In The News

Two Healthcare Providers Agree to Pay More than $14 Million to Resolve False Claims Act Allegations

In addition to maintaining the integrity of its health care programs, the US government has made it clear that it will continue to pursue companies that improperly siphon money away from its programs. Thus, the Department of Justice announced this week that Health Quest Systems, Inc. and two of its subsidiaries (Health Quest) and Putnam Health Center (PHC), have agreed to pay $14.7 million to resolve allegations that the healthcare providers violated the False Claims Act when they knowingly submitted ineligible claims for reimbursement. Health Quest is a network of hospitals and health care provider that deliver surgical, medical and home health services. PHC is its New York-based subsidiary.

“This resolution is a testament to our deep commitment to protecting the integrity of federally- funded healthcare programs,” said Acting Assistant Attorney General Chad A. Readler for the Justice Department’s Civil Division. “We are determined to hold accountable healthcare providers that knowingly claim taxpayer funds to which they are not entitled.” In the settlement that was reached earlier this week, Health Quest and PHC admitted that from April 1, 2009 through June 23, 2015 they knowingly submitted claims that were billed at two levels higher than supported by their documentation. Additionally, Health Quest admitted that from April 1, 2011 through August 2014, they submitted claims for home health services that lacked the required documentation. This included their failure to document face-to-face physician encounters.

From March 1, 2014 through December 31, 2014, the government alleges that Health Quest subsidiary hospital, PHC submitted false claims from two orthopedic physicians who had a direct financial relationship with PHC in violation of the Physician Self-Referral Law (42 U.S. Code § 1395nn). The government alleged that the physicians were compensated in excess of the fair market value for their services. This violates the Self-Referral Law which prohibits, among other things, hospitals from billing Medicare for certain services referred by physicians with whom the hospital has an improper compensation agreement. Finally, the government alleges that the purpose of the excessive compensation that the physicians received was to induce referrals to PHC. This violates the Anti-Kickback Statute (42 U.S.C. § 1320a-7b) as well.

“Today’s settlement holds Heath Quest responsible for false billings to federally funded health care programs, as well as claims tainted by a hospital’s payments to two physicians for administrative services where it appears that one purpose of those payments was to improperly induce referrals. Hospitals and providers must be vigilant to make sure that claims accurately reflect medical services provided and are supported by sufficient documentation. We will continue to investigate whistleblower complaints vigorously to protect public funds,” said United States Attorney Grant C. Jaquith for the Northern District of New York.

In addition to the settlement reached earlier this week, Health Quest is required to enter into a Corporate Integrity Agreement (CIA) with HHS-OIG and to pay the State of New York $895,427 which jointly funds the State’s Medicaid program with the federal government. The settlement resolves three separate lawsuits that were filed by former Health Quest employees under the qui tam, or whistleblower, provisions of the False Claims Act. The Act permits private individuals to sue for false claims and to share in any potential recovery. Usually, plaintiffs engage the services of a qui tam law firm to handle such matters. A qui tam attorney deals in all areas of the False Claims Act and its provisions. The four plaintiffs in this matter will collectively receive $2,824,904.


Healthcare Provider Agrees to Pay $8.5 Million to Settle False Claims Act Allegations

A recurring theme in the government’s efforts to crack down on fraud and abuse, is companies who either out of intent or carelessness, fail to establish audits that can detect over payments from Medicare and other agencies. This was proven to be true when late last month, the Justice Department announced that Caris Healthcare, LP and its subsidiary, Caris Healthcare, LLC., have agreed to resolve allegations that the companies violated the False Claims Act when they submitted false claims, overcharged patients and improperly referred patients for hospice benefits who were not terminally ill. Caris Healthcare operates in Tennessee, Virginia and South Carolina. The government complaint alleged that Caris continued to submit hospice claims for patients even after concerns were raised by its Chief Medical Office and nurse employees who actually examined the patients in question. Moreover, the government also alleged that Caris took no action to determine whether it had received improper payments in the past that should have been returned to Medicare. Finally, the government alleged that Caris engaged in these behaviors in order to meet aggressive admissions and census targets that it set for itself.

