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`
`Chiharu G. Sekino (SBN 306589)
`Casey T. Yamasaki (SBN 335445)
`Miller Shah LLP
`Two Columbia Place, Suite 1140
`1230 Columbia Street
`San Diego, CA 92101
`Telephone: (619) 235-2416
`Facsimile: (866) 300-7367
`Email: cgsekino@millershah.com
`
` ctyamasaki@millershah.com
`
`(Additional counsel listed below)
`
`Attorneys for Plaintiff-Relator
`
`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE SOUTHERN DISTRICT OF CALIFORNIA
`
` Case No.: 3:20-cv-0286-W-AGS
`
`
`
`
`FIRST AMENDED FALSE CLAIMS
`ACT COMPLAINT
`
`
`
`JURY TRIAL DEMANDED
`
`
`
`
`UNITED STATES OF AMERICA; the
`States of CALIFORNIA, COLORADO,
`CONNECTICUT, DELAWARE,
`FLORIDA, GEORGIA, HAWAII,
`ILLINOIS, INDIANA, IOWA,
`LOUISIANA, MARYLAND,
`MASSACHUSETTS, MICHIGAN,
`MINNESOTA, MONTANA, NEVADA,
`NEW JERSEY, NEW MEXICO, NEW
`YORK, NORTH CAROLINA,
`OKLAHOMA, RHODE ISLAND,
`TENNESSEE, TEXAS, VIRGINIA, and
`WASHINGTON; the DISTRICT OF
`COLUMBIA; ex rel., EVEREST
`PRINCIPALS, LLC,
`Plaintiff and Relator,
`
`v.
`ABBOTT LABORATORIES, INC. a/k/a
`ABBOTT LABORATORIES, ABBOTT
`CARDIOVASCULAR SYSTEMS, INC.,
`and ABBOTT VASCULAR INC.,
`Defendants.
`
`FIRST AMENDED COMPLAINT
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`
`TABLE OF CONTENTS
`
`INTRODUCTION ......................................................................................................... 1
`
`
`I.
`
`II. PARTIES ....................................................................................................................... 2
`
`III. JURISDICTION AND VENUE .................................................................................... 5
`
`IV. THE REGULATORY ENVIRONMENT ..................................................................... 6
`A. Government Funded Healthcare Programs ................................................................ 6
`i. Medicare .................................................................................................................. 6
`ii. Medicaid .................................................................................................................. 9
`iii. TRICARE .............................................................................................................. 39
`iv. Government Reimbursement for Abbott’s MC Device ........................................ 42
`
`
`V. APPLICABLE LAW ................................................................................................... 43
`A. The False Claims Act, 31 U.S.C. § 3729, et seq. ..................................................... 43
`B. The Anti-Kickback Statute, 42 U.S.C. § 1320a, et seq. ........................................... 44
`
`
`VI. FACTUAL ALLEGATIONS ...................................................................................... 48
`A. Mitral Regurgitation and Various Treatment Techniques ........................................ 48
`B. Abbott’s Kickback Schemes ..................................................................................... 52
`i. Abbott’s Kickback Schemes are Central to their Business Model ....................... 53
`ii. Abbott Partners with Physicians to Promote the MC Device ............................... 58
`iii. Abbott Disguises Kickback Schemes ................................................................... 80
`
`
`COUNT I- FEDERAL FALSE CLAIMS ACT
`
`(31 U.S.C. §§ 3729(a)(1)(A)) ...................................................................................... 84
`
`COUNT II- FEDERAL FALSE CLAIMS ACT
`
`(31 U.S.C. §§ 3729(a)(1)(B)) ...................................................................................... 85
`
`COUNT III- FEDERAL FALSE CLAIMS ACT
`
`(31 U.S.C. §§ 3729(a)(1)(C)) ...................................................................................... 85
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`COUNT IV- CALIFORNIA FALSE CLAIMS ACT
`
`(Cal. Gov’t. Code § 12650, et seq.) ............................................................................. 86
`
`COUNT V- COLORADO MEDICAID FALSE CLAIMS ACT
`
`(C.R.S.A. § 25.5-4-304, et seq.) .................................................................................. 89
`
`COUNT VI – CONNECTICUT FALSE CLAIMS ACT
`
`(Conn. Gen. Stat. § 17b-301a, et seq.) ........................................................................ 92
`
`COUNT VII – DELAWARE FALSE CLAIMS AND REPORTING ACT
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`(Title 6, Chapter 12, Delaware Code) ......................................................................... 95
