Rialto allegedly directed Clarksville, Indiana-based Kentuckiana Medical Center to offer personal loans to two referring doctors but never asked them to pay the loans back.
Rialto Capital Management LLC and its former affiliate RL BB-IN KRE LLC will pay $3.6 million to settle whistleblower allegations that the now-shuttered Kentuckiana Medical Center they owned and managed paid kickbacks for physician referrals, the Department of Justice said.
According to DOJ, Rialto directed Clarksville, Indiana-based KMC to proffer personal loans to two referring doctors but never asked them to pay the loans back, which investigators said "constituted a form of remuneration prohibited by both the Anti-Kickback Statute and the Stark Law."
"This recovery sends the message that healthcare providers must comply with applicable state and federal laws when billing the United States Government for services, or they will face consequences,” U.S. Attorney for the Southern District of Indiana Josh Minkler said in a media release.
Rialto, through RL BB, bought a bankrupt KMC in 2013. Under the reorganization, KMC and Rialto offered partial ownership in the hospital to referring physicians. That tactic was rejected in the bankruptcy proceedings, DOJ said, so Rialto offered personal loans to referring physicians, which they never attempted to collect.
The settlement resolves a whistleblower lawsuit filed in federal court by Abdul Buridi, MD, who will get $612,000 from the settlement.
Expanded Access provides patients with life-threatening diseases access to experimental medical products, including drugs, and biologic or medical devices.
The Food and Drug Administration on Monday announced a new initiative to help oncologists expedite unapproved and experimental therapies for cancer patients who've "exhausted available treatments."
"The first option for patients who have exhausted available treatments is to enroll in a clinical trial," Acting FDA Commissioner Ned Sharpless, MD, said in a media release. "But when that is not an option, we support Expanded Access and are exploring ways to make it easier for patients, their families and health care professionals to understand the process and how to access investigational therapies."
Expanded Access provides patients with life-threatening diseases access to experimental medical products, including drugs, and biologic or medical devices for treatment outside of clinical trials when there are no comparable or satisfactory alternative therapy options available, FDA said.
Because the treatments are not FDA approved, the agency's role in Expanded Access will be to weigh the potential benefit of an experimental treatment against the potential risks.
Under the program, physicians will ask the drug or device maker to provide the unapproved product, which the company can either approve or deny.
While the FDA said it authorizes "the vast majority" of these requests, Sharpless said that "for many patients or healthcare professionals, especially those not familiar with the Expanded Access program, the process may appear confusing or burdensome."
"Ultimately, a patient cannot submit an application for an investigational medical product; only a qualified physician is able to officially make the request," said Richard Pazdur, MD, director of the FDA's Oncology Center of Excellence.
"Through this pilot program, experienced FDA oncology staff will be available to support physicians and other healthcare professionals with their questions, assist in filling out the appropriate paperwork and acting as a facilitator for the process," Pazdur said.
The Eatontown, New Jersey-based company will pay $7.1 million to resolve criminal and civil allegations, and will cooperate with an ongoing federal investigation of price fixing in the generic drug industry.
Generic drug maker Heritage Pharmaceuticals Inc. will pay more than $7 million to resolve criminal and civil allegations related to a price-fixing scheme with competitors, the Department of Justicesaid.
The Eatontown, New Jersey-based drug company has also agreed to cooperate with an ongoing federal investigation of alleged price fixing in the generic drug industry, DOJ said.
"American consumers have the right to generic drugs sold at prices set by competition, not collusion," Assistant Attorney General Makan Delrahim of DOJ's Antitrust Division said in prepared remarks.
"It is particularly galling that, when healthcare prices in the United States are already high, certain generic pharmaceutical companies and executives engaged in collusive conduct at the expense of individuals who depend on critical medications," Delrahim said. "Heritage and its co-conspirators cheated and exploited vulnerable American patients to pad their bottom line."
A one-count felony charge filed this week in federal court in Philadelphia alleges that in 2014 and 2015 Heritage took part "in a criminal antitrust conspiracy with other companies and individuals engaged in the production and sale of generic pharmaceuticals, a purpose of which was to fix prices, rig bids, and allocate customers for glyburide, a medicine used to treat diabetes," DOJ said.
No other generic drug makers were publicly identified as part of the ongoing investigation by DOJ.
This is the third charge in the DOJ Antitrust Division's ongoing investigation of Heritage, which has already levelled charges against former CEO Jeffrey Glazer and former president Jason Malek.
The Antitrust Division also announced a deferred prosecution agreement after Heritage admitted its role in a price-fixing scheme involving the drug glyburide. Heritage will pay a $225,000 criminal penalty and cooperate with the ongoing criminal investigation.
