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OIG Enforcement Summary: August 16, 2022 – August 31, 2022 – Healthcare


The following is a summary of the federal Department of Health
and Human Services’ Office of Inspector General (OIG) reports
of fraud and abuse enforcement activity across the country. The
enforcement actions reported are based upon federal and individual
states’ activity.

The summaries reflect areas of OIG’s and individual
states’ current and recent enforcement activity. Knowing where
regulators’ attention is focused can help healthcare providers
identify areas of focus for compliance and risk assessment
activities. Although not all the enforcement actions may be
relevant to any one provider’s healthcare business, there may
be some summaries that could be used as examples in compliance
program education (“What to avoid”), or used in
developing a risk management plan. (Note: An Acronym Key appears at
the end of the Report.)

Of Note in this Issue:

  1. New York’s Attorney General announced a settlement with a
    NY not-for-profit provider of services to people with developmental
    disabilities that fraudulently reported executive salaries and
    contractor fees on Medicaid cost reports when services related to
    Medicaid were not provided. The provider agrees to dissolution
    after it transfers its clients to other Medicaid providers and
    submits its final claims on or before 6/30/2023 (8/31).

  2. Another state announced its settlement with Mallinckrodt
    related to Mallinckrodt’s failure to pass along drug rebates to
    Medicaid programs (8/17).

  3. In a related failure to pass along discounts, Washington State
    announced a settlement with a managed care plan that failed to pass
    along PBM discounts to its Medicaid program (8/24).

  4. OIG is prosecuting Paycheck Protection Program (PPP) abuses
    (8/19). Conducting audits of COVID funds distributions is part of
    OIG’s oversight responsibilities.

  5. A California County and other providers connected with the
    County reached a settlement with the Federal government on
    allegations of FMV irregularities. Two Defendants agreed to enter
    into a Corporate Integrity Agreement (CIA). One Defendant refused
    to enter into a CIA and, in response, OIG retains the ability to
    exclude that provider from federal healthcare programs (8/18).

  6. Although three enforcement actions were reported to include
    agreements to enter into CIAs, not all the CIAs have been posted on
    OIG’s website.

August 31, 2022 OIG News Release

Attorney General James Secures $850,000 from Disability
Services Not-for-Profit That Defrauded Medicaid – Maranatha
Human Services Cheated Medicaid By Illegally Paying CEO and Family
Members for Work That Was Not Medicaid Eligible

NY. The Defendant, a not-for-profit developmental disabilities
service provider, entered into a settlement agreement to resolve
allegations that the Defendant submitted false cost reports that
claimed reimbursement for amounts spent on salaries and contractor
fees which were not for the provision of Medicaid services, were
for excessive amounts, and were paid for little or no work
performed. In addition to the repayment, the Defendant agreed to
transfer its Medicaid business to other providers and by June 30,
2023 no longer submit new claims for state-funded healthcare
programs. Additionally, it must submit a petition to dissolve
within 60 days of submission of its final claim to federal and
state healthcare programs. This matter was initiated through a Qui
Tam action. The Defendant’s CEO previously settled allegations
related to his salary and work on non-Medicaid business. He has
been barred from working or volunteering for any entity that
receives Medicaid funding and he is permanently barred from serving
as an officer, director or trustee of any NY not-for-profit
corporation and in any capacity that permits him discretion over
charitable assets.

Attorney General Mark Vargo announces settlement of Medicaid
kick-back suit

SD. See related article on 8/23 on Essilor Laboratories of
America, Inc. This announced SD’s settlement with Essilor.

Global Healthcare Company to Pay $6.3 Million to Resolve False
Claims Act Allegations

NJ. The Defendant, Novo Nordisck, Inc., allegedly violated the
Trade Agreements Act which restricts the procurement of goods under
certain government contracts for purchase from specific designated
countries, by submitting false claims for payment for medical
devices that were manufactured in non-designated countries.

California Man Sentenced to Federal Prison for Role in Health
Care Kickback Conspiracy

TX. The Defendant conspired with others to pay and receive
illegal kickbacks in exchange for the referral of, arranging for,
and recommending healthcare business, specifically pharmacogenetic
(PGx) tests. Those tests identify genetic variations that affect
how patients metabolize certain drugs. The PGx tests were referred
to clinical laboratories in CA.

