Archive for February, 2011

Co-Conspirator of Fraudulent Wheelchair Scheme Rides Off into the Sunset

Monday, February 21st, 2011

The office manager of a wheelchair manufacturer pleaded guilty to conspiring with a church pastor that defrauded Medicare of over $6 million.  The defendant admitted to submitting false claims for high-end power wheelchair and other medical equipment provided to Medicare beneficiaries that did not need them.  The defendant also admitted to destroying documents in an attempt to cover up the fraud.  The guilty plea arose from the efforts of the Medicare Fraud Strike Task Force operating in conjunction with the US Attorney for the Central District of California. 

More information concerning the plea may be found here:

Justice Department Makes Biggest Arrest Ever for Medicare Fraud

Monday, February 21st, 2011

On February 17, U.S. Attorney General, Eric Holder, announced that a joint Department of Justice and Health and Human Services Medicare fraud strike task force made its largest arrest ever in connection with a false billing investigation.  In total, 111 individuals were arrested and 16 search warrants were executed across the country in connection with the investigation.  Those arrested include physicians, nurses, health care executive and others.  The criminal scheme is believed to be worth more than $225 million in false billings.  The arrests concerning fraudulent billing in a wide array of health services including, home health care, physical and occupational therapy, nerve conduction tests and durable medical equipment.  The false claims concerned medical unnecessary treatments and treatment never provided.  In some cases, the government charged that Medicare beneficiaries were paid kickbacks in return for providing beneficiary information to providers to submit false claims. 

The article may be found here:

Ohio Attorney Wants Whistleblowers

Monday, February 21st, 2011

Ohio Attorney General Mike DeWine is advocating for a state false claims act similar to the federal act.  DeWine recognized the benefits of having a state false claims act, having recovered $10 million as its share of a recent FCA settlement with CareSource of Dayton under the Federal False Claims Act.  Had the state version been in place, Ohio would have recovered $11 million instead. 

The article is found here:

Proposed SEC Rules Undermine Dodd-Frank’s Whistleblower Incentives

Thursday, February 10th, 2011

The article, “Proposed SEC Rules Undermine Dodd-Frank’s Whistleblower Incentives,” authored by Marc Raspanti and Bryan Neft was published in The Legal Intelligencer, February 10, 2011.  Mr. Raspanti is a partner in the firm’s Philadelphia office and Mr. Neft is a partner in the firm’s Pittsburgh office. 

To read the article see:

DOJ Joins Whistleblower Suit Against Drug Manufacturer

Monday, February 7th, 2011

On February 1, 2011, the U.S. Department of Justice filed a motion indicating its intent to join in a whistleblower suit against Abbott Laboratories, Inc. This False Claims Act case was brought by whistleblowers inside Abbott Laboratories and accuses the company and the subsidiary of legally promoting off-label uses of the seizure drug Depakote for which it was reimbursed by the federal government. The allegations also include claims that Abbott illegally paid kickbacks to doctors to increase subscriptions which subsequently defrauded Medicare and Medicaid.

For more information see:

DOJ and HHS Announce Recoveries of $13 Billion in FCA Cases

Friday, February 4th, 2011

In a January 24, 2011 letter to U.S. Senator Charles E. Grassley of Iowa, representatives from the U.S. Department of Health and Human Services (“HHS”) and the U.S. Department of Justice (“DOJ”) detailed their efforts in combating health care fraud.  The letter noted that Fiscal Year 2010 was a banner year during which 931 health care fraud defendants were charged, a 16% increase from FY 2009.  This increase includes focused efforts by the Medicare Fraud Strike Force in Miami, Los Angeles, Detroit, Houston, Brooklyn, Tampa, and Baton Rouge.

As of January 4, 2011, DOJ and HHS reported 1,341 qui tam cases under investigation without a decision whether the allegations warrant intervention by the government.  Of those cases, roughly 66% allege health care fraud.  Of that 66%, 867 cases involve allegations of either Medicaid or Medicare fraud. 

The Department of Justice has obtained 716 settlements and judgments in False Claims Act cases since Fiscal Year 2006 which represent approximately $13.4 billion.  During that period, an additional 1,244 qui tam cases were declined or dismissed before election.  The letter also noted that, for qui tam cases filed since October 1, 2006, the average length of time a case remained under seal is thirteen (13) months.  In addition, DOJ has intervened on behalf of qui tam relaters in approximately 23.70% in 2010 and 22.20% since 2006. 

 For more information see:


New York Creates Tax Fraud Unit to Protect Tax Payers using State’s False Claims Act

Friday, February 4th, 2011

On January 27, 2011, New York Attorney General, Eric Schneiderman, announced, his initiative to use a taxpayer-protection unit empowered through New York’s recently strengthened False Claims Act to target multi-state corporate tax fraud schemes, corrupt contractors, and firms that steal public pension funds.  Attorney General Schneiderman remarked that the State’s False Claims Act is “the strongest anti-fraud statute in the United States” and also makes New York the only state able to bring false claims against those who commit tax fraud.  The Attorney General also plans to enhance his office’s Medicaid Fraud Control unit through taking advantage of federal programs which match state funding three-to-one through recoveries. 

Mr. Schneiderman commented, “Today’s announcement is a signal to anyone thinking of ripping off New York taxpayers.  We will go after you with every tool we have.”  The strengthened False Claims Act was sponsored by Attorney General Schneiderman when he was a state senator and contains a provision which allows whistleblowers to pursue “millionaire tax cheats” defrauding New York of more than $350,000.