In exchange, DOJ said it deferred prosecuting Heritage for three years, based on "substantial and ongoing cooperation with the investigation to date, including its disclosure of information regarding criminal antitrust violations involving drugs other than those identified in the criminal charge and the agreement."
In a separate civil resolution, Heritage will pay $7.1 million to resolve price-fixing allegations that DOJ said occurred between 2012 and 2015. The collusion between the drug makers and the ultimate sale of these drugs to federal healthcare programs at inflated prices are violation of the Anti-Kickback Statute and the False Claims Act, DOJ said.
The drugs included hydralazine, used to treat high blood pressure, theophylline, used to treat asthma and other respiratory problems, and glyburide, DOJ said.
Heritage Blames Former Execs
In a media release, Heritage placed the blame for the misconduct on the shoulders of its former executives, "both of whom pleaded guilty in January 2017 to felony antitrust charges; they are now awaiting sentencing, which is currently scheduled for September 26, 2019."
"The company's board of directors terminated both executives in August 2016 after learning of their antitrust conduct and discovering they orchestrated a years-long embezzlement scheme that looted tens of millions of dollars from the Company," Heritage said, adding that the company has filed a complaint in federal court hoping against both men, hoping to recover their losses.
William S. Marth, president and CEO of the Heritage Group, North America and Europe, said the drug maker was "pleased to put these issues behind us and focus on Heritage's future."
"In the years since the conduct occurred, Heritage has revamped its leadership team, strengthened its operations, and built a robust pipeline of future products that will expand the availability of generic pharmaceuticals for consumers," Marth said.
The stakeholders say private equity firm Golden Gate Capital can provide the financing needed to sustain Ensemble's 'exponential growth.'
Bon Secours Mercy Health will sell 51% of its equity in its revenue cycle management subsidiary Ensemble Health Partners to San Francisco-based private equity firm Golden Gate Capital, the stakeholders announced jointly this week.
Financial terms of the deal were not disclosed, and the companies did not say when they expect the sale to be finalized.
When the deal is finalized, Cincinnati-based Bon Secours Mercy Health will keep its partnership with Ensemble, and will hold minority owner status, with a seat on the company's board.
Ensemble will keep its management team, including founder and CEO Judson Ivy, and its headquarters will remain in Mason, Ohio.
The stakeholders said in their media release that the sale was made because Golden State Capital could provide the financing needed to sustain "the exponential growth Ensemble has achieved."
"Healthcare and the relationship between providers and payers are becoming increasingly complex, and the demand for our services is expanding significantly," Ivy said in prepared remarks.
"This partnership will support our continued growth and allow us to invest in new technologies, positioning Ensemble as a leading innovator in our field and allowing us to continue to deliver outstanding results and best-in-class services," Ivy said.
Ivy said that ceding majority ownership "is not a sale of the company, but the addition of a new value enhancing investment partner that is fully committed to our philosophy and mission."
Ivy founded Ensemble in 2014, and the company was purchased for $60 million in 2016 by Mercy Health, which merged with Bon Secoursin 2018. In the past five years, Ensemble has grown to include 3,600 employees with operations in 30 states, and more than 60 partner hospitals, the company said
Bon Secours CEO John M. Starcher, Jr., said the proceeds from the sale will be invested back into the communities it serves.
"This strategic infusion of additional capital will help Ensemble continue to expertly serve clients, while helping ensure Bon Secours Mercy Health can continue to improve the health and well-being of the communities we're privileged to serve for generations to come," Starcher said.
Joseph P. Galichia MD, the former owner of Wichita-based Galichia Medical Group PA, had reached FCA settlements with the federal government in 2000 and 2009.
For the third time since 2000, a Kansas cardiologist has agreed to a multimillion dollar False Claims Act settlement with the federal government.
This week, Joseph P. Galichia MD, the former owner of Wichita, Kansas-based Galichia Medical Group PA, agreed to pay $5.8 million to resolve allegations that he improperly billing federal healthcare programs for medically unnecessary cardiac stent procedures from 2008 through 2014, the Department of Justice said.
The allegedly false billings were sent to Medicare, the Defense Health Agency, and the Federal Employees Health Benefits Program, DOJ said.
"Patient safety is critically important," said Stephen McAllister, U.S. Attorney for the District of Kansas. "Performing medically unnecessary procedures puts patients at risk and defrauds federal health care programs."
Under the settlement, Galichia also agreed to a three-year ban from participating in any federal healthcare programs.
