Top 20 Qui Tam Cases

Although defense and healthcare have been the primary targets of fraud against the government, a host of other government-funded programs are vulnerable and have come under the scrutiny of patriotic-minded “whistleblowers.”

Tenet Healthcare – $900,000,000 under the False Claims Act

In July 2006, Tenet Healthcare (formerly known as NME, see #9 on this list) agreed to pay the Federal Government $900 million for billing violations that include manipulation of outlier payments to Medicare, as well as kickbacks, upcoding, and bill padding. The DOJ press release notes that the settlement was based on the company’s ability to pay – a nice of saying that Tenet stole more money than was recovered in this settlement.

HCA – $731,400,000 under the False Claims Act

In December 2000, HCA The Healthcare Company (formerly known as Columbia HCA), the largest for-profit hospital chain in the United States, pled guilty to criminal conduct and agreed to pay more than $840 million in criminal fines, civil penalties and damages for unlawful billing practices. Of this amount, $731,400,000 was recovered under the False Claims Act. Under the settlement agreement, HCA’s payment will resolve five allegations regarding the manner in which it bills the U.S. government and the states for health care costs. HCA’s frauds on the taxpaying public included: billing for lab tests that were not medically necessary and not ordered by physicians, “upcoding” medical problems in order to get higher reimbursements for more serious medical issues, billing the government for advertising under the guise of “community education,” and billing the government for non-reimbursable costs incurred in the purchase of home health agencies around the country. Note that the December 2000 agreement does not resolve allegations that HCA unlawfully charged the U.S. Government for the costs of running its hospitals, and that it paid kickbacks to physicians to get Medicare and Medicaid patients referred to its facilities.

Merck – $650,000 under the False Claims Act

In January of 2008, Merck settled the very first nominal pricing fraud case in which the company was accused of taking kickback and violating Medicaid best price regulations for Vioxx (an arthritis drug), Zocor (a cholesterol drug), Pepcid (an acid-reflux drug), Cozaar (a hypertensive medication), Fosamax (a bone loss drug), Maxalt (a migraine medication) and Singulair (an asthma medication).

HCA – $631,000,000 under the False Claims Act

In June 2003, HCA Inc. (formerly known as Columbia/HCA and HCA – The Healthcare Company) agreed to pay the United States $631 million in civil penalties and damages arising from false claims submitted to Medicare and other federal health programs. This settlement resolves HCA’s civil liability for false claims including cost report fraud and the payment of kickbacks to physicians. In a separate administrative settlement with the Centers for Medicare & Medicaid Services (CMS), HCA agreed to pay an additional $250 million to resolve overpayment claims arising from its cost reporting practices. Combined with the December 2000 settlement, the government has recovered $1.7 billion from HCA, by far the largest recovery ever reached by the government in a health care fraud investigation.

Serono – $567,000,000 under the False Claims Act

In October of 2005, Serono agreed to pay $704 million to settle a fraud case involving Serostim, a human growth hormone product used to fight AIDS-related wasting. The charges involved kickbacks to doctors for prescribing Serostim, kickbacks to specialist pharmacies for recommending Serostim, illegal off-label marketing of the drug, and non-FDA approved diagnosis equipment designed to spur more Serostim prescriptions. Serostim cost as much as $20,000 for a three-month regime. Of the total $704 million settlement, $567 million is earmarked to settle federal and state civil claims ($305 million federal), with $136.9 million paid as a related criminal fine.

