California Whistleblower is joined by the Government in a Lawsuit Against UnitedHealth Group
The Department of Justice announced earlier this month that the government has joined a lawsuit that has been filed against UnitedHealth Group (UHG) by a whistleblower. The government formally filed papers to intervene in the suit in late March of this year. The suit was originally filed by whistleblower James Swoben in 2009. Swoben has accused the company of taking advantage of the Medicare Advantage payment system by misrepresenting the health status of its patients. This was done by UHG, Swoben alleges, in an effort to boost payment rates from the federal Medicare program. Furthermore, Swoben has alleged that he has proof that UHG has been involved in fraudulent activities that could have cost the government more than $1 billion.
For its part UHG denies any wrongdoing. “We are honored to serve millions of seniors through Medicare Advantage, proud of the access to quality healthcare we provided, and confident we complied with program rules,” said UnitedHealth spokesman Matt Burns. On the other hand, the case in which the government has intervened involves government payments that Swoben and the Justice Department maintain, “gamed” the rules for “risk adjustment.” Under these rules, government payments are adjusted upward for insurers who cover patients with costlier health conditions. The government alleges that UHG boosted adjustment claims by submitting forms for conditions that health plan members did not have.
Medicare Advantage – which serves as an alternative to Medicare – is used by more than 18 million disabled and elderly Americans and cost nearly $150 billion a year to maintain. In the past, nearly half a dozen whistleblower Medicare lawsuits have been filed against companies that are alleged to have over-billed or otherwise committed fraud against the popular program. “This is not one company engaged in episodic bad behavior, but a lucrative business plan that appears to be national in scope,” said Patrick Burns associate director of Taxpayers Against Fraud in Washington. The group is a nonprofit profit organization supported by whistleblowers and their lawyers.
The government is also attempting to combine the Swoben case with another whistleblower action filed in 2011 by former UnitedHealth executive Benjamin Poehling. Poehling alleged then that UHG generated hundreds of millions in overpayments. If you have chosen to disclose False Claims Act violations to the government it is also advised that you contact a whistleblower law firm. A whistleblower attorney can advise you in such matters and will work to protect your rights under the law.
Judge Allows MedStar Health False Claims Act Case to Go Forward
Judge Allows MedStar Health False Claims Act Case to Go Forward
Often, some of the firms involved in allegations of False Claims Act violations come up more than once in this blog. This is the case with MedStar Health. Last month an Illinois Judge – Judge Robert Dow Jr. of U.S. District Court Judge in Illinois – ruled that a False Claim Act violation case could proceed against MedStar and Accretive. The suit was first filed by MedStar Washington Hospital Center employee Cherry Gaziosi who alleged that she helped submit false claims to Medicare, Tricare and Medicaid on behalf of Accretive Health Inc. Accretive Health is based in Chicago and is one of the largest hospital revenue cycle management companies in the United States. In January of this year, Accretive Health changed its name to R1 RCM Inc. Tricare is a health care program for uniformed service members and their families.
Specifically, Gaziosi alleged that MedStar conspired with Accretive in order to change patient treatments solely to increase patient admissions. Moreover, Gaziosi maintains that these changes were made without regard to medical necessity. As a result of this action, Medicare is believed to have paid more for inpatient admissions than it did for observational stays. “Accretive for a number of years peddled a practice to top hospital administrators at a significant number of hospitals around the country, convincing them that Accretive could provide to the hospitals what they called a ‘revenue lift’ particularly from the Medicare system,” Brad Pigott of Pigott & Johnson PA in Jackson, Miss. Pigott represents Ms. Gaziosi and is a False Claims Act attorney. The qui tam provisions of The False Claims Act allow whistleblowers to sue on behalf of the government and to receive a portion of any damages recovered.
Gaziosi further alleged that Accretive created documentation, which sought to justify inpatient admissions for patients who were otherwise determined not to have met a medical necessity. Emergency department staff previously made this determination. In 2015, MedStar Health was among 500 hospitals that paid a $250 million dollar settlement to the U.S. Department of Justice for irregularities concerning the implantation of cardiac devices in Medicare patients. Drinker Biddle & Reath LLP in Washington represents MedStar. Kirkland & Ellis LLP in Washington represents Accretive.
