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.”
Cyclist Lance Armstrong Agrees to Pay $5 Million to Settle False Claims Allegations Related to his Violations of his USPS Sponsorship Agreement
The government efforts to prosecute people who defraud its agencies rarely involve the United States Postal Service. However, the government has recently proven that it will aggressively pursue even famous individuals who are accused of defrauding any of its agencies. This was the case last month when it announced that former professional cyclist Lance Armstrong has agreed to pay the government $5 million to settle claims that his admitted use of performance-enhancing drugs resulted in the submission of false claims for sponsorship payments to the U.S. Postal Service. Armstrong’s team won the prestigious Tour de France six of seven years that it competed. “No one is above the law,” said Acting Assistant Attorney General for the Justice Department’s Civil Division Chad A. Readler. “A competitor who intentionally uses illegal PEDs not only deceives fellow competitors and fans, but also sponsors, who help make sporting competitions possible. This settlement demonstrates that those who cheat the government will be held accountable.”
Armstrong’s sponsorship deal with the USPS required his team to follow the rules of cycling’s government bodies which included a ban against performance enhancing drugs. Between 1999 and 2004, Armstrong was the pilot rider on his team leading it to win the Tour de France, six consecutive times. “The Postal Service has strongly supported the Department of Justice’s intervention and pursuit of this case, as it always has been our position that Lance Armstrong misled the Postal Service,” said Thomas J. Marshall, U.S. Postal Service General Counsel and Executive Vice President. “This matter has now been resolved in a manner that imposes consequences for that wrongful action. With this case, as in all other instances, the Postal Service vigorously defends our brand and our position as a trusted government institution.”
Armstrong and his team mates were eventually stripped of their titles after the U.S. Anti-Doping Agency (“USADA”) found that they had engaged in a doping program design to help Armstrong win the Tour de France. Armstrong admitted to using performance enhancing drugs during a 2013 interview with Oprah Winfrey. “The U.S. Postal Service manages approximately 30,000 contract actions and spends more than $13 billion on contracted supplies and services each fiscal year,” said Scott Pierce, Special Agent in Charge, U.S. Postal Service Office of Inspector General. “The Office of Inspector General supports the Postal Service by aggressively investigating allegations of misconduct within the contracting process. In this instance, we worked hand-in-hand with the Civil Division, the United States Attorney’s Office and the U.S. Postal Service Office of the General Counsel. Today’s result will have a positive impact on the entire contracting process.”
The allegations brought against Armstrong originated from a whistleblower complaint that was filed by Floyd Landis, a former teammate. Landis admitted that he too had used performance enhancing drugs as a member of the USPS-sponsored team. Landis’ complaint was filed under the qui tam or whistleblower provisions of the False Claims Act. These provisions permit private citizens to file for false claims with or without a qui tam lawyer and to share in any recovery. Whistleblower lawyers are skilled in all areas of the False Claims Act. Landis will receive $1.1 million as his share of the settlement.
Pharmacy Owner Receives 15 Years in Prison for $100 Million Fraud Scheme
The government has continued to bring in hundreds of people who have sought to defraud its agencies through the use of elaborate schemes. This was proven to be the case last week when the Justice Department announced that the president and owner of a Florida pharmacy has been convicted of fraud and sentenced to 180 months in prison for his participation in a massive compounding scheme. The scheme impacted private insurance companies as well as Medicare and TRICARE and involved several other individuals who have previously been sentenced or are awaiting sentencing in the case. Moreover, the owner -Nicholas A. Borgesano Jr – has also been ordered to pay $54 million and to surrender various real properties for his part in the scheme. Borgesano plead guilty in November of 2017 to one count of conspiracy to commit health care fraud and one count of conspiracy to engage in monetary transactions involving criminally derived properties. Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division made the announcement along with several other agents from the FBI’s Tampa Field Office, the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG), and others.
As a part of his plea agreement, Borgesano admitted that he owned several pharmacies and shell companies that he and his co-conspirators used to execute a massive fraud scheme involving prescription compounded medications. Their scheme generated more than $100 million. Borgesano owned numerous pharmacies including A to Z Pharmacy, Medplus/New Life Pharmacy and Metropolitan Pharmacy, etc. Borgesano admitted to submitting false and fraudulent claims through these pharmacies to private insurance companies and to Medicare and TRICARE. He and his co-conspirators did so by manipulating billing codes to their advantage. Borgesano also admitted that he and his co-conspirators paid kickbacks and bribes in exchange for patient identifying information. Finally, Borgesano admitted to using wire and check transfer in order to distribute the proceeds of his scheme to his co-conspirators and his shell companies. Several of Borgesano’s co-conspirators have received sentences ranging from 12 to 66 months in prison.
