In The News

Bollinger Shipyards Agrees to Settle False Claims Act Suit

We’ve seen some False Claims Act cases in the news that have been very impactful on various governmental agencies and private companies, but the following case is especially troubling. It involves a charge of fraud that affects a major branch of the US armed forces – the Coast Guard – and the functionality of its military vessels. Back in August of 2011, the US Justice Department filed suit against Bollinger Shipyards Lockport LLC and Halter Bollinger Joint Venture LLC, alleging that they had made false statements to the Coast Guard for the purpose of securing a contract to modify the design of several ships.

It was the government’s charge at that time that Bollinger – back in 2002 – had proposed converting the Coast Guard’s existing 110-FT Patrol Boats (WPDs) into 123-Ft WPBs by extending their hulls and making additional modifications. The government alleged that Bollinger misrepresented the hull or longitudinal strength of the converted vessels in order to secure a contract to convert eight more Coast Guard cutters. The Justice Department also said that Bollinger’s fraudulent activity included failing to follow other quality control procedures that were mandated by their contract.

As a result the first cutter, the Matagorda, suffered hull failure when it was put into service. The modifications Bollinger made to the other vessels caused them to be unseaworthy as well. Attempts to repair the vessels were unsuccessful and these ships were eventually taken out of service. In December of this year, Bollinger finally agreed to pay the United States $8.5 million and to release contract claims to settle this False Claims action filed against it back in 2011.

The case was handled by both the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office of the Eastern District of Louisiana. If you are the defendant in a qui tam law suit, you are advised to hire a False Claims Act attorney who has the expertise to counsel you in this area of the law.


Netcracker Technology Corp. and Computer Sciences Corp. Agree to Settle Civil False Claims Act Allegations

The government’s crackdown on fraud under the False Claims Act continues unabated. Two governmental contractors – Netcracker Technology Corp (NTC) and Computer Sciences Corp (CSC) – have agreed to pay the government a total of $12.75 million to resolve allegations under the False Claims Act claiming that both companies used individuals who did not have security clearance on a Defense Information Systems Agency (NISA) contract. NTC – headquartered in Waltham, Mass – has agreed to pay $11.4 million and CSC – headquartered in Falls Church, Virginia – has agreed to pay $1.35 million. Specifically, the government alleges that from 2008 through 2013 Netcracker used employees who it knew did not have security clearance to perform work it knew required clearance in compliance with DISA and government regulations. The government further alleges that CSC then recklessly submitted those false claims for payment to DISA. Netcracker – a government contractor- and CSC – a subcontractor – implemented software used to help manage the telecommunications network used by the U.S. Department of Defense.

Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division and U.S. Attorney Channing D. Phillips of the District of Columbia both stated the government’s need to maintain the integrity of the procurement process by pursuing violations of the False Claims Act. In recent months the US government has been aggressively cracking down on companies that are alleged to have defrauded the government. Since January 2009, the Justice Department has recovered more than $25.3 billion through False Claims Act cases.

The settlement by NTC and CSC resolves a lawsuit filed under the whistleblower act provision of the False Claims Act; whistleblower lawsuits are also referred to as Qui tam law suits. The law permits parties who file under this section of the False Claims Act to obtain a portion of the government’s recovery. John Kingsley, a former Netcracker employee who informed on his company’s practices, is entitled to and will receive a whistleblower reward of $2,358,750. The resolution in this matter was the result of a joint effort between the U.S. Attorney’s Office of the District of Columbia, the Civil Division’s Commercial Litigation branch and the DISA IG Office


Millennium Health Agrees to Pay $256 Million to Resolve Allegations of Unnecessary Drug and Genetic Testing and Illegal Remuneration to Physicians

Millennium Health agreed to pay the government $256 million to resolve allegations that it defrauded Medicare, Medicaid and other federal programs by billing them for medically unnecessary genetic and urine tests. Millennium, headquartered in San Diego, is one of the largest urine drug testing laboratories in the United States.

On October, 19 – as part of an announced settlement – Millennium agreed to pay $227 million to resolve these allegations under the False Claims Act, which imposes liability on persons and companies who defraud governmental programs. The government alleged that from January 1, 2008 through May 20, 2015 Millennium prompted physicians to order an excessive amount of urine drug tests for patients that were medically unnecessary for the treatment or diagnosis of individual patient’s illness or injury. The tests were done through promotion of “customer profiles” which instead of being tailored to individual patients were in effects orders to physicians to conduct these unnecessary tests. The tests, the government alleged, were not based on necessity but instead were conducted for the sole purpose of billing Medicare, Medicaid and other federal health programs. The practice violated federal rules limiting payment to services that are medically necessary for the treatment and diagnosis of patient illness or injury.

