Archive for February, 2013

Turning up the HEAT

Monday, February 25th, 2013

HEAT_WAVEIn another win for the Health Care Fraud Prevention and Enforcement Action Team (“HEAT”) initiative between the Department of Justice and the Department of Health and Human Services, Fairfax Nursing Center (“FNC”) and its owners will pay $700,000 to resolve allegations raised in a qui tam Complaint. Brought by three former therapists, it is alleged that FNC submitted false claims for Medicare beneficiaries for non-reimbursable rehabilitation therapy services, including excessive and medically unnecessary physical, occupational and speech therapy services from January 2007 to December 2010. The United States alleged that the services provided were excessive, duplicative, performed without clear goals or direction and were performed primarily to capture higher reimbursement rates. The three Relators in the case will collectively share in $122,500 of the recovery.

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The 2012 IRS Whistleblower Report Is Out!

Tuesday, February 19th, 2013

A quick summary:

  • In FY  2011, the IRS received 314 submissions identifying 734 taxpayers that, based on the face of the submissions, appear to meet the section 7623(b) criteria.  In FY 2012, the IRS received 332 submissions identifying 671 taxpayers that, based on the face of the submissions, appear to meet the section 7623(b) criteria.  (P. 7)
  • In 2011, the IRS whistleblower program brought in $48 million.  In 2012, the IRS whistleblower program brought in $592.5 million.
  • In FY 2011, the Whistleblower Office paid the first claims under section 7623(b).  Five claims have been paid under the revised law. “Taxpayer privacy laws do not permit the publication of data on specific claims.”
  • The number of payments made under the section 7623(b) program is not projected to grow dramatically in FY 2013.
  • As of Dec 10, 2012 , the IRS has received 1,449 submissions from 1,126 whistleblowers covering 10,043 taxpayers.  The status of these cases is reported on page 9 and 10 of the report.
  • At the beginning of FY 2012, the Whistleblower Office staff of 18 included ten analysts with decades of experience in a broad array of IRS compliance programs. In addition, the IRS Office of Chief Counsel has appointed a senior attorney to serve as Special Counsel to the Director of the Whistleblower Office. The Special Counsel provides legal advice to the Director and coordinates support that other Chief Counsel offices provide.
  • In January 2012, the Small Business/Self-Employed (SB/SE) Division transferred the Informant Claims Examination (ICE) Unit to the Whistleblower Office. This group of 13 employees is responsible for case management and administration of the discretionary award program under what is now section 7623(a).
  • In July and August 2012, the IRS modified the case management information system to incorporate additional data fields, and modify existing data fields, to capture information that will enhance our ability to manage claims and will allow data to be collected that can help assess Whistleblower Office and Operating Division performance.
  • The IRS whistleblower law does not provide for whistleblower protection. “Unlike other laws that encourage whistleblowers to report information to the government, section 7623 does not prohibit retaliation against the whistleblower.” (P. 14)
  • A share of criminal fines are not part of the awards process.

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Scheme Settled For $26 Million Under False Claims Act

Tuesday, February 19th, 2013

Venice dermatologist Steven J. Wasserman will pay $26 million to the federal government for claims of Medicare fraud under the False Claims Act.  It was alleged that he accepted illegal kickbacks from pathologist Jose SuarezHoyos, owner of Tampa Pathology Laboratory.  Allegedly, Wasserman would send Medicare patients’ biopsy specimens for analysis and diagnosis to TPL.  TPL would then send a report back to Wasserman with a diagnosis and a signature line for Wasserman to sign so Medicare would believe that he, not TPL, performed the diagnostic work.  The government believed that this arrangement began in 1997 to increase the referral business of the laboratory.  Under this agreement, Wasserman received over $6 million from Medicare. 

In 2005, Wasserman’s two offices were raided and files confiscated.  The federal government claimed that Wasserman performed thousands of skin surgeries and biopsies on Medicare patients that were needless.  Jose SuarezHoyos and his laboratory had earlier settled allegations against them for $950,000.  Pathologist Alan Freeman, federal lawsuit whistleblower in this matter, will receive $4 million of the settlement.