In addition to the prison terms that Borg and his co-conspirators received, the men have also been made to surrender items such as cars, boats and real properties valued at more than $7.6 million. These items were purchased by the defendants with proceeds from the fraud scheme. This investigation was spearheaded by several government agencies in conjunction with the Medicare Fraud Strike Force. The Strike Force is part of a joint initiative between the DOJ and HHS to prevent and deter fraud committed against agencies such as Medicare, Medicaid and TRICARE. Qui tam Medicare cases have recovered more than $12.5 billion in falsely billed services. People who report fraud and abuse are protected by the qui tam or whistleblower provisions of the False Claims Act. A whistleblower law firm helps protect the interest of whistleblowers in these cases.
Healthcare Provider Agrees to pay $2 Million to Settle False Claims Act Allegations
A diagnosis of cancer is possibly one of the worst things a patient can hear from his/her doctor. What can make a diagnosis such as this even worse is when health care providers trusted with helping patients along this serious journey act unethically. This is what the government says that one provider has done. Last month the Department of Justice announced that Biotheranostics Inc., a San Diego-based diagnostic laboratory, has agreed to pay $2 million to resolve allegations that it submitted false claims to Medicare for Breast Cancer Index (BCI) tests that were not necessary for the diagnosis or treatment of breast cancer. “Health care providers are responsible for ensuring that the services they provide to Medicare beneficiaries are both reasonable and necessary,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Laboratories that knowingly submit claims for non-reimbursable services will be held accountable.”
By law, Medicare is only responsible for the cost of laboratory tests that are “reasonable and necessary for the diagnosis or treatment of a patient’s illness or injury.” In this case, the government alleged that Biotheranostics knowingly performed BCI tests for breast cancer patients it knew had gone into remission for five years. Thus, the test was not medically necessary or reasonable based on clinical practice guidelines. In doing so, Biotheranostics is also alleged to have violated the False Claims Act by submitting claims to Medicare for these unnecessary procedures.
The False Claims Act is one tool the government has used to prosecute such cases. As part of the qui tam or whistleblower provisions of this act, private citizens are able to sue on behalf of the government and to retain the services of a false claims act lawyer. The government began to vigorously pursue whistleblower Medicare cases back during the previous administration resulting in billions of dollars being returned to government and state programs such as Medicare, Medicaid and TRICARE. (TRICARE is a health care program for uniformed service members and their families.)
“Fighting health care fraud will continue to be a priority of this office,” said United States Attorney Adam L. Braverman for the Southern District of California. “As this settlement demonstrates, we will vigorously investigate and hold responsible laboratories and other providers that choose to submit claims to federal health care programs for unauthorized or unnecessary services.”
Miami Medical Clinic Owner Sentenced to Eight Years in Prison for Defrauding Medicare
The government is continuing to send the message that people who defraud its healthcare programs will not only face fines but will also face prison time. The Justice Department proved this again earlier this month when it announced that Vladimir Prado Sr., the owner of a Miami medical clinic, has been sentenced to 97 months in prison for his part in a $10 million healthcare fraud scheme involving a home health clinic and two physical rehabilitation clinics. Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division made this announcement in conjunction with cooperating agencies include the FBI, the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG), U.S. Secret Service’s (USSS) and local Miami officials.
Prado, who was sentenced by U.S. District Judge Robert N. Scola, is scheduled to serve three years of supervised release following his sentence. Prado and several co-defendants in the case have also been ordered to pay $4,001,499 in restitution. The charges against Prado are one count of conspiracy to commit health care fraud and wire fraud charged. The government says that Prado admitted to owning a Miami medical clinic through which he submitted nearly $5 million in false and fraudulent claims to Blue Cross Blue Shield. These actions resulted in payments to the clinics that totaled approximately $2.6 million.
These actions were also are in direct violation of the False Claims Act which seeks to protect government agencies from fraud and abuse and which helps protect the beneficiaries of healthcare programs such as Medicaid and Medicare. During his trial Prado admitted the he:
- Used money from his activities to purchase a fraudulent home health agency
- Submitted to the Medicare program, via interstate wires, approximately $2.2 million in claims for reimbursement
- Submitted claims for benefits that was medically unnecessary
As a result of Prado’s fraudulent activities, Medicare infused his home health agency with approximately $3.9 million. This case was investigated by the Medicare Fraud Strike Force which operates in nine locations nationwide. Its mission is to deter and prevent fraud. Since its inception the Medicare Strike Force has charged over 3,500 defendants who collectively have falsely billed the Medicare program for over $12.5 billion. One tool it has used to accomplish this is qui tam or whistleblower provisions of the False Claims Act. These provisions allow private citizens to sue for false claims on behalf of the government and to share in any recovery. Qui tam Medicare cases are often brought about by the former employees of companies that are alleged to have committed fraud. A whistleblower law firm helps protect the rights of such witnesses.