TAP Pharmaceutical Products Inc. – $559,483,560 under the False Claims Act

In October 2001, TAP [Taketa-Abbott Pharmaceutical] Pharmaceutical Products Inc. agreed to pay $875 million to resolve criminal charges and civil liabilities in connection with fraudulent drug pricing and marketing of Lupron, a drug sold for the treatment of prostate cancer. Of this amount, $559,483,560 was recovered under the False Claims Act. In addition, TAP pled guilty to a conspiracy to violate the Prescription Drug Marketing Act and paid a $290 million criminal fine, the largest criminal fine ever in a health care fraud prosecution. Under the Lupron scheme, TAP gave doctors kickbacks by providing free samples with the knowledge that the physicians would bill Medicare and Medicaid $500 per dose. At the time the Lupron fraud was discovered, Lupron accounted for 10% of the money spent on prescription drugs under Medicare Part-A. As part of the settlement, TAP entered into what prosecutors called a “sweeping” corporate integrity agreement.

Schering Plough – $255,000,000 under the False Claims Act

In August of 2008, Schering-Plough agreed to pay a total of $435 million to resolve criminal charges and civil liabilities in connection with illegal sales and marketing programs for brain tumor medication Temodar, and Intron-A which is used in the treatment of bladder cancer and hepatitis C. The Schering settlement also covers best price violations related to Claritin RediTabs (an antihistamine), and K-Dur, which is used in the treatment of ulcers.

Lilly Pharmaceuticals – $438 million under the False Claims Act

In January of 2009, Eli Lilly agreed to pay a total of $1.4 billion to resolve Federal, state and criminal charges in relation to the off-label marketing of the drug Zyprexa. Of this sum, $438 million went to satisfy Federal False Claims Act charges, $361 million was divided among the states, and $515 million was paid as a criminal fine.

Abbott Labs – $400,000,000 under the False Claims Act

In July of 2003, a unit of Abbott Laboratories, Inc. pled guilty to obstructing a criminal investigation and defrauding the Medicare and Medicaid programs and agreed to pay $400 million to resolve civil claims. In addition, the subsidiary of Abbott Labs, CG Nutritionals, Inc., agreed to a criminal fine of $200 million. The Abbott/CG Nutritionals scam involved the sale of enteral products which pump special foods into the stomachs and digestive systems of patients who, because of disease or some other disorder, are not able to ingest meals in a normal manner.

Fresenius Medical Care of North America – $385,000,000 under the False Claims Act

In January of 2000, Fresenius Medical Care of North America (National Medical Care), the world’s largest provider of kidney dialysis products and services, agreed to pay the United States $486 million to resolve a sweeping investigation of health care fraud at National Medical Care, Inc. (NMC), a kidney dialysis subsidiary owned by Fresenius. Of this amount, $385,000,000 was recovered under the False Claims Act. Three NMC subsidiaries also pled guilty to three separate conspiracies and were levied fines of $101 million. Fresenius has also entered into a corporate integrity agreement with the U.S. Department of Health and Human Services. The Fresenius/NMC scam involved fraudulent and fictitious blood testing claims by LifeChem, Inc., NMC’s clinical blood testing laboratory, kickbacks to dialysis facilities to obtain blood testing contracts for LifeChem, and fraudulent claims submitted to Medicare for intradialytic parenteral nutrition (IDPN), a nutritional therapy provided to patients during their dialysis treatments.

Cephalon – $375,000,000 under the False Claims Act

In September of 2008, Cephalon settled an off-label marketing case in which the company was accused of marketing the narcotic lollipop Actiq (“fentanyl citrate”) as well as Gabitril (an epilepsy medication) and Provigil (a narcolepsy medication). An additional sum of $50 million was paid to settle criminal charges in this case.

Bristol Myers Squib – $328,000,000 under the False Claims Act

Bristol-Myers Squibb agreed to pay $515 million to settle allegations brought in seven qui tam cases (six in Boston and one in Florida) involved pricing and promotional activities (including kickbacks to doctors) for more than 50 drugs, including 13 drugs with a combined 2007 sales of $10.7 billion – a total of 69 percent of Bristol-Myers’ 2007 pharmaceutical revenue. Drugs included in this settlement include the blood thinner Plavix, antipsychotic Abilify, the cholesterol treatment Pravachol, the cancer therapy Taxol, and the antidepressant, Serzone. Of the $515 million, approximately $328 million will be paid under the Federal False Claims Act, with the state’s getting a total of $187 million

