A Medical Device Daily

New York State and City agreed on July 20 to repay the federal government nearly $540 million to settle whistleblower-sparked Medicaid false claims allegations, according to New York City qui tam whistleblower attorney David Koenigsberg of Menz Bonner & Komar.

An April 2000 report by the former U.S. General Accounting Office, now called the Government Accountability Office, said that Illinois, Michigan, and New York accounted for more than 60% of total school-based medical claims, while New York accounted for 44% of that total. When the Inspector General's audits were released New York officials loudly criticized the agency's methodology and conclusions.

With the settlement the city and state did not admit liability, nor did the federal government concede that its claims were not well founded.

Under the agreement, settling allegations of improperly billed preschool and older students' speech, physical and occupational therapy, psychological counseling and transportation over a seven-year period, New York State will pay nearly $331,879,000 and allow the federal government to retain nearly $108 million of about $303 million it withheld for questionable billing during a seven-year period ending in December 2008. New York City will pay $100 million.

Additionally, New York State agreed to enter into a "Program Compliance Agreement" with the Centers for Medicare & Medicaid Services governing the manner in which the state department of education offers future school and preschool supportive health services programs. This agreement is believed to be the first of its kind between the federal government and a state or local government. It is similar to corporate integrity agreements reached with private entities settling Medicaid fraud allegations.

In other legalities:

• Medversant Technologies (Los Angeles) reported it has filed a patent infringement lawsuit against Morrissey Associates in the U.S. District Court for Central District of California, involving the use of web-based technology to automate the process of credentialing.

The company said that its technology patent has advanced its position in provider data management and covers technologies that allow healthcare organizations to manage provider information. It is a foundational patent for the company and provides for a system for storing, continually verifying, and retrieving credentials records in a global network environment.

Because of the amount of data that healthcare facilities must collect and verify, an automated system is essential for providing a cost-effective solution for this otherwise costly and time consuming process. Medversant has created pockets of efficiency in the provider data management area by setting up clearinghouses in which provider data is centralized and accessed by numerous stakeholders. Medversant's AutoVerifi is utilized throughout the U.S. and is a key component of Medversant's OneSource, ClaimGard, MedMonitored, and HRSource solutions, the company said.

• Align Technology (Santa Clara, California) reported an update on the a lawsuit brought by Ormco (Orange, California) against it in the U.S. District Court for the Central District of California (District Court), which was tried by jury June 9 through June 25, 2009.

As previously disclosed, on June 26, 2009, the jury delivered a verdict against Align. Ormco alleged that Align infringed claims of Ormco's 6,616,444 patent. Align claimed non-infringement, invalidity, as well as unenforceability of the patent and equitable defenses. The jury found the claims asserted by Ormco in the 6,616,444 patent to be infringed and valid. The jury also issued an advisory verdict that Ormco did not engage in prosecution laches or unclean hands, equitable defenses raised by Align.

The jury only determined liability. Any monetary damages will be determined in a later trial, which has not been schedule, but would likely occur in early 2010. The jury verdict does not preclude Align from selling its Invisalign system.