13 Novus Healthcare Fraud Defendants Sentenced to Combined 84
Years in Prison

TX. The Defendants were sentenced for their participation in
alleged fraud by a hospice agency that submitted materially false
claims for hospice services, provided kickbacks, and violated HIPAA
to recruit beneficiaries. Allegations also included that employees
of the hospice dispensed Schedule II controlled substances without
the guidance of medical professionals and moved patients to a new
hospice company in order to avoid a Medicare suspension; the
hospice’s medical directors often signed off on patient care
plans without properly reviewing patient files and falsely
certifying they completed in-person examinations when they had not;
admissions and discharges from the hospice were made without any
physician involvement; and kickbacks were paid to physicians
disguised as medical director salaries to induce referrals.
Additional allegations involve the hospice enrolling first-time
hospice patients through an agreement with Express Medical that
provided access to potential patient confidential medical
information and the hospice referred lab tests and home health
visits to Express Medical.

August 30, 2022 OIG News Release

Florida Lab Owner Charged in $53 Million Health Care Fraud and
Kickback Scheme Related to Genetic Cancer Screening Tests

NJ. The Defendant, a FL owner of multiple labs, allegedly paid
kickbacks and bribes to entities that supplied referrals and orders
for genetic cancer screening tests (CGX) which were used to bill
Medicare and other healthcare benefit program beneficiaries,
without regard to medical necessity. The Defendant allegedly paid
kickbacks to those providing CGX referrals and, to conceal the
bribes, the Defendant and his suppliers entered into sham contracts
to make it appear that the suppliers were engaged in, and being
paid for, legitimate marketing and referrals services. Other
charges for healthcare offenses are pending in FL and PA.

Vision Quest Industries to Pay $2,250,000 to Resolve False
Claims Act Allegations

MN. The Defendant, a DME manufacturer, settled allegations that
its independent sales representative and the sales
representative’s company paid kickbacks in the form of
commission payments based upon a 20-35% net revenue on the
Defendant’s DME equipment sold. This marketing scheme set the
Defendant up as the exclusive brace supplier for specific braces.
Billings were submitted to Medicare. The Defendant also agreed to
enter into a five year Corporate Integrity Agreement.

Medical Director Convicted in Health Care Fraud Scheme

TX. The Defendant, a physician, allegedly authorized toxicology
and genetic testing for TRICARE beneficiaries without seeing,
speaking to, or otherwise treating patients and without
incorporating test results into ongoing treatment. Additionally,
some patients did not know what they were being tested for and
others were enticed to provide urine or saliva specimens in
exchange for $50 gift cards. Evidence at trial allegedly
demonstrated that the Defendant was paid in exchange for signing
off on medically unnecessary and repetitive toxicology and genetic

August 29, 2022 OIG News Release

Idaho Provider Sentenced to Jail for Defrauding State Medicaid

ID. The Defendant was the owner and operator of a company that
provided home health, supervised employment, mental health
counseling and social support to Medicaid participants with
developmental disabilities. She allegedly made false
representations or directed billing personnel to make false
representations regarding services provided to Medicaid patients.
This resulted in overpayments being issued to Defendant by ID

Paxton’s Medicaid Fraud Control Unit Helps Secure
Indictment Against Two Individuals Accused of $6.9 Million Medicaid
Fraud and Kickback Scheme

TX. The Defendants, a manager and operator of a family dental
clinic, allegedly submitted false and fraudulent claims to Medicaid
for dental services that were never provided, paid kickbacks to
marketers and caregivers of children to bring the children for
treatment by the clinic, and one Defendant allegedly employed and
billed Medicaid for a person not licensed to practice pediatric

August 25, 2022 OIG News Release

Charlotte Medical Device And Equipment Manufacturer Agrees To
Pay Over $780,000 To Resolve Allegations Of False Claims Act

NC. The Defendant, a medical device and equipment manufacturer,
settled allegations that it marketed and promoted products that did
not meet Medicare’s or Medicaid’s reasonable and necessary
requirements, and so were not eligible for reimbursement. The
Defendant allegedly did not receive the necessary approvals or the
approvals expired for the products in issue. The matter was
initiated through a Qui Tam case.