The government further alleged that Millennium’s free point of care urine test cups to physicians – which it conditioned on the physician’s agreement to return to Millennium for hundreds of dollars worth of additional testing – violated both the Stark Law and the Anti-Kickback Statute. The Stark Law (named for United States Congressman Pete Stark (D-CA) who sponsored the bill) and the Anti-Kickback Statute prohibit laboratories from giving physicians anything of value in exchange for referrals of tests.

Millennium also agreed to pay $10 million to resolve charges under the False Claims Act that from January 1, 2012 through May 20, 2012 it submitted false claims that were as a result of medically unnecessary genetic testing. Additionally, Millennium as part of a corporate integrity agreement it has entered due to the settlement, agreed to pay $19.2 million to the Centers for Medicare and Medicaid Services (CMS) to resolve administrative actions related to Millennium’s urine drug test billing practices.

Originally the False Claims Act allegations were brought about in a qui tam law suit. The qui tam provision of the False Claims Act is commonly referred to as the whistleblower law. The law allows for private parties to bring suit on the behalf of the government and to share in any recovery. Whistleblowers rewards in this case will total $31.83 million.

Medicare fraud cases have been in the spotlight recently due to increased scrutiny from the Justice Department. Since January 2009, the Justice Department has recovered more than $25.3 billion through False Claims Act cases. More than $16.2 billion of that amount has been recovered in cases involving fraud against federal health care programs. The investigation was spearheaded by the government’s Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative.

The investigation was conducted by the Civil Division’s Commercial Litigation branch, the U.S. Attorney’s Office of the District of Massachusetts, HHS-OIG and HHS’ Office of the General Counsel, CMS, the Office of Personnel and Management Office of Inspector General, the U.S. Postal Service Office of Inspector General, the Department of Veterans Affairs and the FBI.


Government Intervenes In Lawsuits Alleging That Skilled Nursing Chain SavaSeniorCare Provided Medically Unnecessary Therapy

In October of this year the US Government filed a consolidated complaint against SavaSeniorCare, LLC and related entities under provisions of the False Claims Act. The False Claims Act imposes liability on persons and companies who defraud governmental programs. Sava is one of the nation’s largest providers of short-term and long term care services in the United States. They operate approximately 200 skilled nursing facilities (SNFs) in 23 states including several rehabilitation centers in Tennessee.

The government is alleging that Sava pressured its facilities to provide medically unnecessary and unskilled services and procedures to patients with the sole intent of maximizing profits. The government further alleges that Sava facilities delayed discharging patients who were otherwise ready to be released and aimed these practices at corporate targets placing increased revenues over patient need.

The government’s lawsuit is being filed under the qui tam whistleblower provisions of the False Claims Act. Lately, Medicare fraud cases have been in the spotlight due to increased scrutiny from the recently appointed Attorney General of the United States, Loretta Lynch. In June of this year, Lynch and The Department of Health and Human Services (HHS) announced the results of a nationwide sweep resulting in charges against 243 individuals who are alleged to have been involved in Medicare fraud. Included among the charged were 46 doctors, several nurses and other licensed medical professionals.

The False Claims Act provides that defendants who are found guilty of charges brought against them are subject to damages equal to three times the government’s loss plus applicable penalties. Tips about potential fraud, waste, abuse and mismanagement that could lead to a qui tam lawsuit, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477). The consolidated lawsuit is being handled for the government by the Civil Division’s Commercial Litigation Branch and Assistant U.S. Attorney Christopher C. Sabis of the Middle District of Tennessee.


Amedisys Home Health Companies Agree to Pay $150 Million to Resolve False Claims Act Allegations

With so many Medicare fraud cases in the news regularly, it isn’t unheard of for us to let some slip by without sharing them with you…

Last year, Amedisys Inc. and its affiliates agreed to pay $150 million to the federal government to provide resolution to allegations that they infringed upon the False Claims Act by submitting dishonest home healthcare bills to the Medicare program. Amedisys is one of the largest providers of home health services in the United States, operating in 37 states, in addition to Columbia and Puerto Rico.