“Today’s settlement is an important reminder that compliance programs and activities cannot exist in name only. When a healthcare provider is put on notice that a patient is ineligible for a particular Medicare benefit or service, the healthcare provider cannot turn a blind eye to that information but, instead, must take reasonable steps to stop the improper conduct and to determine whether that conduct resulted in prior over payments,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Moreover, when internal audit results or other information reveals the existence of a compliance issue that is not limited to a particular claim, as was the case here, it is incumbent on providers to exercise due diligence to determine how widespread the problem is and to return any over payments.”

“It is completely unacceptable for providers to retain over payments from Medicare after being put on notice of the likelihood of such over payments. Under the law, providers must go beyond merely conducting audits and providing forums for employee concerns. Rather, when Medicare rule violations have been revealed, the provider must take meaningful action to correct them, including repaying Medicare for funds they improperly received. Such corrective actions are vital to the integrity of the Medicare program, and the U.S. Attorney’s Office will continue to use the resources available to it to ensure the government is properly reimbursed for funds it is owed,” said J. Douglas Overbey, U.S. Attorney for the Eastern District of Tennessee.

The settlement resolves allegations that originated from a lawsuit filed by Barbara Hinkle. Hinkle is a registered nurse who formerly worked for Caris Healthcare. Hinkle filed her suit under the qui tam, or whistleblower, provisions of the False Claims Act. This act permits private individuals to sue on behalf of the government, with or without the aid of a False Claims Act attorney, for false claims and to share in any recovery. A whistleblower law firm employs experts who are knowledgeable in all areas of the False Claims Act.


Health Care Management Company Agrees to Pay up to $22.51 Million to Settle False Claim Act and Improper Billing Allegations

The US government has once again sent a strong message to companies that it alleges have sought to place profit over patient welfare. This was proven last week when the Justice Department announced that Healogics, Inc. has agreed to pay up to $22.51 million to settle allegations that it violated the False Claims Act and that it billed Medicare for services to patients that were medically unnecessary and unreasonable. Healogics is a Florida-based hospital that owns wound care centers around the nation. The services that the government alleges that Healogics improperly billed for were for hyperbaric oxygen (“HBO”) therapy.

“Medicare beneficiaries are entitled to care based on their clinical needs and not the financial goals of healthcare providers,” said Acting Assistant Attorney General Chad A. Readler for the Justice Department’s Civil Division. “All providers of taxpayer-funded federal healthcare services, whether contractors or direct billers, will be held accountable when their actions knowingly cause false claims for medically unnecessary services to be submitted.”

HBO therapy is a process in which the entire body is exposed to oxygen under increasing pressure as an adjunctive therapy to treating chronic wounds. The settlement announced last week resolves allegations that from 2010 through 2015, Healogics knowingly submitted false claims to Medicare for HBO therapy that was either unnecessary or unreasonable. “Civil healthcare fraud enforcement has always been a core part of the mission of our office,” said United States Attorney Maria Chapa Lopez for the Middle District of Florida. “With this settlement, our Civil Division confirms its commitment to our nation’s critical struggle against practices that put public health programs at risk.”

In addition to the settlement Healogics has agreed to, the company will also have to enter into a five-year Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General. The CIA requires that Healogics submit itself to a claims and systems review process that must be conducted by an Independent Review Organization. “When greed is the primary factor in performing medically unnecessary health care procedures on Medicare beneficiaries, both patient well-being and taxpayer funds are compromised,” said Special Agent in Charge Shimon R. Richmond of HHS OIG. “We will continue to thoroughly investigate health care companies that engage in such fraudulent schemes.”

