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Tag: 2020 News

Hollywood Pharmacy Owners to Serve 12 Years for $11.8M Fraud

Two owners and operators of a Los Angeles pharmacy were both sentenced to 144 months in prison for their roles in a health care fraud scheme where Medicare and CIGNA were billed more than $11.8 million in fraudulent claims for prescription drugs.

Aleksandr Suris, 51, of Sherman Oaks, California, was sentenced to 144 months in prison by U.S. District Judge S. James Otero of the Central District of California, who also ordered Suris to pay restitution of $11,826,444.65 to Medicare and $17,109.39 to CIGNA. The court ordered Suris to make an immediate partial restitution payment of $500,000.

Maxim Sverdlov, 45, also of Sherman Oaks, was sentenced to 144 months in prison by Judge Otero, who ordered him to pay $11,826,444.65 in restitution to Medicare.  The court ordered Sverdlov to make an immediate partial restitution payment of $500,000.

On Aug. 20, 2019, after an 11-day trial, a jury found Suris guilty of two counts of conspiracy to commit health care fraud, six counts of health care fraud, and one count of conspiracy to commit money laundering.  The jury found Sverdlov guilty of one count of conspiracy to commit health care fraud and one count of conspiracy to commit money laundering.

Suris and Sverdlov were the co-owners and co-operators of Royal Care Pharmacy (Royal Care) in Hollywood. According to the evidence presented at trial, from 2012 to 2015, Suris and Sverdlov fraudulently billed Medicare and CIGNA for prescription medications that Royal Care did not actually purchase or dispense to beneficiaries.  

In order to hide the fraud, Suris and Sverdlov obtained fake drug invoices from co-conspirators to make it appear as if Royal Care had purchased the medicines for which it had billed Medicare and CIGNA, when it actually had not.  Suris and Sverdlov also used these fake invoices to launder the proceeds of the fraud through a co-conspirator.  In total, Suris and Sverdlov submitted more than $11.8 million in bogus claims to Medicare for prescription drugs that they never purchased or dispensed to patients.

This case was investigated by HHS-OIG, the FBI, IRS-CI and the California Department of Justice, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.  Trial Attorney Robyn N. Pullio and Assistant Chief Daniel J. Griffin of the Fraud Section prosecuted the case.

The Fraud Section leads the Medicare Fraud Strike Force. Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 15 strike forces operating in 24 districts, has charged more than 4,200 defendants who have collectively billed the Medicare program for nearly $19 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

DWC Posts Changes to MTUS and OMFS

The Division of Workers’ Compensation has issued a notice of public hearing for proposed evidence-based updates to the Medical Treatment Utilization Schedule (MTUS), which can be found at California Code of Regulations, title 8, section 9792.23.

The public hearing is scheduled for Monday, March 30 at 10 a.m. in the auditorium of the Elihu Harris Building, 1515 Clay Street, Oakland. Members of the public may review and comment on the proposed updates no later than March 30.

The proposed evidence-based updates to the MTUS incorporate by reference the latest published guidelines from American College of Occupational and Environmental Medicine (ACOEM) for the following:

— Occupational Interstitial Lung Disease Guideline (ACOEM November 8, 2019)
Knee Disorders Guideline (ACOEM December 3, 2019)
— Workplace Mental Health Guideline: Depressive Disorders (ACOEM February 13, 2020).

The proposed evidence-based updates to the MTUS regulations are exempt from Labor Code sections 5307.3 and 5307.4 and the rulemaking provisions of the Administrative Procedure Act.

However, DWC is required under Labor Code section 5307.27 to have a 30-day public comment period, hold a public hearing, respond to all the comments received during the public comment period and publish the order adopting the updates online.

The DWC has also posted an amendment to the Hospital Outpatient Departments/Ambulatory Surgical Centers portion of the Official Medical Fee Schedule.

