Under President Joe Biden, the Department of Justice (DOJ) is aggressively pursuing False Claims Act cases in the healthcare industry. Nearly every week, at least one settlement is announced by the DOJ related to FCA fraud. Below are some recent enforcement actions.
Respironics Settlement
On September 1, 2022, Philips RS North America, LLC, f/k/a Respironics, Inc., agreed to pay more than $24 million to settle False Claims Act allegations that it misled federal health care programs by paying kickbacks to durable medical equipment (DME) suppliers. According to the DOJ, Respironics led DME suppliers to submit claims for equipment such as ventilators, oxygen concentrators, CPAP and BiPAP machines by providing physician prescribing data (for free).
Then, three weeks later on September 22, 2022, Respironics and DOJ announced a second settlement of $1.2 million over allegations that the company unlawfully induced referrals for its equipment.
Bayer Corporation Settlement
In early September 2022, Bayer Corporation also agreed to a settlement with the DOJ. The Bayer settlement was for $40 million and settles claims over its alleged use of kickbacks and false claims related to three of its prescription drugs: Avelox, Trasylol, and Baycol.
Bayer allegedly paid kickbacks to doctors and hospitals to induce them to use Avelox and Trasylol and marketed the drugs for off-label uses that were either unreasonable or unnecessary. Bayer’s kickbacks and off-label marketing allegedly resulted in submissions of false Medicare and Medicaid claims for the drugs.
Bayer also allegedly downplayed the risks of Trasylol and Baycol, both of which were withdrawn from the market due to safety concerns, and overstated Baycol’s effectiveness when compared to other statins. In 2005, Bayer paid $1 billion to settle 3,000 cases that claimed the drug caused muscle tissue to break down.
Finally, Bayer allegedly caused the Department of Defense’s combat logistics support agency to fraudulently renew contracts related to Baycol.
Of the $40 million settlement, Bayer will pay $38,860,555 to the United States and $1,139,445 to the Medicaid Participating States. Additionally, Bayer shall pay the Relator $6,000,000 to resolve the Relator’s Retaliation Claim.
This settlement stems from two lawsuits that were initially brought by a former Bayer employee who worked in the marketing department in 2005 and 2006 in New Jersey.
Arrayit Corporation Conviction
While this is not a settlement, Mark Schena, president of Arrayit Corporation, was convicted of misleading investors, health care fraud, and paying illegal kickbacks, related to his alleged participation in the submission of more than $77 million in false and fraudulent claims for allergy and COVID-19 testing. Schena was initially charged with three counts of securities fraud and one count of conspiracy to commit health care fraud. The charges filed against Schena represent the first criminal securities fraud prosecution related to the COVID-19 pandemic brought by the DOJ.
On May 18, 2021, Schena was charged with new counts of health care fraud, conspiracy to pay kickbacks, and payment of kickbacks in connection with false and fraudulent statements about the existence, regulatory status, and accuracy of his company’s COVID tests. The conspiracy allegedly tried to induce the ordering of the Arrayit’s COVID-19 test as well as a medically unnecessary allergy test. Further, the COVID-19 test results were not provided in a timely fashion and were not reliable in detecting COVID-19.
Schena filed a motion hearing for judgment of acquittal and a motion hearing for a new trial, which was continued to December 6, 2022. The sentencing is currently set for January 30, 2023.