Friday, October 31, 2014

Whistleblower and fraud news summary for week of October 27

Dignity Health, a San Francisco-based hospital chain formerly known as Catholic Healthcare West, has agreed to pay the government $37 million to settle allegations that 13 of its hospitals overcharged Medicare and TRICARE for unnecessary inpatient services that could have been done on a less costly and safe outpatient basis. (Dignity Health Agrees to Pay $37 Million to Settle False Claims Act Allegations)

A Detroit-area physical therapist assistant was sentenced to 50 months in prison for his role in a $14.9 million Medicare fraud scheme. Jigar Patel and his co-conspirators billed Medicare for services that were never provided and prescribed unnecessary painkillers and narcotics to patients to induce them to sign the false bills. (Detroit-Area Home Health Care Assistant Sentenced for Scheme to Bill Medicare Nearly $15 Million for Services Not Provided)

The medical device company Biomet Companies has settled with the government for more than $6 million over allegations that the company gave kickbacks to doctors who used its bone-growth stimulators. (Biomet Inks $6M Deal to Settle Kickback Charges)

Friday, October 24, 2014

Whistleblower and fraud news summary for week of October 20

DaVita Healthcare Partners has agreed to pay the government $400 million to settle a whistleblower lawsuit brought by Phillips & Cohen and other government claims. DaVita allegedly paid doctors kickbacks to increase referrals for dialysis patients and reduce competition. (Former DaVita Insider Helped Build Case That Led to $389M Settlement)

Science Applications International Corporation has agreed to a $1.5 million settlement to resolve allegations that the government contractor engaged in conflicting business relationships, violating the False Claims Act. SAIC paid $11.75 million in 2013 to the government for previous alleged False Claims Act violations. (Science Applications International Corporation Agrees to Pay $1.5 Million to Resolve Alleged False Claims Act Violations for Undisclosed Organizational Conflicts of Interest)

A Miami-area physician has been sentenced to 15 years in prison for taking part in a $200 million Medicare fraud scheme through the American Therapeutic Corp. Roger Bergman and his co-conspirators will pay $85.3 million in restitution on top of the jail sentence. (Miami Man Gets 15 Years in Nation’s Biggest Medicare Therapy Scam)

The founder of three Detroit-area home health care agencies pleaded guilty this week for his role in a $22 million home health care fraud scheme. Tayyab Aziz admitted in his plea agreement that he billed Medicare for services that were medically unnecessary or never performed. (Pakistani American Entrepreneur in Detroit Pleads Guilty to $22 Million Home Health Care Fraud Scheme)

Thursday, October 23, 2014

DaVita pays $400 million to settle Phillips & Cohen whistleblower case and related charges

DaVita Healthcare Partners has agreed to settle a whistleblower case brought by Phillips & Cohen LLP and government claims for $400 million. This is apparently the largest ever settlement that covers solely allegations of kickbacks in the healthcare industry.

The whistleblower lawsuit alleged that the healthcare company paid doctors kickbacks to get patient referrals for dialysis treatment and to reduce competition from other dialysis centers. DaVita rewarded doctors who referred patients to its dialysis centers by selling them shares in existing DaVita dialysis centers for less than fair-market value and buying shares in dialysis centers owned by physicians for more than fair-market value, the complaint alleged.

“Our lawsuit alleges that to disguise payments to doctors, DaVita followed the unusual business strategy to ‘buy high and sell low,’” said Eric R. Havian, whistleblower attorney for Phillips & Cohen, in a press release. “Buying high and selling low – although seemingly illogical – makes perfect financial sense if a company wants to pay doctors extra money to influence their decisions and doesn’t want those payments to be detected.”

The lawsuit was brought on behalf of David Barbetta, a former DaVita employee who worked in the mergers and acquisitions department. He spent nearly 5,000 hours over several years poring over detailed financial documents and working with his attorneys and the government on the case.

DaVita will pay $350 million to the federal government to settle the whistleblower lawsuit and other civil charges, $39 million to settle criminal charges, and $11.5 million to settle related state false claims act charges.

Friday, October 17, 2014

Whistleblower and fraud news summary for week of October 13

Bankers looking to “game the system” can easily avoid software that is built to detect potential fraud being discussed in instant messages, claims an American Banker article. This concern is another reason that whistleblowers with insider knowledge are essential for fraud detection and enforcement. (Why Didn’t IM Compliance Tools Save Banks from Scandal?)