The amendment adopts Addenda A and B of CMS’ hospital outpatient prospective payment system rate for Calendar Year 2020 found in the [January 2020 Addendum A CORRECTION.02042020.xlsx] and [January 2020 Addendum B CORRECTION.02042020] files, and replaces the original files for services rendered on or after March 1, 2020.

The order can be found at the DWC website’s OMFS page.

Floyd Skeren – 9th Annual Employment Law Seminar – August 21

Floyd Skeren Manukian Langevin, LLP and Fisher & Phillips are are again co-sponsoring the 9th Annual Employment Law Seminar on August 21, 2020. This is an all-day conference, with break-out sessions, featuring Employment Law and Workers’ Compensation related-topics.

The conference is designed to provide the latest information, and helpful guidance, on Employment Law, human resources (HR), and Workers’ Compensation for employers, HR administrators, risk managers, and Workers’ Compensation claims adjusters.

HR and Minimum Continuing Legal Education (MCLE) credits will be available for attendees of the conference.

There is a great line-up of presenters including Kevin Kish, Director of the Department of Fair Employment and Housing, as keynote speaker. Featured Topics Include:

The latest developments at the Department of Fair Employment and Housing impacting employers; 2020 vision for the workplace;
Key risks to avoid in the crossover between Employment Law and Workers’ Compensation;
— An update on strategies for defending post-termination Workers’ Compensation cases;
— Guidance on implementing a compliant workplace catastrophe plan (e.g. for pandemic flu, major fire, and earthquake);
— Information every employer needs to know about the “California Consumer Privacy Act“;
Ten best practices for avoiding costly HR mistakes in managing family and medical leave, pregnancy disability leave, and paid sick leave, along with a Case Law update;
— Key strategies for investigating and defending Workers’ Compensation psychiatric claims involving harassment claims;
— A review of the top ten essential workplace polices for 2020; and
— Key tips on avoiding the big Employment Law verdict.

This years event will take place on August 21, at the Disneyland Hotel, 1150 West Magic Way, Anaheim, CA 90802. Registration is at 8:00 am, and the conference is from 8:30 am to 5:00 pm
Last year’s event sold out, so make your reservation as soon as possible! Registration can be made online.

You may direct any questions to “”

18 States File Lawsuit Challenging Limits to Joint Employer Liability

California Attorney General Xavier Becerra, as part of a coalition of 18 attorneys general, filed a lawsuit challenging the U.S. Department of Labor’s (DOL) new rule limiting joint employer liability under the Fair Labor Standards Act (FLSA).

Under the Trump Administration’s new rule, Bacerra claims it would become substantially more difficult to establish when organizations are inappropriately shielding themselves from joint employment liability under the FLSA. In the lawsuit, the coalition argues that the rule is contrary to the FLSA’s statutory purpose and violates the Administrative Procedure Act.

In filing the lawsuit, the states argue that the rule’s definition of joint employer does not adequately reflect today’s workplaces, where growing numbers of businesses are outsourcing functions to third-party management companies, independent contractors, staffing agencies, or labor providers.

Entities found to be joint employers can be held accountable for workplace violations against an employee, even if the person is formally employed by another entity.

However, the new rule would make it much harder to establish joint employer liability. For example, under the new rule, employers can attempt to avoid liability by simply asserting that, although they had the ability to exercise control, they did not in fact exercise it.

The coalition further argues that the rule is an unreasonable interpretation of statute, that DOL does not articulate a satisfactory reasoned explanation for the rule, and that DOL lacks critical information and dismisses data and analysis assessing the impact of the rule on workers and joint employers.

While DOL’s rule will create harmful and unnecessary confusion, Bacerra said that workers in California will continue to be protected by the state’s broad definition of an employer.

In filing the lawsuit, Attorney General Becerra joins the attorneys general of New York, Pennsylvania, Colorado, District of Columbia, Delaware, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New Mexico, New Jersey, Oregon, Rhode Island, Vermont, Virginia, and Washington.