The allegations that were resolved by this settlement came from a lawsuit that was filed by James Wilcox. Wilcox is a former Director for Research and Quality for Medical Affairs at Healogics. A separate lawsuit was also filed by two doctors and a former program director who worked at Healogics-affiliated wound care centers. The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act. This act permits private individuals to sue on behalf of the government for false claims and to share in any recovery. People who do so usually retain a qui tam Medicare attorney for this purpose. Whistleblower lawyers are knowledgeable in all aspects of the False Claims Act and its provisions. The settlement provides for a whistleblower share of up to $4,276,900.


Healthcare Chain Agrees to Pay More Than $30 Million to Resolve False Claims Act Allegations

Profiting off of patients while ignoring medical needs is a theme we have often seen repeated in the government’s ongoing battle against healthcare fraud and abuse. This was the case earlier this month when the Department of Justice announced that Signature HealthCARE, LLC (Signature) – a company that owns and operates more than 100 skilled nursing facilities – has agreed to resolve charges that it violated the False Claims Act by knowingly submitting false claims to Medicare. The government further alleges that these claims were for rehabilitation services that were not reasonable or necessary. The government’s settlement with the Louisville, Kentucky based healthcare provider resolves allegations that Signature forged pre-admission certifications so that patients could be covered by Tennessee’s Medicaid program. Under the terms of the agreement, Signature has agreed to pay more than $30 million. The State of Tennessee is scheduled to receive portion of the settlement as well.

“Today’s settlement demonstrates our continuing efforts to protect patients and taxpayer by ensuring that the care provided to beneficiaries of government-funded healthcare programs is dictated by clinical needs, not a provider’s fiscal interests,” said Acting Assistant Attorney General Chad A. Readler for the Justice Department’s Civil Division. “Nursing home facilities provide important services to our elderly, and those facilities must uphold the trust placed in them by billing the government only for reasonable and necessary services.” 

The government alleges that Signature engaged in several illegal activities that resulted in the submission of claims that were unreasonable or unnecessary. It also alleges that Signature provided unskilled services to Medicare patients as well. Specifically, Signature is alleged to have:

  • Placed patients in the highest therapy reimbursement level rather than relying on placement based on individual medical need.
  • Provided patient with the minimum number of minutes required to bill at certain reimbursement levels and discouraged additional therapies that went beyond those minutes.
  • Pressured therapists and patients to complete planned therapies even when patients still needed to participate in therapy.

“Health care providers who engage in deceptive practices place patients at unnecessary risk and contribute to the financial distress of our federal healthcare programs,” said U.S. Attorney Cochran for the Middle District of Tennessee. “Our dedicated teams of civil enforcement attorneys will work tirelessly with the relators who report fraud such as this and with our law enforcement partners who investigate healthcare fraud. When we determine that companies are cheating the taxpayers, we will hold them accountable as we have in this case.”

The settlement with Signature arose from a lawsuit that was filed by two former signature employees Kristi Emerson and LeeAnn Teusca. Their lawsuit was filed under the qui tam or whistleblower provisions of the False Claims Act. These provisions permit private individuals to sue on behalf of the government for false claim and to share in any recovery that may results from such an action. Whistleblower lawyers are often retained to handle such matters. A qui tam attorney is skilled in all areas of the False Claims Act. The Act is designed to maintain the integrity of the healthcare claims system.


Acute Healthcare Management Company Agrees to Pay More Than $1.7 Million to Resolve Alleged False Claims Act Violations

The government has once again sought to pursue companies that it alleges have sought to place profit over patient welfare. This was the case when the Department of Justice announced that Allegiance and four hospitals owned by the post-acute healthcare management company, have agreed to pay $1.7 million to resolve False Claims Act allegations. The company is accused of submitting and causing other hospitals to submit false claims to Medicare for reimbursement. Back in 2005, Allegiance entered into an agreement with several hospitals in the Southeast to provide Intensive Outpatient Psychotherapy (IOP) services to patients. At these hospitals, Allegiance established a system of identifying potential patients, and performing IOP services. The government alleges that at each of these treatment facilities Allegiance – through hospitals that it owned and operated – provided IOP services that:

  • Did not necessitate patient treatment
  • Did not create plans that sought to address individual patient’s needs
  • Did not track or document each patients’ progress
  • Did not provide patients with an appropriate level of treatment
  • Did not set attainable goals for patient recovery
  • Primarily provided patients with therapy that was recreational and not therapeutic.