Florida-based Healthcare Company Agrees to pay More than $10 Million to Settle Alleged False Claims Act Violations
As we enter spring, the government continues to pursue people and entities who seek to defraud Medicare, Medicaid, TRICARE and other agencies designed to alleviate the pain and suffering of sick and injured Americans. One such case occurred earlier this month when the Justice Department announced that Rotech Healthcare Inc., a respiratory equipment supplier, has agreed to pay $9.68 million to settle charges that it knowingly submitted false claims to Medicare for its portable oxygen units. Rotech has also admitted that it billed these units to Medicare beneficiaries who did not use or require them. Finally, as part of the settlement, Rotech has admitted that it billed Medicare regardless of whether or not patients received the portable oxygen units.
“This settlement serves as a warning to suppliers who bill first and ask questions later,” said Acting Assistant Attorney General Chad A. Readler, head of the Justice Department’s Civil Division. “We will investigate and take action against companies who cut corners and place profits over compliance with Medicare’s billing requirements.”
Medicare covers the rental of portable and stationary oxygen equipment for a total of 60 month and allows suppliers to bill monthly for the oxygen to be used in those units. The government maintains that between January 2009 and March 2012, Rotech billed Medicare for portable oxygen contents for Medicare beneficiaries without verifying that the beneficiaries needed or used the equipment. Moreover, Rotech is alleged to have failed to provide the required proof of delivery for these units. Finally, the government alleges that during this time Rotech knowing submitted false claims for the portable oxygen contents units that they knew were ineligible for reimbursement.
“Many people believe that healthcare fraud is a victimless crime; I assure you it is not,” said United States Attorney Joseph D. Brown of the Eastern District of Texas. “Medicare is funded largely by you and me, the American taxpayers, and fraud contributes to runaway health care costs. I commend the whistleblower who had the courage to come forward and who worked with investigators to get to the bottom of this case. Because of her, we were able to recoup millions of dollars improperly paid to Rotech.”
The settlement reached in this case arose from a whistleblower lawsuit that was filed by Janet Hale under the False Claim Act. Hale is a former employee in Rotech’s billing department. Under the qui tam or whistleblower provisions of the False Claims Act, private citizens can engage whistleblower lawyers to represent them against alleged violators. Citizens who do come forward alleging False Claims Act violations are also entitled to a share in any recovery. Whistleblower Medicare cases have come into national prominence since the previous administration began its initiative to crack down on the fraud and abuse of government programs. As a result of the settlement, Ms. Hale will receive $1,645,600.
Fiber Manufacturer Agrees to Pay the US $66 Million to Settle Alleged False Claim Act Violations
Some cases of alleged governmental fraud are so egregious that the government takes special efforts to pursue violators. This was the case last month when the Department of Justice announced that Toyobo Co. Ltd of Japan and its American subsidiary have agreed to pay $66 million to resolve clams that they violated the False Claims Act when they sold defective Zylon fiber used in bullet proof vests. The vests are used by federal, state, local and tribal law enforcement agencies. Specifically, the government alleges that between at least 2001 and 2005, Toyobo and its American subsidiary – Toyobo America Inc. – sold Zylon which they knew was defective. These defects rendered the vest unfit for use. Moreover, the government alleged that Toyobo actively continued to market its Zylon fiber despite knowing that the vests were defective. Toyobo, according to the Justice Department, marketed the material with the use of misleading degradation data that understated fiber’s defects. Toyobo’s actions are alleged to have delayed the government’s actions to determine the extent of Zylon’s flaws by several years. The government’s assertions about the defects in found in Zylon were backed by a National Institute of Justice (NIJ) study that found the vests to be effective in stopping bullets only 50% of the time. Eventually, the NIJ decertified all Zylon-containing vests
“This settlement sends a strong message to suppliers of products to the federal government that they must be truthful in their claims, particularly with regard to health and safety,” said Carol Fortine Ochoa, Inspector General of the General Services Administration. The Civil Division previously recovered more than $66 million from 16 entities involved in the manufacture, distribution or sale of Zylon vests. This included manufactures, weavers, trading companies and five individuals who were involved in the scheme. The US still has lawsuits pending against the former chief executive of Second Chance, and against Honeywell International Inc.
