Friday, March 27, 2015

Whistleblower and fraud news summary for week of March 23

The Department of Justice and Health and Human Services announced that over $27.8 billion has been returned to the Medicare Trust Fund since the inception of the Health Care Fraud and Abuse Control Program in 1997. In 2014 $2.3 billion of the settlements were brought under the False Claims Act, many of which were initiated by invaluable whistleblowers. For every dollar spent on health care-related fraud and abuse investigations in the last three years, the administration recovered $7.70. (Department of Justice and Health and Human Services Announce Over $27.8 Billion in Returns from Joint Efforts to Combat Health Care Fraud)

Bank of New York Mellon Corp. has agreed to pay the government $714 million to settle allegations that the bank fraudulently overcharged customers on currency trades for more than a decade. The case began in 2009 after a financial specialist turned whistleblower, responsible for alerting authorities about the Bernie Madoff scheme, filed a complaint. (Mellon Settles Suits on Currency Transactions for $714 Million)

A New York-based pharmacist has been sentenced to 36 months in prison and ordered to pay $7 million in restitution for defrauding Medicare, Medicaid and the state-funded AIDS Drug Assistance Program. Purna Chandra Aramalla received more than $10 million in reimbursements for prescription medication he purchased from patients who sold the drugs rather than using them to treat their illnesses. (Pharmacist Sentenced to Manhattan Federal Court to 36 Months in Prison for Multimillion-Dollar Medicare/Medicaid Fraud Scheme)

Friday, March 06, 2015

Whistleblower and fraud news summary for week of March 2

In a case that seems to be a major violation of public trust, a California patient safety consultant has agreed to pay the government $1 million to settle allegations that he secretly solicited and accepted kickbacks to recommend and promote use of a certain company’s product while serving on the Safe Practices Committee of the National Quality Forum. Dr. Charles Denham allegedly received monthly kickbacks from CareFusion Corporation in exchange for recommending and promoting CareFusion's product, ChloraPrep, an antiseptic, and didn’t disclose the payments. (United States Settles False Claims Act Allegations Against Safety Consultant and His Companies)

The owner and operator of Massachusetts-based At Home VNA, a home healthcare company, has been sentenced to over seven years in prison and $7 million in restitution after being found guilty of fraudulently billing and laundering $20 million from Medicare. Michael Galatis convinced seniors to enroll with his company even if the seniors did not qualify for the Medicare benefit and also charged Medicare for services without a doctor examining any of the patients. (Natick man convicted of Medicare fraud sentenced to 7.5 years)

Baptist Health Medical Center-North Little Rock, located in Arkansas, has agreed to pay the government $2.7 million to settle allegations that the medical center improperly charged Medicare for more expensive inpatient stays that were originally scheduled as outpatient stays. (Ark. medical center agrees to $2.7M settlement for Medicare false claims)

Friday, February 20, 2015

Whistleblower and fraud news summary for week of February 16

Compassionate Care Hospice of New York will pay the government $6 million to settle allegations that the for-profit hospice submitted false claims to Medicare and Medicaid programs for services that were never provided. (A.G. Schneiderman Announces $6 Million Settlement with Bronx For-Profit Hospice Provider Following Joint Investigation with U.S. Attorney Bharara)

The owner of Longcare Home Health, a Miami home health care company, pleaded guilty to a $13 million Medicare fraud scheme that involved paying kickbacks and bribes to Medicare beneficiaries, doctors' offices and medical clinics in exchange for patient referrals. (Owner of Miami Home Health Company Pleads Guilty for Lead Role in $13 Million Medicare Fraud Scheme)

The Wall Street Journal did an excellent analysis this week of the timing of discharges of Medicare patients at long-term care facilities, which affects Medicare and Medicaid payments. Phillips & Cohen is representing a whistleblower in a qui tam case against Select Medical that alleges the company manipulated the length of stay for Medicare and Medicaid patients in its long-term, acute-care hospitals as a way to increase the hospitals’ revenues from government healthcare programs. (Hospital Discharges Rise at Lucrative Times)

Friday, February 06, 2015

Whistleblower and fraud news summary for week of February 2

Community Health Systems has agreed to pay the government $75 million to resolve a whistleblower lawsuit brought by Phillips & Cohen client Robert Baker. CHS allegedly donated funds to counties in New Mexico as a way to improperly increase federal payments under a program set up to cover treatment costs for indigent patients. (Whistleblower played key role in case that Community Health Systems hospitals settle for $75 million)