If you know of abuse that has been committed against the government or one of its agencies, you are encouraged to report it and to contact a whistleblower lawyer. Whistleblower lawyers will be able to advise you in such matters and will work to protect your rights.
CEO of Barclays Comes Under Investigation for Trying to Identify a Whistleblower
Although this blog is filled with instances of whistleblowers being awarded huge settlements, there is still a great deal of risk involved in engaging in this protected activity. This was demonstrated last week when financial regulators from the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) announced that they were investigating Barclays’ Chief Executive Officer (CEO) Jes Staley’s alleged attempts to unmask a whistle-blower at the company. Barclays – a British multinational banking and financial services company headquartered in London – is one of Britain’s top banks. Staley has been accused of attempting to identify the author of a letter written earlier this year by an employee/whistleblower. As a result of these accusations, Barclays’ board engaged the independent law firm Simmons & Simmons, LLP to lead the investigation into Staley’s alleged misconduct. “I am personally very disappointed and apologetic that this situation has occurred, particularly as we strive to operate to the highest possible ethical standards,” Barclays’ chairman John McFarlane said in a statement.
In the past, Barclays has been embroiled in a number of controversies including alleged regulatory misdemeanors. Specifically, its former CEO resigned from the group during a high profile investigation into Libor (London Interbank Offered Rate) rigging. The Libor Scandal involved a series of transactions connected to the bank. The Libor is an interest rate reached by averaging the interest rates at a number of major banks around the world. The outcome of that case was that the bank was fined nearly £290m ($374.68 million USD.) This latest controversy involving Staley began back in June 2016. Two anonymous letters were sent from the US to some of Barclays board members. The letters concerned Tim Main a friend of Staley and a colleague of his when the two worked at JP Morgan.
According to the FCA/PRA investigation, Staley made two attempts to discover the identity of the whistleblower even attempting at one point to utilize the help of a US law enforcement agency. Though Staley has defended his actions by saying that he honestly believed he was entitled to the information, corporate rules regarding whistleblowing are clear. They stipulate that if an informer asks for anonymity a firm must respect the request. However, Staley is said to have violated this rule because he felt that the content of the letters constituted an “unfair attack” on Main. As a result of this, it is speculated that Staley then asked the bank’s information security team to discover the identity of the author on more than one occasion.
Ironically, Staley stated that he would work to strengthen trust in the bank in light of the aforementioned Libor Scandal. In a statement from the bank’s Board, a spokesman defended Staley’s action. “The investigation… found, and the Board has concluded, that Mr. Staley honestly, but mistakenly, believed that it was permissible to identify the author of the letter.” Staley has received a written reprimand and a pay cut from the board as punishment. If you have chosen to disclose wrongdoing it is also advised that you contact a qui tam lawyer. A qui tam attorney can advise you in such matters and will work to protect your rights under the law.
Jury Awards $115 Million to Whistleblower in False Claims Case Against Florida Nursing Home Facility
Occasionally, whistle-blowers win in cases where the government has not intervened. Such was the case early last month when a federal jury in Florida awarded a nurse, Angela Ruckh, $115 million to settle her False Claims Act suit against her employer (LaVie Management and later CMC II). Ms. Ruckh had alleged that the company had engaged in a fraudulent scheme against the government that was “encouraged by senior officers.” Moreover, Ruckh stated that the scheme actively encouraged employees to falsify claims submitted to the government. The original False Claims Act lawsuit was filed back in 2011. Ruckh began working for Lavie Rehab, a skilled nursing facility, back in February of that same year. After working for a short time, Ruckh discovered what she believed were fraudulent activities being committed by senior officers at the facility.
