Government Intervenes in Lawsuit Against Tenet Healthcare Corp. and Georgia Hospital Owned by Health Management Associates Inc. Alleging Payment of Kickbacks

The government has intervened in a False Claims Act lawsuit against  Tenet Healthcare Corp. (Tenet) and four of its hospitals in Georgia and South Carolina, as well as a hospital in Monroe, Ga., owned by Health Management Associates Inc. (HMA), alleging that the hospitals paid kickbacks to obstetric clinics serving primarily undocumented Hispanic women in return for referral of those patients for labor and delivery at the hospitals.  The hospitals then billed the Medicaid programs in Georgia and South Carolina for the services provided to the referred patients and, in some instances, also obtained additional Medicare reimbursement based on the influx of low-income patients.  Tenet and HMA are two of the largest owner/operators of hospitals in the United States.  HMA was acquired by Community Health Systems last month.  The government also is intervening against the clinics and related entities known as  Hispanic Medical Management d/b/a Clinica de la Mama.

“The Department of Justice is committed to ensuring that health care providers who pay kickbacks in return for patient referrals are held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “Schemes such as this one corrupt the health care system and take advantage of vulnerable patients.”

“My office has made the investigation of health care fraud a priority,” said U.S. Attorney for the Middle District of Georgia Michael J. Moore.  “In a time when too many people were struggling to get health care for themselves and their children, Tenet and these hospitals plundered a system set up for those truly in need.  This kind of scheme drives up costs for everyone, not just the vulnerable patients and groups like those targeted in this case.”

The lawsuit alleges that four Tenet hospitals, Atlanta Medical Center,  North Fulton Regional Hospital, Spalding Regional Hospital and Hilton Head Hospital in South Carolina, and one HMA facility,  Walton Regional Medical Center (since renamed Clearview Regional Medical Center), paid kickbacks to  Hispanic Medical Management d/b/a Clinica de la Mama (Clinica) and related entities in return for Clinica’s agreement to send pregnant women to their facilities for deliveries paid for by Medicaid, in violation of the federal Medicare and Medicaid Anti-Kickback Statute.  The kickbacks were disguised as payments for a variety of services allegedly provided by Clinica.

The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and other federally funded programs.  The Anti-Kickback Statute is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient.

“Investigations such as these are a high priority for the FBI, and we are determined to hold accountable providers that enrich themselves at the expense of government programs and damage the public trust,” said FBI Assistant Director Ronald T. Hosko.  “The FBI is dedicated to preventing and combating all forms of health care fraud; working with federal, state and local partners to effectively resolve allegations and engaging with the public to identify potential schemes.”

The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government when they believe that defendants submitted false claims for government funds and to receive a share of any recovery.  The False Claims Act also permits the government to intervene in such lawsuits, as it has done in this case.  The lawsuit is pending in  the Middle District of Georgia .

The government’s intervention in this matter illustrates its emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $19 billion through False Claims Act cases, with more than $13.4 billion of that amount recovered in cases involving fraud against federal health care programs.

These matters were investigated by the Commercial Litigation Branch of the Justice Department’s Civil Division, the Fraud Section of the department’s Criminal Division, the U.S. Attorney’s Offices for the Middle and Northern Districts of Georgia, the Department of Health and Human Services Office of Inspector General, the Federal Bureau of Investigation and the Office of the Attorney General for the State of Georgia.

The case is captioned United States ex rel. Williams v. Health Mgmt. Assocs. Inc., Tenet Healthcare, et al., No. 3:09-CV-130 (M.D. Ga.).

The claims asserted against Tenet, the HMA facility and Clinica are allegations only, and there has been no determination of liability.

Virginia-Based Contractor to Pay $6.5 Million to Settle Allegations of False Claims on Navy Contracts

Vector Planning and Services Inc. (VPSI), an information technology, systems engineering, program management and consulting firm headquartered in Chantilly, Va. ,  has agreed to pay the government $6.5 million to settle False Claims Act allegations that the company inflated claims for payment under several Navy contracts, the Justice Department announced today.   VPSI’s West Coast center of operations is in  San Diego, Calif.

