Nursing Home Psychiatrist Kickbacks: Clozapine Prescriptions and a Second Bill

A Chicago-area nursing home psychiatrist agreed to pay $3.79 million to the United States and Illinois to resolve the clozapine fraud case, which alleged that manufacturer kickbacks drove prescriptions and false Medicare and Medicaid claims. The government challenged both the drug bills and the physician’s bills for managing patients on the medication. An insider who knew about the manufacturer payments could explain something the prescription alone would never show: whose interests the prescribing decision served.

The Department of Justice announced the physician’s civil settlement on February 13, 2015. The announcement separately put the kickbacks and benefits at nearly $600,000, the money and favors behind the prescribing arrangement. The government alleged that the resulting claims covered thousands of elderly and indigent patients in at least 30 Chicago-area nursing homes and other facilities.

The Payment That Changed the Prescription

The alleged drug manufacturer payments bought a switch from branded Clozaril to generic clozapine. The government’s civil complaint describes the bargain: IVAX would pay the physician under a consulting agreement and provide other benefits, and he would move patients to its drug.

According to the complaint, the psychiatrist had resisted switching patients from Novartis’s Clozaril even after generic versions became available. Novartis had paid him to promote Clozaril. In July 2003, Novartis told him it would withdraw its support, and those payments ended soon afterward.

The next month, the complaint alleged, the physician agreed to switch patients if IVAX paid him $50,000 under a one-year consulting agreement, paid his nurse to speak about clozapine and funded a study through the physician-affiliated Uptown Research Institute. IVAX agreed, and the switching began immediately after the agreement.

The alleged benefits extended beyond the consulting fee. According to the complaint, IVAX paid for Miami trips with airfare, lodging, meals and entertainment for the physician and people around him. The complaint also alleged repeated renewals of the consulting arrangement and payments for sporting-event tickets.

Later, after patients moved to a competing clozapine product, Teva Pharmaceuticals USA allegedly asked what would bring prescribing back. The physician asked Teva to hire an associate. The complaint alleged that Teva did so in May 2006 and that the physician put several hundred patients back on Teva’s clozapine in the following months.

A Last-Resort Drug Across Nursing Homes

A drug of last resort for elderly patients was, allegedly, traded for Miami trips and sporting-event tickets. The Justice Department described clozapine as effective for treatment-resistant schizophrenia. Its account of the drug’s risks included a potentially deadly decrease in white blood cells, seizures and inflammation of the heart muscle.

The complaint put the prescribing pattern in perspective. During the alleged kickback period, approximately four percent of schizophrenia patients receiving atypical antipsychotics received clozapine. The psychiatrist had more than fifty percent of his patients on it. At one nursing home, the complaint alleged, he had seventy-five percent of the residents on clozapine, three hundred out of four hundred.

The government alleged that the manufacturer payments displaced independent medical judgment and attention to individual patients’ needs. The people taking the medication bore its clinical risks while the prescriber received the financial benefits.

The Drug Bill and the Medication-Management Bill

The clozapine allegations reached both pharmacy reimbursement and payment for the physician’s services. The complaint described drug claims to Medicaid and Medicare Part D, alongside professional-service claims to Medicaid and Medicare Part B.

The Pharmacy’s Drug Claim

The pharmacies dispensed the prescriptions and billed the government programs. The government alleged that the psychiatrist knew those claims would follow his orders and caused false claims by writing prescriptions in exchange for kickbacks.

The complaint identified more than 100,000 Medicaid prescription claims and more than 40,000 Medicare Part D prescription claims.

These were pharmacy claims, distinct from a facility’s consolidated bill for a covered Medicare Part A skilled stay. That payment generally bundles drugs, while physician professional services fall outside the bundle.

The Physician’s Medication-Management Claim

The physician also billed for pharmacologic management, the work of prescribing and monitoring psychiatric medication. The complaint identified the code used during the alleged conduct as CPT 90862 and explained that the billed encounter called for a substantive evaluation of the patient’s medical and psychiatric condition.

The complaint alleged more than 40,000 false Medicaid medication-management claims and more than 10,000 false Medicare medication-management claims. Its allegation went directly to the judgment those bills were supposed to pay for:

Medicare and Medicaid were allegedly paying for clinical judgment that the manufacturer payments had already compromised. The second bill matters because it charged for managing the very medication the financial arrangement had helped select.

What Evidence Is Needed to Report Fraud?

We assess what you know about the manufacturer payments, prescribing decisions and patient care, then connect it to the claims. In a clozapine kickback case, the agreement behind a prescribing change can matter as much as the bill itself.

We compare the care record behind the bill with the manufacturer’s payments and the claims to understand what happened inside the practice. Someone who knew the research contract or the hiring decision could know an important part of the arrangement without handling a Medicare bill.

The Physician and Manufacturers Settled Separately

Teva Pharmaceuticals USA and IVAX LLC had already reached their own settlement, announced March 11, 2014, for more than $27.6 million. The manufacturers resolved allegations that their consulting payments and other benefits induced prescriptions for Medicare and Medicaid patients in nursing homes and hospitals.

The Same Influence Can Reach the Medication Review

PharMerica’s Depakote settlement in 2015 shows another route from manufacturer money to a nursing home prescription. The government alleged that the pharmacy received rebates, educational grants and financial support from Abbott Laboratories to recommend Depakote. Consultant pharmacists’ monthly medication reviews supplied the opportunity to influence the physician’s choice.

The clozapine case concerned benefits reaching the prescriber. The PharMerica allegations concerned payments reaching the pharmacy whose consultants recommended drugs. Both put a commercial relationship behind a clinical decision. That is why an employee who understands the manufacturer’s payments or the pharmacy’s contracts may see something a reviewer of patient charts alone would miss.

What Is the Reward for a Medicare Fraud Whistleblower?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. A nursing home whistleblower reward follows the recovery in the case the person brings. Knowledge of the payments behind a prescribing decision can be the starting point for that case.

You Know Why the Prescriptions Changed

If you saw manufacturer payments shape nursing home prescribing, tell our whistleblower experts what happened inside the practice or pharmacy. We work with you to build the case around those decisions and bring in healthcare fraud whistleblower lawyers who understand pharmaceutical kickbacks and Medicare billing. Speak with us about turning your knowledge of the payments and patient care into your strongest kickback whistleblower case.