No Time Limit for Recovery Suits Against Secondary Payers

MSP Recovery LLC, a law firm out of Miami, Florida has been initiating class action litigation country-wide as assignees on behalf of Medicare Advantage Plans (MAPs) alleging that various primary payers have failed to reimburse MAP conditional payments allegedly giving rise to a Private Cause of Action under the Medicare Secondary Payer Act (MSP), specifically located at 42 USC §1395y(b)(3)(A). The litigation success of this organization should serve as a wakeup call for secondary payers, including the workers’ compensation industry. Here is the statutory back story to a new success story (for them) in a recently published appellate decision.

In 1980, to “curb the rising costs of Medicare,” Congress enacted the Medicare Secondary Payer Act, 42 U.S.C. § 1395y, which flipped the payment order, such that private insurers became the primary payers and Medicare became the secondary payer. A primary payer can include an entity responsible for providing workers’ compensation medical care.

When a primary-payer plan doesn’t or can’t pay “promptly” – say, for instance, when it is contesting liability – Medicare can make a conditional payment on behalf of a beneficiary, for which it can later seek reimbursement from the primary plan. If Medicare pays and then seeks reimbursement, only to be refused, the United States can sue the primary plan (or a medical provider) to recover its payment.

Section 1395y(b)(2)(B)(iii) contains a statute of limitations that requires the government to sue within three years of the date that Medicare receives notice of a primary payer’s responsibility to pay. The Act also contains a “private cause of action,” codified at § 1395y(b)(3)(A), which is available to Medicare beneficiaries and other private entities, who “are often in a better position than the government to know about the existence of responsible primary plans” that haven’t reimbursed Medicare or paid a beneficiary’s healthcare provider.

The private cause of action rewards successful plaintiffs with double damages after giving Medicare its share of the recovery, the plaintiff can keep whatever is left over. Unlike the government cause of action, the private cause of action contains no statute of limitations.

In 1997, in yet another effort to make Medicare more efficient, Congress enacted Medicare Part C, or the “Medicare Advantage” program. The legislation created Medicare Advantage Organizations. MAOs – like Medicare itself – were categorized as secondary payers. MAOs can sue to recover from primary plans that should pay, but don’t. MAOs, must utilize the Act’s private cause of action, rather than the government cause of action.

The case of MSPA Claims v. Kingsway Amigo began with an automobile accident in 2012. One of the people injured was a Medicare beneficiary who received her benefits from a Medicare Advantage Organization – Florida Healthcare Plus – that later assigned its claims to MSPA Claims (aka MSP Recovery LLC).

The other party involved in the accident was insured by Kingsway Amigo Insurance. The Medicare beneficiary obtained treatment for her accident-related injuries and Florida Healthcare made $21,965 in payments. The beneficiary settled a personal-injury claim with Kingsway and received a $6,667 settlement payment.

In 2015 MSPA sued Kingsway under the Act’s private cause of action. MSPA argued that Kingsway was the primary payer and Florida Healthcare was the secondary payer, giving MSPA – as Florida Healthcare’s assignee – the right to recover.

Kingsway filed a motion for judgment on the pleadings, arguing that MSPA’s claim was stale because it didn’t comply with the Act’s claims-filing provision limiting recovery claims to 3 years from the time item or service was furnished. The complaint alleged that services were provided between April 29 and July 26, 2012, Kingsway contended that a request for reimbursement had to have been made before July 26, 2015, which it wasn’t.

The district court granted Kingsway’s motion and MSPA appealed. The Court of Appeals for the 11th Circuit disagreed and reversed in the published case of MSPA Claims v. Kingsway Amigo .

The central issue in the appeal was whether MSPA’s failure to comply with the Medicare Secondary Payer Act’s claims-filing provision, § 1395y(b)is fatal to its suit against Kingsway, as the district court concluded.

