December was a busy month at the Department of Justice (DOJ). Here is a roundup of the charges and settlements announced in the past two weeks:

INDIANA HEALTH NETWORK TO PAY $345M TO SETTLED ALLEGED FCA VIOLATIONS

Community Health Network Inc., a health care network headquartered in Indianapolis, has agreed to pay the federal government $345 million to resolve allegations that it violated the False Claims Act by knowingly submitting claims to Medicare for services that were referred in violation of the Stark Law.

Under the Stark Law, when a hospital employs a physician, the hospital may not submit claims for certain services referred by that physician unless the physician’s compensation is consistent with fair market value and not based on the value or volume of their referrals to the hospital. In this lawsuit, the United States alleged that the compensation the health care network paid to its cardiologists, cardiothoracic surgeons, vascular surgeons, neurosurgeons and breast surgeons was well above fair market value, that it awarded bonuses to physicians that were tied to the number of their referrals, and that it submitted claims to Medicare for services that resulted from these unlawful referrals.

The complaint alleged that beginning in 2008 and 2009, senior management at Community Health Network embarked on an illegal scheme to recruit physicians for employment to capture their lucrative “downstream referrals.” Community successfully recruited hundreds of local physicians, including cardiovascular specialists, neurosurgeons, ,and breast surgeons, by paying them salaries that were significantly higher—sometimes as much as double—what they were receiving in their own private practices.

Under the settlement, in addition to paying the United States $345 million, Community Health Network will enter into a five-year Corporate Integrity Agreement with the Department of Health and Human Services-Office of Inspector General.

The settlement stems from a whistleblower complaint filed in 2014 by CHN’s former Chief Financial and Chief Operating Officer Thomas Fischer pursuant to the False Claims Act’s qui tam provisions, which allow private persons to bring a lawsuit on behalf of the government and to share in any recovery. The Act also permits the government to intervene and take over the lawsuit, as it did in this case as to certain of Fischer’s allegations. Fischer’s share has not yet been determined.

“Hoosier Medicare patients deserve to know that their care is based on their medical needs, not their doctor’s financial gain,” said U.S. Attorney Zachary A. Myers for the Southern District of Indiana., in the announcement. “When doctors refer patients for CT scans, mammograms or any other medical service, those patients should know the doctor is putting their medical interests first and not their profit margins. Community Health Network overpaid its doctors. It also paid doctors bonuses based on the amount of extra money the hospital was able to bill Medicare through doctor referrals. Such compensation arrangements erode patient trust and incentivize unnecessary medical services that waste taxpayer dollars.”

MAN CHARGED IN $60M HEALTH CARE FRAUD AND KICKBACK SCHEME

A federal grand jury in Miami has returned an indictment charging a Texas man for his alleged role in a $60 million health care fraud, wire fraud, and kickback scheme involving the submission of false and fraudulent claims to Medicare for medically unnecessary durable medical equipment (DME), genetic tests, and foot bath medications.

Robert Leon Smith III, 48, of Archer City, owned and/or operated a network of DME companies in Florida, Texas, and Maryland and used the companies to allegedly bill Medicare for medically unnecessary orthotic braces that were ineligible for Medicare reimbursement. Smith also allegedly referred doctors’ orders for medically unnecessary orthotic braces, genetic tests, and foot bath medications to other DME suppliers, pharmacies, and laboratories in exchange for kickbacks and bribes, according to court documents. 

Smith is charged with one count of conspiracy to commit health care fraud and wire fraud, four counts of health care fraud, one count of conspiracy to defraud the United States and to pay and receive health care kickbacks, and two counts of solicitation and receipt of health care kickbacks. If convicted, he faces a maximum penalty of 20 years in prison on each conspiracy to commit health care fraud and wire fraud count, a maximum penalty of 10 years in prison for each health care fraud and anti-kickback violations count, and a maximum penalty of five years in prison on each conspiracy to defraud the United States and to pay and receive kickbacks count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

PSYCHOLOGIST SENTENCED TO 27 MONTHS IN PRISON FOR $2.6M HEALTH CARE FRAUD SCHEME

A 72-year-old licensed psychologist from Greenwich, Conn. has been sentenced by a U.S. District Court judge to 27 months in prison, followed by three years of supervised release, for operating a $2.6 million health care fraud scheme..

According to court documents and statements made in court, Lonski, along with his wife, Dr. Evelyn Llewellyn, maintained separate medical practices out of their home office in Old Greenwich.  Lonski and Llewellyn were authorized providers for the Connecticut Medicaid program, Medicare, and other health care benefit programs.  Lonski was responsible for submitting claims for reimbursement for services allegedly provided by himself and Llewellyn, both at their home office and at various skilled nursing facilities within Connecticut.

For years, Lonski billed insurers for services that he knew were not rendered, including by billing for patients who were deceased, for dates of service when he was out of the country, for dates of service when Llewellyn was out of the country, and for dates of service when he was hospitalized.  From 2014 through 2019, Lonski submitted more than 80,000 claims for service, and he claimed to have provided services every single day, including weekends and holidays, except for one day in 2017. On 60 of these dates, Lonski billed for more than 24 hours of service, and on 901 dates, Lonski billed for more than 12 hours of service.  These fraudulent claims resulted in a loss of over $2.6 million , including a loss of $1,157,292 to the Connecticut Medicaid program and a loss of $119,092 Medicare.

In 2002, Lonski settled a federal civil lawsuit alleging health care fraud, which was brought by the government in the Southern District of New York.  Lonski agreed to pay $4 million in restitution and was excluded from participating in all federal healthcare programs, including Medicare and Medicaid, for five years. .

On December 12, 2022, Lonski pleaded guilty to health care fraud. He has been ordered to pay restitution of  the $2.6 million and report to prison on March 25, 2024

In May 2023, Llewellyn entered into a civil settlement agreement with the federal and state governments in which she agreed to pay $658,294 to settle allegations that she received payment for claims submitted by Lonski to the Medicare and Medicaid programs for psychology services allegedly provided by Llewellyn to Medicare and Medicaid beneficiaries that were, in fact, not provided.