PHYSICIAN REFERRALS LEADS TO $10 MILLION FALSE CLAIMS ACT SETTLEMENT

FROM:  U.S. JUSTICE DEPARTMENT 

Tuesday, March 31, 2015

Ohio-Based Health System Pays United States $10 Million to Settle False Claims Act Allegations

Robinson Health System Inc. has agreed to pay $10 million to settle claims that it violated the False Claims Act, the Anti-Kickback Statute and the Stark Statute by engaging in improper financial relationships with referring physicians, the Justice Department announced today.  Robinson is a nonprofit corporation based in Ohio that operates a number of health care facilities in Portage County, Ohio, including Robinson Memorial Hospital.

“The Department of Justice has longstanding concerns about improper financial relationships between health care providers and their referral sources, because such relationships can alter a physician’s judgment about the patient’s true health care needs and drive up health care costs for everybody,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”

The settlement announced today involved Robinson’s financial relationships with a number of referring physicians that allegedly violated the Anti-Kickback Statute and the Stark Statute, both of which restrict the financial relationships that hospitals may have with doctors who refer patients to them.  These relationships included management agreements that Robinson had with two physicians groups.  These physicians allegedly failed to provide sufficient bona fide management services to have justified the payments that they received.  Robinson disclosed these issues to the government.

“Referrals should be made to the best qualified physicians, and must be based on what’s best for the patient,” said U.S. Attorney Steven M. Dettelbach of the Northern District of Ohio.  “Improper financial relationships between hospitals and referring doctors can lead to clouded judgments, which is why the Department of Justice will continue to police such matters vigorously.”

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act, which prohibits false claims for federal funds, including claims submitted in violation of the Anti-Kickback Statute and the Stark Statute.  Since January 2009, the Justice Department has recovered a total of more than $23.9 billion through False Claims Act cases, with more than $15.2 billion of that amount recovered in cases involving fraud against federal health care programs.

The case was handled by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Northern District of Ohio, and the Department of Health and Human Services’ Office of Inspector General.

DOVER CHEMICAL CORPORATION TO PAY $1.4 MILLION FOR MANUFACTURE OF UNAUTHORIZED SUBSTANCES

The following excerpt is from an EPA e-mail:

February 7, 2012
“WASHINGTON – The U.S. Environmental Protection Agency (EPA) and the U.S. Department of Justice announced that Dover Chemical Corporation has agreed to pay $1.4 million in civil penalties for the unauthorized manufacture of chemical substances at facilities in Dover, Ohio and Hammond, Ind. The settlement resolves violations of the Toxic Substances Control Act (TSCA) premanufacture notice obligations for its production of various chlorinated paraffins. Dover Chemical produces the vast majority of the chlorinated products sold in the United States. As part of the settlement, Dover Chemical has ceased manufacturing short-chain chlorinated paraffins, which have persistent, bioaccumulative and toxic (PBT) characteristics. PBTs pose a number of health risks, particularly for children, including genetic impacts, effects on the nervous system, and cancer. Dover Chemical will also submit premanufacture notices to EPA for various medium-chain and long-chain chlorinated paraffin products.

“Assuring the safety of chemicals is one of EPA’s top priorities,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “Today’s action reinforces the need for chemical manufacturers to follow the law and protects Americans from chemicals that could be harmful to their health.”

“This settlement will require Dover to participate in an EPA review of all types of chlorinated paraffin products sold by the company and bring Dover into compliance with the Toxic Substances Control Act,” said Ignacia S. Moreno, assistant attorney general for the Environment and Natural Resources Division of the Department of Justice. “By halting production of short-chain chlorinated paraffins, this settlement will reduce undue risks to human health and the environment.”

Chlorinated paraffins are a family of chemical substances with different properties depending on their carbon chain lengths and are generally identified as short, medium, or long-chain. Chlorinated paraffins are used as a component of lubricants and coolants in metal cutting and metal forming operations, as a secondary plasticizer and flame retardant in plastics, and as an additive in paints. Short-chain chlorinated paraffins, however, have been found to be bioaccumulative in wildlife and humans, persistent and transported globally in the environment, and toxic to aquatic animals at low concentrations. EPA has developed an action plan for these chemicals based on the potential for significant impacts on the environment. The environmental and health concerns relating to medium-chain chlorinated paraffins and long-chain chlorinated paraffins may be similar to those associated with short-chain chlorinated paraffins. Those chemicals may also be persistent and bioaccumulative based on their physical-chemical properties, bioaccumulation modeling, and because they are also found in the environment.

In 1978, EPA compiled the initial TSCA Inventory of chemical substances from industry submissions and those substances were grandfathered onto the TSCA Inventory without additional human health or environmental review. Chemical substances not on the TSCA Inventory constitute “new chemical substances” for which a premanufacture notice (PMN) must be submitted to EPA at least 90 days before a company begins producing the substance. A PMN includes information such as the specific chemical identity, use, anticipated production volume, exposure and release information, and existing available test data. EPA identifies risks associated with new chemicals through the PMN process. In the PMN process, EPA can require additional testing or issue orders prohibiting or limiting the production or commercial use of such substances.”