In rendering its decision, the 11th Circuit Court noted that the plain reading of the MSP claims filing provision did not preclude MSPA Claims from filing suit. Essentially, the Court found that the dependent “notwithstanding” clause and the permissive term “may” in the actual text of the MSP claims filing provision means that MAOs are not required to bring suit as a prerequisite in the 3 year period.

Essentially, the permissive language within the law does not erect a separate bar that private plaintiffs must overcome to sue under the MSP private cause of action.

$1.6 Billion Global Settlement with Opioid Manufacturer Mallinckrodt

The California Attorney General announced a global settlement framework between state attorneys general, local subdivisions, and Mallinckrodt, its subsidiaries, and certain other affiliates. Mallinckrodt is currently the largest generic opioid manufacturer in the United States.

The company said that it had an agreement with a key committee of lawyers representing thousands of local governments suing various drug industry players over opioids – and that the deal has the support of the attorneys general of 47 states and territories.

In the agreement, Malinckrodt agrees to pay $1.6 billion in cash to a trust that will cover the costs of opioid addiction treatment and related efforts, with the potential for increased payment to the trust. The company also agrees that its future generic opioid business will be subject to stringent injunctive terms that, among other things, will prohibit marketing of its opioid products and ensure systems are in place to prevent the drugs from falling into the wrong hands.

Documents gathered as the company prepared for trial showed that a Mallinckrodt sales manager told a distributor in 2009 of the pills: “Just like Doritos; keep eating, we’ll make more.” A company spokesman later called the statement “outrageously callous.”

The company argued in court filings that unlike makers of brand-name drugs, it did not promote opioids to doctors or understate the addiction risks. But plaintiffs in the cases said Mallinckrodt continued to ship suspicious orders without making sure the drugs weren’t going to be diverted to the black market.

Under its agreement, Mallinckrodt is filing for bankruptcy. The plan calls for it to make payments for eight years after the company emerges from the protections. That route is similar to one OxyContin maker Purdue Pharma is taking to settle opioid claims against it.

“Reaching this agreement in principle for a global opioid resolution and the associated debt refinancing activities announced today are important steps toward resolving the uncertainties in our business,” Mark Trudeau, president and CEO of the company, said in a statement.

Joe Rice, a lawyer on the executive committee of plaintiffs suing in federal court over opioids, said in an interview Tuesday that some details of the Mallinckrodt agreement still remain to be ironed out.

Mallinckrodt’s announcement comes weeks before a trial on the toll of opioids is scheduled to start in Central Islip, New York. The looming trial has been a factor in a ramped-up push for other drugmakers and distributors to settle, as well.

There have been increasingly public tensions between attorneys general and the private lawyers for local governments over the biggest of the proposed settlements, which would involve at least the three biggest U.S. drug distribution companies.

States have also been divided on whether to accept the deal, under which the distributors would pay a total of $18 billion over 18 years.

Jury Convicts Manhattan Beach Physician of $700K Fraud

A urologist was sentenced to 71 months in federal prison for submitting fraudulent billings totaling more than $700,000 to Medicare for medically unnecessary and nonexistent treatments, sometimes billing for purported patient visits miles apart and occurring at the exact same time.

Mark Wilfred Tamarin, 65, of Manhattan Beach, was sentenced by United States District Judge Dale S. Fischer, who also ordered him to pay nearly $345,000 in restitution.

After a seven-day trial in July 2019, a jury found Tamarin guilty of six counts of wire fraud and one count of attempted health care fraud. He has been in federal custody since the trial’s conclusion.

According to the evidence presented at trial, from 1987 until 2014, Tamarin was a partner Advanced Urology Medical Offices (AUMO), which had offices in Torrance and West Los Angeles.

From January 2009 until January 2013, at AUMO, where the majority of the patients were covered by Medicare, Tamarin billed Medicare for services he did not and could not have performed and also ordered medically unnecessary tests.

