Tuesday, February 13, 2007

Medicaid consulting group investigated for fraud

Maximus, Inc., a Virginia company which did consulting work for the District of Columbia, either "willfully or recklessly" submitted inaccurate Medicaid bills on behalf of the District, according to
U.S. Department of Justice criminal division lawyers.

A whistleblower suit was filed under the False Claims Act and dismissed, but the government continues to investigate the company. Maximus had a consulting arrangement with the D.C. Child and Family Services Agency, under which it was paid 10 cents of every Medicaid dollar it helped the city recoup. The whitsleblower suit said that the $30 million Maximus recovered for the city was grounded in fraud, and that more than half of the foster children for whom Maximus prepared Medicaid claims had no record of actually having received services.

The Washington Times ran a February 12, 2007 story on the developments.

Government will intervene in qui tam suit against HealthEssentials

The Louisville, Kentucky, Courier-Journal reported on February 13, 2007 that the U.S. Dept. of justice will intervene in a whistle-blower suit against HealthEssentials.

The Louisville company filed for bankruptcy in 2005. The government charges that it systematically overbilled Medicare for the geriatric care and related services it provided at nursing and assisted-living facilities, retirement communities and in patients' homes. The whistle-blower suit accuses HealthEssentials of billing Medicare for services that were not done, billing nurse-practitioner rates for services actually done by lesser-trained medical assistants and committing other infractions.

Although HealthEssentials has no significant assets, the government could seek to recover the $120 million it alleges is owed from former officers or others connected with the company.

Monday, February 05, 2007

FCA suit filed against Westchester County, alleging violations of Fair Housing Act

The New York Times (subscription required) reported in a February 4, 2007 article that Westchester County has been sued under the federal False Claims Act for failing to provide fair and affordable housing.

The lawsuit, filed as a qui tam action by the Anti-Discrimination Center of Metro New York, claims that the county should return $45 million in federal community development grants. The plaintiffs contend that Westchester County should have required communities to desegregate or denied them a portion of the community development grants. They also charge that the county made a false claim when it certified that the communities had met the demands of the Fair Housing Act, which requires that they affirmatively further fair housing.

Friday, February 02, 2007

Hedge fund files qui tam suit against Business Loan Express

The January 29, 2007 issue of the Wall Street Journal (subscription required) reported that Greenlight Capital, a hedge fund, has filed a whistleblower lawsuit claiming that Business Loan Express (BLX) defrauded the Small Business Administration.

One wrinkle is the Greenlight has taken a short position on the stock of BLX's parent company, Allied Capital Corp., essentially betting that the value of the stock will fall.

Allied Capital has been under investigation for more than two years by the U.S. attorney for the District of Columbia in connection with a criminal probe of BLX, but the government has declined to intervene in Greenlight's case.

EDS and Travelers settle qui tam suit for $2.85 million

Travelers Casualty and Surety Company and Electronic Data Systems have agreed to pay the United States $2,850,000 to settle claims brought under the whistleblower provisions of the False Claims Act. The settlement resolves allegations that the companies paid for flood insurance losses knowing that those losses were not covered by National Flood Insurance Program policies.

The allegations were originally brought by a former EDS employee in a whistleblower suit.

Southern Maryland Online ran a story on the settlement on January 18, 2007.

Maryland company settles whistleblower suit for $1.55 million

A Maryland couple, Robert Yin and Karen Kaufman-Yin, and their company, COSMOS Corp., have agreed to pay $1.55 million to settle allegations that they
submitted false claims to the National Science Foundation, the Department of Commerce, the Department of Health and Human Services and the Justice Department. According the government, COSMOS charged government contracts for costs that were not allowed under the contracts, such as marketing and bid proposals. The company is also accused of shifting labor costs from private contracts to its government contracts.

The settlement of the whistleblower suit was reported on by Business Week on January 22, 2007.

Jury finds Kerr-McGee defrauded government in oil royalties suit

A federal jury in Denver found that the Kerr-McGee Corp. defrauded the federal government of millions of dollars in royalties on oil it produced in publicly owned coastal waters.

A former Interior Department auditor was the whistle-blower who brought the suit against Kerr-McGee. His superiors at the department had ordered him to drop his audit findings and he proceeded as a private citizen. He was dismissed from the department in a "reorganization."

The New York Times reported that the jury found that Kerr-McGee had underpaid the government $7.5 million. Since the False Claims Act provides for treble damages and penalties for violations, the company may be forced to pay more than $30 million.