Missouri doctor sentenced to year in prison for healthcare
fraud; he and wife ordered to repay $235,000

MO. The Defendants, a physician and his wife, for nearly a
decade, allegedly injected patients with a cheaper, foreign-sourced
Orthovisc that had not been approved by the FDA. The patients were
unaware of the substitution. The Defendants received reimbursement
based on a more expensive medication than was used, lied to their
compliance officer and a friend by representing the injections came
from a US distributor, and fraudulently persuaded the compliance
officer that the Orthovisc had a required National Drug Code

August 24, 2022 OIG News Release

AG Ferguson: Health care giant Centene to pay Washington $19
million for overcharging state Medicaid program in 2nd largest
Medicaid fraud recovery in WA history

WA. The Defendant, a managed care provider, settled allegations
that it overcharged the Medicaid program for pharmacy benefit
management services when it failed to pass on discounts it received
to the WA Medicaid program and inflated the dispensing fees. In
addition to the amount paid to WA, the Defendant is to pay an
additional $13 million to the federal government. The matter was
initiated through a whistleblower complaint.

August 23, 2022 OIG News Release

Lawrence woman fined, ordered to repay more than $5,000 to
Kansas Medicaid program

KS. The Defendant, a personal care attendant for her son, agreed
to a consent judgement to resolve allegations that she provided her
confidential user information to her son, who logged into an app 91
times, indicating his mother was providing him services at times
when the Defendant was working as an emergency room nurse and not
as her son’s personal care attendant.

Essilor Agrees to Pay $16.4 Million to Resolve Alleged False
Claims Act Liability for Paying Kickbacks

TX. The Defendant, a manufacturer and distributor of optical
lenses and equipment used to produce optical lenses, allegedly paid
remuneration to eye care providers (optometrists and
ophthalmologists) to induce them to order and purchase the
Defendant’s products for their patients in violation of the
AKS. The matter was initiated through a Qui Tam complaint. The
Defendant agreed to enter into a 5 year Corporate Integrity
Agreement, which will include implementing systems, policies,
processes, and procedures to ensure that any discounts, rebates or
other reductions in price offered to providers comply with the

August 19, 2022 OIG News Release

Hospice agrees to pay nearly $1M to settle false claims

TX. The Defendant, a hospice provider, allegedly submitted false
claims for hospice care for patients who were not eligible for, and
did not qualify for, the hospice benefits. Patients were not
terminally ill, which is an eligibility requirement for hospice
care. The matter was initiated through a Qui Tam complaint.

Two indicted for exploiting adult day care patients in Medicare
fraud scheme

TX. The Defendants, a physician and an employee, allegedly paid
kickbacks to adult day care companies to gain Medicare beneficiary
information under the guise of providing medical services. The
Defendants and other co-conspirators allegedly used that
information to perform a variety of unnecessary medical tests and
procedures and order prescriptions for expensive medications that
were not needed; additionally, primary care physicians of patients
were allegedly not consulted prior to, or after, the examinations.
It is also alleged the Defendants were paid kickbacks by marketers
for ordering laboratory tests and prescriptions that were
unnecessary and that patients did not want – in many
instances the patients allegedly did not receive their test results
or the prescribed medication. One Defendant allegedly forged
patient signatures on consent forms related to the fraudulent
laboratory testing services and prescriptions.

Kansas Brothers Indicted for $3.7 Million Healthcare Fraud

KS. The Defendants allegedly created several businesses and
misrepresented the ownership of the enterprises in documents,
submitted false billing for medical services not administered to
patients, used a physician’s provider number without his
authorization, and falsified the physician’s electronic
signature indicated on documents stating he performed medical
procedures he did not perform.

Kansas Chiropractor Indicted for PPP Loan Fraud

KS. The Defendant, a chiropractor, allegedly fraudulently
obtained Paycheck Protection Program (PPP) loans from two banks and
then used a third bank to conceal the proceeds. OIG is charged with
oversight/auditing of PPP funds.

August 18, 2022 OIG News Release

Ventura County’s Organized Health System and Three Medical
Providers Agree to Pay $70.7 Million to Settle False Claims Act

California County Organized Health System and Three Health Care
Providers Agree to Pay $70.7 Million for Alleged False Claims to
California’s Medicaid Program

Attorney General Bonta, U.S. Department of Justice Secure $70.7
Million in Settlements Against a Southern California County
Organized Health System and Three Healthcare Providers for
Violations of the False Claims Act

