Inflated Charges Lead to $30 Million False Claims Settlement

Late last week, the Justice Department announced that a large for-profit health care concern has joined the growing list of health care companies settling False Claims Act cases. In this case, the business will pay the government $30 million plus interest to settle allegations that one of its recently acquired (2004) affiliates violated the FCA by causing Medicare to overpay for a radiopharmaceutical used in certain cardiac diagnostic imaging procedures. According to the Justice Department press release, the pharmaceutical is “distributed in multi-dose vials of powder. In a process known as reconstitution, nuclear pharmacies mix the powder with a radioactive agent to prepare individual doses that are injected into patients as part of the cardiac imaging procedures.” Medicare payment was based, in part, on the number of doses available from vials of the drug. The government alleged that the affiliate provided false or misleading information regarding the number of doses available from vials, causing Medicare to pay artificially inflated rates.

This case originated as a qui tam, or whistleblower, case under provisions of the False Claims Act that permit private citizens with knowledge of fraud against the government to bring an action on behalf of the United States and to share in the recovery. In this qui tam matter, the relator who brought the case will receive over $5 million.

Government lawyers reiterated that pharmaceutical companies should be aware that the government is scrutinizing records “to detect all forms of health care fraud.” In its release, the government stated its hope that “vigorous civil and criminal enforcement will deter companies from defrauding taxpayers in the future.”

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