SmithKline Beecham Clinical Laboratories Inc. d/b/a GlaxoSmith Kline – $325,000,000 under the False Claims Act

In March of 1997, SmithKline Beecham Clinical Laboratories Inc. (SBCL) was ordered to pay $325 million for filing of false claims relating to laboratory tests paid for in whole or in part by the federal government. SmithKline Beecham Clinical Laboratories also agreed to adopt a corporate compliance agreement. The multiple scams involved adding on laboratory tests not requested by doctors and which were not medically necessary, billing for lab tests that were not actually performed, giving kickbacks to doctors in order to get their business, and billing Medicare for dialysis testing already paid for by kidney dialysis centers.

HealthSouth – $325,000,000 under the False Claims Act

In December of 2004, HealthSouth Corporation, the nation’s largest provider of rehabilitative medicine services, agreed to pay the United States $325 million to settle allegations that the company systematically defrauded Medicare and other federal healthcare programs. Said Assistant Attorney General Peter Keisler, “HealthSouth’s fraud on Medicare was driven both by longstanding business practices in its outpatient physical therapy business and improprieties in its inpatient rehabilitation business.”

National Medical Enterprises – $324,200,000 under the False Claims Act

NME agreed to pay $379 million in criminal fines, civil damages, and penalties for kickbacks and fraud at NME psychiatric and substance abuse hospitals in more than 30 states. Of this amount, $33 million will be paid in criminal fines. After this settlement, NME renamed itself “Tenet”. See #1 at top of this list.

Gambro Healthcare – $310,000,000 under the False Claims Act

In December 2004, Gambro Healthcare agreed to pay $310.5 million to resolve civil liabilities stemming from alleged kickbacks paid to physicians, false statements made to procure payment for unnecessary tests and services, and payments made to Gambro Supply, a sham durable medical equipment company. The settlement also requires Gambro to allocate $15 million to resolve potential liability with various state Medicaid programs. Gambro Healthcare has also entered into a comprehensive Corporate Integrity Agreement. The Gambro Supply Corporation, a wholly-owned subsidiary of Gambro Healthcare, has also agreed to plead guilty to criminal felony charges; admit to execution of a healthcare fraud scheme; pay a $25 million fine; and be permanently excluded from the Medicare program.

Schering-Plough- $292,969,482 under the False Claims Act

In July 2004, Schering-Plough, a major pharmaceutical manufacturer, agreed to plead guilty to fraud in the pricing of Claritin sold to the Medicaid program. The settlement agreement included a criminal fine of $52.5 million, $117 million to settle state claims, and nearly $176 million to settle federal False Claims Act claims

AstraZeneca Pharmaceuticals – $266,127,844 under the False Claims Act

In June 2003, AstraZeneca Pharmaceuticals LP, a major pharmaceutical manufacturer, pled guilty to health care fraud and agreed to pay $355,000,000 to resolve criminal charges and civil liabilities in connection with its drug pricing and marketing practices with regard to Zoladex, a drug sold for the treatment of prostate cancer. Of this amount, $266,127,844 was recovered under the False Claims Act, and the remainder was levied as criminal fines. AstraZeneca pled guilty to giving doctors kickbacks by providing free drug samples knowing that the doctors would then turn around and bill Medicare and Medicaid hundreds of dollars per sample.

St. Barnabas Hospitals – $265,000,000 under the False Claims Act

In June 2006, St. Barnabas Healthcare, a nonprofit chain of eight hospitals in New Jersey, agreed to pay $265 million to settle a False Claims Act lawsuit filed by three whistleblowers. The case dealt with “outlier” Medicare payments which a hospital can claim if a procedure is particularly difficult or complex. St. Barnabas generated 41% of its total inpatient Medicare revenue from outlier payments as compared to the national average of 4.75%. The government estimated damages in the case at $630 to $700 million, but the settlement was based on St. Barnabas’ ability to pay.

