Healthcare and Pharma Cases


Inpatient Rehabilitation Facility Network Encompass Pays $48 Million to Resolve Medicare Fraud Allegations

Alabama-based Encompass Health Corporation (now HealthSouth Corp.) has agreed to pay $48 million to settle Medicare fraud allegations. According to prosecutors, Encompass’s Inpatient Rehabilitation Facilities (IRFs) falsified "disuse myopathy" diagnostics in order to maintain their standing as high-reimbursement Medicare-approved IRFs.  

The alleged fraud was brought forward in three separate whistleblower lawsuits, later joined by the Department of Justice. According to the allegations, Encompass IRFs systematically admitted patients who were “too sick or disabled to participate in or benefit from intensive inpatient therapy." 

According to U.S. Attorney Maria Chapa Lopez (Florida, Middle District), "This important civil settlement concludes a lengthy, comprehensive investigation that brought to light a nationwide scheme that the government contends was intended to defraud our fragile public health...


Methodist University Hospital: A “Nonprofit” that Seeks Profits by Suing the Poor, Including Its Own Low-Wage Employees

Methodist University Hospital: A “Nonprofit” that Seeks Profits by Suing the Poor, Including Its Own Low-Wage Employees

When Carrie Barrett rushed to the ER at Methodist University Hospital in Memphis, she needed an emergency heart catheterization. The procedure required a two-night stay at the hospital. That was in 2007. In 2010, the hospital sued her for not having paid her share of the medical services it provided: $12,109, close to what Barrett makes in a year.

The woman did not remember receiving any notices to pay before she was notified of the hospital’s lawsuit. Methodist Le Bonheur, the hospital system affiliated with the United Methodist Church, which is supposed to be a nonprofit, was not only seeking payment of the $12,109, but also attorney’s fees, court costs, and added interest.

Today, Barrett’s debt amounts to $33,000. Over the years, the hospital has managed to garnish money from her meager paychecks on 15...


Chicago Nursing Homes and Service Providers Agreed to Pay About $9.7 Million to Settle Fraud Allegations

Chicago Nursing Homes and Service Providers Agreed to Pay About $9.7 Million to Settle Fraud Allegations

According to a recently resolved False Claims Act complaint, Orland Park-based Quality Therapy and Consultation Inc. (now defunct), and its owner, Frances Parise, systematically billed federal health care programs for services that were never rendered. The alleged misconduct took place as part of Quality Therapy’s work with various nursing homes in the state of Illinois.   

The nursing homes mentioned in the whistleblower lawsuit have all agreed to a settlement. Under its terms, Lakeshore Healthcare will pay $2.7 million, Balmoral Home will pay $1.7 million,  Ridgeview Rehab will pay $1 million, and Carlton at the Lake will pay the largest settlement: $3.6 million.

The alleged fraud was brought to the government’s attention in 2014, when Katherine Verhulst, a former occupational therapist with Quality Therapy, filed a qui tam lawsuit presenting evidence of her employer’s unlawful practices. As a False Claims Act whistleblower with original information about fraud, Verhulst will receive a $1.9 million award....


SEC Whistleblower from Brazil Gets $4.5 Million Award After Reporting Misconduct by Zimmer Biomet

SEC Whistleblower from Brazil Gets $4.5 Million Award After Reporting Misconduct by Zimmer Biomet

A whistleblower in Brazil has just received a $4.5 million award for his role in uncovering a kickback scheme allegedly run by a subsidiary of Zimmer Biomet Holdings Inc. (Zimmer Biomet), a medical device manufacturer. The tipster is a former orthopedic surgeon who became aware of the alleged misconduct while practicing medicine in his home country.

Based in Indiana, Biomet markets its orthopedic and dental implant devices on a global scale. The whistleblower, on the other hand, is a prominent surgeon in South America and former president of Brazil’s Orthopedic Sports Medicine Society. As it is customary with SEC whistleblowers, his name has not been made public.

In 2013, the whistleblower reported the alleged misconduct anonymously to Biomet executives. Within 120 days, he reported it to the SEC. According to his reports, the company was still running a kickback scheme in Brazil, in spite of having faced SEC penalties in the past for the same type of misconduct....


Game Over for Monsanto: $2 Billion Verdict to Give Way to Massive Wave of Settlements, Top Roundup Litigator Says

Game Over for Monsanto: $2 Billion Verdict to Give Way to Massive Wave of Settlements, Top Roundup Litigator Says

The recent $2 billion jury verdict against Monsanto may be a clear indication that Bayer will likely settle the remaining 13,000 cases claiming the active ingredient in Roundup, glyphosate, causes aggressive blood and bone cancer.

Attorney Brian Mahany is convinced that numerous settlements will follow and has good evidence to back up his claim. An active participant in the recent spate of Roundup cancer lawsuits, he is well placed to interpret the verdict.