Ruckh discovered these fraudulent activities through her work which involved helping to train minimum data set (MDS) coordinators. (MDS forms generate a code that determines how much Medicare pays each facility.) Ruckh alleged that there was a treatment disparity between Medicare and Medicaid patients. The former nurse claimed that LaVie treated patients who were on Medicaid as if they did not have a payer source. This lead to different treatment for patients with the same condition based solely on which program they were covered under. Specifically, Ruckh alleged that Medicare claims were based on upcoding.
Ruchk also alleged that Lavie Rehab “ramped up” therapy for patients based on monetary considerations. “They would take 88 to 92 year old people with multiple major health problems — heart problems, dementia, kidney failure, some of whom were on hospice care at the end of life — and they were giving them the highest amount of therapy under the Medicare guidelines. People who could only sit up straight for two minutes without passing out were subjecting them to 720 minutes, 12 hours of therapy a week,” Ruchk said. A statistician was used to help bolster Ruchk’s claims. He used a random sample of Medicaid and Medicare patients and reviewed Ruchk’s claims of upcoding and “amping.” Another nurse and auditor, Shirley Bradley, concluded that on the basis of these findings Medicaid patients were generally ignored and received no or inferior care. “They [LaVie Rehab] didn’t create care plans for the Medicaid patients because that would have been a road map to show that they weren’t providing the care needed. It made no sense to them to produce a plan that would show the care that they were not providing. It would have been a road map showing the disregard for the patient,” said Bradley.
Ruchk’s award of $115 million was determined by the number of submitted false claims. Each false claim is subject to a monetary penalty of between $5,500 and $11,000. If you have chosen to disclose False Claims Act violations to the government it is also advised that you contact a False Claims Act lawyer. A False claims act attorney can advise you in such matters and will work to protect your rights under the law.
Attorney in the Justice Department’s Whistleblower Unit Busted in FBI Sting
The government’s use of the whistleblower provisions of the False Claims Act hit a bit of a snag as of late last month when the Justice Department prosecutors accused Jeffrey Wertkin of attempting to sell information about a whistleblower’s confidential lawsuit against a Silicon Valley company. At the time, FBI agents had yet to discover whether Wertkin, who left the government last month, got the lawsuit from someone inside the Justice Department or if he sold other secrets as well. The government says that Wertkin attempted to sell secrets about a pending case for $310,000. “They’re going to have to review all his cases,” said Glenn Grossenbacher, a San Antonio whistle-blower attorney not involved in the case. “Did somebody give this case to him? Did he take it with him? Are there other cases involved? It’s a Pandora’s Box of questions.” A spokesperson for the FBI, Matthew Bertron, declined to comment on the accusations.
The government uses information provided by whistleblowers to strengthen its case against agencies that are accused of defrauding it. Wertkin, 40, has worked at the Justice Department since 2010. He worked on cases related to the government’s ongoing crackdown on healthcare fraud and remained there until his departure in April 2016. Wertkin began working at Akin Gump Strauss Hauer & Feld in Washington, DC that same year. His job at the company was to defend companies that were being sued under the whistleblower provisions of the False Claims Act. According to a legal recruit at Major, Lindsey & Africa, attorneys with Wertkin’s credentials typically make in excess of $500,000 a year.
According to prosecutors, Wertkin attempted to sell information to a man he believed worked for the Silicon Valley tech company by saying that he could help him “get ahead of the investigation.” The man turned out to be an undercover FBI agent. Wertkin was later arrested in a California hotel. During his tenure with the Justice Department, Wertkin tried cases involving AseraCare, Inc., PharMerica Corp and Medco Health solutions. PharMerica Corp and Medco Health Solutions paid $31.5 and $7.9 million dollars in settlements respectively. If you have chosen to disclose False Claims Act violations to the government it is also advised that you contact qui tam attorneys. A Qui tam attorney can advise you in such matters and will work to protect your rights under the law.