“The Department of Justice will vigorously protect taxpayer funds from false claims,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.   “Contractors who wish to do business with the military must act with honesty and integrity, or they will be held accountable for their actions.”

VPSI has a number of contracts with the Navy and its contractors to provide information technology, systems engineering and management consulting services.   Under these contracts, VPSI is entitled to bill the government for its indirect costs, which are costs such as overhead that cannot be allocated directly to a particular contract.   The government alleged that, from 2005 to 2009, VPSI inflated its indirect cost billings to the government by improperly including direct costs, for which it had already been paid, in indirect cost accounts that were then allocated across its government contracts and billed again.   The government further alleged that VPSI submitted claims for other costs that were never incurred.

“Our office will work aggressively with our investigative partners to protect taxpayer funds from abuse,” said U.S. Attorney for the Southern District of California Laura E. Duffy.   “Today’s settlement demonstrates our commitment to pursue defense contractors who knowingly defraud or overcharge military programs.”

The allegations resolved by the settlement were originally brought by a whistleblower in the U.S. District Court for the Southern District of California, under the  qui tam, or whistleblower, provisions of the False Claims Act.   The Act permits private parties to sue, on behalf of the government, companies and individuals who have falsely claimed federal funds and to share in any recovery.   The whistleblower in this case will receive  $1.28 million.

This settlement is the result of a coordinated effort by the Justice Department’s Civil Division, the Civil and Criminal Divisions of the U.S. Attorney’s Office for the Southern District of California, the Defense Criminal Investigative Service, the Naval Criminal Investigative Service and the Defense Contract Audit Agency.

The case is captioned United States ex rel. Hai Ba Trung v. Vector Planning and Services Inc., et al., 3:12-cv-02353-LAB-BGS (S.D. Calif.).   The claims settled by this agreement are allegations only; there has been no determination of liability.

Former Virginia Subcontractor Pleads Guilty to Bribery

Dwayne Allen Hardman, 44, of Charleston, W.V., pleaded guilty today to paying bribes to public officials.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and Dana J. Boente, Acting U.S. Attorney for the Eastern District of Virginia,  Special Agent in Charge  Robert Craig of the Defense Criminal Investigative Service   Mid-Atlantic Field Office (DCIS), Acting Executive Assistant Director Charles T. May Jr. of the Naval Criminal Investigative Service (NCIS) Atlantic Operations and  Special Agent in Charge Royce E. Curtin of the FBI’s Norfolk Field Office made the announcement after the plea was accepted by U.S. Magistrate Judge Douglas E. Miller in the Eastern District of Virginia.
Hardman was charged by criminal information on Feb. 12, 2014, with paying a bribe to public officials.   Hardman faces a maximum penalty of 15 years in prison when he is sentenced on June 6, 2014.
According to a statement of facts filed with the plea agreement, in November 2004, Hardman and another businessman established a government contracting corporation in Chesapeake, Va., to provide support to the Military Sealift Command (MSC) on various telecommunications projects.   Shortly thereafter, in early 2005, Hardman and his business partner agreed to pay cash bribes to two MSC officials in exchange for official action to steer government contracts to Hardman’s corporation.   From March 2005 and until 2007, Hardman, his business partner and others paid the MSC officials approximately $3,000 each month in cash bribes.   During this time, Hardman and his business partner withdrew approximately $144,000 in cash, which was then provided to the two MSC officials in exchange for their assistance in securing MSC contracting and subcontracting business for Hardman’s company.
According to court documents, in February 2009, Hardman left his former business and formed another government contracting company in Chesapeake with another businessman.   The two MSC officials again agreed to steer contracting work to Hardman’s new company in exchange for receiving bribes from Hardman and his new business partner.   In May 2009, Hardman and his new business partner paid each of the two MSC officials $25,000 in cash bribes.
On Feb. 12, 2014, one of the MSC officials, Kenny Toy, who was the Afloat Programs Manager for MSC’s N6 Command, Control, Communication and Computer Systems Directorate, pleaded guilty to accepting bribes in conjunction with this scheme.
This case was investigated by Special Agents of the FBI, the Naval Criminal Investigative Service, and the Defense Criminal Investigative Service.   Trial Attorney Emily Rae Woods of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Stephen W. Haynie are prosecuting the case.