The settlement announced last month resolves allegations that arose from two lawsuits. The first was filed by the United States and the other was filed by Aaron Westrick, a law enforcement office formerly employed by Second Chance. Westrick’s lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act. This act permits private individuals to sue behalf of the government for false claims and to share in any recovery. This can be done using the services of a false claims act attorney. A false claims act attorney, or qui tam lawyer, specializes in all aspects of the False Claims Act. As a result of his actions, Dr. Westrick will receive $5,775,000 as his share of the recovery.
The Department of Justice and Health and Human Services Recover $2.6 Billion as part of its Ongoing Campaign Against Healthcare Fraud
There is little doubt that the government’s efforts at combating healthcare fraud have been a success. This success has been demonstrated in terms of human health and safety and in terms of monies recovered by the government. As an example of the latter, the Health and Human Services Secretary Alex Azar released a fiscal year 2017 Health Care Fraud and Abuse Control report showing that the government has recovered $4 for every one dollar it has expended in its fight against healthcare fraud. In FY 2017, the government’s healthcare fraud prevention and enforcement efforts recovered $2.6 billion in taxpayer dollars from individuals and entities attempting to defraud the federal government and Medicare and Medicaid beneficiaries. Some of these fraudulent practices include:
- The operation of “pill mills” from medical offices
- Providers submitting false claims to Medicare for ambulance transportation services
- Clinics submitting false claims to Medicare and Medicaid for physical and occupational therapy
- Drug companies taking kickbacks from providers for prescription drugs
- Companies misrepresenting the capabilities of their electronic health record software to customers
“Today’s report highlights the success of HHS and DOJ’s joint fraud-fighting efforts,” said HHS Secretary Azar. “By holding individuals and entities accountable for defrauding our federal health programs, we are protecting the programs’ beneficiaries, safeguarding billions in taxpayer dollars, and, in the case of pill mills, helping stem the tide of our nation’s opioid epidemic.” The Fraud Strike Force has secured prison sentences for more than 300 defendants, caused other defendants to enter Corporate Integrity Agreements (CIAs), and recovered vast sums of tax payer money. Lately, the current attorney general – Jeff Sessions – has included the national opioid crisis as part of the overall effort to combat healthcare fraud and abuse. Thus, the Department of Justice has also been going after doctors who overprescribe opioids. Of course people who are accused of defrauding the government are entitled to legal representation as are people who report such fraud. The latter can employ the services of a qui tam attorney. A qui tam law firm provides legal representation for individuals who, using the qui tam provisions of the False Claims Act, choose to sue on behalf of the government.
In addition to criminal prosecutions, the HHS Office of the Inspector General (OIG) has sought to exclude providers who have committed fraud from participation in healthcare programs in the future. A total of 3,244 individuals and entities were excluded in FY 2017. Some have even lost their licenses due to their alleged activities. In August of last year, Attorney General Sessions announced the formation of the Opioid Fraud and Abuse Detection Unit as part of the ongoing battle to combat healthcare fraud and abuse. Prosecutors have already charged several entities with the unlawful distribution of opioids.
Texas-based Radiation Therapy Company Agrees Pay More than $11 Million to Settle Allegations that it Violated False Claims Act
Alleged violators of the False Claims Act often come up with elaborate schemes when it comes to illegally profiting from government healthcare programs. However, this has not deterred the government in its efforts to crack down on fraud and abuse. Case in point: The justice department announced last week that SightLine Health (SightLine) has agreed to pay $11.5 million to settle allegations that it not only violated the False Claims Act but that it also violated the Anti-Kickback Statute as well. The government alleges that in doing so, SightLine submitted false claims to the Medicare program. Oncology Network Holdings, LLC – which acquired SightLine back in 2011 – will share in the cost of the settlement. The Anti-Kickback Statute – also known as the Stark Law – is designed to ensure that financial incentives do not influence a physician’s medical decisions. It prohibits anyone from offering, paying, soliciting or receiving remunerations for items or services covered by federally funded programs such as Medicare, Medicaid, TRICARE, etc. As is often the case, claims found to be in violation of the Anti-Kickback statute can be subject to the False Claims Act too.
