Archive for February, 2014

Federal Government Announces Record Healthcare Fraud Recoveries

Friday, February 28th, 2014

For the fifth year in a row, federal fraud prevention efforts have seen an increase in the amount of money which has been recovered from individuals and companies who attempted to defraud federal health programs serving seniors or who sought to obtain payments to which they were not entitled.  A record $4.3 billion dollars was recovered this past fiscal year.  This was an increase from the $4.2 billion which obtained in fiscal year 2012.  Over the last five years, a total of $19.2 billion has been returned to the taxpayers, more than double the $9.4 billion which was received in the prior five year period.

In addition to monetary recoveries, investigations have led to significant prison sentences for those who have been convicted of engaging in unlawful activity.  In fiscal year 2013, the average prison term was 52 months.

An annual report issued by the Health Care Fraud and Abuse Control Program showed that the government recovers $8.10 for every dollar spent on health-care related fraud and abuse investigations.

A key player in uncovering fraudulent activity is the Health Care Fraud Prevention and Enforcement Team (“HEAT”).  This organization was created in 2009 and focuses on preventing fraud, waste and abuse in the Medicare and Medicaid programs.  It has also allowed the Justice Department and Department of Health and Human Services to improve their coordination.  HEAT is now operating Medicare Fraud Strike force teams in fraud hot spots throughout the country.  Advanced data analysis techniques are used to identify high-billing levels and allow investigators to target emerging schemes, schemes which are shifting locations and chronic fraud by those who are pretending to be healthcare providers or suppliers.

JP Morgan Pays $614 Million In Mortgage Fraud Case

Friday, February 28th, 2014

JP Morgan is the most recent Wall Street firm to write a check, a whopping $614 million,  to the government to settle allegations that it violated the False Claims Act by knowingly underwriting non-compliant mortgages that received federal insurance coverage from the Department of Housing and Urban Development (HUD), the Department of Veterans Affairs (VA) and the Federal Housing Administration (FHA).   The resolution involved  an admission that for more than a decade they had violated the federal FCA.  Improper mortgage lending both undermines the housing market and threatens vital programs that provide millions of Americans the opportunity to own a home. This is the most recent action by the government to aggressively combat improper mortgage fraud.

West Virginia Rejects False Claims Legislation

Thursday, February 27th, 2014

The West Virginia House of Delegates has refused to adopt false claims legislation for the state.

The Government Fraud Prevention Act, previously known as the False Claims and Taxpayer Protection Act of 2014, was intended to uncover fraud against the state, would have given the West Virginia Attorney General the power to investigate such activity and would have permitted individuals to bring suit against anyone who knowingly caused the state to pay a false claim.

Opponents of the bill expressed concern that enactment would have a negative impact on job growth because it would make small businesses reluctant to come to the state. House Delegate John Shott stated that the businesses community has been “open, hostile and well-organized” in its response to the proposed act. According to House Delegate Paul Espinosa, the legislation was duplicative because fraud prevention laws already exist.

Supporters of the bill, on the other hand, stated that the monetary compensation produced by the act would be funneled back into the economy and could help balance the budget. House Delegate John B. McCuskey responded that while this was possible, it was not a guarantee.

In the end, by a small margin, West Virginia’s proposed false claims act was voted down.

One Of Nation’s Largest Medical Imaging Providers Pays $15.5M To Settle Whistleblower Lawsuits

Wednesday, February 26th, 2014

Doshi Diagnostic Imaging Services, P.C., and Diagnostic Imaging Group, LLC, one of the largest medical imaging providers in the United States, has agreed to pay $15.5 million to settle several whistleblower allegations that they violated the federal False Claims Act and similar state statutes by improperly billing the Medicare and Medicaid Programs for diagnostic imaging studies that were unnecessary, never performed, or were not ordered by the treating physician.  Doshi Diagnostic also has agreed to pay legal fees to the whistleblower’s counsel.  Doshi Diagnostic denies liability for the allegations that are part of the settlement. 

Out of the $15.5 million, the federal government will receive approximately $13.6 million, and the remainder will be divided between the State of New York and the State of New Jersey.

The allegations settled were first asserted by the former Associate Medical Director of Doshi Diagnostic, Mark D. Novick, M.D., in a whistleblower or qui tam law suit filed on September 30, 2009, in the United States District Court for the District of New Jersey.  That lawsuit was filed by the law firm of Pietragallo Gordon Alfano Bosick & Raspanti, LLP, and counsel in New York City.  Attorney Michael Morse, with Pietragallo Gordon Alfano Bosick & Raspanti, stated “Dr. Novick exhibited tremendous courage in blowing the whistle and helping the United States and States of New York and New Jersey to recover millions of taxpayer dollars.” 