MarketWatch ran a January 24, 2007 story on the verdict.

FCA suit against ITT not filed under seal

The Corporate Crime Reporter said on January 24, 2007 that a False Claims Act suit was filed against ITT in Manhattan federal court. The FCA requires that relators who are proceeding under the qui tam provisions of the Act file their suit under seal, meaning that its contents are not available for viewing, but that wasn't originally done in this instance. The complaint is now under seal but it is known that alleges that ITT overbilled the government for security guard services in Bosnia.

The sealing provision allows the Dept. of Justice to investigate the case before the company is made aware of the charges. It protects the whistleblower who may still be working for the company. And it protects the company's reputation, in the event that the charges are groundless.

Eyewear manufacturer settles False Claims Act suit.

The United States Attorney for the Western District of New York announced that Korrect Optical has agreed to a $3.35 million dollar settlement of a False Claims Act suit.

The suit, which originated as a whistleblower suit brought under the qui tam provisions of the Act, alleged that Korrect submitted false ophthalmic claims to the Department of Veteran Affairs. The claims allegedly included false certifications, unprescribed add-ons, non-rendered services including UV and scratch coating, product substitution and also involved unlicensed dispensers.

The U.S. Attorney's Office issued a January 18, 2007 press release.

Radiology company settles Medicare mischarging allegations

The U.S. Attorney for the Northern District of Alabama announced that Southern Radiology Services, LLC will pay the United States $36,000 to settle civil claims arising out of charges SRS submitted claims to Medicare for services performed by unqualified technologists.

The suit originated as a whistleblower action filed under the qui tam provisions of the federal False Claims Act. The whistleblower, a former SRS employee, alleging that SRS billed Medicare for portable X-ray services performed by unqualified technologists, including student technologists.

The U.S. Attorney's Office issued a press release on January 23, 2007.

Federal government joins qui tam suit against pharmaceutical manufacturer

The United States has intervened in a whistleblower suit filed in the District of Massachusetts against Boehringer Ingelheim Roxane, Inc. and various related entities, alleging that Roxane violated the False Claims Act. The company is alleged to have engaged in a scheme to report false and inflted prices for several drugs. The reported prices are used to establish reimbursement rates for federal health care programs. In some instances, according to the complaint, the reported prices were more than 1,000 percent the actual sales prices on certain of the drugs. it manufactures.

The United States Attorney's Office for the District of Massachusetts reported on the intervention in a January 29, 2007 press release.

RightCHOICE Managed Care to pay $975,000 to resolve FCA allegations

RightCHOICE Managed Care will pay the United States $975,000 to settle a False Claims Act suit brought under the qui tam provisions of the Act.

The suit alleged that RightCHOICE overcharged the Federal Employees Health Benefits Program in providing health care benefits to federal employees and their dependents in the state of Missouri. RightCHOICE was alleged to have paid higher fees to a preferred provider network for the federal beneficiaries than was paid for other patients.

The Dept. of Justice issued a press release on January 31, 2007.

Design and engineering firm settles FCA suit

The PBSJ Corporation, a Florida design and engineering firm, has paid more that $6.4 million to settle allegations that it violated the False Claims Act.

The settlement arose from an embezzlement scheme perpetrated by PBSJ’s former Chief Financial Officer and two other employees. The scheme involved shifting funds and fabricating entries in the company’s books and records to cover up the fraud, and resulted in PBSJ’s audited overhead rates being overstated. More than a dozen federal agencies were affected by the fraud, including the Departments of the Army, Transportation, Interior and Homeland Security.


The U.S. Dept. of Justice issued a press release on January 24, 2007.

FCA suit alleges false 9/11 claims

The U.S. Dept. of Justice has filed a civil False Claims Act suit alleging that two men fraudulently obtained loans and grants designed to assist businesses in recovering from the 9/11 terrorist attacks.

According to the suit Alexander Koltovskoy received loans and grants from the Mortgage and Rental Assistance program and the World Trade Center Business Recovery Grant program. With Vincent Pizzi, he received assistance from the Economic Injury Disaster Loan program.

The pair falsely claimed that their business had leased property and maintained equipment at 2 World Trade Center.

On Oct. 3, 2003, Koltovskoy and Pizzi were convicted of federal criminal charges relating to the fraudulent conduct described above.

Additional details are available in the February 1, 2007 issue of the North Counry Gazette.