The settlement resolved the allegations that, from 2008 to 2010, particular Amedisys offices inappropriately billed Medicare for ineligible patients and services. This included billings for nursing and therapy services that were not considered medically necessary, some were provided to patients who weren’t homebound, and furthermore Amedisys misrepresented the conditions of patients’ in order to increase its Medicare payments. These violations were the alleged consequence of management pressure on nurses and therapists to deliver care based on the financial benefits to Amedisys as opposed to the needs of the patients. Allegations further assert that Amedisys maintained inappropriate financial relationships with referring physicians thus violating statutory requirements.

The false claims allegedly made by Amedisys deprive American taxpayers of millions of dollars, when these dollars could have been spent on care and treatment that is legitimately needed. Along with the settlement, Amedisys also agreed to follow the terms of a Corporate Integrity Agreement with the Department of Health and Human Services; these compliance measures are intended to circumvent and detect illicit conduct such as that alleged in this case.

This settlement provides resolution to seven lawsuits against Amedisys that were filed under the qui tam whistleblower provisions of the False Claims Act; these provisions allow citizens to make civil actions on behalf of the Federal Government. A Medicare fraud whistleblower is entitled to share in any recovery of funds. The whistleblowers against Amedisys, who are the primarily former employees, will collectively split over $26 million in whistleblower rewards.


Walter Investment Management Corp. Pays More Than $29 Million to Settle False Claims Act Allegations

The federal whistleblower act has struck again. But this time we aren’t talking Medicare fraud cases

Walter Investment Management Corp. (WIMC) is an expanded mortgage banking firm with primary concentration on the servicing and installation of residential loans. WIMC has agreed to pay $29.63 million to resolve allegations that, through its affiliate companies—Reverse Mortgage Solution Inc., REO Management Solutions LLC and RMS Asset Management Solutions LLC—it violated the False Claims Act in relation to their involvement in the Department of Housing and Urban Development’s Home Equity Conversion Mortgages program, which insures “reverse” mortgage loans. WIMC, through its affiliates, provides various services in the residential mortgage industry, including reverse or forward mortgages on behalf of major financial establishments. Reverse mortgage loans enable elderly homeowners to access their home equity.

The government alleged that, between August 2009 and March 2015, Reverse Mortgage Solution Inc., (with the knowledge and support of its corporate parent, WIMC) submitted untruthful claims for debenture interest from HUD by failing to appropriately reveal that it had not met certain deadlines thus was not entitled to such interest payments. The government also alleged that from July 1010 to October 2014, WIMC, through its subsidiaries, submitted false claims to HUD for the reimbursement of unlawful referral fees by falsely representing them to be lawful sales commissions. It should be noted that the claims resolved by this settlement are allegations only, and there has been no determination of liability.

According to U.S. Attorney A. Lee Bentley III of the Middle District of Florida, “This settlement represents a significant milestone in our office’s long standing campaign against mortgage fraud.” She went on to say, “HUD’s lending programs are vital to the economic well-being of some of our district’s most vulnerable residents and we are committed to holding the servicers and lenders to high standards.”

This settlement resolves allegations filed in a lawsuit by qui tam whistleblower and former executive of RMS, Mathew McDonald. The False Claims Act permits private individuals to sue on behalf of the government; it also permits the government to intervene in such lawsuits, as it did in this case. Mr. McDonald will receive $5.15 million in whistleblower rewards. Thanks to qui tam lawsuits such as these the government has the chance to prove their commitment to holding the services and lenders to high standards, and they have


KMART Corporation Pays $1.4 Million to Resolve False Claims Allegations in Connection with Drug Manufacturer Coupons and Gas Discount

KMART Corp., better known as the Kmart department store chain that operates approximately 780 in- store pharmacies throughout the United States, Puerto Rico and the U.S. Virgin Islands, has paid the United States $1.4 million to resolve allegations that it violated the False Claims Act. This suit was filed by a qui tam whistleblower who is a former Kmart pharmacist and had allegedly witnessed Kmart’s illicit behavior.

This settlement resolves allegations that Kmart violated the False Claims Act by using drug manufacturer coupons and gasoline discounts as improper inducements to Medicare program beneficiaries. The United States government contended that between June 2011 and June 2014, Kmart deliberately and illicitly influenced the choices made by Medicare beneficiaries to use Kmart pharmacies to fill their prescriptions by authorizing the Medicare beneficiaries to use drug manufacturer coupons to reduce or abolish prescription co-pays that they otherwise would have been required to pay. It was alleged that Kmart’s conduct had caused Medicare beneficiaries to seek more expensive, brand name drugs in lieu of cost-effective generic drugs, which resulted in the government’s costs to increase without any added medical benefit.