Attorney Marc S. Raspanti commented: “This case exemplifies the tremendous work protecting taxpayer funds that can be accomplished through the close partnership between whistleblowers, their counsel, and, most importantly, our federal and state government colleagues.  The government team, which included Arthur DiDio from the United States Department of Justice, Charles Graybow and Jacob Elberg from the United States Attorney’s Offices in New Jersey, Gerri Gold from the New York Attorney General’s Office, and Michele Weiner from the New Jersey Attorney General’s Office, worked tenaciously, and cooperatively with our client and legal team to end the improper practices alleged in this case and to recover millions of dollars in taxpayer funds.”

Doshi Diagnostic, based in New York, currently owns and operates more than 20 free-standing diagnostic imaging centers, located in the New York City area.  It also previously owned and operated diagnostic imaging centers in New Jersey and Florida.  Doshi Diagnostic performs hundreds of thousands of outpatient radiological and nuclear medicine studies each year and, according to public statements, recorded annual revenues in 2005 of approximately $130 million. 

According to the allegations in the whistleblower Complaint, since at least 2006, Doshi Diagnostic routinely bundled and billed the Medicare and Medicaid Programs for 2 separate diagnostic imaging procedures (including ultrasounds and x-rays) when only 1 procedure was actually performed.  Doshi Diagnostic carried out this scheme most frequently when performing abdominal or trans-rectal ultrasounds, and pelvic x-rays.  Instead of billing Medicare and Medicaid for the single ultrasound or x-ray that it actually performed, Doshi Diagnostic repeatedly submitted bills to the government for two separate procedures, thereby costing the government millions of dollars more than Doshi Diagnostic should have been paid.     

The Complaint also alleged that Doshi Diagnostic routinely added expensive Color Doppler and Three Dimensional Reconstruction charges onto sonograms, CT scans, and MRIs.  According to the Complaint, these charges, which cost Medicare and Medicaid millions of dollars, were medically unnecessary, were not ordered by the treating physicians, and in some cases the Doppler and 3-D reconstruction procedures were never actually performed.

Attorney Douglas Rosenblum added: “If every doctor demonstrated our client’s courage, the Medicare and Medicaid programs would be better protected against fraud, waste, and abuse.”  

Case CaptionUnited States and the States of New York and New Jersey ex rel. Mark D. Novick, M.D. v. Doshi Diagnostic Imaging Services, P.C., Civil Action No. 09-4992 (D.N.J.)

For more information about this case, including a copy of the whistleblower Complaint, or to learn about whistleblower cases under the federal and state False Claims Acts, please visit

West Virginia Re-Examining Enactment of False Claims Legislation

Wednesday, February 26th, 2014

On Thursday, the West Virginia House Judiciary Committee again sent legislation which would establish a West Virginia False Claims Act to the House of Delegates. 

According to House Judiciary Chairman Timothy Manchin, the leadership of the House asked the Judiciary Committee to re-examine the legislation because of concerns that the bill would result in a wave of baseless lawsuits.  Language in the bill has been changed to address this issue and the bill was returned to the full House of Delegates following a 15-9 vote. 

 HB4001, also known as the False Claims and Taxpayer Protection Act of 2014, is modeled after the federal False Claims Act and is intended to uncover and encourage the reporting of fraud which is being committed against the state.  The bill urges the reporting of suspicious activity involving taxpayer funds and gives the West Virginia Attorney General the power to investigate this fraud.  Individuals – both inside and outside the government – can bring suits against anyone who knowingly causes the state to pay a false claim and would share in the proceeds of any recovery which is obtained. 

In addition to the federal government, 29 states and the District of Columbia, have already enacted some type of false claims legislation.  In 2012, federal and state suits recovered $9 billion in taxpayer funds.  In fiscal year 2013, the federal government, alone, received $3.8 billion in settlements and judgments.  Some of those judgments are being appealed, though.

West Virginia currently receives up to about 30% of funds recovered in connection with Medicare fraud.  States that have false claims statutes approved by the federal government receive up to about 40% of the monies recovered. 