Former Chief Executive Officer of Oil Services Company Pleads Guilty to Foreign Bribery Charges

The former chief executive officer of PetroTiger Ltd., a British Virgin Islands oil and gas company with operations in Colombia and offices in New Jersey, pleaded guilty today for his role in a scheme to pay bribes to foreign government officials and to defraud PetroTiger.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Paul J. Fishman of the District of New Jersey and Special Agent in Charge Aaron T. Ford of the FBI’s Newark Division made the announcement.
Knut Hammarskjold, 42, of Greenville, S.C., the former co-CEO of PetroTiger, pleaded guilty before U.S. District Judge Josephy E. Irenas in Camden, N.J., to an information charging one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and to commit wire fraud and is scheduled for sentencing on May 16, 2014.   Gregory Weisman, 42, of Moorestown, N.J., the former general counsel of PetroTiger, pleaded guilty to the same charges on Nov. 8, 2013.   Charges remain pending against Joseph Sigelman, 42, of Miami and the Philippines, the other former co-CEO of PetroTiger, for conspiracy to commit wire fraud, conspiracy to violate the FCPA, conspiracy to launder money and substantive violations of the FCPA.
According to the charges, the defendants allegedly paid bribes to an official in Colombia in exchange for the official’s assistance in securing approval for an oil services contract worth roughly $39 million.   To conceal the bribes, the defendants allegedly first attempted to make the payments to a bank account in the name of the foreign official’s wife, for purported consulting services she did not perform.   The charges allege that Sigelman and Hammarskjold provided Weisman invoices including her bank account information.   The defendants made the payments directly to the official’s bank account when attempts to transfer the money to his wife’s account failed.
In addition, court documents allege that the defendants attempted to secure kickback payments at the expense of several of PetroTiger’s board members.   According to the criminal charges, the defendants were negotiating an acquisition of another company on behalf of PetroTiger, including on behalf of several members of PetroTiger’s board of directors who were helping to fund the acquisition.   In exchange for negotiating a higher purchase price for the acquisition, two of the owners of the target company agreed to kick back to the defendants a portion of the increased purchase price.   According to the charges, to conceal the kickback payments, the defendants had the payments deposited into Sigelman’s bank account in the Philippines, created a “side letter” to falsely justify the payments, and used the code name “Manila Split” to refer to the payments amongst themselves.
Sigelman and Hammarskjold were charged by sealed complaints filed in the District of New Jersey on Nov. 8, 2013.   Hammarskjold was arrested on Nov. 20, 2013, at Newark Liberty International Airport.   Sigelman was arrested on Jan. 3, 2014, in the Philippines.   The charges against Sigelman, Hammarskjold and Weisman were unsealed on Jan. 6, 2014.
The conspiracy to commit violations of the FCPA count carries a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the value gained or lost.   The conspiracy to commit wire fraud count carries a maximum penalty of 20 years in prison and a fine of the greater of $250,000 or twice the value gained or lost.
As to the charges in the complaint pending against Sigelman, they are merely accusations and the defendant is presumed innocent unless and until proven guilty.
The department has worked closely with and has received significant assistance from its law enforcement counterparts in the Republic of Colombia and greatly appreciates their assistance in this matter.    The department also thanks the Republic of the Philippines, including the Bureau of Immigration, and the Republic of Panama for their assistance in this matter.   Significant assistance was also provided by the Criminal Division’s Office of International Affairs.
The case is being investigated by the FBI’s Newark Division.   The case is being prosecuted by Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Aaron Mendelsohn of the District of New Jersey.