`
`COUNT VIII – FLORIDA FALSE CLAIMS ACT
`
`(Fla. Stat. § 68.081, et seq.) ......................................................................................... 98
`COUNT IX – GEORGIA FALSE MEDICAID CLAIMS ACT
`
`(Ga. Code Ann., § 49-4-168, et seq.) ........................................................................ 101
`
`COUNT X – HAWAII FALSE CLAIMS ACT
`
`(Haw. Rev. Stat. § 661-21, et seq.) ........................................................................... 103
`
`COUNT XI – ILLINOIS WHISTLEBLOWER REWARD AND PROTECTION ACT
`
`(740 ILCS 175, et seq.) .............................................................................................. 106
`
`COUNT XII – INDIANA FALSE CLAIMS AND WHISTLEBLOWER PROTECTION
` ACT (Indiana Code 5-11-5.5, et seq.) ....................................................................... 109
`
`COUNT XIII - IOWA FALSE CLAIMS LAW
`
`(I.C.A. § 685.1, et seq.) ............................................................................................. 112
`
`COUNT XIV – LOUISIANA MEDICAL ASSISTANCE PROGRAMS INTEGRITY
`
`LAW (La. Rev. Stat. Ann. § 437.1, et seq.) .............................................................. 114
`
`COUNT XV – MARYLAND FALSE CLAIMS ACT
`
`(MD Code, Health - General, § 2-602, et seq.) ......................................................... 117
`
`COUNT XVI – MASSACHUSETTS FALSE CLAIMS ACT
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`(Mass. Gen. Laws Ann. Chap. 12 § 5A, et seq.) ....................................................... 119
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`COUNT XVII – MICHIGAN MEDICAID FALSE CLAIMS ACT
`
`(Mich. Comp. Laws Ann. § 400.603, et seq.) ........................................................... 122
`
`COUNT XVIII – MINNESOTA FALSE CLAIMS ACT
`
`(M.S.A. § 15C.01, et seq.) ......................................................................................... 125
`
`COUNT XIX – MONTANA FALSE CLAIMS ACT
`
`(MCA § 17-8-401, et seq.) ........................................................................................ 128
`
`COUNT XX – NEVADA FALSE CLAIMS ACT
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`(N.R.S. § 357.010, et seq.) ........................................................................................ 131
`
`COUNT XXI – NEW JERSEY FALSE CLAIMS ACT
`
`(N.J.S.A. § 2A:32C-1, et seq.) ................................................................................... 133
`
`COUNT XXII – NEW MEXICO FRAUD AGAINST TAX PAYERS ACT
`
`(N.M. Stat. Ann. §§ 27-14-1, et seq.) ........................................................................ 136
`
`COUNT XXIII – NEW YORK FALSE CLAIMS ACT
`
`(State Finance Law § 189) ......................................................................................... 140
`
`COUNT XXIV – NORTH CAROLINA FALSE CLAIMS ACT
`
`(N.C.G.S.A. § 1-605, et seq.) .................................................................................... 143
`
`COUNT XXV – OKLAHOMA MEDICAID FALSE CLAIMS ACT
`
`(63 Ok. St. Ann. § 5053, et seq.) ............................................................................... 146
`
`COUNT XXVI – RHODE ISLAND FALSE CLAIMS ACT
`
`(Gen. Laws 1956, § 9-1.1-1, et seq.) ......................................................................... 149
`
`COUNT XXVII – TENNESSEE MEDICAID FALSE CLAIMS ACT
`
`(Tenn. Code Ann. § 71-5-181, et seq.) ...................................................................... 152
`
`COUNT XXVIII – TEXAS FALSE CLAIMS ACT
`
`(V.T.C.A. Hum. Res. Code § 36.001, et seq.) ........................................................... 154
`
`COUNT XXIX – VIRGINIA FRAUD AGAINST TAX PAYERS ACT
`
`(§ 8.01-216-3a) .......................................................................................................... 157
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`COUNT XXX - WASHINGTON MEDICAID FRAUD ACT
`
`(RCWA 74.66.005, et seq.) ....................................................................................... 160
`
`COUNT XXXI – D.C. PROCUREMENT REFORM AMENDMENT ACT
`
`(D.C. Code § 2-308.13, et seq.) ................................................................................ 162
`
`PRAYER FOR RELIEF .................................................................................................. 165
`
`DEMAND FOR JURY TRIAL ....................................................................................... 166
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`I.
