto a collection agency. If no payment was made, Cox stopped writing or calling people underits own name and instead did so as Ozark Professional Collections. If a debtor asked who ownedor operated Ozark Professional Collections, the debt collectors refused to answer thesequestions. In fact, the employee manual for Ozark Professional Collections specifically told itscustomer service representatives not to answer questions regarding the nature, ownership oroperation of Ozark Professional Collections. As a result, the patients who owed debts to LesterE. Cox Medical Center assumed that they had been turned over to an independent collectionagency rather than merely another division of Cox Hospital to collect its debt.In a similar case, United States District Judge, Dean Whipple, has held that this constitutes aclear violation of the Fair Debt Collection Practices Act. Judge Whipple stated:Copyright 2011 Raymond R. Arons, Teaneck, NJ, USA

43. Lecture 16 43In the present case it is painfully obvious from the record that Cox Medical Centers is a creditorwho, in the process of collecting its own debts, uses a name other than its usual business namenamely Ozark Professional Collectionsto indicate that a third party is attempting to collectits debt. Indeed, OPC deliberately tries to avoid telling consumers that it is a division of CoxMedical Centers. Consequently, Cox Medical Centers is a debt collector in the eyes of thestatute. Daley v. Povena Hospital, 88 F.Supp. 2d 881 (N.D.Ill 2000) (holding hospitals using itsown employees for in-house collection under a misleading doing business as designation liableunder the FDCPA).The Court now turns to whether Cox violated the FDCPAs provisions. Naturally, in light of theabove ruling and the facts, the Court finds that by sending two collection letters to theHuntsmans on OPC letterhead, Cox committed two violations of 1692e(14). Therefore, theCourt grants Defendants summary judgment on Count IV. CLICK HERE TO READ THECOURT JUDGMENTSo, if you have received a collection letter or telephone call from Ozark Professional Collectionson or after August 11, 2002, you have a claim against Lester E. Cox Medical Center for violatingthe Fair Debt Collection Practices Act.A potential class action lawsuit has been filed on behalf of all individuals who received acollection communication from Ozark Professional Collections on or after August 11, 2002. CLICK HERE TO READ THE CLASS ACTION COMPLAINT . While the court has notyet been asked to certify the lawsuit as a class action, we are registering potential class membersso that if and when the court does certify the class to proceed we will have already begun theprocess of identifying class members. If you would like to register as a potential class memberplease use the CONTACT US form on this website. CLICK HERE TO CONTACT US . Itasks for basic information such as your name, address, telephone number, e-mail address, andaccount information with Cox Medical Center. It also asks for the date of any communicationswith Ozark Professional Collections (OPC) requests that you send us a copy of anycommunications you have had with Ozark Professional Collections and any related bills fromLester E. Cox Medical Center, if you have them.There is no cost or obligation to register as a class member or to participate in the class action, ifand when it is certified. In turn, if the class is not certified we may pursue certain individualclaims at our option, but reserve the right not to proceed with other claims if we determine it isnot feasible to do so. If you have any questions regarding this matter, you may contact us at ourtoll free number 1/800-444-7552. For further information regarding the law firms and thelawyers who are pursuing this potential class action, please click below to be connected to theirrespective websites. Thank you for your interest and we look forward toCopyright 2011 Raymond R. Arons, Teaneck, NJ, USA

44. Lecture 16 44Hospitals/Facilities Clinics & PhysiciansCox South Find a Physician/Clinic3801 S. National Ave. Search by region, specialty or physician name toSpringfield, MO 65807 find the physician that best meets your health care needs.563-bed hospital, full-service care facility at theheart of the "Medical Mile" in south Springfield. CoxHealth owned and operated clinics A directory of clinics organized by clinic name.Cox North1423 N. Jefferson Ferrell-Duncan ClinicSpringfield, MO 65802 A directory of physicians organized by specialty72-bed facility, and the original site of the 1906 The Clinic at Walmartopening of Burge Hospital, which has become Walk-in services for basic care is available throughCoxHealth. CoxHealth at local Walmart stores.Cox Monett Helpful Information801 Lincoln Ave.Monett, MO 65708 Maps, Directions & Parking Easy-to-use maps and directions to get you where25-bed critical access hospital serving Monett, Mo., you need to be in the city, on our campuses orand the surrounding counties. inside a specific building.Cox Walnut Lawn Construction Updates1000 E. Walnut Lawn Please check here for current and futureSpringfield, MO 65807 construction projects at CoxHealth, as well as updates to parking, building entry and navigationA 102-bed extension of the Cox South campus that related to these projects.offers Rehabilitation Services, Wound Healing andUrgent Care. Phone Numbers Frequently called phone numbers for CoxHealth.Cox Surgery Center960 E. Walnut LawnSpringfield, MO 65807New facility that provides a centralized location formost outpatient surgeries.Urgent Care1000 E. PrimroseSpringfield, MO 65807CoxHealth Adult and Pediatric Urgent Carelocations are your one-stop facilities for non life-threatening illnesses and injuries.Copyright 2011 Raymond R. Arons, Teaneck, NJ, USA

46. Lecture 16 46 Case 10- Hospital Fraud The University of Pennsylvania Health System (UPHS) paid $3.5 million to resolve allegations that UPHS had erroneously submitted separate and distinct Medicaid payment claims for blood transfusions on bills that had more than one unit per day. Further, UPHS allegedly submitted fraudulent claims associated with office visits for new patients, as well as fraudulent claims for infusion therapy. UPHS is the 20th hospital to settle under the 3-year-long Operation Vampire project, aimed at uncovering hospitals erroneous Medicare claims associated with blood transfusions. Including this case, Operation Vampire recoveries total approximately $12.5 million. 30 University of Pennsylvania Health System 31Copyright 2011 Raymond R. Arons, Teaneck, NJ, USA

47. Lecture 16 47 CEO Pennsylvania Health System 32Left to Right: Ralph Muller, CEO of the University of Pennsylvania Health System; Penn President AmyGutmann; and Raymond and Ruth Perelman cut the ribbon to mark the official opening of the PerelmanCenter for Advanced Medicine at Penn while Dr. Arthur Rubenstein, Executive Vice President of theUniversity of Pennsylvania for the Health System and Dean of the School of Medicine looks on.Copyright 2011 Raymond R. Arons, Teaneck, NJ, USA

49. Lecture 16 49 Case 11- Hospital Fraud Lester E. Cox Medical Centers, a health care system headquartered in Missouri, has paid $60 million and entered into a 5-year CIA with HHS/OIG to settle allegations that it paid doctors at a local physician group for referrals, and billed Medicare for the services resulting from those referrals, in violation of the Anti- Kickback and Physician Self-Referral statutes 22 Lester E. Cox Medical Centers Our MissionAbout CoxHealth CoxHealths Mission is to improve the health of the communities we serve through quality health care, education and research. and Cox Medical Centers Lester E. Cox Medical Centers Mission is to provide compassionate, quality health care, health education and research consistent with available financial resources. Health care will be provided without prejudice and regardless of the patients ability to pay. and Cox Monett Cox Monetts mission is to improve the health status of our community by providing high quality health care, education and wellness, through value and convenience with a personal touch. 27Copyright 2011 Raymond R. Arons, Teaneck, NJ, USA

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