The United States has formally settled part of, and joined in part of, a lawsuit brought by a whistle-blower that alleges a Northeast Florida-based sleep clinic intentionally billed the government for millions of dollars of services that were not medically necessary, and, in some instances, were never actually performed. The qui tam complaint, filed by a former employee of the clinic, alleges that the defendants—a sleep clinic and four physicians—violated the False Claims Act (FCA) by knowingly submitting false claims to the government for payment.
The government announced on Sept 9 that it had reached a settlement with the primary defendant, the Sleep Medicine Center, and two physicians—Dr Hubert Zachary and Dr George Restea. In reaching this settlement, the parties resolved allegations that, from January 1, 2010, until November 13, 2013, Zachary ran the Sleep Medicine Center, a clinic that treated patients for sleep-related disorders. Rather than treat patients in accordance with Medicare and TRICARE regulations, the United States contended that Zachary and the Sleep Medicine Center submitted claims for polysomnographic sleep studies and psychological testing that were not medically necessary, were not conducted by appropriately licensed individuals, or were not actually performed. Further, the United States alleged that, while Restea agreed to act as the center’s medical director, he failed to properly supervise the center as he agreed to do. The Sleep Medicine Center agreed to pay $200,000 to resolve the claims and both the Center and Zachary voluntarily agreed to be excluded from participation in the federal healthcare programs for 8 years. Restea agreed to pay nearly $100,000 to resolve the claims.
The actions mean that the government will move forward against remaining defendants Dr John DeCerce and Dr George Young. The government contends that these individuals also agreed to act as medical directors and staff physicians. While these doctors certified that they would supervise the clinic, the government alleges that the doctors merely lent their names in exchange for compensation. But for these physicians’ involvement, the lawsuit alleges, the Sleep Medicine Center would not have been able to bill the federal healthcare programs. For example, the government alleges that Young signed durable medical equipment orders for patients that he never saw and DeCerce sleep study interpretations even when the machines allegedly performing the approved studies were broken.
This lawsuit was originally filed under the qui tam or whistleblower provisions of the False Claims Act by Donna Nichols, a former employee at the clinic. Under those provisions, a private party, known as a relator, can file an action on behalf of the United States and receive a portion of the recovery. Nichols will receive more than $60,000 as part of today’s settlement.
This settlement illustrates the government’s emphasis on combating healthcare 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 Department of Justice along with the Department 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. Since January 2009, the Justice Department has recovered more than $19 billion through False Claims Act cases, with more than $13.4 billion of that amount recovered in cases involving fraud against federal healthcare programs.
The claims resolved by this settlement are allegations only, and there has been no determination of liability. The lawsuit against the defendants was filed in the US District Court for the Middle District of Florida and is captioned United States ex rel. Nichols v. Sleep Medicine Center et al.