`
`INTRODUCTION
`1.
`Relator, Everest Principals, LLC (“Everest” or “Relator”), brings this qui
`tam action seeking damages and civil penalties on behalf of the United States of America
`(the “United States”) and the states of California, Colorado, Connecticut, Delaware,
`Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Louisiana, Maryland, Massachusetts,
`Michigan, Minnesota, Montana, Nevada, New Jersey, New Mexico, New York, North
`Carolina, Oklahoma, Rhode Island, Tennessee, Texas, Virginia, and Washington, as well
`as the District of Columbia (collectively, the “Plaintiff-States”) pursuant to the qui tam
`provisions of the federal False Claims Act (“FCA”), 31 U.S.C. §§ 3729 et seq.; the Anti-
`Kickback Statute (“AKS”), 42 U.S.C. § 1320a-7b, and applicable analogous state laws,
`against Defendants, Abbott Laboratories, Inc. a/k/a Abbott Laboratories (“Abbott Labs”),
`Abbott Cardiovascular Systems, Inc., (“ACS”) and Abbott Vascular Inc. (“AVI”)
`(hereinafter collectively referred to as “Abbott,” “Defendants,” or the “Company”).
`2.
`As set forth more fully below, Relator alleges in this action that Defendants
`engaged in an unlawful, systematic, and nationwide scheme of paying kickbacks to
`physicians and hospitals in the form of, inter alia, patient referrals, patient practice
`building, free patient marketing service, honoraria for sham speaker programs, rewards in
`the form of clinical trial opportunities, marketing events and consulting services, free
`lavish meals, and cocktail parties, to induce physicians and hospitals to use Abbott’s
`MitraClip® device (“MC Device”) for medical procedures performed on cardiac patients
`covered by Medicare, TRICARE, the Veterans Administration health care program,
`Medicaid, and other state and federally-funded healthcare programs (together hereinafter
`referred to as “Government Healthcare Program(s)”), in violation of the FCA, AKS, and
`analogous state laws and statutes.
`3.
`By paying kickbacks to doctors and hospitals, Abbott knowingly caused the
`submission of thousands of false claims for payment to Government Healthcare
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`Programs. Accordingly, Abbott is liable under the FCA, AKS, and applicable analogous
`state laws for treble damages and penalties for these claims for payment for the
`Transcatheter Mitral Valve Repair (“TMVR”) procedure1, the MC Device, and hospital
`costs, as discussed in detail below.
`4.
`Abbott’s unlawful scheme was, and still is, widespread and ratified at the
`highest levels of the Company.
`II.
`PARTIES
`5.
