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Wisconsin Pain Management Companies To Settle False Claims Act Allegations

Gerald Scroop

October 1, 2020

The Department of Justice announced today that Advanced Pain Management Holdings Inc. (APMH), its wholly-owned subsidiaries,  APM Wisconsin MSO (“APM MSO”) and Advanced Pain Management LLC (APM LLC); and Advanced Pain Management S.C. (APMSC) (collectively the “APM Entities”) have agreed to pay $885,452 to settle claims that they violated the False Claims Act by paying kickbacks and by performing medically unnecessary laboratory tests.  The APM Entities are headquartered in the Milwaukee, Wisconsin area. 

“Healthcare providers must make recommendations about their patients’ health without respect to their own financial interests,” said Acting Assistant Attorney General Jeffrey Bossert Clark for the Department of Justice’s Civil Division.  “We will continue to do our part to protect federal health care program beneficiaries and the American taxpayers from the corrupting influence of kickbacks designed to undermine the impartiality and integrity of physician decision making.”

“The financial arrangements pursued by APMH wrongly gave physicians an incentive to make medical decisions based on their own financial interests, rather than their patients’ interests,” said U.S. Attorney Matthew D. Krueger for the Eastern District of Wisconsin.  “Medicare and Medicaid only pay for procedures and tests that are medically necessary and untainted by kickbacks.  This settlement reflects our office’s continuing efforts to combat violations of the False Claims Act and improper arrangements under the Anti-Kickback Statute.”     

“It is imperative that the public has faith and trust that the decisions made by medical providers are based upon the best interests of their patients” said Lamont Pugh III, Special Agent in Charge, U.S. Department of Health & Human Services, Office of Inspector General – Chicago Region.  “The specter of a payment of a kickback in any form or fashion diminishes that faith and trust and can lead to the improper payment and wasting of limited taxpayer dollars. The OIG will continue to work with our investigative partners to ensure the continued integrity of federally funded health care programs.”

The United States alleged that APMH improperly gifted shares of incentive stock to non-employee APMSC physicians who performed pain management procedures at APMH’s ambulatory surgical centers.  The incentive stock was to be redeemed upon a sale of APMH and was dependent on the profitability of APMH, which was determined largely by referrals from the non-employee physicians.  The incentive stock was allegedly given as a reward for past and anticipated referrals to APMH’s ambulatory service centers. 

The United States further contended that APMH paid non-employee APMSC physicians to serve as medical directors in a manner that was tied to the volume of procedures at APMH’s ambulatory surgery centers.  There were no written agreements documenting the services the medical directors were to provide, and the medical directors were not required to record or report any medical director functions.

The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by federally funded programs.  The Anti-Kickback Statute is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient.

The United States alleged that the APM Entities performed confirmatory urine drug tests that were medically unnecessary.  For certain claims, providers allegedly failed to customize orders for confirmatory urine drug tests based on each patient’s individualized risk assessment and circumstances, resulting in a higher level of testing than supported by the medical record.  The APM Entities disclosed these improper urine drug test claims to the Department of Health and Human Services. 

The settlement resolves allegations originally brought in a lawsuit filed by a whistleblower under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery.  The whistleblower will receive $142,152 as her share of the federal recovery in this case.

The APM Entities settlement with the United States is based on their ability to pay, and is part of a broader settlement that also resolves various state law claims.   

The case was handled by the U.S. Attorney’s Office for the Eastern District of Wisconsin with assistance from the Justice Department’s Civil Division, and the U.S. Department of Health and Human Services Office of Inspector General. 

The lawsuit is captioned United States, et al. ex rel. Hedstrom v. Advanced Pain Mgmt., et al., Case No. 13-C-556 (E.D. Wisc.). The claims settled by this agreement are allegations only, and there has been no determination of liability.

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