Tamarin covered Kindred Hospital, a sub-acute medical center in Ladera Heights, for AUMO. Kindred is a facility designed for patients with serious medical problems and in need of long-term care, but for whom a traditional hospital setting is unnecessary.

There, he billed for numerous patient visits that never happened and for services he never provided. The evidence presented at trial showed that on multiple occasions between 2009 and 2013, Tamarin purportedly was in two places miles apart at the same time he was treating patients in both locations.

At his office at AUMO, Tamarin ordered medically unnecessary tests for his patients. In particular, he ordered two to three times the number of post-void residual (PVR) tests and renal ultrasounds for urology patients in comparison to his three medical partners. Tamarin ordered so many PVRs that the office’s medical assistants suggested that the office purchase a second PVR machine. Tamarin ordered these tests before speaking with or seeing a patient despite the fact that the tests themselves only were appropriate in limited medical circumstances.

In total, Tamarin caused more than $700,000 in fraudulent claims to be billed to Medicare, of which Medicare paid approximately $219,934 in fraudulent Kindred claims and $124,802 in medically unnecessary PVR and renal ultrasound claims.

Judge Issues AB-5 Injunction Against Instacart

A county judge in San Diego has ruled that Instacart misclassified the overwhelming majority of its California workforce.

While it will not have any immediate effect, the injunction represents a critical first step in enforcing the new state law known as “AB5.”

The statute, which took effect earlier this year, attempts to ensure that so-called “gig economy” and other workers are considered employees, rather than unilaterally being declared independent contractors. Under state law, employees are eligible for consideration benefits, including workers’ compensation, unemployment, unionization rights and more. Companies save millions annually by avoiding such financial costs.

“We disagree with the judge’s decision to grant a preliminary injunction against Instacart in San Diego,” the company said Monday night in a statement provided by Instacart spokeswoman Natalia Montalvo.

“We’re in compliance with the law and will continue to defend ourselves in this litigation. We are appealing this decision in an effort to protect shoppers, customers and retail partners. The court has temporarily stayed the enforcement of the injunction, and we will be taking steps to keep that stay in place during the appeals process so that Instacart’s service will not be disrupted in San Diego.”

The labor law case, People of California v. Maplebear – Instacart’s official corporate name – was initially brought by the San Diego city attorney in September.

Instacart “avoids paying its ‘shoppers’ a lawful wage,” San Diego City Attorney Mara W. Elliott said late Monday.

The “landmark ruling makes clear that Instacart employees have been misclassified as independent contractors, resulting in their being denied worker protections to which they are entitled by state law,” Elliott said in a statement to NBC News. “We invite Instacart to work with us to craft a meaningful and fair solution.”

Even though the judge’s order was issued Feb. 18, it was not formally served on the parties until Monday. The order will not take effect until Friday, the same day as a hearing related to arbitration, another central issue in this case.

“The ruling on the motion for preliminary injunction is not an adjudication of the ultimate rights in controversy,” San Diego Superior Court Judge Timothy Taylor wrote. “It simply represents the court’s discretionary decision whether defendant should be restrained from exercising a claimed right pending trial.”

The judge’s ruling practically invited Instacart to appeal.

“Frankly, the sooner the Court of Appeal can hold forth on these issues, the sooner the parties will have a clear and definite signal of what is expected of them,” Taylor wrote.

Similar companies including Uber have resisted the law and have a multi-pronged approach, including arguing that its drivers are not “core” to its business and should be treated as contractors. Uber has also lead the charge for a new ballot measure that supporters say would “protect flexibility,” while critics say would gut the heart of AB5 and the state Supreme Court ruling that underpins it.

FDA to Use Claims Data to Confirm Drug Clinical Trials

The Institute for Clinical and Economic Review (ICER), a small but influential Boston-based research group, has signed a deal with private technology company Aetion to help it use patient health data in its reports on whether individual drugs are priced properly.