Boeing has agreed to pay $23 million for submitting false billing claims to the government. The defense contractor allegedly charged improper labor costs that violated contracts for maintenance and repair of military airplanes, such as time mechanics spent at meetings not directly related to the contracts. (Boeing Agrees to $23 million Labor Charge Settlement)

A dozen Swiss banks are under investigation for aiding tax evasion by the US, but a non-prosecution agreement may save them from criminal charges. A Swiss newspaper reported that the banks would escape prosecution if they “detail their wrongdoing with U.S. clients and pay fines.” (Draft U.S. Deal for Swiss Banks in Tax Row Seeks “Total Cooperation”: Paper

Two Houston-area diagnostic centers have agreed to pay the government $2.6 million to settle claims that the centers improperly billed Medicare. The diagnostic centers allegedly used the provider number of a physician who had not authorized the center to do so, and billed Medicare for services the physician was not involved in. (Operators of Houston Area Diagnostic Centers Agree to Pay $2.6 Million to Settle Alleged False Claims Act Violations)

Friday, October 10, 2014

Whistleblower and fraud news summary for week of October 6

Extendicare Health Services has agreed to pay the government $38 million to settle allegations that the skilled nursing home charged Medicare for services that were not provided or were substandard. This is the largest failure-of-care settlement with a nationwide chain skilled nursing facility. The two whistleblowers in the case will receive a total of $2.05 million as a reward under the False Claims Act. (Extendicare Health Services Inc. Agrees to Pay $38 Million to Settle False Claims Act Allegations Relating to the Provision of Substandard Nursing Care and Medically Unnecessary Rehabilitation Therapy)

Northrop Grumman is under investigation again because of a whistleblower lawsuit that alleges the defense contractor took risky shortcuts and faked tests for military equipment. The government has declined to intervene but has the option to join the case later. Northrop Grumman has previously settled whistleblower cases brought by Phillips & Cohen clients that settled separately for $12.5 million, $111 million and $325 million. The latter was the largest settlement ever of a whistleblower case by a defense contractor. (Northrop Faked Tests of GPS Systems, Whistle-blower Suit Claims)

Two managers of multiple Los Angeles medical clinics were indicted for their role in a $4 million Medicare fraud scheme that paid illegal kickbacks to doctors for services that were never provided. (Manager of Three Los Angeles Medical Clinics Indicted in $4 Million Medicare Fraud Scheme)

DRS Technical Services Inc. has agreed to pay the government $13.7 million to settle False Claims Act allegations. The defense contractor allegedly billed the government for work that required high level job qualifications but was performed instead by employees without those qualifications. (Virginia Contractor to Pay U.S. $13.7 Million to Settle Charges of Overbilling)

HCA whistleblower opposes re-election of former HCA CEO as FL governor

John Schilling, a whistleblower whose “qui tam” case exposed an extensive Medicare fraud accounting scheme by hospital giant HCA, held a press conference this week to explain his opposition to the re-election of Florida Gov. Rick Scott, who was the CEO at HCA when the multi-year fraud was committed. HCA paid the government a total of $1.7 billion to settle all civil and criminal charges, with the final settlement in 2003. At the time, that was the largest healthcare fraud settlement ever.

Schilling and another whistleblower were represented by Phillips & Cohen LLP. They received a total reward of $100 million under the qui tam provisions of the False Claims Act for their information and the work on the case by them and their attorneys.

Tuesday, October 07, 2014

Whistleblower and fraud news summary for week of September 29

The Wall Street Journal says that big banks are turning away certain clients to reduce the risk of money laundering and are conducting complex investigations to root out any illegal activities by their clients. (The Morning Risk Report: Big Anti-Money Laundering Fines Reshaping Banking)

Doctors made $380 million last year from speaking and consulting fees paid for by pharmaceutical and device makers, reinforcing the “murky financial ties between physicians and the health care industry.” (Detailing Financial Links of Doctors and Drug Makers)

Three people were convicted in Detroit this week in a $29 million Medicare fraud scheme. The owner of an adult day care center was given kickbacks to release patient billing information, which was then used to bill Medicare for services that were never provided. (Detroit-Area Operator of Adult Day Care Center, Two Home Health Care Company Owners Convicted in $29 Million Medicare Fraud Conspiracy)

