They've been called the "X-Men of healthcare," four down-to-earth, middle-aged healthcare professionals with seemingly superhuman powers to unearth hundreds of millions of dollars of fraud and bring billion-dollar companies to their knees.
In the process of their adventures they could become the richest whistleblowers ever.
Ven-A-Care of the Florida Keys, formerly a home infusion company, maintains a small office located in a nondescript Key West neighborhood mini-mall. It's no longer in business and exists only to support the whistleblower lawsuits its four partners have filed against large healthcare companies. Some of the suits remain under seal.
The partners are close friends Luis Cobo, 49, Ven-A-Care co-founder, pharmacist and third-generation "conch," or native Key Wester, whose family operated a drug store there; co-founder Mark Jones, 44, a registered nurse who specialized in caring for AIDS patients; John Lockwood, M.D., 48, an orthopedic surgeon who no longer practices; and Zachary Bentley, 48, a former marina operator who joined Ven-A-Care in 1989 to manage the 2-year-old company.
Ven-A-Care was a small but growing infusion company providing AIDS care and treating other terminally ill patients. It was founded at the height of the AIDS crisis in the late 1980s to care for dying gay men who came to the Florida Keys to spend their last days in paradise. But that was before a large national chain-Waltham, Mass.-based National Medical Care, then owned by W.R. Grace-came to the market, eventually forcing Ven-A-Care out of business, partly by offering allegedly illegal incentives to local physicians to refer to its Key West clinic.
The Ven-A-Care partners paid a high price for refusing to partner with National Medical Care in what they viewed as a fraudulent scheme. NMC wanted Ven-A-Care's partners to collapse their business into an NMC start-up company, ImmuneCare, in exchange for part ownership of that clinic, franchising royalties down the road and promises of riches.
"They told us if we didn't, that they'd bury us," Bentley says, "and the referrals just dried up. After our company went out of business, Mark and I had to share a car and ride bikes. Mark lost his home and had to move in with his parents into a trailer. You get to a point where you can't downsize anymore. There wasn't anything else they could take away from us."
Bentley, described by himself and others as a "man with a mission," was the driving force behind the whistleblower suits, but each of the men brought a specialized talent to the mix. The partners immersed themselves in complex government reimbursement regulations, industry practices and fraud laws.
Bentley contacted government regulators in 1991 about NMC's business practices, but they ignored him. In June 1994, Ven-A-Care filed a civil whistleblower suit against NMC in Miami. The case was later transferred to the U.S. attorney's office in Boston.
The "X-men" avenged National Medical Care's actions. The company, which no longer exists in name, was partly dismantled, sold and absorbed by German dialysis giant Fresenius. Fresenius paid the U.S. Justice Department $486 million in civil and criminal fines last year to settle Ven-A-Care's 1994 civil whistleblower lawsuit. At least three top NMC executives pleaded guilty to criminal kickback and conspiracy charges and received prison sentences and fines. And three NMC divisions pleaded guilty to criminal fraud and kickback charges and were excluded from Medicare and Medicaid programs. None of the Key West doctors ever faced charges for their role in the NMC scheme there.
Under the federal False Claims Act, Ven-A-Care and its partners were entitled to a $40 million recovery.
But that's not the end of the story.
A different whistleblower suit brought by the four Ven-A-Care partners, this one filed in 1995 in Miami federal court against more than 20 pharmaceutical companies, alleges that the drug manufacturers manipulated the benchmark price Medicare uses to reimburse doctors for administering a relatively small number of drugs. Medicare doesn't pay for most prescription drugs but does reimburse for certain classes of medicine that must be administered by a physician, usually in an outpatient office setting.
That standard, known as the average wholesale price, is set and reported by the drug manufacturers. It bears little resemblance to the average selling price of a drug. The suit alleges drug companies set an artificially high average wholesale price to encourage doctors who administer medications to cancer, hemophilia and AIDS patients to prescribe their drugs. The suit alleges the companies encouraged physicians to bill government health programs at 95% of average wholesale price, guaranteeing a huge built-in profit.
Through that practice, called "marketing the spread," physicians stand to gain hundreds of dollars in profits per dose just for administering a drug, while the drug companies gain a captive market share and fat profits.
Healthcare lawyers and government officials say that because the drug companies do not bill Medicare directly, they escaped the intense antifraud scrutiny and whistleblower lawsuits experienced by the hospital, long-term-care and clinical laboratory industries.
That is, until the Ven-A-Care partners stepped in.
The lawsuit filed by the "Ven-A-Care boys," as they are known by the law-enforcement agencies that worked with them, came to light after a $14 million settlement in January with New Haven, Conn.-based drug giant Bayer Corp. The suit rocked the pharmaceutical industry and further stirred public outrage in Congress and among consumer groups about high prescription-drug prices and illegal marketing practices. It is the first of an expected 20 settlements, and it took more than five years from the time the suit was filed until the first drug company settled.
Sources close to the investigation say several times the government planned to shut down the case. But the Ven-A-Care boys were persistent.
"It became an obsession for me," Bentley says. "Come hell or high water I was going to see it through to its conclusion."
"It was a completely new field for the government," says Mark Lavine, assistant U.S. attorney in Miami, who investigated both the Ven-A-Care case against National Medical Care and the average wholesale price lawsuit. "The Ven-A-Care boys . . . served both as whistleblowers and expert consultant roles and explained what was going on to us."
Carolyn McElroy, who headed the Maryland Medicaid fraud control unit for 17 years and is now a healthcare lawyer with the Washington office of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, also credits the Ven-A-Care partners with launching the government's scrutiny of drug companies.
"Without their lawsuit this would not be a high-priority government enforcement issue," McElroy says.