Galiachia sold his practice to HCA Wesley Medical Center in June, 2018.
The latest settlement stems from a whistleblower lawsuit filed by Aly Gadalla, MD, that the federal government joined in 2014. Gadalla will get $1.16 million from the settlement.
Galiachia emailed a statement to HealthLeaders, denying any wrongdoing but said he agreed to the settlement "because fighting the action was taking up far too much of his time and energy."
"Further, after nearly seven years, it simply became too costly to keep defending against these false accusations. Dr. Galichia has devoted his entire career to the practice of medicine and the cardiovascular care of many, many Kansans," the statement read. "Sadly, he feels this has been a matter of legal bullying and calls on Congress to prevent prosecutors in the future from attempting to practice medicine in the courts or by threat of legal action against well-meaning and competent physicians."
This is the third False Claims Act settlement with Galichia and GMED, DOJ said.
In 2009, Galichia and GMED paid $1.3 million to settle allegations that they submitted claims for services not provided or lacking proper documentation, DOJ said.
In 2000, Galichia and GMED paid $1.5 million to settle allegations that they submitted up-coded claims, double billed for the same services, and billed for services they didn't provide.
The SMP projects cost the government more than they saved in 2018, but OIG said the savings could be understated.
The nation's 61 Senior Medicare Patrol projects played a role in saving Medicare more than $12 million in 2018, according to a reportfrom the Department of Health and Human Services Office of the Inspector General.
The bulk of the savings came from expected recoveries of $11.9 million from the SMP's role in identifying two home health fraud schemes and one physician who provided unnecessary services and falsified records, OIG said.
The 6,935 members of the 61 SMPs in 2018 also reported $15,136 in Medicare recoveries, $5,734 in Medicaid recoveries, generated cost avoidance of $602,063, and saved beneficiaries and others $27,689, OIG said.
The Senior Medicare Patrol program was created in under the 1997 Omnibus Consolidation Appropriation Act, and is funded by grants from the U.S. Administration for Community Living.
The 61 SMPs conducted a total of 26,932 outreach events, reaching 1.7 million people, with 278,761 interactions with individual Medicare beneficiaries or their caregivers, OIG said.
The SMPs showed a 23% increase from 2017 with individual interactions in 2018 (278,761, up from 226,261). In addition, the projects reported significantly higher amounts for cost avoidance ($602,063 in 2018, up from $211,749 in 2017), while expected Medicare recoveries dropped ($15,136, down from $2 million). The number of beneficiaries contacted through outreach efforts declined to 1.7 million in 2018 from 1.9 million in 2018, OIG said.
With an operating budget of $18.1 million in 2018, the SMP projects appeared to cost the government more than they saved, but OIG said the savings it's audit found could be understated.
"We note that the projects may not be receiving full credit for recoveries, savings, and cost avoidance attributable to their work," OIG said. "It is not always possible to track referrals to Medicare contractors or law enforcement from beneficiaries who have learned to detect fraud, waste, and abuse from the projects."
"In addition, the projects are unable to track the potentially substantial savings derived from a sentinel effect, whereby Medicare beneficiaries' scrutiny of their bills reduces fraud and errors," OIG said.
The defendants allegedly tried to cash in on lawsuits filed around the country relating to the TVM implants and the alleged harm they caused women.
A physician and a surgical funding facilitator have been indicted for their alleged role in a nationwide scheme to cheat women plaintiffs in a class-action suit involving transvaginal mesh implants, the Department of Justice said.
Wesley Blake Barber, 49, of Detroit, Michigan, the owner of Surgical Assistance Inc. and Medical Funding Consultants LLC, and Christopher Walker, MD, 49, a licensed urogynecologist and the owner of MedSurg Holdings LLC, in Orlando, Florida, were arrested on Friday and charged in a six-count indictment filed in the Eastern District of New York.
The charges include one count of conspiracy to commit wire fraud, three counts of wire fraud, one count of conspiracy to violate the Travel Act and one count of violating the Travel Act, DOJ said.
The indictment alleges that Barber and Walker tried to cash in on lawsuits filed around the country relating to the TVM implants and the alleged harm they caused women.
Women in the lawsuits who had their TVMs surgically removed got larger settlements than women who did not. So, the two defendants allegedly lured the women into having surgical procedures to remove the TVMs, after allegedly lying to them about the risks of the TVM implants and the need to incur huge debts and travel long distances to undergo the surgeries.
Walker also allegedly paid kickbacks and bribes to Barber in exchange for the referral of these women for surgeries, DOJ said.
