Category: Daily News

Admera Health LLC has agreed to pay the United States $5,389,648 to resolve allegations that it violated the False Claims Act by paying commissions to third party independent contractor marketers in violation of the Anti-Kickback Statute (AKS). Admera will pay an additional $147,851 to individual states for claims paid to Admera by state Medicaid programs.

Admera is a New Jersey-based company that provides biopharmaceutical research services for health care institutions and provided clinical laboratory testing services to health care providers relating to pharmacogenetics until 2021. Pharmacogenetics analyzes how a patient’s genetic attributes affect their response to therapeutic drugs.

The settlement resolves allegations that, from Sept. 1, 2014, through May 21, 2021, Admera made commission-based payments to independent contractor marketers in return for recommending or arranging for the ordering of genetic testing services in violation of the AKS. The AKS prohibits offering or paying remuneration in return for arranging or recommending items or services covered by Medicare and other federally funded programs.

As part of the settlement, Admera has admitted that it made millions of dollars of commission payments to independent-contractor marketers to induce them to arrange for or recommend that health care providers order and refer clinical laboratory services to Admera, including genetic tests, that were reimbursable by Medicare and/or Medicaid, that it paid marketers through arrangements that took into account the volume and value of genetic testing referrals, and that Admera was informed that the payment of commissions to independent contractors did not comply with the AKS but continued to enter into such contracts.

The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by relators, Sunil Wadhwa and Ken Newton, co-founders of Financial Halo LLC/MedXPrime, a former third-party marketer for Admera.

Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned U.S. ex rel. Wadhwa and Newton v. Admera Health, LLC et al (E.D. Cal.). Relators will receive $862,343 of the proceeds from the settlement.

The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, and the United States Attorney’s Office for the Eastern District of California, with substantial investigative assistance from HHS-OIG, the Federal Bureau of Investigation, and the Department of Veterans Affairs, Office of Inspector General. The matter was handled by Assistant U.S. Attorney Colleen Kennedy for the Eastern District of California and Civil Division Fraud Section Trial Attorney Elizabeth J. Kappakas.

The investigation and resolution of this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

The claims resolved by the settlement are allegations only and there has been no determination of liability.

DaVita Inc. provides kidney dialysis services through a network of 2,816 outpatient dialysis centers in the United States, serving 204,200 patients, and 321 outpatient dialysis centers in 10 other countries serving 3,200 patients. The company primarily treats end-stage renal disease (ESRD), which requires patients to undergo dialysis 3 times per week for the rest of their lives unless they receive a donor kidney. The company has a 37% market share in the U.S. dialysis market. It is organized in Delaware and based in Denver.

DaVita has agreed to pay $34,487,390 to resolve allegations that it violated the False Claims Act by paying kickbacks to induce referrals to DaVita Rx, a former subsidiary that provided pharmacy services for dialysis patients, and by paying kickbacks to nephrologists and vascular access physicians to induce the referral of patients to DaVita’s dialysis centers.

The Anti-Kickback Statute prohibits anyone from offering or paying, directly or indirectly, any remuneration – which includes money or any other thing of value – to induce referrals of patients or of items or services covered by Medicare, Medicaid and other federally funded programs.

The United States alleges that DaVita paid kickbacks to a competitor to induce referrals to DaVita Rx to serve as a “central fill pharmacy,” or prescription fulfillment provider, for that competitor’s Medicare patients’ prescriptions. In exchange, DaVita paid to acquire certain European dialysis clinics and agreed to extend a prior commitment to purchase dialysis products from the competitor. DaVita would not have paid the price that it did for these deals without the competitor’s commitment to refer its Medicare patients’ prescriptions to DaVita Rx in return.

The United States further alleges that DaVita provided management services to vascular access centers owned by physicians in a position to refer patients to DaVita’s dialysis clinics. DaVita paid improper remuneration to these physician-owners in the form of uncollected management fees to induce referrals to DaVita’s dialysis centers.

Finally, the United States alleges that DaVita paid improper remuneration to a large nephrology practice to induce referrals to DaVita’s dialysis clinics. DaVita gave the practice a right of refusal to staff the medical director position at any new dialysis center that opened near the nephrology practice and paid the practice $50,000 despite the practice’s decision not to staff the medical director position for those clinics.  