Joshua Leighr, the False Claims Act whistleblower and former Kmart pharmacist who brought this case forward, will receive approximately $248,500 from the settlement—this is Mr. Leighr’s whistleblower reward for challenging Kmart and filing a lawsuit on behalf of the United States.

This settlement is a demonstration of the government’s emphasis on combating health care fraud and it illustrates the problem of Medicare fraud cases in the United States


North Broward Hospital District Agrees to Pay United States $69.5 Million to Settle False Claims Act Allegations

North Broward Hospital District is one of the nation’s largest public hospital systems and this week it became yet another entity in the U.S. to settle a qui tam lawsuit. North Broward Hospital District is a special taxing district of the state of Florida that operates hospitals and other health care facilities in the Broward County, Florida area. Earlier this week the hospital district agreed to pay the United States $69.5 million to settle allegations that it violated the False Claims Act by engaging in improper financial relationships with referring physicians. This agreement marks the largest settlement ever reached without litigation.

This settlement resolves allegations that the hospital district provided compensation to nine employed physicians that exceeded the fair market value of their services. The United States contended that these agreements violated the Stark Statute—which restricts the financial relationships that hospitals may have with doctors who refer patients to them—as well as the False Claims Act.

Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, had this to say about the settlement: “The Department of Justice has long-standing concerns about improper financial relationships between health care providers and their referral sources, because those relationships can alter a physician’s judgement about the patient’s true health care needs and drive up health care costs for everybody… In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”

This settlement stems from a qui tam whistleblower lawsuit filed on behalf of the government by Ft. Lauderdale orthopedic surgeon, Dr. Michael T. Reilly. A whistleblower reward of just over $12 million will be awarded to Dr. Reilly


Medical Device Manufacturer NuVasive Inc. to Pay $13.5 Million to settle False Claims Act Allegations

As a whistleblower law firm, we feel it’s our duty to keep you informed about the happenings in the False Claims Act world. So here’s another qui tam whistleblower case you might have missed:

In July of 2015, California-based medical device manufacturer NuVasive Inc. agreed to pay the United States a $13.5 million settlement to resolve allegations that the company caused health care providers to submit false claims to Medicare and other federal health care programs for spine surgeries by marketing the company’s CoRent System for surgical uses that were not approved by the U.S. Food and Drug Administration (FDA). The settlement also resolved allegations that NuVasive caused false claims by paying kickbacks to induce physicians to use the company’s CoRent System.

The United States alleged that between 2008 and 2013, NuVasive promoted the use of the CoRent System for surgical uses that were not approved or cleared by the FDA, including the use in treating two complex spine deformities, severe scoliosis and severe spondylolistheses. As a result of this conduct, the United States alleged that NuVasive caused the physicians and hospitals to submit false claims to federal health care programs for certain spine surgeries that were not eligible for reimbursement.

As far as Medicare fraud cases go, this is a particularly disturbing one. The laws put in place by the FDA are there to ensure that medical devices are safe and effective; if medical device manufacturers aren’t held accountable to those laws, that leaves the general public—those of us who would just believe that our doctors are using safe and approved devices—at risk. Furthermore, according to Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, “It is also imperative that manufacturers not improperly influence the selection of medical devices in order to ensure that these decisions are based on the needs and interests of patients, not on a physician’s own financial interests.”

Cases such as these are often brought on thanks to whistleblower protection under the False Claims Act. In this case, former NuVasive sales representative Kevin Ryan stepped forward to file suit against his former employers on behalf of the United States. Mr. Ryan’s whistleblower reward will be approximately $2.2 million from the settlement


Quest Diagnostics Pays the United States $1.79 Million to Resolve False Claims Act Allegations

Another qui tam Medicare case came to a resolution this week when Quest Diagnostics Inc. and Quest Diagnostics Clinical Laboratories Inc. (known collectively as Quest Diagnostics) paid the United States $1.79 million to settle claims that it violated the False Claims Act. Whistleblower lawyers are keeping busy as the United States aggressively pursues Medicare fraud cases such as this one.

Quest Diagnostics’ settlement resolves allegations that the company submitted duplicative claims to Medicare for certain venipuncture services and diagnostic tests and certain panel tests and select components of those panels. The United States alleged that these payments violated the False Claims Act. It is important to note that the claims settled by this agreement are allegations only, and there has been no determination of liability.

This settlement resolves a lawsuit filed in the Eastern District of California under the qui tam whistleblower provisions of the False Claims Act. The whistleblower who stepped forward in this case will receive will receive $358,000 in whistleblower rewards.