The third quarter of this year brought numerous high-dollar False Claims Act (FCA) settlements involving a variety of industries and alleged conduct.
Below are noteworthy resolutions that reflect recent enforcement trends.
Anti-Kickback Statute Enforcement
There have been several settlements in recent months resolving allegations of violations of the Anti-Kickback Statute (AKS). Three Two are highlighted here:
- On July 18, dialysis provider DaVita agreed to pay over $34 million to resolve qui tam allegations that it gave unlawful remuneration to physicians in exchange for referrals, in violation of the AKS. First, the government alleged that DaVita bought certain dialysis clinics and products from a competitor in exchange for sending Medicare patients’ prescriptions to DaVita Rx. Second, the government alleged that DaVita provided free management services to vascular access centers to induce the physician owners of those centers to refer dialysis patients. Third, the government alleged that DaVita provided a right of first refusal for medical directorships and an improper medical director payment to a large nephrology practice in exchange for dialysis referrals. DaVita did not admit liability under the settlement.
- On August 20, a radiology practice and its physician founder agreed to pay nearly $9 million to resolve qui tam allegations that they violated the FCA and the AKS through an improper transaction with local referring physicians. According to the press release, the practice opened a series of clinics to surgically treat Peripheral Arterial Disease, raising the capital to do so from physicians who were likely to be able to refer Medicare patients to the surgical clinics. In his pitch to potential investors, the founder allegedly told them they could ensure a good return on their investments by referring patients to receive revascularization surgery there for high profits, and that once the surgical centers were profitable they could be sold for profit.
- On September 18, senior primary care provider Oak Street Health agreed to pay $60 million to resolve qui tam allegations that it unlawfully compensated third-party insurance agents for making referrals or recommendations of their clients to Oak Street. Under its Client Awareness Program, the government alleged that Oak Street paid these insurance agents to contact seniors who were eligible for or enrolled in Medicare Advantage and market Oak Street to them, and then refer any interested seniors to Oak Street via a three-way phone call or electronic form submission. Oak Street was acquired by CVS Health in 2023.
Pharmaceuticals
Two recent settlements related to allegations of improperly billing the government for prescription drugs.
- On September 4, Walgreen Co. and Walgreens Boots Alliance Inc. agreed to pay $106.8 million to resolve allegations that it billed government healthcare programs for prescriptions that never were dispensed. The government alleged that over an 11-year period, Walgreens billed the government for prescriptions that it processed but that the beneficiaries never picked up. According to the press release, Walgreens received credit under the Department of Justice’s guidelines for, among other things, implementing enhancements to its pharmacy management system to prevent future occurrences and for self-reporting certain conduct. Walgreens also will receive a credit of more than $66 million for amounts previously refunded to the government.
- On September 4, Glenmark Pharmaceuticals Inc. USA agreed to pay $25 million to resolve allegations that it conspired to fix the price of the generic drug pravastatin. The government alleged that Glenmark paid and received compensation in violation of the AKS through arrangements with other pharmaceutical manufacturers on price, supply, and the allocation of customers. The press release specified that the amount of the settlement is based on Glenmark’s ability to pay and is in addition to a separate $30 million criminal penalty that Glenmark paid to resolve related criminal charges. Glenmark also entered into a deferred prosecution agreement to resolve those criminal charges.
Federal Grant Funding
- On August 26, the City of Los Angeles agreed to pay $38.2 million to resolve allegations that it sought and used federal grant funds from the Department of Housing and Urban Development to build multifamily affordable housing that the city knew failed to meet federal accessibility requirements. Initially filed as a qui tam complaint, the government intervened in the case in 2017 and filed a complaint in intervention alleging that the city used federal grant funding for more than a decade to build multifamily affordable housing but failed to make its housing program accessible to people with disabilities.
The government alleged that the city’s housing was not structurally accessible because of failures like slopes that were too steep, counters that were too high, and thresholds that did not permit wheelchair access. The government also alleged that the city failed to maintain a publicly available list of accessible units and their accessibility features in accordance with federal requirements and that it repeatedly certified its compliance with grant requirements despite those failures.
To see additional settlements from Q3 2024 not included here, head to our Healthcare Fraud & Abuse Resource Center.