“Federal funding for mental health services must be wisely and prudently spent,” said United States Attorney Cody Hiland for the Eastern District of Arkansas. “Allegiance sought this taxpayer money by targeting and taking advantage of vulnerable members of our population who sought mental health treatment, including those in the Eastern District of Arkansas. This office is dedicated to pursuing all appropriate remedies against companies who behave in such a manner.”

Other defendants that are a party to this settlement include:

  • Allegiance Health Management, Inc.
  • Allegiance Behavior Health Center of Plainview, LLC
  • Allegiance Specialty Hospital of Kilgore, LLC
  • North Metro Medical Center a/k/a Allegiance Hospital of North Little Rock, LLC
  • Sabine Medical Center a/k/a Allegiance Hospital of Many, LLC.

 “Medicare funds must be targeted to those with a legitimate need,” said Special Agent in Charge CJ Porter for the Office of Inspector General of the U.S. Department of Health and Human Services. “Entities that bill for needless services – as alleged here – cheat taxpayers and threaten the integrity of government health programs.” The government previously reached settlement with several other hospitals involved in this matter.

The settlement reached with Allegiance arose from a lawsuit that was originally filed in the Eastern District of Arkansas under the whistleblower or qui tam provisions of the False Claims Act. These provisions permit private parties to file suit on behalf of the United States for false claims. Plaintiffs can then use a qui tam law firm or whistleblower law firm. These kinds of firms are trained in all aspects of the False Claims Act. The original suit was filed by Ryan Ladner, a former program manager at Allegiance. Mr. Ladner is scheduled to receive approximately $300,000 as his share of the settlement.


Inchcape Shipping Services Holdings Limited Agrees to pay $20 million to Settle Charges that it Overcharged the US Navy

Few things raise the ire of the government more than those who are alleged to have illegally siphoned resources away from American service men and women. This is what the government alleges happened last week when the Department of Justice announced that Inchcape Shipping Services Holdings Limited and several of its subsidiaries have agreed to pay $20 million to resolve allegations that they violated the False Claims Act. The contractor with the US Navy is accused of knowingly overbilling for contracts related to its husbandry services. (Inchcape is headquartered in the UK.) The lawsuit alleged that from 2005 to 2014, Inchcape knowingly overbilled the Navy for services such as waste removal, telephone services, ship-to-shore transportation, force protection services and local transportation. According to the government, Inchcape overstated the quantity of goods and services it provided and billed the Navy at rates in excess of its contract. Finally, the government alleges that Inchcape double-billed for some of its goods and services.

“Federal contractors may only charge the government for costs allowed by their federal contracts,” said Acting Assistant Attorney General Chad A. Readler, head of the Justice Department’s Civil Division. “The Department of Justice will take action against contractors that knowingly submit inflated claims to the armed forces—or any other agency of the United States—as those inflated claims wrongfully divert taxpayer dollars.” “We trust contractors supporting our war fighters to act with the utmost integrity and expect them to comply with their obligations to bill the government as called for by their contracts,” said U.S. Attorney for the District of Columbia Jessie K. Liu. “This settlement reflects our Office’s strong commitment to holding accountable those who violate these fundamental principles, no matter where they may be located.”