`Relator is a single member Delaware limited liability corporation whose sole
`member was employed by Abbott from August 2015 to April 2017 as a Therapy
`Development Specialist in its Structural Heart Division.2 Relator has personal knowledge
`and experience regarding Abbott’s kickback schemes and false claims alleged herein and
`has information that these practices are continuing to this date. Relator brings this action
`on behalf of the United States and the Plaintiff-States pursuant to the qui tam provisions
`of the FCA, the AKS, and applicable and analogous state laws.
`6.
`Abbott Labs (NYSE:ABT) is a publicly traded, global healthcare company
`organized under the laws of the State of Illinois and headquartered in Abbott Park,
`Illinois. In 2009, Abbott Labs fully acquired the company that developed and holds the
`patent for the MC Device, Evalve Inc., for $410 million dollars. Abbott Labs is the
`corporate parent of AVI and ACS and dictated and controlled all of the operational
`
` 
`1 Pursuant to the Centers for Medicare and Medicaid Services (“CMS”) National
`Coverage Determination (“NCD”) issued on January 19, 2021, the term Transcatheter
`Mitral Valve Repair, or TMVR, was replaced with the term Transcatheter Edge-to-Edge
`Repair, or TEER, to more precisely define the treatment of functional and degenerative
`MR. Accordingly, procedures referenced in this Amended Complaint that pre-date this
`NCD will be referred to as TMVR, and those that post-date the NCD will be referred to
`as TEER.
`2Relator and Relator’s sole member are referred to hereafter collectively as “Relator.”
`Relator was always informed that his/her employer was Abbott Labs.
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`policies and practices, including the marketing and sales policies and practices, with
`respect to the MC Device. Abbott Labs also controls all ethics and compliance policies
`and practices with respect to Abbott, including in connection with the implementation of
`such policies and practices as required by Abbott’s past Corporate Integrity Agreement
`(“CIA”) with the Office of Inspector General of the Department of Health and Human
`Services (“HHS-OIG”) of the United States. Abbott Labs also controls such policies and
`practices by operating and controlling the Office of Ethics and Compliance, as well as all
`internal investigations, of Abbott (including for AVI and ACS).
`7.
`AVI is a Delaware corporation with a principal place of business at 3200
`Lakeside Drive, Santa Clara, California, the same business address as ACS, and presents
`itself as the Vascular Division of Abbott Labs. AVI is a wholly owned subsidiary of
`Abbott Labs. Relator and his/her managers received their employment agreements from
`AVI, but then received their paychecks and normal compensation from Abbott Labs
`(while receiving certain non-scheduled compensation from AVI) and were employed by
`Abbott, which functions as one enterprise.3 AVI conducted Abbott Labs’ speaker
`programs with respect to the MC Device (“Speaker Programs”), as well as marketed the
`MC Device on behalf of Abbott. AVI also provided employee training on behalf of
`Abbott Labs with respect to the marketing and sales of the MC Device.
`8.
`ACS also is a subsidiary of Abbott Labs and is a corporation organized and
`existing under the laws of the State of California with its principal place of business at
`3200 Lakeside Drive, Santa Clara, California, the same address as AVI. ACS is a wholly
`owned subsidiary of Abbott Labs and also is a subsidiary of AVI. ACS presents itself as
`the Structural Heart Division of Abbott Labs’ Vascular Division (i.e., AVI) and sells the
`MC Device under an exclusive license from another Abbott Labs’ subsidiary, Evalve.
` 
`3 For example, Michael Dale, Abbott’s Senior Vice President of the Structural Heart
`division, receives Abbott Labs (ABT) stock options as part of his compensation package.
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`9.
`ACS and AVI form the structural heart and vascular businesses of Abbott
`Labs and, at all pertinent times, all three defendants functioned as a joint entity, an
`integrated enterprise, as alter egos of each other, as agents of each other and a single or
`joint employer. Abbott Labs acquired the company that owns the patent for the MC
`Device (Evalve), sells the MC Device through another subsidiary (ACS), and markets the
`MC Device through another subsidiary (AVI) whose employees are paid by Abbott Labs,
`who engage in the unlawful practice building and provide the illegal inducements to the
`physicians for referring patients to other physicians who implant the MC Devices while
`providing other illegal inducements to the physicians who implant the MC Devices on
`Abbott’s behalf.