Global Monsanto/Bayer Settlement in The Works

According to Mahany, the court quietly postponed the bellwether trial scheduled to begin on May 20th. Instead, the court noted an upcoming “confidential mediation.”...


DOJ Joins Whistleblower Suit Against Mallinckrodt Over Fraudulent Billings Involving Pediatric Drug that Cost Medicare Billions

The Department of Justice has just joined two pharmaceutical company insiders in a lawsuit against Questcor Pharmaceuticals, which allegedly defrauded taxpayers out of hundreds of millions of dollars through a “multi-tiered” scheme to inflate the price of a pediatric drug.

The alleged scheme, which has been described as one of “the largest drug price increases” in our nation’s history, included bribing doctors and other healthcare professionals to boost sales.   

The defendant, Questcor Pharmaceuticals, is now Mallinckrodt. The drug in question is H.P. Acthar Gel. From 2000 to 2019, the price of the drug, which is used to treat a rare disorder in infants, went from $40 to $39,000 per unit, which represents nearly a 100,000 percent...


Did Illegal Kickbacks Help Mallinckrodt Sell Acthar for Lofty $39,000?

Did Illegal Kickbacks Help Mallinckrodt Sell Acthar for Lofty $39,000?

In the face of skyrocketing drug prices, the federal government has opted to intervene in a whistleblower lawsuit against Mallinckrodt Pharmaceuticals - whose drug price increases are among the largest in U.S. history.

For years, healthcare providers have criticized the price of Mallinckrodt’s H.P. Acthar Gel (Acthar), a drug used to treat symptoms of multiple sclerosis, lupus, rheumatoid arthritis, and seizures in infants. In August 2007, the price of Acthar jumped from $1,600 to $23,000 per vial.

Cost per vial of the drug has increased from $40 to nearly $39,000 in just 19 years - nearly a 97,000% price increase. Currently, annual Acthar sales exceed $1 billion.

But how does a drug company compete in the pharmaceutical world with prices at $39,000 per vial? According to two Mallinckrodt whistleblowers, by breaking the law....


Health Management Associates CEO Has Agreed to Pay $3.46 Million to Settle Alleged Kickbacks and Fraudulent Billings

Health Management Associates CEO Has Agreed to Pay $3.46 Million to Settle Alleged Kickbacks and Fraudulent Billings

Gary D. Newsome, the former CEO of Florida-headquartered hospital chain Health Management Associates LLC, has agreed to pay $3.46 million to resolve allegations about his role in a large-scale fraud scheme that cost Medicare millions of dollars.    

According to the whistleblower lawsuit resolved by the settlement, Newsome conspired to increase the number of admissions of Medicare beneficiaries into Health Management-controlled hospitals. The physicians also received illegal bonuses in exchange for admissions.

The hospital admissions mentioned in the lawsuit were medically unnecessary, as the patients did not require a hospital stay to be efficiently treated. The scheme was allegedly designed to increase Medicare billings....


US WorldMeds LLC Will Pay $17.5 Million to Resolve Medicare Fraud Allegations Involving Kickbacks

US WorldMeds LLC Will Pay $17.5 Million to Resolve Medicare Fraud Allegations Involving Kickbacks

Kentucky-based US WorldMeds LLC will pay $17.5 million to resolve allegations that it offered kickbacks to both doctors and patients to secure prescriptions of its drugs Apokyn and Myobloc, used to treat Parkinson’s disease. The prescriptions generated millions of dollars for the company in the shape of Medicare billings.

The multi-million-dollar settlement resolves a whistleblower lawsuit filed by two former employees of US WorldMeds, Dr. Bennett and Dr. Chinnapongse. Under the False Claims Act, the two relators stand to receive a shared award amounting to 15-25 percent of the total recoveries.

The whistleblowers quit their jobs immediately after the resolution of the lawsuit became public. According to a spokesperson for Dr. Chinnapongse, he is not only “a brilliant scientist,” but also “a deeply ethical doctor who stood up at great risk to do the right thing,” and, “precisely the kind of whistleblower that the False Claims Act is meant to reach.”...


Astellas Will Pay $100 Million to Resolve Kickback Allegations Involving Medicare Copays

Astellas Will Pay $100 Million to Resolve Kickback Allegations Involving Medicare Copays

Astellas, a pharmaceutical company, has just agreed to pay $100 million to resolve allegations that it illegally used charitable foundations to cover Medicare copays to boost sales of its drug Xtandi.

Because patients covered by Medicare are often required to make partial payments for prescription drugs, many foundations subsidize them. When pharmaceutical companies donate to those foundations, the practice may violate the Anti-Kickback Statute, which forbids drugmakers from incentivizing the purchase of their products.

Astellas is the maker of Xtandi, a drug used to treat prostate cancer. According to the government’s findings, Astellas directly asked two foundations to start two funds to assist prostate cancer patients with their copay obligations. The funds then began exclusively subsidizing the purchase of Xtandi by Medicare-covered patients. Meanwhile, Astellas was the only donor to the funds....