The Department of Justice (DOJ) recently announced settlements involving alleged noncompliance with Medicare billing requirements for heart-valve replacement surgeries, false statements in federal funding research grants, and physician kickback schemes for clinical laboratories. The settlements show DOJʼs continued scrutiny in these areas.
Heart-Valve Replacement Surgeries
On May 16, Cape Cod Hospital agreed to pay $24.3 million to resolve allegations that it billed for heart-valve replacement surgeries despite failing to comply with Medicare requirements that one or more cardiologists independently examine the patient to determine whether the procedure is necessary and document their findings in the medical record. DOJ alleged that in some cases, the doctors failed to perform the required evaluations, and in other cases, the doctors failed to adequately document their clinical judgment. The relator, a former interventional cardiologist at the hospital, will receive $4.3 million of the settlement. Cape Cod Hospital will also enter into a five-year corporate integrity agreement with the U.S. Department of Health and Human Services.
Research Grants
On May 17, Cleveland Clinic agreed to pay $7.6 million to resolve allegations that it made false statements to the National Institutes of Health (NIH) in connection with three federal grant awards. DOJ alleged that Cleveland Clinic failed to disclose that the principal investigator on the grants was receiving funding from foreign sources, despite an NIH requirement that researchers disclose all sources of funding on a grant application. DOJ also alleged that Cleveland Clinic allowed employees to impermissibly share passwords, resulting in employees being inappropriately granted access to NIHʼs online grant reporting program. As part of the settlement, NIH imposed Specific Award Conditions on Cleveland Clinicʼs grants for one year, which will require a high-level Cleveland Clinic employee to personally attest to the truth, completeness, and accuracy of all grant support information provided to NIH. Cleveland Clinic is also required to develop a corrective action plan and an improvement plan for its internal controls.
This settlement brings to an end one of the last remaining government enforcement actions related to foreign influence and research grant disclosure requirements. In January 2022, the National Science and Technology Council issued "Guidance for Implementing National Security Presidential Memorandum 33 (NSPM-33) on National Security Strategy for United States Government-Supported Research and Development," in order to provide clear and effective rules for ensuring research security and establishing researcher responsibilities. NSPM-33 and its associated guidance documents address the following five areas for U.S. governmentsupported research and development:
- Disclosure requirements and standardization.
- Digital persistent identifiers.
- Consequences for violation of disclosure requirements.
- Information sharing.
- Research security programs.
Moving forward, how DOJ interprets and enforces NSPM-33 will be a key topic to monitor for academic medical centers, research institutions, and individual researchers seeking research grants from NIH and other federal agencies.
Clinical Laboratory Marketing
Two laboratory marketers, their marketing companies, five physicians and affiliated entities agreed to pay a total of $1.5 million to resolve False Claims Act (FCA) claims arising from alleged violations of the Anti-Kickback Statute (AKS). The settlement resolved allegations that two laboratory marketers and their companies conspired to pay kickbacks to physicians in Texas, South Carolina, and Arkansas to induce them to order tests from clinical laboratories in New Jersey and Virginia. The kickbacks were allegedly disguised as consulting or medical director fees, and the marketers allegedly received commissions from the clinical laboratories in exchange for those referrals.
DOJ also announced settlements with five physicians and their practices to resolve allegations that the physicians received kickbacks from laboratory marketersʼ purported management service organizations in exchange for ordering laboratory tests. In one instance, the clinical laboratories allegedly paid commissions to an independent contractor recruiter to use an associated company to pay kickbacks to healthcare providers in exchange for referrals.
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