Minnesota-based ev3, a subsidiary of Medtronic, will pay the government $1.25 million to resolve a Phillips & Cohen whistleblower lawsuit that alleged that ev3 advised hospitals to bill Medicare for an outpatient procedure as a more expensive inpatient procedure to encourage use of ev3's products. The whistleblower, Amanda Cashi, was awarded 20 percent of the total settlement. (Medtronic subsidiary ev3 pays $1.25 million to settle Medicare billing fraud case)

In a separate case, Medtronic Inc. has agreed to pay the government $2.8 million to resolve allegations that the medical device company violated the False Claims Act by submitting bills to Medicare for a procedure known as "SubQ stimulation" that was not reimbursable. (Medtronic Inc. to Pay $2.8 Million to Resolve False Claims Act Allegations Related to "SubQ Stimulation" Procedures)

Maryland Attorney General Brian Frosh has said it is his top priority to win passage of state legislation that will encourage whistleblowers to report fraud by private government contractors. The proposed legislation would broaden coverage of the Maryland False Claims Act beyond Medicaid and healthcare-related fraud to include any type of fraud against the government. Whistleblowers who file “qui tam” lawsuits would receive 15 to 25 percent of the amount recovered as a reward. (Attorney General Frosh Urges New Tool to Crack Down on Fraud)

Friday, January 30, 2015

Whistleblower and fraud news summary for week of January 26

Teachers and students in the Fresno Unified school district in California are seeing the benefits of a whistleblower lawsuit brought by Phillips & Cohen LLP against Office Depot for overcharging on school supplies. The school district will receive $550,000 out of the total $68 million settlement and will disperse the funds to teachers so they can buy classroom supplies. Teachers often pay out of their own pocket to stock their classrooms. (Fresno Unified recoups $550,000 after statewide Office Depot settlement)

A Kansas City, Missouri, chiropractor was sentenced to 15 months in prison for his role in a $3 million Medicare fraud scheme. Michael Kelley Miller pleaded guilty for billing Medicare for nerve block injections that were not medically necessary. (Former Waldo Chiropractor Sentenced for $3 Million Medicare Fraud)

The former Chief Operating Officer of the Hollywood Pavilion psychiatric hospital, located in Florida, was sentenced to 6 years in prison and ordered to pay $39.3 million in restitution for his role in a $67 million healthcare fraud scheme. Christopher Gabel admitted to submitting false claims to Medicare for treatment that was not medically necessary and admitted to paying and receiving bribes and kickbacks to patient brokers to falsify invoices. (Hospital executive gets prison for health care fraud)

The Centers for Medicare and Medicaid Services is developing a new pilot program that will determine how many Medicare fraud cases are occurring in home health care settings. Medicare has paid almost $1 billion in improper payments in home health expenditures since 2010. (CMS plans pilot to better estimate home health agency fraud)

The New York Times examines the controversy over the medical necessity of treatments to relieve blockages in the arms and legs. The Justice Department joined two “qui tam” lawsuits earlier this month involving that issue. (Medicare Payments Surge for Stents to Unblock Blood Vessels in Limbs)

Friday, January 16, 2015

Whistleblower and fraud news summary for week of January 12

Office Depot has agreed to pay more than 1,000 government entities in California $68.5 million to resolve a whistleblower lawsuit that alleged that Office Depot overcharged them for office supplies. The whistleblower, David Sherwin, represented by lead counsel Phillips & Cohen, spent years pursuing the case and died last year of cancer. (Whistleblower's efforts help thousands of California cities and schools recover $68.5 million from Office Depot)

A Michigan physician has been sentenced to 15 months in prison and $1.3 million in restitution for her role in a $2.1 million Medicare fraud scheme. Dr. Paula Williamson conspired to commit healthcare fraud by referring Medicare beneficiaries for home health care services that weren't medically necessary. (Redford Twp. doctor sent to prison for Medicare fraud)

Two Houston-area mental health clinic owners were sentenced to 148 and 120 months in prison, respectively, for paying and receiving kickbacks in a Medicare fraud scheme. The clinics billed Medicare for services that weren’t medically necessary or weren’t provided totaling $97 million, according to evidence at trial.(Physician owners of mental health clinic sentenced to $97 million Medicare fraud scheme)

Friday, January 09, 2015

Whistleblower and fraud news summary for week of January 5

Daiichi Sankyo Inc. has agreed to pay the government $39 million to settle allegations raised in several whistleblower (“qui tam”) lawsuits that the international pharmaceutical company paid kickbacks to doctors to induce them to prescribe Daiichi drugs including high blood pressure medications Azor, Benicar and Tribenzor, and the cholesterol drug Welchol. (Daiichi Sankyo Inc. Agrees to Pay $39 Million to Settle Kickback Allegations Under False Claims Act)