The settlement arose from a case that was filed by several former employees of Inchcape under the qui tam provisions of the False Claims Act. Under the act, private citizens may -either with or without the aid of whistleblower lawyers – bring suit on behalf of the government. Whistleblowers can not only bring suit on behalf of the United States, they are also entitled to a share of any recovery. The government intervened in this case as it usually does. The government has intervened in many such instances including in qui tam Medicare cases. As part of last week’s resolution, the whistleblowers – Noah Rudolph, Andrea Ford and Lawrence Cosgriff – will receive approximately $4.4 million.


Pfizer Agrees to Pay Nearly $24 Million to Resolve Alleged False Claims Act Violations

The government has long maintained that kickback schemes interfere with a healthcare professional’s decision making process. Thus, it has been determined to halt such schemes when they arise. This was shown late last month, when the Justice Department announced that drug maker Pfizer has agreed to pay $23.85 million to resolves claims that it violated the False Claims Act when it used a foundation to channel money to the co-pays of Medicare patients who were taking three of its drugs. By doing this, Pfizer is also alleged to have violated the Anti-Kickback Statute (42 U.S.C. § 1320a-7b). The Anti-Kickback Statute prohibits pharmaceutical companies and other healthcare providers from offering, directly or indirectly, any remuneration for its products or services.

Specifically, the government alleged that Pfizer used a foundation as a conduit to pay co-pays for patients who used three of its drugs: Sutent, Inlyta and Tikosyn. Furthermore, the government alleged that Pfizer used a third party specialty pharmacy to move certain patients to the foundation, which covered the patients’ Medicare co-pays. According to the government, Pfizer then made donations to the foundation it had set up as a conduit and received confirmation that the co-pays had been funded. With regards to its drug Tikosyn – which treats arrhythmia in patients with atrial fibrillation or atrial flutter – the government alleges that Pfizer arranged for the foundation to compensate patients for a 2015 price increase. Knowing that this price increase would cause some Medicare beneficiaries co-pay obligations to increase, Pfizer set up a fund that specifically financed patients’ co-pays. This is seen as an incentive for patients to continue using Tikosyn. Indeed, Tikosyn patients accounted for nearly all the beneficiaries whose copayments were paid by the fund.

“Pfizer used a third party to saddle Medicare with extra costs,” said United States Attorney Andrew E. Lelling. “According to the allegations in today’s settlement agreement, Pfizer knew that the third-party foundation was using Pfizer’s money to cover the co-pays of patients taking Pfizer drugs, thus generating more revenue for Pfizer and masking the effect of Pfizer’s price increases. The Anti-Kickback Statute exists to protect Medicare, and the taxpayers who fund it, from schemes like these. At the same time, we commend Pfizer for stepping forward to resolve these issues in a responsible manner.” In addition to the settlement Pfizer has agreed to pay, the pharmaceutical giant has also entered into a corporate integrity agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS-OIG). Under the terms of the CIA, Pfizer must implement measures designed to ensure that its interactions with third-party patient assistance programs comply with the law. They are also subject to reviews by an independent organization and must implement a risk assessment and mitigation process.

“Our corporate integrity agreement promotes independence between Pfizer and any patient assistance programs to which it may donate,” said Gregory E. Demske, Chief Counsel to the Inspector General for the United States Department of Health and human Services. “Without true independence, as we have seen in this case, drug companies may use patient assistance programs as conduits for improper payments that harm Medicare.” Since 2009, the government has waged a campaign against healthcare fraud which has increased the number of reported whistleblower Medicare cases. The False Claims Act is one of the tools it has used to do so. Whistleblowers who report fraud and abuse usually engage the services of a qui tam law firm


The United States Intervenes in Several False Claims Act Lawsuits Involving Specialty Pharmaceutical Company Insys

According to a 2016 study by the Department of Health and Human Services, the nation’s current opioid crisis has resulted in the deaths of more than 42,000 Americans per year. Spurred by statistics like this, The Justice Department has linked its efforts to combat opioid misuse with its campaign against fraud and abuse of Medicare, Medicaid and TRICARE. To demonstrate this, the Justice Department announced last month that it was intervening in several lawsuits accusing Insys Therapeutics Inc., of violating the False Claims Act and engaging in a complex kickback scheme. According to the government, the specialty pharmaceutical company, which is based in Chandler, Arizona, did so in order to market its drug Subsys. Subsys is a powerful opioid which is taken in sublingual form and is highly addictive. Back in 2012, Subsys was approved by the FDA for the treatment of persistent pain in adult cancer patients who had developed a tolerance to other opioids.