CA Inc Agrees to Pay the Government $45 Million to Resolve Alleged False Claims Act Violations
The Department of Justice’s crackdown on alleged acts of fraud and abuse has seen many different kinds of businesses accused of dealing with governmental agencies in a less than forthright manner. This was shown to be the case when last week the Department of Justice announced that CA Inc. (CA) had agreed to pay $45 million to resolve alleged violations of the False Claims Act. The government alleges that the company made false claims and statements while it was negotiating a General Services Administration (GSA) contract. CA is an IT management software services company based in New York. “Today’s settlement demonstrates our continuing vigilance to ensure that contractors deal forthrightly with federal agencies when seeking taxpayer funds,” said acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “We will take action against contractors who withhold information and cause the government to pay more than it should for commercially available items.”
The settlement resolves allegations that CA filed false claims under a GSA contract that was awarded to the company for software licenses and maintenance services. Under the Multiple Award Schedule (MAS) contract, GSA pre-negotiates prices and contract terms for subsequent orders from federal agencies. The government alleges that CA’s contractors misrepresented how they conducted business in the market place and that this hampered GSA’s ability to negotiate a fair price for CA’s services. The MAS contract also contained a clause stating that CA had to reduce its prices to the government if its prices to commercial customers improved.
In short, the settlement resolves allegations that CA did not disclose its discounting practices to GSA contracting officers when negotiating the MSA contract. The government alleged that CA provided false information about the discounts it gave commercial customers for its software license and maintenance services. These violations are alleged to have occurred in 2002. The contract was extended in 2007 and 2009. Finally, the settlement resolves claims that CA violated the “price reduction” clause that was a part of the MSA contract. “This case illustrates that we will vigorously pursue federal contractors who fail to negotiate and perform their obligations with transparency and fairness,” said U.S. Attorney Channing D. Phillips for the District of Columbia. “Together with our federal partners, we will zealously press such claims in court to recover what is owed to the American taxpayer.”
The settlement comes about as the result of a lawsuit that was filed by a Dani Shemesh, a former employee of the CA Software Israel LTD. Under the False Claims Act, whistleblowers can sue on behalf of the government and share in any recovery. Shemesh’s share of the settlement comes to $10.195 million. If you know of abuse that has been committed against the government or one of its agencies, you are encouraged to report it and to contact a qui tam lawyer. Qui tam lawyers will be able to advise you in such matters and will work to protect your rights.
Whistleblower Files suit Against a NE Ohio Rehabilitation Center Alleging Medicare Fraud
Late last month whistleblower Lynn Roycroft, a former clinical supervisor, at Abraxas Ohio – a 100 bed Residential Treatment Center for adolescent males owned by GEO Group, Inc. – filed a federal lawsuit alleging that the facility had falsely and fraudulently billed Medicare for counseling sessions that did not occur. The GEO Group, Inc. is a Florida-based, private prison company that specializes in corrections, detention and mental health treatment. It is currently one of the largest private prison companies in the nation. According to Medicaid officials, Abraxas has received more than $33 million in payments from the program since 2012.
Roycroft also alleges that men and women who otherwise had no prior education or experience in counseling were hired by Abraxas, given a week of training and then granted positions as counselors for the 100 boys who are housed at the facility. Roycroft further alleges that in addition to the financial and billing irregularities that existed at Abraxas Ohio, that teenage boys were often restrained rather than being given counseling for their drug and/or alcohol abuse. “The philosophy of the institution was to get as many kids in there as you could and bill Medicaid your three hours of group counseling a day, whether the groups happened or not,” Roycroft said. “To me, it’s just blatant fraud.” A representative for, GEO Group, Inc. – Pablo Paez -has denied all allegations and says that his company will “vigorously” defend itself against these charges.
The lawsuit, which was filed in U.S. District Court, is pending. Roycroft as a whistleblower is seeking unspecified damages. The case aligns with the government’s ongoing efforts at combating health care fraud via its Health Care Fraud Prevention and Enforcement Team (HEAT) which was announced back in May of 2009 by the Attorney General and the Secretary of Health and Human Services. The result is that since January 2009 the Justice Department has recovered more than $31.4 billion through False Claims Act cases. Moreover, whistleblowers have been able to utilize a qui tam lawyer to share in settlements that have come about as a result of the government’s efforts. If you have chosen to disclose False Claims Act violations to the government it is also advised that you contact qui tam lawyers. A Qui tam attorney can advise you in such matters and will work to protect your rights under the law.