`10. At all pertinent times, from a corporate perspective, Abbott Labs has paid
`the inducements that resulted in the false claims at issue on behalf of AVI and ACS, and
`has profited by selling the MC Devices to physicians and hospitals as a result of those
`false claims (and then made licensure payments to Evalve). Abbott Labs, however,
`operates on a consolidated financial basis such that the profits of ACS, AVI and Evalve
`all ultimately flow up to and reside in Abbott Labs, such that it would be inequitable not
`to hold each of the defendants liable for the conduct at issue in this case.
`11. Defendants directly participated in the false claim violations described
`herein and were the alter egos of one another, there being a sufficient unity of interest and
`ownership among and between them that the acts of one were for the mutual benefit of
`and can be imputed to the others. Specifically, the policies and practices that resulted in
`the kickbacks at issue were perpetrated and encouraged by their common management.
`12.
` Abbott Labs filed consolidated financial statements and consolidated
`statements of operations of its subsidiaries with the Securities and Exchange
`Commission. Such consolidation was proper pursuant to Generally Accepted Accounting
`Principles because Abbott Labs controlled ACS, AVI and its other subsidiary entities,
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`including Evalve. More specifically, ACS, AVI and Evalve were mere instrumentalities
`or conduits through which Abbott Labs did business. It would be inequitable to treat
`Abbott as anything but one individual entity.
`13. ACS and AVI operate in an essentially undercapitalized manner with
`essentially all of their profits placed in and under the control of Abbott Labs.
`14. Abbott portrays itself as a single entity, publicly promoting itself as a unified
`nationwide operation through brochures, marketing materials, website, and
`communications with the media, as well as in correspondence to state licensing and
`certification agencies.
`15. There is and was sufficient unity of interest and ownership among and
`between each Defendant such that the acts of one were for the benefit of and could be
`imputed to all others. Further, at all times herein mentioned, each Defendant acted as the
`agent and partner of, conspired with, and participated in a joint venture with the
`remaining Defendants. Moreover, in engaging in the conduct described below,
`Defendants all acted with the express or implied knowledge, consent, authorization,
`approval, and/or ratification of their co-defendants.
`16. To the extent that any of the Defendants was not considered the alter ego of
`the others for purposes of the claims asserted in this Amended Complaint, they
`alternatively would be liable for engaging in conspiracy to violate applicable law, as set
`forth below.
` III. JURISDICTION AND VENUE
`17. This Court has subject matter jurisdiction over this action pursuant to 28
`U.S.C. § 1331 and 31 U.S.C. § 3732. This Court has supplemental jurisdiction over the
`counts relating to the analogous false claims act statutes of the states of California,
`Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa,
`Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nevada, New
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`Jersey, New Mexico, New York, North Carolina, Oklahoma, Rhode Island, Tennessee,
`Texas, Virginia, and Washington, along with the District of Columbia, pursuant to 28
`U.S.C. § 1367.
`18. This Court has personal jurisdiction over Defendants pursuant to 31 U.S.C. §
`3732(a) because Defendants can be found in, reside, or transact business in this District.
`Additionally, this Court has personal jurisdiction over Defendants because acts prohibited
`by 31 U.S.C. § 3729 occurred in this District.
`19. Venue is proper in this District pursuant to 31 U.S.C. § 3732(a) because
`Defendants transact business in this District and numerous acts proscribed by 31 U.S.C. §
`3729 occurred in this District.
`20. Relator is the original source of the information upon which this First
`Amended Complaint (“Complaint”) is based and the facts alleged herein, as that phrase is
`used in the FCA and other laws at issue in this Complaint.
`21.