“Illegal kickback payments corrupt the market for health care services and cause harm and financial loss to Medicare and other federally funded health care programs,” said Special Agent in Charge Linda Hanley of the Department of Health and Human Services Office of Inspector General (HHS-OIG). “Our ongoing enforcement efforts aim to safeguard the integrity of taxpayer-funded health care programs, like Medicare and Medicaid, while curbing schemes that unduly influence patients’ and doctors’ health care options.”

The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Dennis Kogod, a former Chief Operating Officer of DaVita Kidney Care. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned United States ex rel. Kogod v. DaVita, Inc., et al., No. 17-cv-02611-PAB (D. Colo.). Kogod will receive $6,370,000 of the proceeds from the settlement.

The resolution obtained in this matter was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the District of Colorado with assistance from HHS-OIG.

The claims resolved by the settlement are allegations only. There has been no determination of liability.

In January 2019 Waliullah Nazari fell off a ladder at work rendering him unconscious. Hospital records indicated he suffered a broad-based disc herniation between vertebrae 4 and 5, with resulting bilateral/lateral recess stenosis, and sciatica. Nazari submitted a workers’ compensation claim to Liberty Mutual Insurance (Liberty Mutual) and received benefits between January 5 and July 19 totaling $99,656.96.

During the course of his treatment for this injury, Nazari told an orthopedic surgeon that he needed a walker to stand and could not walk without using a walker.

On April 11, a private investigator working for Liberty Mutual conducted a recorded surveillance session and saw Nazari enter his car and drive away. He saw Nazari return in the car, exit the car, and walk without using a walker and with a normal gait. Later that day, he saw Nazari walk unassisted to a car, remove a folding aluminum walker from the trunk, assemble the walker, and then carry the walker out of view. A few minutes later, he observed Nazari walking slowly with a walker for support to a medical transport van where the driver assisted him into the van. When the van returned to the residence, the investigator watched as Nazari used the walker to slowly ambulate up the driveway and out of view.

During another surveillance session Nazari was videotaped carrying a small child in his arms, assisting the child into a vehicle, and driving away.

Liberty Mutual deposed Nazari during the time between the video surveillance sessions. At the first deposition, the attorney representing Liberty Mutual observed Nazari enter the room using a walker, move very slowly while standing, and take “quite a bit of time” to sit into his chair. During his second deposition, Nazari claimed, among other things, that he has been unable to carry his child and could not drive because he used a walker. Liberty Mutual closed the investigation in August and reported the matter to the local District Attorney’s Office and California Department of Insurance.

A criminal case was filed, and a jury found Nazari guilty of two counts of making false and fraudulent statements for the purpose of obtaining workers’ compensation benefits (Ins. Code, § 1871.4, subd. (a)(1)) and seven counts of attempted perjury under oath (Pen. Code, §§ 118, subd. (a) & 664). The trial court suspended imposition of sentence and placed Nazari on probation for two years, sentenced him to 365 days in jail as a condition of probation, stayed pending successful completion of probation, and ordered him to pay restitution totaling $53,879.44 at $100 per month. Nazari appealed his conviction.

The Court of Appeal affirmed the trial court in the unpublished case of People v Nazari -D081940 (July 2024).

The sole issue raised on appeal was the sufficiency of the evidence. Nazari contended the evidence was insufficient to show the statements he made to the orthopedic surgeon (1) were false and (2) made for the purposes of obtaining workers’ compensation benefits.

Nazari contends the sub rosa videos of him walking and standing without the use of a walker after his April 1 visit do not show the falsity of his statements on April 1 because the orthopedic surgeon observed symptoms consistent with a back injury and he presumably received relief from the epidural injection.

However the Court of Appeal noted that “there is no evidence in the record to support Nazari’s contention he received an epidural injection before he was subject to surveillance” And from the “videos, the jury could reasonably conclude Nazari misrepresented his pain level, faked reliance on the walker during his physical examination, and falsely told the orthopedic surgeon that he required a walker to stand or walk”.

