Michigan Healthcare Fraud/Medicare Fraud Enforcement

The federal government sometimes accomplishes this task with the assistance of the Michigan Medicaid Fraud Control Unit (MFCU). Both entities are, in turn, often assisted in their efforts by the bravery and actions of whistleblowers.

Modeled after the federal False Claims Act, the Michigan Medicaid False Claims Act permits private citizens to bring qui tam actions on behalf of the State of Michigan to recover treble damages and civil penalties. MCL §400.601 et seq.

Nolan Auerbach & White represents whistleblowers in federal court only. We will bring cases on behalf of whistleblowers under the Michigan qui tam statute as part of an action under the federal False Claims Act. We do so under the Court’s pendent jurisdiction.

The liability provisions of the Michigan Medicaid False Claims Act, MCL § 400.603, provide as follows:

Sec. 3. (1) A person shall not knowingly make or cause to be made a false statement or false representation of a material fact in an application for Medicaid benefits;

(2) A person shall not knowingly make or cause to be made a false statement or false representation of a material fact for use in determining rights to a Medicaid benefit…

Cases completed in Michigan that were originally brought in a Michigan federal court include:

On July 10, 2020 the Attorney General for the State of Michigan announced the settlement between the Government and Universal Health Services, Inc. relating to False Claims Act allegations relating to medically unnecessary inpatient behavioral health services and illegal kickbacks.

The government’s allegations covered admissions for beneficiaries who were not eligible for inpatient or residential treatment because their conditions did not require that level of care and then failing to properly discharge admitted beneficiaries when they no longer required inpatient care. It was alleged that facilities billed for services not rendered, improper and excessive lengths of stay, failure to provide adequate staffing, training, and/or supervision of staff, and improper use of physical and chemical restraints and seclusion. The Government contended that UHS’s facilities failed to properly provide adequate individual assessments and treatment plans which included discharge planning, and required individual and group therapy service.

Our law firm represented a heroic whistleblower Bruce Moilan who filed a whistleblower lawsuit in 2007 against McAllen Hospitals L.P., d/b/a/ South Texas Health System (a subsidiary of Universal Health Services Inc.). In 2009, UHS agreed to pay the federal government $27.5 million to resolve allegations that they, along with its three hospitals, paid kickbacks to physicians in the form of sham medical directorships and leases. Bruce Moilan was the Systems Director for material management at the STHS is listed on our law firm’s Wall of Heroes.

On April 10, 2020 the U.S. Attorney’s Office for the Eastern District of Michigan announced a $4.03 million settlement to resolved False Claims Act allegations of unnecessary rehabilitation therapy services by Encore Rehabilitation Services LLC (Encore). Encore is based in Farmington Hills, Michigan, and is comprised of over 600 health care facilities in over thirty states. The False Claims Act allegations included billing by Encore for services that were not necessary, reasonable or provided. The whistleblowers were four former Encore employees.

On October 10, 2019 the U.S. Attorney’s Office for the Western District of Michigan announced that six anesthesiologists with Traverse Anesthesia Associates, P.C. (“TAA”) agreed to pay the Government over $600,000 for submitting false claims to the United States. The False Claims Act allegations involved failure to meet the requirements of medically directed anesthesia services. The two whistleblowers were former employees of the company.

Detroit Medical Center agreed to pay the United States $30 million to settle allegations that it violated the False Claims Act, the Anti-Kickback statute and the Stark statute, by engaging in improper financial relationships with referring physicians. The medical center self-reported its violations to the government after discovering them while preparing for its sale to Vanguard Health Systems Inc.

GE Healthcare Inc. agreed to pay the United States $30 million to settle allegations that a company GE Healthcare acquired in 2004, Amersham Health Inc., violated the False Claims Act. Amersham Health Inc. was accused of providing false or misleading information to Medicare regarding Myoview, a radiopharmaceutical used in certain cardiac diagnostic imaging procedures, thereby causing Medicare to reimburse for the drug at inflated rates. In addition, the company was alleged to have improperly diluted Myoview in order to maximize the number of doses available per vial, which led to an increased number of patient-ready doses, thereby inflating Medicare reimbursements. This settlement resolves a False Claims Act qui tam suit filed by James Wagel, a pharmaceutical representative for Bristol-Myers Squibb. Wagel, will receive a $5.1 million share of the federal government’s recovery.