Arizona-Based NextCare Inc. to Pay U.S. $10 Million to Resolve False Claims Act Allegations

Allegedly Charged for Unnecessary Testing and Inflated Billing for Urgent Care Medical Services

WASHINGTON—NextCare Inc., an Arizona-based company, has agreed to pay $10 million to settle federal and state allegations that it submitted false claims, the Justice Department announced today. NextCare is an owner of a chain of urgent care facilities with locations in Arizona, Colorado, Texas, North Carolina, Ohio, and Virginia.

The settlement resolves allegations that NextCare submitted false claims to Medicare, TRICARE, and the Federal Employees Health Benefits Program, as well as the Medicaid programs of Colorado, Virginia, Texas, North Carolina, and Arizona by billing for unnecessary allergy, H1N1 virus, and respiratory panel testing. The United States also alleged that NextCare inflated billings for urgent care medical services in the years under review, a practice known as upcoding.

“This settlement demonstrates the Justice Department’s commitment to ensuring that federal health care dollars are spent appropriately,” said Stuart Delery, Acting Assistant Attorney General for the Civil Division. “Health care providers who administer unnecessary services or who overcharge for care will be held accountable.”

Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina, noted that, “Today’s $10 million settlement with NextCare demonstrates our commitment to putting a stop to improper billing practices that exploit Medicare and drain vital resources from our health care system. NextCare’s upcoding and unnecessary medical testing wasted taxpayers’ dollars. This is a strong message to companies and individuals who engage in such conduct. We are here, we are watching, and we will use all of our resources to safeguard the integrity of important public programs and protect consumers across the nation.”

Daniel R. Levinson, Inspector General of the Department of Health and Human Services (HHS-OIG), added, “Providers who subject beneficiaries to unnecessary medical testing, as alleged against NextCare, compromise the well-being of their patients and squander federal health care funds.”

As a condition of the settlement, NextCare Inc. is also required to enter into a Corporate Integrity Agreement with HHS-OIG under which the company will be monitored for a period of five years to ensure that in the future it complies with all federal healthcare program rules.

The allegations resolved by today’s settlement were initially raised in a lawsuit filed against NextCare by former NextCare employee Lorin Cohen. Under the False Claims Act, private citizens acting as relators can bring suit on behalf of the United States and share in the recovery. Ms. Cohen will receive $1.614 million as her share of the recovery.

This resolution is part of the government’s emphasis on combating health care fraud and another step forward for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, a collaborative effort launched in May 2009 by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services (HHS). Settlements such as this one emphasize both the Department of Justice and HHS’s commitment to the reduction and prevention of Medicare and Medicaid financial fraud. Through the False Claims Act alone, the Justice Department has recovered more than $7.7 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $11.3 billion.

This matter was handled jointly by the Civil Division of the United States Department of Justice, the U.S. Attorney’s Office for the Western District of North Carolina, the FBI, the North Carolina Attorney General’s Office, the Office of Inspector General of the Department of Health and Human Services (HHS-OIG), the TRICARE Management Activity, and the Office of Personnel Management (OPM), which administers the FEHBP. The claims settled by this agreement are allegations only, and there has been no determination of liability.