CA. The Defendants, a Venture County Medi-Cal Managed Care
Commission (operator of multiple varying healthcare providers); a
non-profit hospital; and non-profit healthcare organization,
allegedly submitted false claims to Medi-Cal for “Additional
Services” provided to Adult Expansion Medi-Cal members that
were not allowed medical expenses under their Medicaid contracts
with CA; the pre-determined amounts did not reflect FMV of the
Additional Services provided; and/or the Additional Services
duplicated services already provided. Additionally it was alleged
that the payments were unlawful gifts of public funds. The matter
was initiated by a Qui Tam complaint. Two of the Defendants agreed
as part of the Settlement to execute a five year Corporate
Integrity Agreement. One Defendant, Clinicas del Camino Real Inc.,
although it entered into a healthcare fraud settlement with the US,
refused to enter into a CIA and is listed on the OIG’s website
as a provider that is High Risk – Heightened Scrutiny. As
part of the Settlement Agreement, OIG reserved the right to exclude
Clinicas for the alleged conduct.

Leavenworth woman ordered to repay $3,500 for Medicaid

KS. The Defendant, a personal care attendant for her
mother-in-law, allegedly submitted false claims to Medicaid as if
she were providing home care after her mother-in-law was
hospitalized and had died.

Owner & Operator Of Former Nashville-Based Lowry Medical
Supply, Inc. Charged In HealthCare Fraud Conspiracy – Charges
Allege Approximately $30 Million Fraudulently Billed to

TN. The Defendants, an owner and operator of a defunct medical
supply company, allegedly paid kickbacks and bribes in exchange for
referral of Medicare beneficiaries by medical professionals; worked
with fraudulent telemedicine companies for braces that were
medically unnecessary; and lured Medicare beneficiaries who were
elderly or suffering from dementia into a scheme to mail orthotic
braces that the beneficiaries never asked for, never wanted, and
never needed, which were then billed to Medicare. In 2018, the
Defendants had been warned by a Medicare accrediting agency of the
violations of Medicare rules, but did nothing to change their

Two charged in $6M pediatric dental Medicaid fraud/kickback

TX. The Defendants, an operator and manager at a dental clinic,
allegedly submitted false and fraudulent claims to Medicaid for
dental services that were never provided as billed; paid kickbacks
to marketers and caregivers of children Medicare insures to bring
them to their dental clinic for services; employed an individual to
practice pediatric dentistry without a license and billed Medicaid
for services; and laundered Medicaid monies to a personal bank

August 17, 2022 OIG News Release

Mallinckrodt to Pay More Than $230 Million to Settle Lawsuit
Alleging Underpayment of Medicaid Drug Rebates

ID. Mallinckrodt’s financial settlement with ID is announced
and it involves Mallinckrodt’s and its predecessor,
Questcor’s, underpayment of Medicaid drug rebates to ID and, as
a result, violations of the FCA.

August 16, 2022 OIG News Release

Local home health care business owner sent to prison for $10M
Medicare fraud

TX. The Defendant, an owner of two home care businesses,
allegedly billed Medicare by fraudulently using the names of
beneficiaries that were not patients of the Defendant’s
agencies. Additionally, it was alleged the beneficiaries did not
need home health services, were not treated by a physician, and
never were patients.

If you have any questions on any of the summaries, or if you
would like assistance in developing a compliance plan (including
compliance training materials) to address any OIG Enforcement
activity or other compliance or risk management matter, please
contact Matthew Babcock at Harris Beach, PLLC at or (518)


  • AG = Attorney General

  • AKS = Anti-Kickback Statute

  • CIA = Corporate Integrity Agreement

  • CMP = Civil Monetary Penalties

  • CMS = Centers for Medicare and Medicaid Services

  • CPT = Current Procedural Terminology Codes

  • DME = Durable Medical Equipment

  • E&M = Evaluation & Management services

  • FEHBP = Federal Employees Health Benefits Program

  • FMV = Fair Market Value

  • DOJ = United States Department of Justice

  • FCA = False Claims Act

  • FWA = Fraud, Waste & Abuse

  • HHS = Department of Health and Human Services

  • IA = Integrity Agreement

  • LTC = Long Term Care (usually facilities)

  • MCO = Managed Care Organization (typically Medicaid)

  • MFCU = Medicaid Fraud Control Unit

  • MSO = Management Services Organization

  • OIG = Office of Inspector General in HHS

  • OT = Occupational Therapy

  • PBM = Pharmacy Benefit Managers

  • PT = Physical Therapy

  • SNF = Skilled Nursing Facility

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.


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