DOJ Resolves More than $1 Billion in False Claims Act Settlements in First Half of 2024
Gibson Dunn recently published a mid-year update on the False Claims Act (FCA) collections for the first half of the year, noting that “[t]he first half of 2024 is a reminder that [the flow of enforcement] can surge at any moment, bringing with it massive settlements.” The update notes that the Department of Justice (DOJ) continues to focus on cybersecurity and has reached False Claims Act settlements across multiple industries, using various legal theories.
As we often see from FCA recoveries, most of the $1 billion in settlements involve health care and life science industry entities. Starting the year strong was a $42.5 million settlement between the DOJ and ChristianaCare, a healthcare facility operator based in Delaware. The settlement resolved claims that the company provided ancillary service providers (i.e., nurse practitioners and physician assistants) to help with patients as an inducement to non-employee physicians to refer patients to the company’s hospitals.
That same day, Florida non-profit cancer treatment and research center, the H. Lee Moffitt Cancer Center & Research Institute Hospital, agreed to pay $19.5 million, resolving allegations that it billed federal health care programs for items and services used in clinical trial research that it should have billed to non-government sponsors.
In mid-January, Columbus LTACH d/b/a Silver Lake Hospital, a long-term care hospital based in New Jersey, reached an $18.6 million settlement to resolve FCA allegations. Certain Silver Lake investors agreed to pay $12 million plus interest for alleged violations of the Federal Debt Collection Procedures Act (FDCPA). In this case, the government alleged that the hospital manipulated the cost outlier payment system for supplemental reimbursement by increasing its charges more than its costs and beyond what the hospital would be able to repay once Medicare cost reports were reconciled to its charges.
In February, medical device company Lincare admitted that it received reimbursements for claims that did not comply with billing rules and continued to seek payments in instances where it was aware that patients were not using its respiratory equipment. In connection with the admission, Lincare agreed to pay $25.5 million.
Endo Health Solutions, Inc., reached a settlement valued at up to $464.9 million over the course of ten years, resolving criminal and civil investigations related to the company’s sales and marketing of its opioid, Opana ER with INTAC.
New York-Presbyterian/Brooklyn Methodist reached a $17.3 million settlement with the DOJ over allegations that contractual arrangements with physicians at a chemotherapy infusion center were actually unlawful “kickbacks.” Under the contracts, the physician compensation was linked to the number of referrals the physicians made for services at the infusion center. Additionally, the settlement resolved claims that physicians at the infusion center did not adequately supervise chemotherapy services.
May brought a $27 million settlement with the DOJ and Florida businessman Daniel Hurt, resolving allegations that he and several of his companies (including Fountain Health Services LLC, Verify Health, Landmark Diagnostics LLC, First Choice Laboratory LLC and Sonoran Desert Pathology Associates LLC) conspired with others to violate the FCA by submitting false claims to – and receiving payments from – Medicare for cancer genomic tests that were not medically necessary and that were obtained through illegal kickbacks.
Finally, at the end of June, Baylor St. Luke’s Medical Center, Baylor College of Medicine, and Surgical Associates of Texas jointly reached a $15 million settlement with the DOJ, resolving claims that they billed for concurrent heart surgeries in violation of the teaching physician and informed consent regulations of Medicare.
In addition to an overview on enforcement activity, the update also includes an overview of legislative and policy developments (at both the federal and state levels) as well as some significant legal decisions from the first half of the year.