Observers say the support for the bill from senior leaders in both parties also means that its prospects are solid for clearing an otherwise dysfunctional Senate in some form.
The Senate Health Committee on Thursday unveiled a sweeping bipartisan proposal that aims to address surprise medical bills, improve transparency, and reduce the cost of prescription drugs and the overall cost of healthcare delivery.
"Republicans and Democrats in the United States Senate have announced this proposal of nearly three dozen specific bipartisan provisions that will reduce the cost of what Americans pay for healthcare," Committee Chairman Lamar Alexander (R-Tenn.) said in prepared remarks.
"These are common sense steps we can take, and every single one of them has the objective of reducing the healthcare costs that you pay for out of your own pocket," Alexander said, adding that his committee hopes to have the legislation on the Senate floor by July.
Sen. Patty Murray (D-Wash.), a co-sponsor of the Lower Health Care Costs Act of 2019, said the draft legislation addresses "important issues like surprise medical billing, drug prices, maternal mortality, and vaccine hesitancy," and that the rare bipartisan effort demonstrates that "we can make progress when both sides are at the table ready to put patients and families first."
The fact that an otherwise gridlocked, deeply partisan Senate could work together on sweeping legislation such as this demonstrates that both parties are hearing the frustrations from their constituents.
"There's one issue I hear a lot about from Tennesseans, and it is, 'What are you going to do about the health care costs I pay for out of my own pocket?'" Alexander said. "Well, we've got an answer."
Observers say the support for the bill from senior leaders in both parties also means that its prospects are solid for clearing Senate in some form.
"Folks should take this package seriously," Dean Rosen a former Republican senior health adviser and a partner at Mehlman Castagnetti Rosen & Thomas, told NPR.
"When you have a chairman and a ranking member that have worked together on a bipartisan package in the committee of jurisdiction, it always gives more weight to the product," he said.
Stakeholders Respond
Tom Nickels, executive vice president of the American Hospital Association, mostly praised the Act but raised concerns "about several of the proposals that would allow the government to intrude into private commercial contracts between providers and insurers."
"Specifically, banning so-called 'all or nothing' clauses could lead to even more narrow networks with fewer provider choices for patients, while adversely affecting access to care at rural and community hospitals," Nickels said in prepared remarks.
On surprise medical bills, Nickels said the AHA's "preferred solution is simple: patients should not be balance billed for emergency services, or for services obtained in any in-network facility."
"They should therefore have certainty regarding their cost-sharing obligations based on an in-network amount," he said. "We strongly oppose approaches that would impose arbitrary rates on providers, along with untested proposals such as bundling payments, which would be unworkable and would do nothing to solve the issue of surprise billing.
Matt Eyles, president and CEO of America's Health Insurance Plans, said the payer lobbylargely agrees with the proposals put forward in the Act and would work with the committee in the coming weeks.
While drafting the bill, Alexander said the committee solicited comments from the right-leaning American Enterprise Institute, the left-leaning Brookings Institution, Republican and Democratic governors and state insurance commissioners, doctors, hospitals, patients, and innovators. The legislation is expected to be marked up by the end of June.
The maker of ready-to-use IV bags and preloaded syringes has been repeatedly cited for safety concerns at its four manufacturing plants over the past dozen years.
A federal judge in Illinois has slapped a permanent injunction against PharMEDium Services LLCin the wake of the Lake Forest-based drug maker's repeated safety lapses at compounding pharmacies in four states.
"PharMEDium exposed patients across the United States to risk of receiving a harmful drug, which we find unacceptable," Acting Food and Drug Administration Commissioner Ned Sharpless, MD, said in a media release.
"We will continue to take appropriate enforcement actions when compounding pharmacies and outsourcing facilities produce drugs under substandard conditions or use inappropriate practices that could lead to serious harm to patients," Sharpless said.
Under a consent decree that came with Wednesday's injunction, PharMEDium cannot make or distribute its drugs from its Memphis, Tennessee plant until the FDA approves a corrective action.
PharMEDium President Scott Aladeen and Warren Horton, the company's vice president for Quality and Research and Development, were named in the permanent injunction as the people responsible for compliance with the consent decree.
PharMEDium had already shuttered its Cleveland, Mississippi plant in the wake of publicity surrounding the safety lapses.
Under the injunction, the company's Sugar Land, Texas, and Dayton, New Jersey plants must also hire independent compliance inspectors, FDA said.
PharMEDium is a major national supplier of ready-to-use IV bags and prefilled syringes. The safety concerns raised by the FDA and the ensuing plant closures greatly disruptedthe supply of critically needed drugs to the nation's hospitals.