Nazari next contends that his statements to the orthopedic surgeon were not made for the purposes of obtaining workers’ compensation benefits but for treatment. “However, a claims specialist at Liberty Mutual testified he ‘very much’ relies on statements a workers’ compensation claimant makes to medical professionals, as well as the claimant’s deposition testimony and medical records to determine what benefits will be paid to the claimant. Thus, Nazari’s statements to the orthopedic surgeon influenced the surgeon’s opinion that Nazari required further treatment and influenced Liberty Mutual’s decision to pay Nazari’s medical bills – a form of benefits.”

Charter Communications has nearly 100,000 employees and provides telecommunications services throughout the United States. Charter has adopted an alternative dispute resolution program called Solution Channel, which it describes as “the means by which a current employee, a former employee, an applicant for employment, or Charter can efficiently and privately resolve covered employment-based legal disputes.”

Charter job applicants had to agree to use Solution Channel. If a job offer was made, prospective employees used a computerized onboarding process. They were required to read several company documents and policies and to agree by use of an electronic signature. Thse documents included a Mutual Arbitration Agreement and the Solution Channel Guidelines.

Charter hired plaintiff Angelica Ramirez in July 2019. Using the onboarding process, Ramirez accepted the proposed Agreement, including adherence to the Guidelines. In May 2020, Ramirez was fired. She sued Charter in July 2020, alleging claims for discrimination, harassment, and retaliation under the Fair Employment and Housing Act along with a claim of wrongful discharge in violation of public policy.

Charter moved to compel arbitration. The trial court found that the Agreement was one of adhesion because it was required as a condition of employment and also concluded additional provisions were unconscionable. Finding the Agreement was “permeated with unconscionability,” the court refused to enforce it and denied the motion to compel arbitration

The California Supreme Court granted review of the to consider the remedy (among other issues). Should the courts have refused to enforce the agreement, or could they have severed the unconscionable provisions and enforced the rest?

The Supreme Court concluded that the matter must be remanded for further consideration of this question in the case of Ramirez v. Charter Communications, Inc. -S273802 (July 2024).

In its Opinion, the Supreme court agreed that some of the provisions of the Agreement were appropriately found to be unconscionable by the Court of Appeal, and disagreed in the reasoning of the Court of Appeals in others.  Many pages of the Opinion were dedicated to a discussion of the standards to be used in the analysis, and indeed are a clear guideline for employers who have agreements with employees as to arbitration of disputes.  However the Supreme Court when on to discuss the concept of severing the unconscionable provisions rather than refusing to enforce the agreement as a whole.

Civil Code section 1670.5, enacted in 1979,codifies the principle that a court can refuse to enforce an unconscionable provision in a contract. Civ. Code, § 1670.5, subd. (a).) provides that “If a contractual clause is found unconscionable, the court may, in its discretion, choose to do one of the following: (1) refuse to enforce the contract; (2) sever any unconscionable clause; or (3) limit the application of any clause to avoid unconscionable results.”

The “strong legislative and judicial preference is to sever the offending term and enforce the balance of the agreement.” Though the “statute appears to give a trial court some discretion as to whether to sever or restrict the unconscionable provision or whether to refuse to enforce the entire agreement,” it “also appears to contemplate the latter course only when an agreement is ‘permeated’ by unconscionability.” The trial court’s decision to act as Civil Code section 1670.5 permits is reviewed for abuse of discretion. (Murphy v. Check ’N Go of California, Inc. (2007) 156 Cal.App.4th 138, 144 (Murphy).)

According to Charter, the Court of Appeal assumed that “while one or two provisions may be severed from an arbitration agreement, three or four is too many.” Charter urges that there is no hard and fast rule regarding the number of provisions that may be severed from a contract.

The Supreme Court noted that “some Courts of Appeal have treated the severance question as more of a quantitative inquiry than a qualitative one. (See, e.g., Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 90; Ontiveros v. DHL Express (USA), Inc. (2008) 164 Cal.App.4th 494 at p. 515; Murphy supra, 156 Cal.App.4th at p. 149.) However, other courts have rejected the proposition that ‘more than a single unconscionable provision in an arbitration agreement precludes severance.’ (Lange, supra, 46 Cal.App.5th at p. 454.) “

The Supreme Court then clarified by saying: “Here, we clarify that no bright line rule requires a court to refuse enforcement if a contract has more than one unconscionable term. . Likewise, a court is not required to sever or restrict an unconscionable term if an agreement has only a single such term. Instead, the appropriate inquiry is qualitative and accounts for each factor Armendariz identified. At the outset, a court should ask whether ‘the central purpose of the contract is tainted with illegality.’ ” Other clarifying remarks on this topic were made in the Opinion.