Specifically, the United States alleges that Insys paid kickbacks in order to induce physicians and nurse practitioners to prescribe their drug to patients. The kickbacks came in the form of speaker program payments for physicians which were shams. Insys is also alleged to have used other gratuities as incentives such as lavish meals and entertainment and jobs for the relatives and friends of those they were seeking to influence. Moreover, the government alleges that Insys even encouraged physicians to prescribe their drug for patients who did not have cancer and that they lied to insurers about certain diagnoses so that they could be later reimbursed by Medicare and TRICARE.

“Improper financial relationships between physicians and drug companies can distort a physicians’ best judgment for their patients, in addition to undermining patient health and trust. This is especially troubling when the drugs are opioids,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Lying to federal health programs about patients’ medical diagnoses is also completely unacceptable. The Justice Department will pursue these illegal actions and continue to hold drug companies and doctors accountable for their roles in contributing to this deadly epidemic.”

The government’s actions against Insys have already resulted in criminal convictions or guilty pleas against agents of the company and Subsys prescribers. The government intervention in these lawsuits was aided by the qui tam or whistleblower provisions of the False Claims Act. These provisions allow private citizens to bring suit against those they accuse of false claims. Whistleblowers are also able to receive a share of any recovery. Such actions are usually handled by a qui tam law firm. A qui tam lawyer specializes in all aspects of the False Claims Act. The five separate lawsuits that were consolidated in this case are:

 

  • United States, et al., ex rel. Guzman v. Insys Therapeutics, Inc., et al., 13-cv-5861
  • United States ex rel. Andersson v. Insys Therapeutics, Inc., 14-cv-9179
  • United States ex rel. John Doe and ABC, LLC v. Insys Therapeutics, Inc., et al., 14-cv-3488
  • United States ex rel. Erickson and Lueken v. Insys Therapeutics, Inc., 16-cv-2956
  • United States ex rel. Jane Doe, et al. v. Insys Therapeutics, et al., 16-cv-7937

“I applaud the Civil Division and the U.S. Attorney for their untiring efforts to hold health care providers accountable to the American taxpayer,” said Vice Adm. Raquel Bono, director of the Defense Health Agency. “The Department of Justice’s efforts safeguard the health care benefit for American service members, veterans and their families. The Defense Health Agency continues to work closely with the Justice Department, and other state and federal agencies to investigate those who participate in fraudulent practices.”


The United States Secures $114 Million Judgment from Three People Accused of Paying Kickback and Filing False Claims

Despite the crackdown on health care fraud that the government implemented during the last administration, certain individuals and entities continue to breach the trust between healthcare providers and patients. This was the case late last month as the Department of Justice announced that the US has obtained a judgment in the amount of $111,109,655.30 against three defendants for their role in a kickback scheme and for filing false claims. The individuals – LaTonya Mallory, Floyd Calhoun Dent III and Robert Bradford Johnson – were accused of paying false remuneration to physicians in exchange for patient referrals. This violates the False Claims Act as well as the Anti-Kickback Statute. Finally, the government charged that as a part of these activities, the group caused two laboratories to bill for medically unnecessary testing.