Friday, September 26, 2014

Whistleblower and fraud news summary for week of September 22

The SEC has awarded an anonymous whistleblower, represented by Phillips & Cohen LLP, more than $30 million for his role in helping to uncover fraud that would not have been detected otherwise. This is the largest whistleblower award given out by the SEC since the Dodd-Frank Act was enacted in 2010. (SEC Announces Largest-Ever Whistleblower Award)

Caremark has agreed to pay the federal government $6 million to settle allegations that the pharmacy benefit management company failed to reimburse Medicaid for prescription drug costs that should have been paid by a patient’s private insurance. (Caremark Will Pay $6 Million to Resolve False Claims Act Allegations)

Shire Pharmaceuticals will pay the government $56.5 million to resolve two whistleblower lawsuits and government allegations that the pharmaceutical company marketed several of its prescription drugs for off-label uses, which violates the False Claims Act. Shire allegedly overstated the effectiveness of several of its Attention Deficit Hyperactivity Disorder drugs, such as Adderall XR, and promoted certain other drugs – Pentasa and Lialda – for uses not approved by the US Food & Drug Administration. (Shire to Pay $56.6 Million to Settle False Marketing Claims)

Seven people were indicted, and three people pleaded guilty for their roles in a $56 million home healthcare scheme to defraud Medicare in New Orleans. So far thirteen people have been charged in the case, which alleges billing Medicare for services and equipment that were not medically necessary or not provided. (Seven Defendants Indicted and Three Other Defendants Plead Guilty for Their Roles in $56 Million Medicare Fraud Scheme)

Monday, September 22, 2014

SEC Awards More Than $30M to P&C Whistleblower

The Securities and Exchange Commission has approved its highest ever whistleblower award – at least $30 million to $35 million – to a whistleblower represented by Phillips & Cohen LLP.

“Our client exposed extraordinarily deceitful and opportunistic practices that were deeply entrenched and well hidden,” said Phillips & Cohen partner Erika Kelton. “Federal regulators never would have known about this fraud otherwise, and the scheme to cheat investors likely would have continued indefinitely,”

Under the 2011 Dodd-Frank Act, the SEC is authorized to award whistleblowers between 10 to 30 percent of a total recovery. The whistleblower is a foreign citizen.

"Whistleblowers from all over the world should feel similarly incentivized to come forward with credible information about potential violations of the U.S. securities law," said Sean McKessy, Chief of the SEC's Office of the Whistleblower.

“This record-breaking award sends a strong message about our commitment to whistleblowers and the value they bring to law enforcement,” said Andrew Ceresney, director of the SEC’s Division of Enforcement, in a press release.

Friday, September 19, 2014

Whistleblower and fraud news summary for week of September 15

U.S. Attorney General Eric Holder is urging Congress to increase rewards for Wall Street whistleblowers. Holder says the increased rewards will encourage potential whistleblowers to come forward, potentially preventing another financial bubble. (Eric Holder to Call For Bigger Wall Street Whistleblower Rewards)

Three patient recruiters for the defunct home health care company Trust Care Health Services Inc. were sentenced to prison for their involvement in a $20 million healthcare fraud scheme. The recruiters received kickbacks from the company for bringing in patients, while the company billed Medicare for services that were not medically necessary or weren't provided. (Three Patient Recruiters Sentenced in $20 Million Miami Health Care Fraud Scheme)

IRS Commissioner John Koskinen called himself a “big believer” in the IRS whistleblower program Monday during a speech at the Taxpayers Against Fraud Education Fund conference in Washington, DC, this week. Koskinen also said the whistleblower’s office will see a 70 percent staffing increase to help with the caseload. (Koskinen: I love whistleblowers)

A Plus Home Health Care Inc. has agreed to pay $1.65 million to the government to resolve allegations that the home health care company offered kickbacks to encourage patient referrals. A Plus allegedly hired physicians’ spouses for a marketing position where little to no work was performed and used the spouses’ salaries to induce the physician to refer Medicare patients to A Plus. (Florida Home Health Care Company and its Owners Agree to Resolve False Claims Act Allegations for $1.65 Million)