21st Century Oncology to pay $19.75M in Unnecessary Tests Medicare Lawsuit

21st Century Oncology of Fort Myers, Florida, has agreed to pay the Federal Government $19.75 million in a health care fraud settlement that resolves allegations that the company submitted false claims to both Medicare and Tricare for unnecessary medical tests.

21st Century Oncology to pay $19.75M in Unnecessary Tests Medicare Lawsuit

Whistle blower Mariela Barnes, once a medical assistant for one of 21st Century Oncology’s urologists, received $3.2 million as a reward provided for in the qui tam (whistle blower) provision of the U.S. False Claims Act for bringing the matter to light. Barnes had initiated legal action in 2013 by filing a False Claims whistleblower claim.

The False Claims Act lawsuit alleged that 21st Century Oncology had performed and billed federal healthcare programs for fluorescence in situ hybridization (FISH) cancer tests that were not medically necessary, between 2008 and 2012. It also claimed that the whistleblower had been wrongfully fired and threatened following her disclosure of the company´s wrongdoings. 

Drs. Robert Scappa, David Spellberg, Steven Paletsky, Meir Daller Healthcare Fraud Suit Defendants 

The Department of Justice named four urologists in connection with the unnecessary medical test claims: Dr. Meir Daller, Dr. Steven Paletsky, Dr. David Spellberg and Dr. Robert Scappa. The legal proceedings also revealed that 21st Century encouraged its professionals to order more FISH tests by offering financial incentives tied to the number of tests they referred to a lab that was also operated by 21st Century Oncology – allegedly Stark Law violations and anti-kickback law violations which respectively prohibit referring to providers with common ownership and incentives for medical referrals..

FISH tests map the genetic material in human cells. They are used to visualize certain abnormalities in specific genes. Used in the diagnosis of bladder cancer, FISH tests are only required in certain cases. A computerized FISH test costs anywhere between a few hundred dollars and $1,000, while an older version of the test costs under $100. 

Altered Records, Evidence Destroyed on Lucrative Test’s Necessity 

While 21st Century Oncology submitted thousands of claims for FISH tests instead of other less expensive and, arguably, equally effective tests, it may also have ordered FISH tests routinely for patients who did not need them in the first place.

According to the lawsuit, Dr. Spellberg would alter patients` medical records to reflect traces of blood in urine, then falsely diagnosing hematuria, a common symptom of bladder cancer. With the suspicion of the cancer, came the need for the lucrative testing.

The whistleblower, Mariela Barnes, was actually Dr. Spellberg´s direct assistant. The lawsuit also claimed that David Spellberg diligently destroyed evidence by having the original negative tests shredded.

21st Century Met Five of Five Criteria on Questionable Billing for Medicare

Based on Medicare´s billing records for 2012, 21st Century´s pathologists billed the federal healthcare program more for computerized FISH tests than any other laboratory in the US. In fact, a 2014 report from the Office of the Inspector General (Department of Health and Human Sciences) on “Questionable Billing for Medicare” made reference to a Florida lab that met its five criteria for questionable billing. Though the report did not refer to it by name, the lab was later identified as 21st Century Oncology. The Fort Myers-based lab was one of a total of six highlighted in the document.

Among other interesting data, the report revealed that the average Medicare reimbursement per 21st Century physician had been $107,700 in 2010, a figure that amounts to 24 times the average for non-independent labs across the country. The average Medicare reimbursement per patient was a staggering $1,193, where the national average was about $70. 

The whistleblower lawsuit did not only manage to recover millions of dollars for the federal government and taxpayers, but it also shed light on the epidemic problem of self-referral in the health sector. While there are laws designed to prevent healthcare providers to profit from self-referral, such as 21st Century allegedly did by ordering tests from their in-house lab, there are currently many ways to do this under a semblance of legality.

Lobbyists Paid $600,000 by Donors with 21st Century Oncology Ties

The White House has repeatedly recommended narrowing the scope of the Stark Law’s in-office ancillary-services exception, which could potentially save Medicare $6 billion in ten years’ time by discouraging medical overutilization. The White House´s recommendations were confronted by lobbying from eight radiation-oncology labs, including 21st Century, and failed to gain support from the Senate.

Through both donations from its chairman´s family and a political action committee, 21st Century Oncology has spent in excess of $600,000 on political lobbying over the last seven years. It remains to be seen whether the Senate will change its point of view in the light of the outcome of this and other similar cases.

“Attack on Medicare by Unscrupulous Providers” says Official Shimon Richmond

Commenting on the resolution of the lawsuit against 21st Century, Special Agent in Charge Shimon Richmond of the Department of Health and Human Services Office of Inspector General commented, “This kind of unvarnished fraud is an attack on Medicare by unscrupulous providers and the OIG and its federal partners will take whatever steps are necessary to stop them.”

Whistleblower Mariela Barnes said she was satisfied with the result and happy that taxpayer money had been recovered. “All she wanted to do from day one is do what was right. Without whistleblowers generally, allegations like this would never come to light,” her representative commented. Barnes also received an award in another settlement against Dr. David Spellberg.

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