CareCore National LLC to Pay $54 Million to Resolve Whistleblower Claims of Medicare and Medicaid Fraud

Milberg LLP today announced that the U.S. Department of Justice, the United States Attorney for the Southern District of New York, and several state Attorneys’ General Medicaid Fraud Units, have reached a $54 million settlement in a newly-unsealed healthcare fraud whistleblower action against CareCore National LLC. The company, headquartered in Blufton, SC, provides pre-authorization/pre-certification services for diagnostic testing to ensure that only medically reasonable and necessary tests are performed on patients and paid for by insurers. Of the $54 million recovery, $45 million will go to the federal government and $9 million will go to various participating states.

CareCore merged with MedSolutions, Inc. in December of 2014 and now operates as eviCore healthcare. CareCore provided these services around the country to managed care organizations and other providers, touting their services as cost control and reduction measures.

Milberg LLP represented the whistleblower, or “relator,” in the lawsuit, which was filed under seal on February 21, 2013 in federal court in the Southern District of New York. The Relator, a Licensed Practical Nurse, alleged that CareCore trained its nurse employees to violate its own protocols that were supposed to ensure that its customers pay only for diagnostic testing that is medically reasonable and necessary.

Specifically, under CareCore’s stated protocol, nurses were required to refer pre-authorization requests that failed to meet certain criteria to medical doctors for their review so the doctors could issue or deny the pre-authorization requests. These requests were required by CareCore’s customers – managed care organizations and other health insurers that provide services to the beneficiaries of government programs through Medicare Part C and Medicaid Managed Care.

Instead, due to critical time constraints required by its customers, CareCore directed its nursing staff to “Process As Directed” or to “PAD” certain of those cases that had been sent for a doctor’s review. For these “padded” cases, nurses were instructed to issue pre-authorizations for diagnostic testing even though the set criteria had not been met and the doctors had not conducted the required review. Thus, the managed care organizations and other providers, including those with which the government contracts, paid for diagnostic tests, like costly MRIs and PET scans, that were not properly authorized as being medically reasonable or necessary.

Partner Anna C. Dover of Milberg LLP said: “The brazenness of this company’s actions—even using the acronym “PAD” —is appalling. At a time when healthcare costs are spiraling out of control, it is vital that whistleblowers like our client come forward to prevent this type of abuse.” Pursuant to False Claims Act provisions, the Relator will be awarded approximately $10.5 million plus interest—or 20%–from the Government’s combined federal and state recovery.

The settlement was handled by Assistant U.S. Attorney Arastu K. Chaudhury of the U.S. Attorney’s office of the Southern District of New York and Kathleen Von Hoene of the Florida Office of the Attorney General (on behalf of the states); Matthew Gluck, Anna C. Dover, and Rolando G. Marquez of Milberg LLP and co-counsel Stephen A. Weiss and TerriAnne Benedetto of Seeger Weiss LLP.

Note: Milberg LLP is widely recognized as a leading class action and complex litigation firm, representing individual and institutional investors, unions, consumers, and whistleblowers. In addition to having litigated landmark cases resulting in groundbreaking legal precedents and corporate governance reforms benefitting shareholders, Milberg also maintains an active whistleblower, or “qui tam,” practice. Milberg has returned hundreds of millions of dollars to federal and state treasuries in both intervened and non-intervened qui tam cases, including United States ex rel. Mortgage Now, Inc. v. Bank of America Corp. (WD NC 3:12cv360-MOC-DSC) (Relator’s action alleging that Bank of America had improperly recouped insurance proceeds from HUD to which it was not entitled was settled as part of the $16.65 billion global settlement regarding Bank of America’s mortgage practices – the largest civil settlement with a single entity in American history) and Mason v. Medline Industries, Inc., et al., No. 07-cv-5615 (N.D. Ill.) (Government declined to intervene in Relator’s action alleging unlawful kickbacks, bribes, and other illegal remuneration to induce health care providers to continue to purchase defendant’s medical supplies and yet the case settled for $85 million – one of the largest settlements of a non-intervened FCA case to date).

If you would like more information about this case or Milberg’s false claims act practice, please contact the following attorney:

Anna C. Dover, Esq.
Milberg LLP
1 Pennsylvania, 50th Fl.
New York, NY 10119
212-594-5300