“Improper financial relationships between physicians and laboratories can distort a physicians’ best judgment for their patients, in addition to undermining patient health and trust,” said Acting Assistant Attorney General for the Justice Department’s Civil Division Chad Readler. “Executives and other individuals who break the law will be held personally accountable for their actions.” During their trial, the defendants were proven to have paid physicians remuneration disguised as processing fees. The fees ranged from between $10 to $17 per patient for blood testing. The testing took place at Health Diagnostics Laboratory Inc. (HDL), of Richmond, Virginia; and Singulex Inc., of Alameda, California. Moreover, the government also introduced evidence of a kickback scheme that resulted in physicians referring patients to HDL and Singulex for medically unnecessary test. These tests were later billed to several federal health care programs.

The three defendants were found to be liable for causing the submission of more than 35,000 false claims worth in excess of $16 million. These claims were submitted to Medicare and TRICARE by HDL. The jury also found that two of the defendants – Dent and Johnson – were liable for the filing of an additional 3,813 false claims and that this cost the government $467,935.

“The Court’s damages award in this case recognizes the seriousness of what these defendants did,” said Sherri A. Lydon, U.S. Attorney for the District of South Carolina. “Paying kickbacks to cause unnecessary tests injures patients, the Medicare Program, and American taxpayers and the District of South Carolina will continue to pursue those who participate in such conduct.” The claims resolves lawsuits that were brought about by three plaintiffs – Dr. Michael Mayes, Scarlett Lutz, Kayla Webster, and Chris Reidel – under the qui tam, or whistleblower, provisions of the False Claims Act. Under the act, individuals can sue on behalf of the government for false claims and share in any recovery. The act also permits the United States to intervene on behalf of whistleblowers as it did in this case. Whistleblowers often retain the services of a qui tam lawyer or false claims act lawyer to represent them. The whistleblowers’ share of any recovery has yet to be determined.


Trucking Company Agrees to Pay More Than $1 million to Settle False Claims Act Allegations

Once again the US Postal Service has added it considerable weight to the prosecution of companies that are alleged to have defrauded governmental agencies. Back in March of this year, the Justice Department announced that Beam Brothers Trucking Inc. (BBBT) and several of its principals have agreed to pay $1,025,000 to resolve allegations that they overcharged the U.S. Postal Service (USPS) and that they violated the False Claims Act. BBBT and its principals – Gerald Beam and Garland Beam – had contracts to transport mail for the USPA. BBBT is based in Mt. Crawford, Virginia. “The Department of Justice takes seriously its role in protecting the federal procurement process from false claims,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “This settlement demonstrates that we will hold accountable federal contractors engaging in fraud, and will ensure that federal funds are protected from overcharges and abuse.”

USPS contracted with BBBT and other trucking companies to transport mail throughout the United States. On some of the contracts, USPS gave trucking contractors credits cards in order to cover their fuel costs. These cards were known as ‘Voyager Cards’. The settlement resolves allegations that BBBT misused these cards to buy fuel on contracts that did not allow for their use. This resulted in inflated charges to those cards which violated the False Claims Act. “Contractors working for the federal government are held to the same high ethical standards as full-time employees,” U.S. Attorney for the District of New Jersey Craig Carpenito said. “This settlement will return more than $1 million to the USPS.”

The settlement came about as a result of a lawsuit that was filed by a former BBBT employee – Bobby Blizzard – under the qui tam or whistleblower provision of the False Claims Act. The False Claims Act permits private parties to sue on behalf of the federal government for false claims and to share in any potential recovery. Whistleblower Medicare lawsuits have increased since the government began cracking down on fraud and abuse. Qui tam law firms are often retained by those seeking to use this provision to sue companies that are alleged to be involved in fraudulent activity. Mr. Blizzard’s share of the recovery has yet to be determined. “We are gratified to have contributed to this investigation and applaud the exceptional work by the investigative team for both protecting the contracting process and overall program costs,” said Special Agent in Charge Scott Pierce of the U.S. Postal Service Office of Inspector General. “Along with our law enforcement partners, the USPS OIG will continue to aggressively investigate those who engage in activities designed to defraud the Postal Service.”