Bayer Corporation – $257,200,000 under the False Claims Act

In April 2003, Bayer Corp. paid $257,200,000 to settle Medicaid fraud charges involving a “lick and stick” scheme in which Bayer sold re-labeled products to an HMO at deeply discounted prices, and then concealed this price discount in order to avoid paying additional rebates to the government. $143 million of the Bayer settlement went to resolve a whistleblower’s allegations that Bayer defrauded the Medicaid and Public Health Service programs by relabeling products sold to a health maintenance organization at deeply discounted rates and then concealing the discounts to avoid paying rebates, in violation of the Medicaid Rebate program. In addition, Bayer paid $108 million to reimburse state Medicaid programs for the same conduct. An additional $5.5 million criminal fine was also levied.

Schering-Plough – $255,000,000 under the False Claims Act

In August of 2006, Schering-Plough agreed to pay a total of $435,000,000 to resolve criminal charges and civil liabilities in connection with illegal sales and marketing programs for its drugs Temodar for use in the treatment of brain tumors and metastases, and Intron-A for use in treatment of superficial bladder cancer and hepatitis C. The settlement also involved claims involving best price violations for Claritin RediTabs, an antihistamine, and K-Dur, used in treating stomach ulcers.

First American Health Care of Georgia – $225,000,000 under the False Claims Act

In October of 1996, a home health care organization and its purchaser agreed to reimburse the federal government $255 million for overbilling and making fraudulent Medicare claims. Under the agreement, First American Health Care of Georgia, Inc., the nation’s largest home health care provider, and its new owner, Integrated Health Services, Inc, agreed to reimburse the federal government for money stolen from Medicare through fraudulent billing practices. The alleged fraud was that First American billed Medicare for costs unrelated to the care of patients in their homes, including the personal expenses of First American’s senior management, as well as for the company’s marketing and lobbying expenses. In a related criminal action, the company’s two major principals, Jack and Margie Mills, were found guilty of defrauding Medicare, and were sentenced to prison terms of 90 months and 32 months respectively for their participation in the fraud. An Epilogue: IHS never paid the Federal Government under the terms of the settlement, and IHS itself filed for bankruptcy in February of 2000. The bankruptcy courts later collected 7.5 cents on the dollar, or $19.1 million of the original $255 million settlement.

Amerigroup – $225,000,000 under the False Claims Act

In March of 2008, Amerigroup was found liable, in a trial by jury, in a False Claims Act case in which the company was accused of discriminating against pregnant women who were supposed to be recruited into a state-sponsored Medicaid HMO. Losing the case triggered automatic triple damages of $144 million. An additional $190 million in statutory fines were levied by U.S. District Judge Harry Leinenweber who noted that Amerigroup “pilfered money from Medicaid coffers to pad its own pockets.” The Amerigroup case, was brought by whistleblower Cleveland A. Tyson and was joined by both the U.S. Department of Justice and the Illinois Attorney General’s office. Post-trial, the case was settled (August 2008) for $225,00,000 to avoid the appeals process

BankAmerica – $187.5 million under the California False Claims Act

In 1998 BankAmerica Corp. paid $187.5 million to settle charges that it illegally kept unclaimed bond proceeds from the state of California and more than 1,000 cities, counties and public agencies statewide. This is the single largest state False Claims Act settlement to date.

Laboratory Corporation of America – $182,000,000 under the False Claims Act

In November 1996, Laboratory Corporation of America Holdings (LabCorp), agreed to pay $182 million to resolve charges that it submitted false claims for medically unnecessary laboratory tests to federal and state health care programs. The fraud involved bundled lab tests that were billed to Medicare as free-standing tests, resulting in an eight-fold increase in charges to Medicare.

This information is for educational purposes. It is not offered as and does not constitute legal advice or legal opinions. You should not act or rely upon this information without seeking the advice of an attorney.

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