In The News

Durable Medical Equipment Suppliers to Pay $7.5 Million to Resolve False Claims Act Allegations

In May of 2009 the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative was announced by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicaid and Medicare fraud cases through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act under which a private party, or Medicare whistleblower, can sue for false claims on behalf of the government and share in any recovery. It’s thanks to these efforts that cases such as the following are coming to light and getting resolved.

Last month the Justice Department announced that Orbit Medical Inc. and Rehab Medical will pay $7.5 million to resolve allegations that Orbit submitted false claims to federal health care programs for power wheelchairs and accessories. To qualify for these Medicare wheelchair reimbursements, a physician must conduct a face-to-face examination of the beneficiary and provide the supplier with a written prescription for a power wheelchair within 45 days of such an encounter, along with documentation that supports the medical necessity of the device. Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division said, “Power wheelchair suppliers must bill federal healthcare programs accurately and honestly to ensure that federal dollars are used for individuals who truly need these mobility devices.” According to the qui tam lawsuit brought against Orbit, they did not fullfill this obligation.

The settlement with Orbit Medical and Rehab Medical resolves allegations that Orbit sales representatives knowingly altered physician prescriptions and supporting documentation to get orbit’s power wheelchair and accessory claims paid by Medicare, the Federal Employees Health Benefits Plan and the Defense Health Agency. The government alleged that Orbit sales representatives changed or added dates to physician prescriptions and chart notes to falsely document that the prescription was sent to the supplier within 45 days of the face-to-face beneficiary exam; created or altered chart notes and other documents to falsely establish the medical necessity of the power wheelchair or accessory; forged physician signatures on prescriptions and chart notes; and added facsimile stamps to supporting documentation to make it appear as though the physician’s office had sent the documents to Orbit. “The resolution of this case helps to restore funds taken from the Medicare trust fund through the use of falsified records and billings… Health care fraud is aggressively prosecuted in Utah and every effort is made to restore government funds taken through such conduct,” said U.S. Attorney Carlie Christensen of the District of Utah.

The allegations resolved by this settlement were filed by two former Orbit employees; the whistleblowers were reporting Medicare Fraud. The former employees, Dustin Clyde and Tyler Jackson will receive approximately $1.5 million in whistleblower rewards. The whistleblowers’ suit also named as a defendant Jake Kilgore, the former vice president and sales manager at Orbit Medical for the Western region of the United States and this settlement does not resolve the pending claims against Kilgore. –

Garden State Cardiovascular Specialists P.C. Agrees to Pay $3.6 Million for Allegedly Submitting False Claims to Federal Health Care Programs

In May of this year Garden State Cardiovascular Specialists P.C. agreed to pay more than $3.6 million to resolve allegations that its facilities falsely billed federal health care programs for tests that were not medically necessary. Garden State, a cardiology practice which owns and operates several facilities in New Jersey under the name NJ MedCare/NJ Heart, agreed to this settlement to resolve allegations that were raised in a lawsuit filed under the qui tam whistleblower provisions of the False Claims Act.

This settlement resolves allegations that Garden State and its principals, Jasjit Walia M.D. and Preet Randhawa M.D., submitted claims to Medicare for various cardiology diagnostic tests and procedures which were not medically necessary. It is important to note that the claims settled by this agreement are allegations only, and there has been no determination of liability.

The Medicare fraud whistleblower that brought this qui tam lawsuit forward, Cheryl Mazurek, is set to receive more than $648,000 in whistleblower rewards as part of the settlement. There are thousands of innocent people working for big government organizations who see fraudulent practices like these firsthand. Stepping forward and blowing the whistle takes courage. If you are thinking of stepping forward and being a Medicare whistleblower or whistleblower of any kind, be sure to do your research so you’re sure to choose a law firm with experience in and a vast knowledge of whistleblower law.

Global Computer Enterprises, Inc. Agrees to Pay $9 Million to Settle Civil False Claims Act Allegations

It’s a sad state of affairs when fraud and business practice integrity issues run rampant among big corporations. Unfortunately, that is true of the world that we live in today. In April of this year one such corporation, Global Computer Enterprises, Inc. and its president and sole owner, Raed Muslimani agreed to pay $9 million to settle allegations brought forward by a False Claims Act whistleblower.