In a complaint filed this week by the Department of Justice at the request of the FDA, federal officials accused PharMEDium of violating the Federal Food, Drug, and Cosmetic Act "by distributing adulterated, misbranded, and unapproved new drugs in interstate commerce."
The FDA said in its complaint that "PharMEDium's drugs were adulterated because they were prepared, packed, or held under insanitary conditions whereby they may have been contaminated with filth or rendered injurious to health and because PharMEDium failed to comply with current good manufacturing practices."
The allegedly adulterated drugs included oxytocin and morphine sulfate.
The FDA said that PharMEDium also "distributed unapproved new drugs and misbranded drugs because PharMEDium failed to comply with all of the requirements for drugs compounded in a registered outsourcing facility."
Since 2013, the FDA said it has inspected PharMEDium's compounding pharmacies and found numerous infraction that resulting in a 2018 warning letter. The company had been previously warned of similar concerns about unsanitary conditions in 2007, FDA said.
PharMEDium Responds
Gabe Weissman, a spokeman for PharMEDium, said in an emailed response to HealthLeaders that the injunction is the end result of discussions that the drugmaker held with federal regulators.
"Those discussions have concluded and the now filed Consent Decree, which permits commercial operations to continue at PharMEDium’s Dayton, New Jersey and Sugar Land, Texas compounding facilities and allows administrative operations to continue at the Lake Forest, Illinois headquarters, represents an important step forward in our journey to sustainable compliance," Weissman said. "We look forward to satisfying all aspects of the Consent Decree, including requirements pertaining to the Memphis facility."
"During a period of rapid regulatory changes for 503B Outsourcing Facilities, PharMEDium has spent the last several months implementing substantial improvements centered on demonstrating our commitment to patient safety and applicable current Good Manufacturing Practice (cGMP) requirements," Weissman said.
"PharMEDium is committed to the highest standards of safety and quality. We will always evaluate and invest in efforts to achieve full regulatory compliance and best meet the needs of our customers and patients they serve."
California-led defenders of the ACA say the plaintiffs are asking the court 'to do what Congress—after years of debate and deliberation—repeatedly refused to do: dismantle the entire Affordable Care Act.'
The Trump Administration and Texas-led states hoping to see the Affordable Care Act repealed judicially don't have the standing to gut the bill in its entirety, intervening Democratic attorneys general from 21 states said in a brieffiled Wednesday.
The California-led defenders of the ACA told the 5th U.S. Circuit Court of Appeals that the plaintiffs are asking "this Court to do what Congress—after years of debate and deliberation—repeatedly refused to do: dismantle the entire Affordable Care Act."
"It is no secret that the plaintiffs, and their new-found allies in the federal Executive Branch, oppose the ACA as a policy matter," the interveners wrote. "But they can articulate no plausible legal ground for the breathtakingly broad policy change that they ask this Court to uphold under the guise of constitutional adjudication."
Specifically, the intervening AGs argued that:
The Texas-led plaintiffs have no standing to challenge the individual mandate, because no plaintiffs were injured by the provision when Congress eliminated the tax penalty for failing to buy insurance.
Despite a U.S. District Court ruling invalidating the individual mandate (along with the rest of the ACA) the provision is constitutional and similar to other laws passed by Congress.
Even if the lower court's ruling on the unconstitutionality of the individual mandate is upheld, the provision could still be severed from the ACA because Congress sought to keep every other provision of the ACA when it cut the tax to zero.
The 5th Circuit announced that it will hold oral arguments the week of July 8.
U.S. District Judge Reed O'Connor last December declared the entire ACA invalid, as the plaintiff states had requested. The ruling was appealed to the Fifth Circuit by the California-led coalition.
Since O'Connor's ruling, Wisconsin and Maine left the plaintiff coalition after Democratic AGs took office in those states following the November general elections.
Initially, the Trump Administration's DOJ offered a partial defense of the ACA, arguing that most of the sprawling healthcare legislation should remain intact, even if the ACA's individual mandate were to be struck down in light of Congress zeroing out its tax penalty.
O'Connor's ruling invalidating the ACA went much further than what DOJ had urged. Earlier this year, however, DOJ reversed course and notified the appeals court that it agrees with the plaintiffs' argument and O'Connor's ruling, and would entirely abandon its partial defense of the ACA.
Defenders of the ACA say a repeal of the sweeping law could adversely affect 133 million people, including 17 million children, with pre-existing conditions. In addition, invalidating the law would challenge the coverage of more than 12 million people who became insured under the ACA's Medicaid expansion.
