Ore. AG, U.S. Attorney Note Health Care Fraud Settlement with Physician

November 11, 2004

Oregon Attorney General Hardy Myers this week joined United States Attorney Karin Immergut in announcing a health care fraud settlement with G. Craig Kiser, M.D., a McMinnville physician specializing in urology.

In a complaint filed in United States District Court under the Federal False Claims Act, Dr. Kiser was accused of improperly billing federally funded health care programs, specifically Medicare and Medicaid, for drugs received as free samples from the Manufacturer.

Under the terms of the settlement filed with the complaint, Dr. Kiser, while denying the specifics of the allegations, agreed to enter into a compliance program and will pay restitution, fines and penalties up to $213,198.40 to resolve the matter.

This case arose out of the landmark settlement reached between the United States Department of Justice, the Oregon Department of Justice Medicaid Fraud Unit (MFU) and TAP Pharmaceuticals, over TAP’s marketing of the drug Lupron. Lupron is used largely to treat prostate cancer. In the earlier case, TAP was accused of unlawful marketing of Lupron, including providing free samples of Lupron to physicians while encouraging the physicians to submit claims to federally funded health care programs for the product. It is unlawful for any Medicaid or Medicare provider to bill either program for products the provider receives at no cost.

As part of its settlement with Oregon MFU, TAP was required to provide the MFU a list of all Oregon physicians who received free samples of Lupron from TAP representatives. Examination of that list showed a major spike in the number of free samples delivered by TAP to Dr. Kiser over a several month period.

Further investigation by the Department of Health and Human Services, Office of Inspector General (HHS-OIG) and the MFU reportedly established that Dr. Kiser’s office had indeed billed federal health care programs for the cost of 23 doses of Lupron that Kiser had received as free samples from TAP. It should be noted that prior to entering the settlement with the state and federal governments, Dr. Kiser voluntarily repaid the $10,349.20 he had received in payment on those 23 claims, and he received credit for that restitution as part of the settlement. But under the Federal False Claims Act, a health care provider is liable for treble the actual damages and a penalty of upwards of $11,000/per false or fraudulent claim submitted.

The settlement was jointly negotiated by Assistant United States Attorney Robert Nesler and Special Assistant United States Attorney Ellyn Sternfield of the Oregon MFU. As long as he follows the terms of the affirmative terms of the settlement, Dr. Kiser will be allowed to continue to participate as a provider of Medicaid and Medicare funded services.

The attorneys commended the outstanding efforts of the Portland-based HHS-OIG Special Agent, who headed the investigation. HHS-OIG Office of Counsel negotiated the terms of the compliance agreement with Dr. Kiser, which was filed as part of the settlement. The compliance agreement requires, among other things, that Dr. Kiser have written policies in his office governing the receipt, storage, use, inventory and financial disposition of drug samples, and that all employees be trained on such procedures.

“Today’s settlement represents another successful collaboration between the state’s Medicaid Fraud Unit and our federal law enforcement partners,” Myers stated. “By combining resources with the U.S. Attorney, we can ensure our limited public health care dollars are lawfully and appropriately spent.”

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