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Seeger Weiss LLP today announced that the U.S. Department of Justice, the United States Attorney for the Southern District of New York, and several state Attorneys’ General Medicaid Fraud Units, have reached a $54 million settlement in a newly-unsealed healthcare fraud whistleblower action against CareCore National LLC. The company, headquartered in Blufton, SC, provides pre-authorization/pre-certification services for diagnostic testing to ensure that only medically reasonable and necessary tests are performed on patients and paid for by insurers. Of the $54 million recovery, $45 million will go to the federal government and $9 million will go to various participating states.
CareCore merged with MedSolutions, Inc. in December of 2014 and now operates as eviCore healthcare. CareCore provided these services around the country to managed care organizations and other providers, touting their services as cost control and reduction measures.
Stephen A. Weiss represented the whistleblower, or “relator,” in the lawsuit, which was filed under seal on February 21, 2013 in federal court in the Southern District of New York. The Relator, a Licensed Practical Nurse, alleged that CareCore trained its nurse employees to violate its own protocols that were supposed to ensure that its customers pay only for diagnostic testing that is medically reasonable and necessary.
Specifically, under CareCore’s stated protocol, nurses were required to refer pre-authorization requests that failed to meet certain criteria to medical doctors for their review so the doctors could issue or deny the pre-authorization requests. These requests were required by CareCore’s customers – managed care organizations and other health insurers that provide services to the beneficiaries of government programs through Medicare Part C and Medicaid Managed Care.
Instead, due to critical time constraints required by its customers, CareCore directed its nursing staff to “Process As Directed” or to “PAD” certain of those cases that had been sent for a doctor’s review. For these “padded” cases, nurses were instructed to issue pre-authorizations for diagnostic testing even though the set criteria had not been met and the doctors had not conducted the required review. Thus, the managed care organizations and other providers, including those with which the government contracts, paid for diagnostic tests, like costly MRIs and PET scans, that were not properly authorized as being medically reasonable or necessary.
“Our client was deeply troubled by the wrongdoing that he witnessed and after a lot of soul-searching decided to come forward in order to end a practice that was not only wrong, but cost the U.S. taxpayers many tens of millions of dollars,” says his attorney, Stephen A. Weiss of Seeger Weiss. “It’s never an easy decision, but it’s a courageous and correct decision.”
Weiss added: “At a time when healthcare costs are spiraling out of control, it’s vital that whistleblowers like our client come forward to prevent this type of abuse.” Pursuant to False Claims Act provisions, the Relator will be awarded approximately $10.5 million plus interest—or 20%–from the Government’s combined federal and state recovery.
The settlement was handled by Assistant U.S. Attorney Arastu K. Chaudhury of the U.S. Attorney’s office of the Southern District of New York and Kathleen Von Hoene of the Florida Office of the Attorney General (on behalf of the states); Seeger Weiss partner Stephen A. Weiss represented the relator and led the case.
Note: Seeger Weiss LLP has successfully represented relators in a myriad of qui tam “whistleblower” proceedings. The firm was relator’s counsel in United States ex rel. Alexander, et al. v. Warner Chilcott plc, et al., No. 11-cv-10545-RGS (D. Mass.), in which the Government recovered $125 million in connection with a sprawling healthcare fraud orchestrated by pharmaceutical company Warner-Chilcott, and was counsel to the whistleblower in People of the State of New York, ex rel. Vijay Tharwani v. Mohanbhai Ramchandani and Mohan’s Custom Tailors, Inc., Index No. 103744/2012, which resulted in the recovery of $5.5 million by the State of New York in connection with a decade-long tax evasion scheme perpetrated by “tailor to the stars” Mohanbhai “Mohan” Ramchandani. The firm, with offices in New York, Philadelphia and New Jersey, represents plaintiffs in a variety of practice areas, including qui tam, pharmaceutical injury, securities and investment fraud, consumer protection, environmental and asbestos exposures, personal injury and medical malpractice, product defect, antitrust, and commercial disputes.
For more information about this case or Seeger Weiss’ whistleblower practice and relator services, please contact Stephen A. Weiss at 212-584-0700 or toll-free at 877-912-2668.