FOR IMMEDIATE RELEASE MONDAY, SEPTEMBER 26, 1994

HCF

T2 MEDICAL, INC., AGREES TO PAY $500,000 AND DISCONTINUE IMPROPER PRACTICES IN SETTLEMENT WITH GOVERNMENT

ATLANTA, GEORGIA -- T2 Medical Inc., a Georgia-based home infusion company,has agreed to pay a $500,000 penalty and stop the that contributed to its growth as part of a settlement of federal fraud charges.Kent B. Alexander, U.S. Attorney in Atlanta, and J General of the U.S. Department of Health and Human Services, announced that the Government has filed suit today in U.S. District Court together with a consent decree that permanently enjoins T2, of Alpharetta, Georgia, from engaging in improper financial relationships with referring physicians. Under the consent judgment T2 must now radically restructure the way it does business to sever the existing links between patient referrals and paymentsto physicians. to reimburse the government for the damages to Medicare and the costs of investigation, and the requirement that T2 alter its business arrange-ments, the government has agreed not to pursue further criminal, civil, or administrative sanctions against T2 for certain business arrangements that T2 had with physicians. T2 is a major national provider of outpatient and home infusion therapy and lithotripsy. Infusion therapy is the administration to a patient of nutrients, antibiotics and other drugs and fluids, either intravenously or through a feeding tube. From 1989 through 1993, T2 entered into a variety of arrangements with physicians who were in a position to refer their patients to infusion therapy centers. In a typical scenario, T2 would help physician-investors establish an infusion center, manage the center, then once a profitable referral pattern was established between the physicians and the center, purchase the center in exchange for shares of restricted T2 stock. By restricting the physicians from selling their stock, T2 ensured that the physicians' economic fortunes would be tied to T2's profits, which in turn relied on patient referrals. These arrangements interjected a financial interest into physician's referral decisions, which should have been based solely on the patient's best interests. A physician who is receiving payments from a provider may consider, consciously or unconsciously, his or her potential profit from referrals in addition to the appropriate considerations of medical necessity, quality, cost, and convenience to the patient. The settlement agreement and proposed injunction will safeguard the Medicare and Medicaid programs and their beneficiaries. T2's various business arrangements enabled T2 to pay doctors who could refer patients to T2 and its affiliates. Thus, T2 paid physicians remuneration in order to induce the physicians to refer patients to T2 infusion centers. The complaint filed by the government alleges that T2's arrangements violated the Medicare and Medicaid anti-kickback statute, 42 U.S.C.i 1320a-7b(b). To the extent that the improper ownership structure of these entities violated the anti-kickback statute, the claims submitted to Medicare and Medicaid by T2 and some related entities are false and fraudulent within the meaning of the False Claims Act, 31 U.S.C. 3729(a) and the Civil Money Penalties Law, 42 U.S.C. 1320a-7a(1)(B). Where, as in this case, false or fraudulent claims are being submitted to Medicare or Medicaid, the activity which is leading to the submission of such claims may be enjoined pursuant to 42 U.S.C. 1320a-7a(k). The settlement agreement and proposed injunction place a number of restrictions on T2's future actions. Within six months, T2 must: except under limited circumstances cease managing or providing other services to entities which are owned by physicians; ensure that stock in T2 held by physicians is not restricted in any way; offer physicians ownership in T2 only on terms equally available to the public through trading on a national exchange; and not participate in any partnership or other co-ownership arrangement with physicians in any entity providing infusion therapy or one of several other types of services. The proposed injunction immediately prohibits infusion therapy centers managed by T2 from seeking or accepting Medicare or Medicaid reimbursement. In addition, within one month, T2 will notify patients at its facilities that their physicians may have an ownership interest in the facility. T2 must establish that each patient has read and signed a form acknowledging that the physician who referred the patient to T2 may have a financial interest in the referral and that the patient has the freedom of choice to obtain services elsewhere. Alexander and Brown noted that the anti-kickback statute must be aggressively used in cases such as this to curtail waste, fraud and abuse in the Medicare and Medicaid programs. In the current health care system, physicians and other health care providers often have an economic incentive to order excessive services. The provision of unnecessary services drives up ealth care costs and often places the patient at risk. Because of the nature of most medical judgments by physicians, however, it is extremely difficult for prosecutors to prove directly that particular referrals by physicians are unnecessary or otherwise improper. The anti-kickback statute is designed to combat overutilization, reduce costs, and safeguard patients' freedom of choice, by reducing the ability of providers to try to induce physicians to

In the settlement, in exchange for

steer their patients to the highest bidder. Today's settlement agreement and proposed injunction will help ensure that physicians' medical judgments are not tainted by financial inducements from providers. Alexander and Brown expressed their appreciation to assistant U.S. Attorney Randy S. Chartash, who investigated the matter and negotiated the settlement, and Special Agent Edward N. LeFaivre of the Office of Inspector General, who investigated the case. #### 94-548