SmithKline pays millions to settle charges of fraudulent Medicare billing
SmithKline Beecham has agreed to pay the federal government $325 million to resolve civil allegations that it defrauded Medicaid and Medicare by billing the government for unnecessary or never-performed medical tests.
It is the second largest settlement in the history of healthcare fraud cases. National Medical Enterprises Inc. of Santa Monica, Calif., agreed to a $379 million settlement in 1994.
The SmithKline settlement is part of a beefed up effort by the U.S. Department of Justice and the Department of Health and Human Services to investigate fraud in the healthcare system. “Operation Labscam,” which was started after the 1992 prosecution of National Health Laboratories Inc. for submitting false claims to the government, has recovered more than $800 million in settlements with 10 companies. SmithKline Beecham, a British medical and products company, is the third major laboratory to settle with the federal government and agree to incorporate integrity agreements designed to prevent abuse in the future.
“We expect businesses to take these steps on their own initiative, before any unlawful conduct occurs,” said Attorney General Janet Reno. “But to medical laboratories who ignore this advice, our warning is clear—we will bring the full weight of the federal government’s powers to bear to enforce the law and protect the American people from being ripped off.”
A SmithKline Beecham official said that the company never intentionally violated the law and that ambiguities in regulations and guidelines remain a problem. “Although we believe we have strong defenses, our decision to settle this case was driven by the enormous potential costs and uncertainties connected with lengthy litigation,” said Jan Leschly, chief executive of SmithKline Beecham. “It was simply too great a risk to our shareholders, employees, and customers.”
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