GCE is a cloud-based “software as a service” provider. The whistleblower alleged that GCE concealed its utilization of prohibited engineers and employees on software services contracts with the federal government. GCE was competitively awarded federal contracts with the U.S. Department of Labor, the Equal Employment Opportunity Commission, the General Services Administration, the United States Secret Service, and the United States Coast Guard. During the competitions for those contracts and after award, GCE allegedly misrepresented and/or concealed that it was utilizing engineers and other employees who were expressly prohibited from working on the contracts due to their citizenship/immigration statuses, security clearance statuses, labor qualifications and/or overseas locations.

A qui tam lawsuit was being prepared when GCE and Muslimani agreed to pay the United States $9 million out of GCE’s Chapter 11 proceeding to resolve the allegations filed under the False Claims Act. It is important to note that the civil claims settled by GCE, Muslimani and the United States were allegations only and there was no determination of civil liability. The settlement obtained in this matter was the result of a coordinated effort by the U.S. Attorney’s Office for the Eastern District of Virginia and the Financial Litigation Section and Fraud Section of the Commercial Litigation Branch of the Civil Division of the Department of Justice

UPS to Pay $25 Million in False Claims Suit

Last month the United Parcel Service Inc. (UPS), a package delivery company based out of Atlanta, agreed to pay $25 million to resolve allegations that it submitted false claims to the federal government in connection with its delivery of Next Day Air overnight packages. This is just another case in the long line of recent suits being filed under the False Claims Act Whistleblower provision.

UPS holds contracts with the U.S. General Services Administration and the U.S. Transportation Command, which provides support to various Department of Defense agencies. These contracts guaranteed delivery of packages by specific times the following day. This suit was filed following allegations that from 2004 to 2014 UPS engaged in practices that concealed its failure to comply with its delivery guarantees, thereby depriving federal customers of the ability to request refunds for the late delivery of packages.

It should be noted that this civil settlement resolves claims made in the lawsuit filed under the whistleblower provision of the False Claims Act. These claims are allegations only and there has been no determination of liability.

The Whistleblower Protection Act provides protection to private parties who file suit on behalf of the United States for false claims. Whistleblowers are entitled to whistleblower rewards, most often in the form of a portion of the government’s recovery resulting from the suit. The UPS civil lawsuit was filed in the Eastern District of Virginia by Robert K. Fulk, a former employee of UPS. He will receive $3.75 million from this settlement.

PharMerica to Pay $31.5 Million for Medicare Fraud

In May 2015, PharMerica Corporation agreed to pay the United States $31.5 million to resolve a medicare fraud whistleblower lawsuit alleging that PharMerica violated the Controlled Substances Act. These allegations claimed that PharMerica dispensed Schedule II controlled drugs without a valid prescription and billed these prescriptions to Medicare in violation of the False Claims Act; these drugs, which were improperly dispensed, cost taxpayers millions of dollars.

PharMerica operates as a pharmacy for long-term care patients. Many of its drugs are controlled substances under Schedule II of the Controlled Substances Act, such as oxycodone and fentanyl, which have a potential for abuse and can cause significant damage to the patient. PharMerica was accused of dispensing these drugs in a widespread scheme across the nation in non-emergency situations and without first obtaining a treating physician’s written prescription. The qui tam law suit also alleged PharMerica enabled nursing home staff to order the drugs without first ascertaining that a physician had documented a medical judgement that the drugs were necessary and should be administered to the patients.

The whistleblower law suit was brought by a pharmacist formerly employed by PharMerica, who saw the wrongful conduct and decided to become a False Claims Act whistleblower. As a whistleblower reward, that pharmacist will receive $4.3 million of the recovery.

The False Claims Act suit was settled as the result of the joint efforts of Department of Justice, the U.S. Attorney Office for the District of Rhode Island, and the U.S. Attorney Office for the Eastern District of Wisconsin

Hospital Administrator Gets 40 Years in Prison for Medicare Fraud

In May, the former assistant administrator of Riverside General Hospital was sentenced to 40 years in prison for his participation in a massive Medicare fraud scheme. His sentencing followed a guilty plea that he and others at the hospital committed Medicare fraud by paying illegal kickbacks to recruit Medicare patients and then billed for partial hospitalization program services that were either not medically necessary or, in many instances, never provided at all. The defendant pled guilty to conspiracy to commit health care fraud, conspiracy to pay and receive kickbacks and paying illegal kickback. This scheme involved paying kickbacks to recruiters and group home operators to provide the hospital with intelligible patients for the hospital’s partial hospitalization program. Thus far, at least ten people have been convicted for their participation in the scheme which falsely billed $116 million to the Medicare program. Others convicted in the scheme included the owners of the hospital, a patient file auditor and a paid patient recruiter.