Two Vessel Engineers Convicted of Environmental Crimes and of Obstruction
The government’s pursuit of fraud and abuse often involves the collaboration of seemly disparate agencies such as the Coast Guard and the Justice Department. This was proven to be the case when the Department of Justice announced late last month that a federal jury in Charleston, South Carolina Court had convicted two chief engineers of the vessel T/V Green Sky of falsifying documents in order to conceal the illegal discharge of oily bilge waste. The two were also convicted of obstruction. Herbert Julian – who served as chief engineer of the ship – was convicted of two felony counts for obstruction of justice. Panagiotis Koutoukakis – chief engineer from February 1 to August 3, 2015 – was also convicted of two felony counts, one for Act to Prevent Pollution from Ships (APPS) violations plus another for falsifying records. It was also revealed at the time that Aegean Shipping Management, S.A., had previously pleaded guilty to a violation of the APPS and obstruction of justice.
“With Charleston serving as one of the largest ports on the Eastern seaboard, working vessel pollution cases with the Environmental Crimes Section is an important focus for our office,” said U.S. Attorney Beth Drake, District of South Carolina. “Through criminal charges, we can deter those who would dump oily wastes into the world’s oceans and use false documents to cover it up.” The Green Sky is a chemical tanker flagged in Liberia. It generates large amounts of oil-contaminated waste water. This contaminated bilge waste is required to be removed from the vessel before it fills up the bottom of the Engine Room and causes damage to equipment and jeopardizes ship safety. Nevertheless, the law forbids oceangoing vessels from discharging this oily waste water directly into the sea.
The evidenced showed that the Green Sky regularly pumped contaminated, oily water directly overboard into the sea. Moreover, not only did the discharges go undisclosed, the records of the Green Sky were alleged to have been falsified in order to cover up these activities. The Green Sky falsified these activities using several methods: the first was that it omitted illegal bypass operations. The second was that it claimed that an oil water separator was used that had not been. Finally, the record books of the Green Sky were falsified with erroneous entries in order to further the cover-up. While nearly all of the discharges occurred in international waters, at least two occurred within the Exclusive Economic Zone of the United States.
Further evidence presented at the trial showed that the chief engineers covered up illegal overboard discharged through a “magic” hose and “magic” valve system that was apparently designed to bypass the ship’s oil water separator. Both Koutoukakis and Julian are said to have falsified the oil record books in order to hide the illegal discharges. These falsified records were ultimately presented to the U.S. Coast Guard during an inspection of the vessel. The Coast Guard was alerted to the deception by three whistleblowers that came forward to report the crimes. Testimony given at Julian’s trial revealed that he had hidden the log prior to the Green Sky’s arrival in Charleston and then lied to the Coast Guard about the vessel having a sounding log.
Prior to the trial, the Green Sky’s operator, Aegean Shipping Management, S.A., pleaded guilty to one APPS violation for illegally discharging waste into the sea and one count of obstruction. Moreover, unsealed documents revealed that the operating company agreed to pay a $2 million penalty. Aegean Shipping was also sentenced to probation and made to follow an environmental compliance plan. A second engineer, Nikolaos Bounovas, was acquitted of all charges against him. The case was investigated by the U.S. Coast Guard Sector Charleston and the Coast Guard Investigative Service. The case was prosecuted with the help of the U.S. Department of Justice’s Environmental Crimes Section and several other agencies. If you know of abuse that has been committed against the government or one of its agencies you are encouraged to report it and to contact a qui tam lawyer. An expert in qui tam law will be able to advise you in such matters and will work to protect your rights.