` Relator has complied with all procedural requirements of the laws under
`which this case is brought.
`22. Relator brings this action based on its personal knowledge and, where
`indicated, on information and belief. None of the actionable allegations set forth in this
`Complaint are based on public disclosure as set forth in or within the meaning of 31
`U.S.C. § 3730(e)(4).
`IV. THE REGULATORY ENVIRONMENT
`A. Government Funded Healthcare Programs
`i. Medicare
`23.
`In 1965, Congress enacted the Health Insurance for the Aged and Disabled
`Act, 42 U.S.C. §1395, et seq., known as the Medicare Program (“Medicare” or “Medicare
`Program”), as part of Title XVIII of the Social Security Act (“SSA”), to pay for the costs
`of certain health care services. Entitlement to Medicare is based on age, disability, or
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`affliction with end-stage renal disease. See 42 U.S.C. §§ 426, 426-1. The regulations
`implementing the Medicare Program are found at 42 C.F.R. § 409, et seq.
`24. The Secretary of Health and Human Services (“HHS”) administers Medicare
`through the Centers for Medicare and Medicaid Services (“CMS”). The Medicare
`program consists of both (1) Medicare Part A, which authorizes the payment of federal
`funds for hospitalization and post-hospitalization care, 42 U.S.C. § 1395c-1395i-2
`(1992); and (2) Medicare Part B, which authorizes the payment of federal funds for
`outpatient-type services, including, but not limited to, physician services, supplies and
`services incident to physician services, laboratory services, outpatient therapy, diagnostic
`services, and radiology services. 42 U.S.C. § 1395(k), (i), (s).
`25. To participate in the Medicare Program, a provider of services must file a
`provider agreement with the Secretary of HHS. 42 U.S.C. § 1395cc. The provider
`certifies that he/she/it is knowledgeable of Medicare requirements on the Medicare
`provider enrollment form. The provider agreement requires compliance with the
`requirements that the HHS Secretary deems necessary for participation in the program.
`Id.
`
`26. Medicare enters into agreements with physicians to establish the physician’s
`eligibility to participate in the Medicare Program. For physicians to be eligible for
`participation in the Medicare program, they must certify that they agree to comply with
`the AKS, among other federal health care laws. Specifically, on the Medicare enrollment
`form, CMS Form 855I, the “Certification Statement” that the medical provider signs
`states: “You MUST sign and date the certification statement below in order to be enrolled
`in the Medicare program. In doing so, you are attesting to meeting and maintaining the
`Medicare requirements stated below.” Those requirements include:
` agree to abide by the Medicare laws, regulations and program instructions
`that apply to me . . . The Medicare laws, regulations and program
`instructions are available through the fee-for-service contractor. I
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`understand that payment of a claim by Medicare is conditioned upon the
`claim and the underlying transaction complying with such laws, regulations,
`and program instructions (including, but not limited to, the Federal anti-
`kickback statute and the Stark law), and on the supplier’s compliance with
`all applicable conditions of participation in Medicare.
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`* * *
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`I will not knowingly present or cause to be presented a false or fraudulent
`claim for payment by Medicare and will not submit claims with deliberate
`ignorance or reckless disregard of their truth or falsity.
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`27. Part B of the Medicare Program is funded by insurance premiums paid by
`enrolled Medicare beneficiaries and contributions from the federal treasury. Eligible
`individuals who are 65 or older or disabled may enroll in Part B to obtain benefits in
`return for payments of monthly premiums as established by HHS. Payments under the
`Medicare Program are often made directly to service providers such as physicians, rather
`than to the patient/beneficiary. This occurs when the provider accepts assignment of the
`right to payment from the beneficiary. In that case, the provider bills the Medicare
`Program.
`28. Part B of the Medicare Program covers certain facility use and medical
`services provided to qualified patients/beneficiaries, including outpatient services such as
`the services rendered by Defendants.