Mr. Manchin believes that the False Claims and Taxpayer Protection Act of 2014 has the potential to return up to $90 million a year to West Virginia taxpayers.  This money could then be used for road repair, in-home care for seniors and assistance for volunteer firefighters. 

Addiction Clinic, Lab, Doctors Pay $15.75 Million

Tuesday, February 18th, 2014

The U.S. Government announced that SelfRefind, a chain of addiction treatment clinics, PremierTox LLC, a clinical laboratory that performs urine testing, and two physicians owners of SelfRefind and PremierTox (Drs. Bryan Wood and Robin Peavler) have agreed to pay $15.75 million to resolve allegations that they violated the False Claims Act by submitting claims to Medicare and Kentucky’s Medicaid program for drug tests that were medically unnecessary, more expensive than those performed or billed in violation of the Stark Law. SelfRefind operates a chain of addiction treatment clinics that provide services to Medicare and Medicaid beneficiaries at 12 locations across Kentucky. The owners of SelfRefind, Drs. Wood and Peavler, each purchased a 20 percent ownership stake in PremierTox, a clinical laboratory created to perform urine drug testing. According to the government’s allegations, after Wood and Peavler became owners of PremierTox, SelfRefind began referring comprehensive urine drug screening tests to PremierTox that were unnecessary and many times more expensive than other suitable alternative tests. The government also alleged that PremierTox submitted to Medicare and Medicaid inflated claims that misidentified the class of drug being tested and billed for tests that were referred by SelfRefind in violation of the Stark law. The Stark allegations stem from billings by SelfRefind billings to Medicare and Medicaid for lab services that were referred by Drs. Wood and Peavler, who have a financial relationship with PremierTox laboratory.

Whistleblower Case Against OtterBox To Settle

Tuesday, February 18th, 2014

A False Claims Act case filed in federal district court in Denver by a former employee against OtterBox nears settlement. The Fort Collins-based company has until the end of February to finalize a deal. The whistleblower, who worked as OtterBox’s supply chain director, alleged in his lawsuit that the company failed to pay customs duties on the full value of its popular cellphone cases. In response to the parties’ request for more time to settle the case, the federal court stayed the case until March 3, 2014, and ordered the parties to notify the court of the status of the case by February 28th. Any settlement must be approved by the U.S. Department of Homeland Security, the Department of Justice, and the U.S. Attorney’s Office.

Military Contractor Settles Case Of Absentee Employees

Tuesday, February 18th, 2014

The Department of Justice anounced on February 12, 2014 that MPRI Inc., a Virginia-based company, has agreed to pay the United States Government $3.2 Million to resolve a case involving false labor charges for work on a contract to support of the Army in Afghanistan. The case centered on allegations that MPRI billed for employees who had not worked because they were granted leave and were out of the country. Under the Army contract, MPRI was to support the Army in redesigning and rebuilding the Afghan Defense Sector to create a national security system for Afghanistan that would accommodate a modern Western military. The suit was filed under the False Claims Act by a whistleblower who worked for MPRI in Afghanistan between 2007 and 2009 as a finance officer and contract support official. The alleged false billing by MPRI occurred between March 2005 and October 2010. The case is captioned U.S. ex rel. Lankford v. MPRI Inc., Case No. 10-193 (S.D. Ohio).

Illinois Farm Settles Subsidy Fraud Case For $5.4 Million

Thursday, February 6th, 2014

Dowson Farms, a farm business based in Divernon, Illinois, paid $5,364,000 to the U.S. to resolve False Claims Act allegations that it defrauded the federal farm subsidy program from 2002 to 2008 by avoiding the statutory caps on farm subsidy payments. Specifically, the owners of Dowson Farms, John J. Dowson, John C. Dowson, Darrel Thoma, Amy D. Thoma, and Melissa D. Vorreyer, created sham corporate entities in order to receive additional farm subsidies from the federal government which they were not entitled to. The settlement was reached out of court by the U.S. Attorneys’ Office for the Central District of Illinois before any lawsuit was initiated.

For more information see:

Whistleblower Suit Against Prime Healthcare Alleges Medicare Fraud

Thursday, February 6th, 2014

According to a whistleblower suit brought under the False Claims Act, Prime Healthcare, a major healthcare company, defrauded CMS by over $50 million by misrepresenting the conditions of patients at 14 of its California hospitals. The whistleblower suit was filed by Karin Bernsten, the director of performance improvement at Alvarado Hospital in San Diego. Although the U.S. has not yet intervened in the case, it retains the right to do so.

For more information see: