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AG’s Medicaid fraud investigators recover $3.4 million for NC

Release date: 4/28/2010

Total of $361 million recovered in NC’s decade-long battle against health fraud, Cooper says

Raleigh: Omnicare and IVAC Pharmaceuticals have agreed to pay $2.8 million to North Carolina as part of a $112 million national settlement to resolve allegations that the companies used unlawful kickback schemes to defraud federal and state health care programs, Attorney General Roy Cooper announced today. 
Another case investigated by Cooper’s Medicaid fraud team resulted in the criminal conviction of an Aulander woman. The court also ordered her to repay more than $650,000 for overcharging for ambulance trips.

The cases are examples of how Cooper’s Medicaid Investigations Unit works to fight fraud, waste and patient abuse in the health care industry.
“Health care fraud rips off taxpayers and patients and drives up costs for everyone,” Cooper said.  “Cracking down on wasteful Medicaid spending has already paid off for North Carolina, but we need to increase the efforts even more.”
Over the past decade, the North Carolina Medicaid Investigations Unit (MIU) has recovered $361 million from hospitals, doctors, pharmaceutical makers, medical equipment companies, mental health and personal care providers, ambulance services and others. The MIU has also helped convict 229 individuals on criminal charges including patient abuse and neglect as well as financial fraud.  In the federal fiscal year that ended September 30, 2009, the MIU recovered $43.5 million and won 27 criminal convictions.
The Governor’s proposed budget announced last week would double the size of the Attorney General’s MIU by adding 34 new investigators, attorneys and support personnel to expand the crackdown, particularly on community service providers that commit fraud. 
Omnicare and IVAX
The settlements announced today with Omnicare and IVAX will return $112 million to state and federal governments for Medicare and Medicaid programs. Omnicare is a Delaware corporation headquartered in Covington, Kentucky that specializes in providing pharmacy services to long term care facilities. IVAX Pharmaceuticals, Inc. is a Florida corporation headquartered in Weston, FL that manufactures generic drugs. 
As part of the settlements, North Carolina recovered $2.4 million from Omnicare and $404,978 from IVAX. Funds will go to support state and federal Medicaid efforts in the state. Medicaid is a joint federal-state program that provides health insurance for the poor.
Omnicare and IVAX are also required to enter into Corporate Integrity Agreements with the Office of the Inspector General of the U.S. Department of Health and Human Services which will closely monitor the companies’ future practices.
These settlements are based on five separate whistle blower lawsuits filed by private individuals and consolidated in U.S. District Court in Massachusetts under state and federal false claims statutes. The states and the federal government alleged that Omnicare and IVAX engaged in several unlawful kickback schemes:
  • Omnicare solicited and received $8 million for agreeing to purchase $50 million in generic drugs from IVAX Pharmaceuticals and to push nursing home patients to use the drugs.
  • Omnicare paid $50 million to certain nursing home chains in exchange for 15-year contracts to refer nursing home patients to Omnicare for the patients’ drug purchases.
  • Omnicare provided pharmacy consultants to long term care facilities throughout the country at below-market rates in exchange for the facilities’ agreeing to use Omnicare’s pharmacy services exclusively.
  • Omnicare solicited and received kickback payments in exchange for agreeing to convince physicians to prescribe the antipsychotic drug Risperdal.
A team formed by the National Association of Medicaid Fraud Control Units conducted settlement negotiations with Omnicare on behalf of participating states. The North Carolina settlement agreement was reached by the Attorney General’s MIU and the N.C. Division of Medical Assistance.
Faith Elaine Sumner of Preferred Medical Transport
An investigation by Cooper’s MIU recently resulted in the federal criminal conviction of Faith Elaine Sumner, 43, of Aulander on charges of aiding and abetting health care fraud.
Sumner previously worked as an officer manager for Preferred Medical Transport (PMT), a company that provides ambulance services.   Investigators discovered that from 2006 to 2008, Sumner unlawfully billed Medicare and Medicaid for more than $650,000 by submitting false claims for ambulance trips to take clients to and from dialysis treatments. Patients were usually transported to routine dialysis treatments by van, but Sumner repeatedly falsified trip records and related documents to make it appear that patients needed to be taken by ambulance for medical reasons.
The Attorney General’s MIU and the U.S. Department of Health and Human Services Office of Inspector General conducted the investigation together.
On March 23, United States District Court Judge James C. Dever, III sentenced Sumner to 46 months in prison followed by three years of supervised release. Under a plea agreement, Sumner will also pay $677,272 in restitution to Medicare and Medicaid.

Contact:  Noelle Talley (919) 716-6413