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Medicare Whistleblower gets $1.1 million in False Claims Act case

A Medicare False Claims Act case brought against a laboratory company in western Wisconsin and its owners has ended with a settlement of $8.5 million dollars. The whistleblower who came forward with allegations of fraud will receive $1.1 million of the settlement money.

Pharmasan Labs, Inc. and NeuroScience, Inc., and  Gottfried Kellermann, and Mieke Kellermann, agreed to pay $8.5 million to the United States to million to settle claims it submitted false billing information to Medicare and resolve False Claims Act allegations.

The United States claimed that Pharmasan had knowingly and falsely billed Medicare for almost five years of food sensitivity tests that were not eligible for reimbursements and knowingly submitted claims for laboratory services that violated Medicare rules and which were, therefore, not reimbursable. .

In the charges, the prosecutor alleged that Pharmasan falsely billed Medicare for ineligible food sensitivity testing for nearly five years; Pharmasan employees knew that Medicare prohibited payment for food sensitivity testing; and Pharmasan employees submitted false information to Medicare disguising the type of test that Pharmasan was performing so that Medicare would pay for the services.

The prosecution also claimed that Pharmasan knowingly violated Medicare billing rules by submitting claims for services provided by non-physician practitioners.   A large portion of Pharmasan’s referrals for laboratory services came from non-physician practitioners that were not eligible to refer Medicare paid services. Pharmasan knew that Medicare billing rules prohibit payment for such laboratory services.  In spite of that, Pharmasan employees billed Medicare for these services for nearly five years.

Under the terms of the settlement, Pharmasan had to admit that the United States was able to prove all of the above.

According to Pharmasan, a billing manager was solely responsible for submitting the false information. The manager left in 2012 after which the Pharmasan and its billing company NeuroScience sued him, in part, they say, for diverting reimbursements to his own accounts.

The defendants agreed to let the government keep $2.8 million seized by federal agents in March of last year, with an additional penalty of $5.7 million.

They must also create a comprehensive Medicare compliance program with annual claims reviews.

The United States took action after a whistleblower filed an action under the qui tam provisions of the False Claims Act.  The whistleblower’s tip resulted in a multi-agency investigation and, ultimately with a prosecution by the Assistant U.S. Attorney’s Office.

Medicare false claims are one of the most common types of fraud against taxpayers and it is a crime that the federal government takes seriously. Employees who have evidence of Medicare false claims should consider seeking the advice of a whistleblower attorney as their first move.