Easton Hospital, based in Pennsylvania, will pay the government $662,000 to resolve whistleblower allegations that the hospital violated the False Claims Act by performing procedures that were medically unnecessary or never performed. (Easton Hospital Agrees to $662K Settlement of False Claims Act Allegations)

A North Text chiropractor was sentenced to 12 years in prison and ordered to pay $2.4 million in restitution for his role in a healthcare fraud scheme. Dr. Abbas Zahedi was convicted of five counts of healthcare fraud for submitting health insurance claims to insurers for services that were never provided. Five other defendants in the case also were convicted and sentenced.  (Chiropractor Sentenced in Health Care Fraud Case)

Wednesday, December 24, 2014

Whistleblower and fraud news summary for week of December 15

Eyak Technology LLC and Eyak Services LLC have agreed to pay the government $2.5 million and relinquish rights to any additional payments from the U.S. to resolve allegations that the technology contractors submitted false claims. The subsidiaries of Eyak Corporation held a $1 billion contract with the U.S. Army Corps of Engineers during the alleged fraud which included accepting kickbacks and submitting invoices for work that was never performed. (Federal Contractors Eyak Technology LLC and Eyak Services LLC Resolve False Claims Act and Anti-Kickback Act Allegations)

Bruker Corp, based in Massachusetts, agreed to pay the government $2.4 million to settle charges that the life sciences company violated the Foreign Corrupt Practices Act by bribing Chinese officials to gain business. (SEC Charges Massachusetts-Based Scientific Instruments Manufacturer with FCPA Violations)

The Securities Docket held a webcast on Dec. 18 titled “Navigating the Minefield of Dodd-Frank’s Whistleblower Provisions and the FCPA (2014 Update)” that examined Dodd-Frank cases and the SEC whistleblower reward program. Erika Kelton, a partner at Phillips & Cohen, provided the whistleblower perspective and talked about the anti-retaliation efforts of the SEC. Ms. Kelton “noted that virtually all of the calls that her firm gets from whistle-blowers seeking representation are from employees who reporter their complains internally.” (Companies Risk SEC’s Wrath by Discouraging Whistle-blowers)

Wednesday, November 26, 2014

Whistleblower and fraud news summary for week of November 24

A New York-based doctor has agreed to pay the government $2.35 million to resolve claims that he falsely billed Medicare. Dr. Gilbert Lederman allegedly miscoded experimental cancer treatments to receive reimbursements from Medicare even though the program did not cover the treatment. Staten Island University Hospital, the hospital where Lederman performed the cancer treatments, previously paid the government $74 million to settle related civil charges. (NYC Doctor Known for Radio Ads Settles Medicare Fraud Case)

A Detroit-based surgeon, Dr. Aria Sabit, has been charged for allegedly billing millions to Medicare for spinal surgeries that were unnecessary or never performed. (Bloomfield Hills Surgeon Charged in Health Care Fraud)

A Boeing subcontractor has been sentenced to 15 months in prison and must pay a $50,000 fine for his involvement in a bribery and kickback scheme. Jeffrey Lavelle, owner and operator of J.L. Manufacturing, paid Boeing officials for information on non-public financial and bid information that led to Lavelle’s company obtaining almost $2 million in subcontracts. (Boeing Subcontractor Gets 15 Months in Kickback Case)

Three New York pharmacies and seven individuals have been indicted for their role in a $5 million Medicaid fraud scheme.  The pharmacies allegedly were paying customers for prescriptions that were then billed to Medicaid but were never filled. (A.G. Schneiderman Announces Indictment of Three Brooklyn Pharmacies, Pharmacy Owners, and Pharmacists for Alleged $5 Million Medicaid Fraud)

Friday, November 21, 2014

SEC whistleblower program continues to grow

The Securities and Exchange Commission received a record number of tips under its whistleblower-reward program in fiscal year 2014, with more than 3,600 tips from all 50 states, Washington, DC and Puerto Rico, and 60 foreign countries.

The SEC released its annual whistleblower report about the Dodd-Frank program this week, which discussed the substantial progress being made in several areas.

The SEC awarded its largest ever award, $30 million, to a whistleblower this year.  The whistleblower, represented by Phillips & Cohen, helped uncover fraud that would not have been detected without insider knowledge. In 2013, Phillips & Cohen partner Erika Kelton predicted in a article that the SEC whistleblower program would pick-up steam, receiving more tips and producing more awards – which the SEC report proves has happened.

Another highlight in FY2014 was the SEC’s decision to exercise its anti-retaliation authority for the first time. The SEC charged Paradigm Capital Management for retaliating against an employee who reported wrongdoing to the SEC, settling with the hedge fund advisory firm for $2.2 million.