Large national regulators, including the U.S. Food and Drug Administration and United Kingdom’s National Institute for Health and Care Excellence (NICE), are considering increasing the use of data gathered outside of clinical trials on the effectiveness of treatments, often referred to as real-world data.

The FDA is running a pilot project using Aetion’s technology to analyze insurance claims to try to replicate clinical trial results, as part of a requirement to comply with healthcare legislation called the 21st Century Cures Act. It is seeking to determine under what circumstances such data could replace clinical trials, which have long been the foundation of medicine regulation.

Former FDA Commissioner Scott Gottlieb is a board member at Aetion.

The agreement with Aetion, which licenses the required claims data, will allow ICER to better inform its cost-effectiveness reports beyond clinical trial data and other information provided by patients, pharmaceutical companies and research papers.

ICER will pilot the use of real world analysis in follow-up reports on how patients are being prescribed and how they react to treatments that have reached the market through one of the FDA’s accelerated approval pathways.

ICER President Steve Pearson said it can use data collected by Aetion to analyze the standard of care for a disease, or to see if larger numbers of patients in medical practice react similarly to drugs as those in tightly controlled clinical trials.

For instance, he said, patients may be taking different dosages than given in trials, which could impact the cost effectiveness of a drug.

ICER is not a government agency and has no authority to set prices. But many large health insurers take their reports into account when they negotiate prices with drug manufacturers and determine patient access. Drugmakers also take into account ICER estimates when they set prices for new medicines.

New York-based Aetion has funding from venture capitalists including from units of Amgen and McKesson, as well as from drugmakers Sanofi and Ucb and health insurer Horizon Health Services.

24 Companies Join Blockchain Group to Limit Counterfeit Meds

Some of the industry’s largest pharmaceutical companies, including Pfizer and Eli Lilly have developed a blockchain-based system to track prescription drugs across the supply chain to better halt the flow of counterfeit medicines.

Some two dozen companies in the industry including drugmakers, distributors, retailers and delivery firms created the blockchain-based MediLedger Network, which it has been testing in the verification of drug returns. They said they intend to further expand the system this year.

Blockchain, which first emerged as the technology underlying virtual currency bitcoin, is a shared database maintained by a network of computers.

The MediLedger group submitted a report to the U.S. Food and Drug Administration laying out the benefits of blockchain for this specific issue, Susanne Somerville, chief executive officer at technology company Chronicled, told Reuters.

The company claims that Blockchain has the capacity to break apart the silos dividing pharmaceutical suppliers and customers, while also building bridges for secure record keeping of each transaction that protects every party and ensuring fidelity across supply chains.

“Even though the drug supply in the United States is safe, there are small percentages – of potential counterfeit drugs. Certainly, there’s a lot of evidence of diverted drugs,” Somerville told Reuters in an interview.

She said counterfeit drugs are a big problem in third world countries, where it is estimated that half of their drugs are counterfeit. “This is a plan intended that this never happens in this country.”

Among the 24 participating companies are Amgen, FedEx, GlaxoSmithKline, Novartis, AmerisourceBergen, Sanofi, Walgreens Boots Alliance and Walmart.

The World Health Organization estimates that counterfeit medicines worth $79.26 billion are traded annually.

“The current point-to-point systems infrastructure lacks the ability to keep data in sync across the healthcare supply chain, which ultimately increases the risk of counterfeit, diverted or otherwise illegitimate products,” David Vershure, head of channel and contract management for Roche’s Genentech unit, said in a statement.

The core function of the MediLedger Network is to validate the authenticity of drug identifiers throughout the supply chain, the MediLedger report said. This can all be done without any proprietary data being shared openly on the blockchain or ever leaving a company’s control.

The MediLedger project was created in response to the FDA’s call early last year for pilot projects testing an electronic inter-operable system as outlined in the Drug Supply Chain Security Act (DSCSA).