More information:


Medicaid Managed Care Plan Contractor to Pay $26 Million for False Claims

Friday, February 4th, 2011

The U.S. Department of Justice announced on February 1, 2011 that three companies, CareSource, CareSource Management Group Co., and CareSource USA Holding Co., agreed to pay the United States and the State of Ohio $26 million to resolve allegations that they induced Medicaid to pay for assessments and case managements, which were not actually provided to children and adults.  CareSource is based in Dayton, Ohio and provides managed care benefits to Medicaid beneficiaries in Ohio, Indiana, and Michigan.  The allegations against the CareSource entities were that they knowingly failed to provide required screening, assessment, and case management between January 2001 and December 2006 for adults as well as for children with special health care needs.  The Department of Justice alleged that CareSource received millions of dollars in Medicaid funds to which it was not entitled.

This suit was filed under the False Claims Act by two former employees of Care Source, who filed the suit in the Southern District of Ohio when they became aware of Care Source’s practices and sought to rectify the harm caused by the Medicare recipients.  As part of the settlement, both whistleblowers will receive a share of the federal portion of the settlement totaling approximately $3.1 million.

“Cash-strapped Medicaid programs, such as Ohio’s, can ill afford conduct such as this, designed to improve this company’s bottom line at the expense of a program benefiting the poor and disabled,” stated Tony West, Assistant Attorney General for the Civil Division for the U.S. Department of Justice.  Pam Brecht, Esquire, Of Counsel for Pietragallo Gordon Alfano Bosick & Raspanti, LLP, spearheaded the litigation for the whistleblowers and commented “the Federal False Claims Act empowers whistleblowers…to bring private resources to Bayer to put an end to fraud, waste, and abuse in state and federal programs.”

This settlement is part of the U.S. Government’s greater emphasis on combating health care fraud in another significant step for the Health Care Fraud Prevention and Enforcement Action team (“HEAT”).  It was also the result of the coordinated effort by the Commercial Litigation Branch of the Department of Justice’s Civil Division; the U.S. Attorney’s Office for the Southern District of Ohio; the Health Care Fraud Section of the Ohio Attorney General’s Office; and Health and Human Service Office of Inspector General.

 For more information see:

TexTexas Drug Maker Ordered to Pay $170 Million for Fraud Against Medicare

Friday, February 4th, 2011

On February 1, 2011, a jury in Travis County, Texas, returned a verdict against drug manufacturer Actavis Mid-Atlantic, LLC, based on allegations that it misrepresented drug prices to the federally-funded Medicaid program. The jury’s finding determined that Actavis and its co-defendant, Actavis Elizabeth, LLC, should pay the state of Texas and the federal government $170.3 million for its fraud against Medicaid. This verdict stemmed from a whistleblower lawsuit filed under seal by a small pharmacy based on Florida called Ven-a-Care. The owners of the pharmacy pursued their claim after learning that Actavis had inflated drug prices to Medicare. The result follows investigations over the last ten years by the Texas Attorney General’s Civil Medicaid Fraud team regarding prices set by pharmaceutical manufacturers. “Today’s verdict makes clear that the Texas Attorney General’s Office will hold Medicaid providers accountable for defrauding the taxpayers. I am grateful to the trial team for their hard work on this complex case,” commented Texas Attorney General, Greg Abbot. The Texas Attorney General’s office has investigated several fraudulent drug pricing cases and has recovered hundreds of millions of dollars through pre-litigation settlements. These recoveries include settlements against Teva Pharmaceuticals, Inc. in July 2010 for $51 million, as well as against Bristol Meyers Squibb in July 2008 for $37.4 million.

For more information see:

Food for Fraud – Is a Lack of Investigators Allowing Food Stamp Fraud to Proliferate?

Tuesday, February 1st, 2011

Even though an estimated one out of every eight people in the United States is currently receiving food stamp benefits as part of the Supplemental Nutrition Assistance Program (“SNAP”) – the highest level of participation in the food stamp program since it began in 1939 – the last five years have seen a 20% drop in the number of investigations conducted by the USDA’s Food and Nutrition Services branch, which oversees SNAP.  Indeed, while there are now 193,753 merchants nationwide that participate in the program, the total number of investigators employed by Food and Nutrition Services stands at just 40.

“It’s ridiculous,” Patrick Burns, with Taxpayers Against Fraud, a non-profit public interest group based in Washington, D.C., said of the few investigators assigned to probe food stamp fraud and trafficking by retailers. “Our ability to ferret out fraud is directly related to the number of ferrets we have, which is why we don’t ferret out much.”

One of the biggest concerns raised by the current system is the amount of “trafficking” in food stamps.  Certain, unscrupulous, retailers will purchase food stamps from the beneficiaries of the SNAP program for 50 cents on the dollar.  According to the government, the amount of food stamp trafficking stands at just 1%, or about $241 million, down from 3.8% ten years ago.  According to the government, electronic monitoring through the digital tracking of redemptions via the debit cards used by food stamp recipients, have enabled the USDA to combat food stamp fraud even as the number of beneficiaries of the SNAP program has exploded in recent years.

Critics such as Burns, however, remain skeptical.  He points out that it is difficult to imagine such a low rate of fraud in a program as sprawling as SNAP, with $50 billion in benefits paid out yearly to nearly 42 million Americans.  “The first job of a government agency is to pass the laugh test and I’m not so sure a 1 percent leakage in the food stamp program does that,” Burns said. “I don’t believe they have a clue to what their fraud rate is. They’re just guessing.”

For more information see: