False Claims Act Resource Center

Archive for September, 2011

Medical Device Manufacturer Pays $9.25 million For Overcharging Federal Health Programs

Thursday, September 29th, 2011

A wholly owned subsidiary of Boston Scientific agreed to pay $9.25 million to the U.S. to settle False Claims Act allegations that it overcharged federal health programs for replacement pacemakers and defibrillators.

According to allegations in a qui tam suit filed by whistleblower Robert A. Fry, Guidant LLC failed to give warranty rebates and credits to hospitals for devices that were explanted even if those devices were still covered under a product warranty or credit.

In order to boost its sales to doctors and hospitals, Guidant would claim to potential customers that its devices were reliable and long-lived and that there were significant credits were available if a product needed to be replaced while under warranty.

Despite its claims, however, Guidant knew that it would not give the appropriate credit to a purchaser of a device that failed while still under warranty. As a result of its failure to give rebates or credits, Guidant submitted invoices to Department of Veterans Affairs’ hospitals and Department of Defense facilities that failed to accurately reflect the real cost of a replacement pacemaker or defibrillator. Guidant also overcharged Medicare by causing private hospitals that were reimbursed by Medicare to pay more for replacement defibrillators and pacemakers than they should have.

For bringing this fraud to light, Fry will receive $2.3 million of the settlement.

For more information see:  http://www.justice.gov/opa/pr/2011/September/11-civ-1256.html

HMO To Pay $4.8 million FCA Settlement

Thursday, September 29th, 2011

Abri Health Plan Inc., of Germantown Wisconsin and its parent company, Universal American Financial Corp., agreed to pay $4.8 million to the U.S. to resolve a suit brought under the qui tam provisions of the False Claims Act relating to its Medicare Part C coverage plan.

According to the whistleblowers, James Mlaker and J.D. Webb, Abri’s salespeople would mislead customers about the scope of the Medicare Part C coverage plan in violation of Medicare regulations and would even sign customers up for the plan without their consent.  Additionally, Abri allegedly paid doctors for referrals and paid customers to sign up for the Medicare Part C coverage plan. 

As their share of the recovery, Mlaker and Webb will receive more than $900,000 of the $4.8 million.

For more information see: http://www.jsonline.com/news/wisconsin/130541793.html

Doctor double-bills Medicare for arthritis drug—pays $349,860 to settle FCA allegations

Thursday, September 29th, 2011

On September 27, 2011, Stephen H. Stern, a Kentucky physician, and his practice, Kentuckiana Center for Better Bone and Joint Health, agreed to pay $349,860 to the U.S. to settle claims that Stern double billed Medicare for a drug used to treat arthritis. The settlement arose from a qui tam complaint filed by Suzette L. Sewell-Scheuremann, a former employee of Dr. Stern’s practice. According to Sewell-Scheuremann’s complaint, Dr. Stern would use a single vial of Infliximab, a drug used to treat rheumatoid arthritis, to treat multiple patients, and then bill Medicare as if he used a vial for each patient. In this way, Dr. Stern was able to fraudulently overbill Medicare for three years—from December 2003 until December 2006. In addition to his settlement with the U.S., Stern will also pay Sewell-Scheuremann’s attorney’s fees, costs, and expenses. As part of the settlement, Sewell-Scheuremann will receive $70,000 as her relator share.

For more information see: http://www.justice.gov/opa/pr/2011/September/11-civ-1260.html

Why is Qui Tam Litigation Often So Difficult to Resolve?

Thursday, September 22nd, 2011

The article “Why is Qui Tam Litigation Often So Difficult to Resolve?” was authored by Marc S. Raspanti, Esq. and Meredith Auten, Esq. and featured in the September 2011 edition of AHLA Connections.  Mr. Raspanti is founder of the firm’s Qui Tam Litigation Practice Group. 


NASA Contractor’s Service-Disabled Veteran Owned Small Business Fraud Uncovered

Thursday, September 22nd, 2011

Lydia Demski, the owner and founder of several companies, agreed to pay $800,000 to the U.S. to resolve False Claims Act allegations that a company she owned fraudulently obtained a service-disabled veteran-owned small-business (SD VOSB) contract to refurbish equipment at a NASA facility in Ohio.  Demski who is not a service-disabled veteran, set up a company called Deerpath International, and certified that it was owned and operated by a service-disabled veteran as required under the SDVOSB requirements in order to obtain the contract.  In reality, Demski funneled the work to Deerpath, Corp., another corporation she owned.

The government’s discovery of Demski’s fraud was initiated by Greg Fones, a former employee of Demski who filed suit against her under the qui tam provisions of the False Claims Act.  Fones will receive $140,000 of the settlement for uncovering her scheme. 

For more information see:  http://www.justice.gov/opa/pr/2011/September/11-civ-1226.html

Shoe Company Founder Kicked to the Curb by the Government—Gets a Year in Prison for Mail Fraud Related to Medicare Reimbursement

Thursday, September 22nd, 2011

Rickey Kanter, the owner and CEO of Dr. Comfort, a company that sells specialized shoes and inserts for diabetics, plead guilty to mail fraud and will pay a civil fine for improperly submitting claims for Medicare reimbursement.   Although Medicare will reimburse certain diabetics for therapeutic footwear that conforms to specific standards, Kanter knowingly sold non-conforming shoe inserts to diabetic, Medicare patients and was reimbursed with Medicare money.

Kanter will serve a year and a day in federal prison for mail fraud and will pay a $27 million civil fine for his fraudulent submissions to Medicare.  He is also barred from participating in any federal healthcare program for 15 years. 

Two former Dr. Comfort employees will share $4.8 million of the civil recovery for uncovering Kanter’s fraudulent activity by filing a suit against Kanter under the qui tam provisions of the False Claims Act.

For more information see: http://www.jsonline.com/news/crime/130000898.html

Saudi Company Pays for its Illegal Kickback Scheme to Obtain Army Contracts in the Middle East

Thursday, September 22nd, 2011

Tamimi Global Company Ltd. (TAFGA), a Saudi Arabian company, agreed to pay $13 million to the U.S. government to settle criminal and civil allegations that it paid illegal kickbacks and gratuities to a KBR employee to obtain a U.S. Army subcontract. Specifically, TAFGA paid KBR subcontract manager Steven Lowell Seamans $133,000 in kickbacks to get preferential treatment for the award of a subcontract to provide dining services in Camp Arifjan in Kuwait under KBR’s LOGCAP (Logistics Civil Augmentation Program) III contract. TAFGA also admitted paying illegal gratuities to the Army Sergeant in charge of food services at Camp Arifjan to receive favorable treatment in the contract’s performance. As part of a deferred prosecution agreement with the U.S. Attorneys Office to settle the criminal allegations against it, TAFGA will pay $5.6 million and agree to institute a strict compliance program to ensure that its employees strictly follow government contract legal and ethical standards. TAFGA will also pay $7.4 million to the U.S. to resolve civil violations of the False Claims Act and the Anti-Kickback Statute for its payment of illegal kickbacks.

For more information see: http://www.justice.gov/opa/pr/2011/September/11-civ-1226.html

California Medical Billing Company Resolves Allegations of False Claims to Federal Health Care Programs

Tuesday, September 6th, 2011

The Justice Department announced today that Janzen, Johnston & Rockwell Emergency Medicine Management Services Inc. (JJ&R), who handles billing services for physicians, hospitals and other health care providers, was accused of submitting false claims to Medicare and Louisiana’s Medicaid program and has agreed to settle and pay the United States $4.6 million.

JJ&R exaggerated claims that it had coded on behalf of emergency room physicians in Louisiana and California.  Also, JJ&R did not regularly follow Medicare’s coding rules for governing the submission of teaching physicians claims. Le Jeanne Harris, a former employee of JJ&R, came forward with the allegations and the lawsuit was filed under the FCA. U.S. Attorney’s Office for the Middle District of Louisiana, as well as HHS Office of the Inspector General (OIG) and the Commercial Litigation Branch – Fraud Section of the Justice Department’s Civil Division handled the matter.

Read more at: http://www.justice.gov/opa/pr/2011/September/11-civ-1129.html

Customs Fraud Scheme Reaches FCA Settlement

Tuesday, September 6th, 2011

A $3.85 million settlement involving a customs fraud scheme carried out by a Hong-Kong based jewelry manufacturer and its partners has recently been made public. Kirby McInerney LLP filed the action under the FCA on behalf of its client, a whistleblower who learned about the fraudulent conduct. The whistleblower will receive approximately 19% of the $3.85 million settlement.

Noble Jewelry Ltd., a global jewelry company based in Hong Kong, and certain New York affiliates, was accused of being involved in a scheme in regards to submitting false customs declarations and false invoices on shipments. The Manhattan U.S. Attorney’s Office and the Office of U.S. Immigrations and Customs Enforcement’s Homeland Security Investigations performed a thorough investigation of the whistleblower’s complaint. Then the United States filed its own civil complaint and entered into a settlement with the defendants requiring them to pay $3.85 million plus interest in damages and penalties under the False Claims Act.

Read more at: http://www.marketwatch.com/story/kirby-mcinerney-llp-announces-385-million-settlement-of-whistleblower-case-against-jewelry-importers-engaged-in-customs-fraud-scheme-2011-09-01

Medicare Integrity Program

Tuesday, September 6th, 2011

The Government Accountability Office was requested to look into how effectively the funding provided for the Centers for Medicare & Medicaid Services’ (CMS) Medicare Integrity Program (MIP) are being used to address the integrity of the Medicare Program. GAO took into account use of funding by CMS for MIP, how CMS evaluates MIP’s efficiency, and what aspects CMS considers when allotting funds.

CMS increased in total MIP funding received by $168 billion in four years, to expand MIP’s activities. Some funding was able to be transferred to different MIP programs to consolidate contractors, with the majority going to assist integrity activity. CMS claims to evaluate MIP performance by the goals to reduce wrongful payment rates for Medicare, but do not connect the effectiveness of MIP with CMS’s overall reduction goal. CMS is also unclear in communicating to its employees about the MIP program’s overall reduction goals targeting improper payments.   CMS already measures MIP effectiveness by evaluating ROI, which CMS calculates as savings from an activity in relation to expenditures. Although, the data it uses has flaws, including unreliable information for one type of contractor and not all calculations are up to date. It will be essential for CMS to correct these defects to guarantee dependability in ROI reporting. GAO has made some recommendations to CMS to fix these issues.

Read more at: http://www.gao.gov/new.items/d11592.pdf


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