“The Court of Appeal’s judgment is reversed. The matter is remanded for further proceedings consistent with our decision.” … “On remand, the Court of Appeal may consider the severance question anew, in light of its answers to those questions, and in a manner consistent with this opinion.”

The San Francisco Zen Center is the largest Soto Zen Buddhist temple in North America. It was formed to “encourage the practice of Zen Buddhism by operating one or more religious practice facilities and educating the public about Zen Buddhism.”

The Center operates three residential programs that build on each other. First, an individual can be a “guest student” who lives at the temple for two to six weeks. Second, an individual can be a Work Practice Apprentice (WPA) for a two-to-three-year residency. Third, an individual who completes a Work Practice Apprenticeship can be staff at the temple as a continuation of Zen training.

WPAs follow a strict practice schedule of formal and work practice. Formal practice includes morning and evening meditations and services, soji (temple cleanings), dharma talks, classes, and a range of other events. Work practice includes things like cooking, dishwashing, cleaning, and doan ryo ceremonial tasks ‘which support the formal practice, such as ringing bells, cleaning altars, and watching the door during zazen meditations.

Alexander Behrend became involved with the Center in 2014 after he was in a car accident that left him with physical disabilities and PTSD. Following his car accident, Behrend was unable to remain in his prior employment and therefore unable to afford his apartment. In 2016, he spoke with the Center’s head of practice because he was given a one-month notice of losing his housing. He then applied and was accepted as a guest student in November 2016. In January 2017, he was accepted as a WPA, where he received room and board at the center and a small stipend.

Behrend was assigned to the maintenance crew in September 2018, but that work exacerbated his PTSD symptoms. Behrend sought accommodations, including moving off the maintenance crew, but eventually the Center “made a decision to end [his] participation in the Program.”

Behrend sued for disability discrimination under the Americans with Disabilities Act (ADA) in the Northern District of California, and the Center moved for summary judgment on its affirmative defense under the First Amendment’s ministerial exception.

The district court granted the Center’s motion, determining that no party disputed that the Center is a religious organization and the undisputed facts established that Behrend fit within the ministerial exception. Behrend appealed, arguing that he was not a minister because he performed mostly menial work and did not have a “key role in making internal church decisions and transmitting the faith to others.”

The 9th Circuit Court of Appeals affirmed the district court’s grant of summary judgment in the published case of Alexander Behrend V. San Francisco Zen Center, Inc. -23-15399 (July 2024).

The ministerial exception exempts a church’s employment relationship with its ‘ministers’ from the application of some employment statutes, even though the statutes by their literal terms would apply. The exception is grounded in both religion clauses of the First Amendment. The Establishment Clause prevents the Government from appointing ministers, and the Free Exercise Clause prevents it from interfering with the freedom of religious groups to select their own.

The ministerial exception was recognized to preserve a church’s independent authority to select, supervise, and if necessary, remove a minister without interference by secular authorities.

Behrend argued on appeal that the exception only covers those with “key roles” in preaching and transmitting the faith to others. But precedent from the 9th Circuit and the Supreme Court evinces a much broader rule that covers positions like his.

There is no “rigid formula for deciding when an employee qualifies as a minister.” Hosanna-Tabor Evangelical Lutheran Church and School. v. EEOC, 565 U.S. 171(2012) at 190. In Hosanna-Tabor, the Supreme Court of the United States considered whether the exception applied to a “called” teacher at a Lutheran school who was commissioned by the Church after completing a special religious teaching program, and who taught elementary school math, language arts, social studies, gym, art, music, and religion to her students. Id. at 178.

Even though only a small part of her day was spent actually teaching religion, the Court determined the exception applied, considering “all the circumstances of her employment.” The Court found relevant that she was given a formal title by the Church, that she held herself out as a minister, and that she received the title after “a formal process of commissioning.”

“Here, the ministerial exception protects the Center’s ability to determine who may serve in its WPA program. While Behrend argues that he was not a minister because, as a WPA, he performed mostly menial work, there is no genuine dispute that ‘[w]ork itself is an essential component of Zen training and is indistinguishable from other forms of practice.’ “