The criminal case was the result of an investigation involving the FBI, the Texas Attorney General’s Medicare Fraud Control Unit and the Health and Human Services’ Office of the Inspector General, and was part of Medicare Fraud Strike Force. The case was prosecuted by the U.S. Attorney office in the Southern District of Texas

DaVita HealthCare Sets Aside $495 Million for Qui Tam Case

Whatever happened to business integrity? What happened to the days of being able to trust the businesses of our nation? More importantly, how can we trust companies that do multi-million dollar business with the Federal Government? When fraudulent practices reign, what happens to the innocent victims?

DaVita HealthCare Partners Inc., a leading U.S. kidney dialysis provider, has announced that it is setting aside $495 million to settle a false claim lawsuit for Medicare fraud in its dialysis clinics. This case, one of the largest False Claims Act settlements, involves allegations that DaVita HealthCare purposely used larger dose vials of Epogen than it knew would be needed for patient dialysis treatments. This resulted in the intentional wasting of medicine dosages in order to fraudulently cause increased payments by Medicare. The qui tam lawsuit was filed in Atlanta and alleged that DaVita’s conduct had been occurring from 2003 through 2010, and involved thousands of instances of fraud and false claims. This qui tam whistleblower case was brought by a doctor and a nurse who worked in DaVita’s dialysis clinics in Georgia.

This case is exactly what the False Claims Act is for. As with almost every qui tam case, this Medicare fraud allegation involved employees realizing that the company they worked for was cheating and they knew they had to do something about it. One of the biggest concerns for employees to come forward and blow the whistle is the fear of retaliation. The False Claims Act offers protection and whistleblower rewards for employees and others who blow the whistle on companies engaging in fraud in government contracts and other federally funded programs. Who will step up to the plate to protect their whistleblower rights when the help is needed most? Only whistleblower law firms who specialize in handling cases in qui tam litigation can

First Tennessee Bank N.A. Agrees to Pay $212.5 Million to Resolve False Claims Act Liability

As evidenced by the somewhat recent financial crisis and housing market downturn, fraudulent single family home mortgages were rampant for quite a few years. Slowly but surely, some of the entities who originated those fraudulent home mortgages are being brought to justice. Often these cases, filed under the False Claims Act, come to be thanks to a whistleblower within the company finally speaking up.

First Tennessee Bank N.A., headquarted in Memphis, Tennessee, recently agreed to pay the United States $212.5 million to resolve allegations that it violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the U.S. Department of Housing and Urban Development’s Federal Housing Administration that did not meet applicable requirements. According to the Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division, “First Tennessee’s reckless underwriting has resulted in significant losses of federal funds…”

First Tennessee Bank’s fraudulent underwriting and failure to report even a single deficient mortgage to the FHA caused the FHA to insure hundreds of loans that were not actually eligible for insurance and, as a result, the FHA later suffered substantial losses. When entities such as First Tennessee Bank profit handsomely while taxpayers incur substantial losses they must be brought to justice with a qui tam lawsuit, which is what happened in this case. As a part of the settlement, First Tennessee Bank admitted to a series of fraudulent acts that led them to a failure to comply with FHA origination, underwriting and quality control requirements.

Thinking about speaking up and reporting fraudulent behavior within your company? Thanks to whistleblower protections and experienced qui tam law firms with the expertise and resources to proceed with these cases, you have knowledgeable counsel available to guide you through the decision process of stepping forward

Mortgage Fraud Recovery

Flagstar Bank FSB has agreed to pay $132.8 million to settle False Claims Act allegations that it improperly approved home mortgage loans for government insurance. The settlement by the company based in Troy, Michigan, is one of the first successful mortgage fraud prosecutions under the False Claims Act. Under the terms of the settlement, Flagstar accepted responsibility for its conduct and committed to reform its business practices to ensure compliance with Department of Housing and Urban Development requirements.

Drug pricing settlement

General Electric Co.’s health-care unit will pay more than $30 million to settle claims that a company it bought in 2004 provided false information to Medicare to pad billings for a drug used to diagnose heart disease. The fraud settlement involves the drug Myoview sold by Amersham Health Inc. and resolves claims filed under the False Claims Act. Under drug pricing laws, pharmaceutical providers are required to report best price and average sales price calculations for Medicare reimbursement.