`29. The United States provides reimbursement for Medicare claims from the
`Medicare Trust Fund through CMS. To assist in the administration of Part B of the
`Medicare Program, CMS contracts with Medicare Administrative Contractors (“MACs”).
`MACs process the reimbursement of claims for Part B services submitted by Defendants
`on CMS Form 1500 to Medicare.
`30. CMS Form 1500 currently requires the following certification by physicians
`and suppliers as a pre-condition of payment:
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`In submitting this claim for payment from federal funds, I certify that: 1) the
`information on this form is true, accurate and complete; 2) I have
`familiarized myself with all applicable laws, regulations, and program
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`instructions, which are available from the Medicare contractor; 3) I have
`provided or will provide sufficient information required to allow the
`government to make an informed eligibility and payment decision; 4) this
`claim, whether submitted by me or on my behalf by my designated billing
`company, complies with all applicable Medicare and/or Medicaid laws,
`regulations, and program instructions for payment including but not limited
`to the Federal anti-kickback statute and Physician Self-Referral law
`(commonly known as Stark law); 5) the services on this form were
`medically necessary and personally furnished by me or were furnished
`incident to my professional service by my employee under my direct
`supervision, except as otherwise expressly permitted by Medicare or
`TRICARE; 6) for each service rendered incident to my professional service,
`the identity (legal name and NPI, license #, or SSN) of the primary
`individual rendering each service is reported in the designated section. For
`services to be considered “incident to” a physician’s professional services, 1)
`they must be rendered under the physician’s direct supervision by his/her
`employee, 2) they must be an integral, although incidental part of a covered
`physician service, 3) they must be of kinds commonly furnished in
`physician’s offices, and 4) the services of non-physicians must be included
`on the physician’s bills.
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`31.
`In submitting Medicare claim forms, then, providers must certify: (1) that
`they are knowledgeable of Medicare requirements; (2) that the information included on
`the form presents an accurate description of the services rendered; and (3) that the
`services were medically indicated and necessary for the health of the patient.
`ii. Medicaid
`32. Medicaid was also created in 1965 as part of the SSA and authorized federal
`grants to states for medical assistance to low-income, blind, or disabled persons, or
`members of families with dependent children or qualified pregnant women or children.
`The Medicaid program is jointly financed by the federal and state governments. CMS
`administers Medicaid on the federal level. The federal portion of each state’s Medicaid
`expenditures varies by state. States pay medical providers directly, but they procure the
`federal share of payment from accounts which draw on the United States Treasury. 42
`C.F.R. §§ 430.0-430.30 (1994).
`33. The law requires state Medicaid plans to execute written agreements
`between the Medicaid agency and each provider furnishing services under the plan
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`(“provider agreements”). 42 C.F.R. § 431.107(b). Providers who participate in the
`Medicaid program must sign provider agreements with their states that certify
`compliance with the state and federal Medicaid requirements, including the AKS.
`Although there are variations among the states, the agreement typically requires the
`prospective Medicaid provider to agree that he or she will comply with all state and
`federal laws and Medicaid regulations in billing the state Medicaid program for services
`or supplies furnished.
`34. Furthermore, in many states, Medicaid providers, including both physicians
`and hospitals, must affirmatively certify, as a condition of payment of the claims
`submitted for reimbursement by Medicaid, compliance with applicable federal and state
`laws and regulations.
`35.
`In New York, for example, physicians and pharmacies must periodically
`sign a “Certification Statement for Provider Billing Medicaid,” in which the provider
`certifies that claims submitted “to the State’s Medicaid fiscal agent, for services or
`supplies furnished,” “will be subject to the following certification. . . . I (or the entity)
`have furnished or caused to be furnished the care, services, and supplies itemized and
`done so in accordance with applicable federal and state laws and regulations.”
`36. The following states have provider certification requirements for their
`Medicaid programs that are the same or similar to that of the State of New York in all
`material respects.
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