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Proposed IRS Rules May Limit Size Of Whistleblower Awards Under FATCA

Tuesday, February 19th, 2013

The Internal Revenue Service has recommended new whistleblower rules which could weaken the Foreign Account Tax Compliance Act.  The FATCA seeks to thwart international tax evasion by mandating that foreign financial institutions must report information regarding U.S. taxpayer accounts to the IRS.  Under the Bank Secrecy Act, taxpayers who have financial interest or signature authority over a foreign financial account must report account information each year to the IRS by filing a Report of Foreign Bank and Financial Accounts.  At this time, if a whistleblower provides the IRS with information to collect taxes, the whistleblower can obtain awards under the IRS Code, Section 31. 

Critics say the newly proposed IRS rules would allow whistleblower claims to languish, would severely limit the size of awards, make it less likely that people would come forward, and make it more difficult for whistleblowers to collect awards.  U.S. Senator Charles Grassley of Iowa stated that the proposed IRS regulations would “hamstring the program by limiting whistleblower awards and discouraging knowledgeable insiders from coming forward.”  The IRS is allowing comments on the proposed rules until February 19, 2013, with public hearings most likely to follow.

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New Obama Task Force To Aggressively Investigate 2008 Mortgage Meltdown

Tuesday, February 12th, 2013

New York Attorney General Eric Schneiderman says there is a desire among prosecutors to respond more aggressively to the 2008 sub-prime mortgage meltdown.  This was after President Obama launched a task force to investigate fraud during the meltdown.  The first case filed by the new task force was filed against JP Morgan Chase claiming “a systematic fraud on thousands of investors between 2005 and 2007.”   Schneiderman stated he started with due diligence firms that determined the quality of loans that the banks were buying and putting into mortgage-backed securities.  He said it was a sham.

 Schneiderman told FRONTLINE correspondent Martin Smith, “I think what we’ve expanded and what we have done is to increase the appetite for these broader-platform cases that addressed systematic patterns of fraud rather than going on a deal-by-deal basis. I think that’s a huge step…And that’s what we are seeking accountability for, and that’s what we’ll continue to pursue.”

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Hospital Self-Reports Overbilling To Federal Government And Agrees To Pay $4.9 Million In Restitution

Tuesday, February 12th, 2013

Catholic Health Initiatives, previous owner of St. Joseph Medical Center, will pay the federal government $4.9 million because it kept Medicare and Medicaid patients in the hospital longer than was necessary.  The company based in Denver, owns hospital around the county.  Previously and unrelated to the current settlement, the medical company was involved in lawsuits from hundreds of patients who accused star cardiologist at St. Joseph, Dr. Mark Midei of placing unneeded stents in arteries of patients.  CHI paid the federal government $22 million dollars in that case for allegations of a kickback scheme involving the cardiology practice where Dr. Midei practiced and to repay Medicare for the unnecessary stents placed in patients under Dr. Midei’s care.

A routine audit by St. Joseph uncovered the unnecessary stays and was reported to officials in the federal government.  Patrick Burns, spokesperson for Taxpayers Against Fraud stated, “It’s a huge difference if they self-reported.  That means at least somebody inside the company has integrity and realized that the cost of avoiding bad news was going to be worse than facing the bad news.”

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Debarred Former Pharmaceutical Company Officer Down On His Luck Trying To Have Professional Restrictions Removed

Wednesday, February 6th, 2013

In 1996, Baldev Raj Bhutani pled guilty to one count of conspiracy and six count of violation the federal Food, Drug and Cosmetic Act for his role in manufacturing adulterated pharmaceuticals in violation of US regulations on good manufacturing processes, as well for manufacturing  opioid painkillers without following proper record-keeping requirements and for using decomposed raw material; in finished products.  In 2004 the FDA permanently barred Bhutani from providing services to any company with an approval pending before the FDA. 

Now 9 years later, the FDA has refused his most recent request to overturn his debarment.  The FDA claimed that since Bhutani’s debarment was based on his convictions, two of which were felonies, he could only be reinstated if the convictions were overturned or if he had provided substantial assistance to the investigation that led to his conviction.  In determining that Bhutani was not eligible, the agency found that he had offered no substantial assistance precisely because Bhutani made no showing that the Department of Justice, which had prosecuted him, considered him to be cooperative, or that the DOJ agency had moved to reduce the severity of his punishment.  The FDA further found that Bhutani has offered no substantial assistance to the government.  The agency noted that he merely agreed to comply with the law after he had already violated it. 

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