Four Pennsylvania-Based Companies and Two Individuals Agree to Pay $3 Million to Resolve Alleged False Claims Act and Customs Violations
Occasionally, the government’s crackdown on fraud touches businesses that have an international clientele. This was shown last February when the Department of Justice announced that three Pennsylvania-based importers – Ameri-Source International Inc., Ameri-Source Specialty Products Inc., Ameri-Source Holdings Inc. – and their owners, Ajay Goel and Thomas Diener, had agreed to pay $3 million to resolve violations of the False Claims Act. The lawsuit alleged that – among other things – the companies had engaged in a scheme to evade custom duties on small diameter graphite electrodes from the People’s Republic of China (PRC). (Small diameter electrodes are used as fuel in electric arc and ladle furnaces which are used in the production of steel.) Imports of PRC-manufactured small-diameter graphite electrodes have been subject to antidumping duties since Aug. 21, 2008. “This settlement shows that the Department of Justice is committed to pursuing claims against anyone involved in a scheme to seek an unfair advantage in U.S. markets by evading duties on imported goods, including the individuals who run the companies and knowingly participate in such schemes,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division at the time.
The settlement resolved allegations that from December 2009 to March 2012 Ameri-Source International Inc. evaded anti-dumping duties on 15 shipments of small diameter electrodes it had imported from the PRC. Moreover, the government alleged that Ameri-Source and other companies conspired in a scheme to evade duties on these imports. Ameri-Source International would later plead guilty to two counts of smuggling based on the charges. It also admitted to misrepresenting the size of the graphite rods. The corporation was sentenced to pay a $250,000 criminal fine within 10 days. “This settlement underscores one of HSI’s primary efforts, which is to ensure a level playing field for companies engaged in legitimate trade and commerce with the United States,” said Special Agent in Charge John Kelleghan of Homeland Security Investigations (HSI) Philadelphia. “HSI special agents will continue to protect the revenue of the United States and aggressively investigate individuals and companies who attempt to operate outside our laws and regulations.”
The allegations that were resolved by the settlement were brought about by a whistleblower at Graphite Electrode Sales Inc. under the provisions of the False Claims Act. This act permits private parties to sue on behalf of the government in cases of False Claims Act violations and to share in any recover that comes as a result of the lawsuit. Graphite Electrode Sales Inc. received approximately $480,000 as its share of the settlement. If you know of abuse that has been committed against the government or one of its agencies you are encouraged to report it and to contact a qui tam lawyer. A qui tam attorney can advise you in such matters and will work to protect your rights under the law.
Appeals Court Rules that the Settlement in the Quest Diagnostic Qui Tam case can be Publicly Revealed.
Earlier this month, the U.S. Court of Appeals for the 3rd Circuit in Pennsylvania ruled that a shared agreement between two qui tam claimants who brought suits against Quest Diagnostics can be made available for public view. The Court ruled in the case of Fair Laboratory Practices Associates v. Riedel that making the settlement agreement available for public viewing would not result in personal harm and that allowing its disclosure was also in the public interest. The suit arose from a qui tam suit brought against Quest Diagnostics (QDI) in a California state court by plaintiffs Riedel and Hunter Laboratories. Both parties filed numerous suits against QDI and other laboratories in the case. Under the qui tam provisions of the False Claims Act, private parties can sue on behalf of the government in cases of False Claims Act violations and share in any recover that comes about as a result of the lawsuit.
According to court documents, Fair Laboratory Practices Associates and Hunter entered into a qui tam sharing agreement and agreed to share in their respective suits against QDI and other laboratories. Appellate Judges Thomas Ambro, Patty Shwartz and Julio Fuentes ruled for a seal reversal, saying that that the district court had, “too quickly discounted the public’s interest,” in the case. (In 2009 Quest Diagnostics agreed to pay the U.S. $302 million to resolve allegations that a subsidiary sold misbranded test kits. In 2015, Quest Diagnostics agreed to pay the United States $1.79 million to resolve False Claims Act allegations)
The case is a part of the government’s ongoing efforts at combating health care fraud via its Health Care Fraud Prevention and Enforcement Team (HEAT) which was announced back in May of 2009 by the Attorney General and the Secretary of Health and Human Services. The result is that since January 2009 the Justice Department has recovered more than $31.4 billion through False Claims Act cases. If you have chosen to disclose False Claims Act violations to the government it is also advised that you contact qui tam lawyers. Qui tam attorneys can advise you in such matters and will work to protect your rights under the law.