“Investment arrangements that are structured to improperly compensate physicians for referrals can encourage physicians to make decisions based on financial gain rather than the best interest of their patients,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “The Department of Justice is committed to preventing illegal inducements, in whatever form, that undermine the integrity of our public health programs.” The settlement reached last week resolves allegations that SightLine violated the Anti-Kickback Statute and the False Claims Act by targeting physicians who referred patients to cancer treatment centers. Specifically, SightLine is alleged to have formed several leasing companies that allowed referring physicians to invest and profit from such referrals. SightLine is then alleged to have distributed the profits gained through radiation therapy treatments on cancer patients to physicians-investors.
“As the professionals charged with recommending and referring medical procedures for our community, physicians’ primary motivation must remain the well-being of their patients,” said U.S. Attorney Erin Nealy Cox. “Today’s settlement demonstrates our determination to eliminate complex business ventures that improperly interpose financial considerations into our physicians’ medical judgment.”
In addition to having to pay $11.5 million to settle the allegations, ION, SightLine and their related entities have been made to enter into a five-year Corporate Integrity Agreement (CIA) with HHS-OIG. The agreement is intended to increase accountability and transparency and to ensure that SightLine, etc., behaves in an ethical and lawful manner going forward.
“Companies seeking to boost profits by paying physicians kickbacks for patient referrals undermine impartial medical judgment and increase health care costs for everyone,” said Chief Counsel to the HHS Inspector General Gregory Demske. “We will continue to investigate such illegal, wasteful business arrangements in order to protect government health programs and the patients served by them.”
The allegations that are the basis of this settlement were originally the basis of a lawsuit filed under the qui tam or whistleblower, provisions of the False Claims Act. This act permits private parties to sue alleged violators of the False Claims Act on behalf of the government. Plaintiffs can do so by utilizing the services of a qui tam law firm. Qui tam Medicare cases have increased since the government began its crackdown on fraud and abuse back in 2009. Under this law, private parties are then able to share in any recovery. The whistleblower in this case will receive up to $1.725 million.
Prominent Medical Device Manufacturer Agrees to Pay More than $33 Million to Resolve Alleged False Claims Act Violations
Health care providers and the manufacturers of medical devices who put patient care at risk remain on notice from the federal government even as last year saw the US bring a record number of violators to justice. This was the case again, when the Justice Department announced last month that Alere, Inc. – a Massachusetts-based medical device company – and Alere San Diego (Alere) have agreed to pay the United States $33.2 million to resolve allegations that the companies submitted false claims to Medicaid, Medicare and other government programs. Moreover, the government accused the companies of knowingly selling unreliable point-of-care diagnostic devices. “The United States is fortunate that innovative healthcare companies regularly develop medical devices that improve patients’ lives, often in remarkable ways,” said Acting Assistant Attorney General Chad A. Readler for the Justice Department’s Civil Division. “But the Department will hold medical device manufacturers accountable if they knowingly sell defective products that waste taxpayer dollars and adversely impact patient care.”
Specifically, the government alleged that between 2006 and 2012, Alere knowingly sold faulty point-of-care testing devices under the brand name Triage®. The devices were designed to aid in the diagnosis of acute coronary syndromes, heart failure, drug overdosing and other serious conditions. The devices were often used in ER departments to aid doctors in making timely medical decisions. The government says that it put Alere on notice after it received complains about the device’s erroneous results. Often the devices produced false negatives and positives, etc. Despite warnings from the government, Alere is alleged to have failed to take the proper corrective actions regarding their devices until the FDA prompted a recall of Triage® in 2012. Of the more than $33 million Alere has agreed to pay, $28,378,893 will be returned to the federal government and a total of $4,860,779 will be returned to individual states. (Several states jointly funded claims for Triage® devices submitted to state Medicaid programs.)
“Congress passed the False Claims Act on March 2, 1863 to protect taxpayer dollars from fraud and abuse and to allow private citizens to join the effort,” said Maureen R. Dixon, Special Agent in Charge for the U.S. Department of Health and Human Services Office of Inspector General in Philadelphia. “We will continue to work with concerned citizens, the Department of Justice and our investigative partners to ensure the federal government only pays for honest, high quality, health care products and services.”
The Alere settlement sprang from a whistleblower action that was filed by a former senior quality control analyst at the company – Amanda Wu. The whistleblower or qui tam provisions of the False Claims Act permits private parties to sue on behalf of the federal government with or without a qui tam lawyer and to receive a share of any recover. A whistleblower law firm handles cases involving plaintiffs who have reported alleged False Claims Act violations. As part of the Alere settlement in this case, Ms. Wu will receive approximately $5.6 million.