Independent Contractor in Afghanistan Pleads Guilty for His Role in Offering $54,000 in Bribes to a U.S. Government Official

Earlier today at the federal courthouse in Brooklyn, N.Y., Akbar Ahmad Sherzai, 49, of Centreville, Va., an independent contractor for a trucking company operating in Afghanistan that was responsible for delivering fuel to U.S. Army installations, pleaded guilty to his role in offering a U.S. Army serviceman $54,000 in bribes to falsify documents to reflect the successful delivery of fuel shipments that Army records indicate were never delivered.  Sherzai faces a maximum of 15 years imprisonment and a $250,000 fine.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and United States Attorney for the Eastern District of New York Loretta E. Lynch made the announcement.
“The defendant sought to use deception, corruption and greed to enrich his company at the risk of jeopardizing the U.S. Army’s supply lines in Afghanistan,” said U.S. Attorney Lynch.  “Attempts to corrupt American officials will not be tolerated, either at home or abroad.”  U.S. Attorney Lynch extended her grateful appreciation to the Special Inspector General for the Afghanistan Reconstruction, Homeland Security Investigations and the FBI for their assistance in this case.
The U.S. Army regularly contracts with local Afghan trucking companies to transport U.S. military equipment, fuel, and other supplies throughout Afghanistan.  To ensure the companies fulfilled these requests, the U.S. Army used transportation movement requests (TMRs), which, when properly completed, verified that the shipments were successfully completed before approving payments to the trucking companies.
In April 2013, Sherzai approached a U.S. military serviceman to discuss fuel delivery missions that had been classified by the U.S. Army as “no-shows,” meaning that the fuel had not been delivered.  Sherzai offered the serviceman a bribe to falsify the TMRs to reflect successful deliveries so that Sherzai’s company would receive payment and avoid penalties for failed fuel deliveries.  The serviceman, under the supervision of law enforcement, continued to meet with Sherzai to discuss payments for the falsification of records.  On two separate occasions, Sherzai paid the serviceman bribes in cash on American military bases in Afghanistan.  On another occasion, Sherzai arranged for the serviceman’s bribe to be transferred to the United States through a hawala, an informal money transfer system.  In total, Sherzai paid the serviceman $54,000 in cash to falsify fourteen TMRs.  Each “no show” delivery mission, absent the fraudulent TMRs, would have resulted in a fine of the company by the U.S. government of $75,000.
Sherzai was arrested on a criminal complaint on Sept. 24, 2013.  The guilty plea proceeding was held before U.S. Magistrate Judge Robert M. Levy.
The government’s case is being prosecuted by Assistant U. S. Attorney Amir H. Toossi and Trial Attorney Daniel Butler of the Criminal Division’s Fraud Section.


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Comcast Deal: If Netflix Is Fine, Regulators Might Be Too

Comcast Deal: If Netflix Is Fine, Regulators Might Be Too

“This deal can be enjoined if it gives too much clout to Comcast-Time Warner as a purchasing entity even though consumers may be unaffected,” Stucke said.

Maurice Stucke comments on Comcast deal to CNNMoney

Comcast deal to face antitrust hurdles

“”The FCC is going to be the wild card,” said Maurice Stucke, antitrust law professor at the University of Tennessee and an attorney at law firm GeyerGorey. “This is the opportunity for the new chief to take a stance and become a vocal regulator.””

Bridgestone Corp. Agrees to Plead Guilty to Price Fixing on Automobile Parts Installed in U.S. Cars


WASHINGTON — Bridgestone Corp., a Tokyo, Japan-based company, has agreed to plead guilty and to pay a $425  million criminal fine for its role in a conspiracy to fix prices of automotive  anti-vibration rubber parts installed in cars sold in the United States and  elsewhere, the Department of Justice announced today.

According to a  one-count felony charge filed today in U.S. District Court for the Northern  District of Ohio in Toledo, Bridgestone engaged in a conspiracy to allocate  sales of, to rig bids for and to fix, raise and maintain the prices of automotive  anti-vibration rubber parts it sold to Toyota Motor Corp., Nissan Motor Corp.,  Fuji Heavy Industries Ltd., Suzuki Motor Corp., Isuzu Motors Ltd. and certain  of their subsidiaries, affiliates and suppliers, in the United States and  elsewhere.  In addition to the criminal  fine, Bridgestone also has agreed to cooperate with the department’s ongoing  auto parts investigations.  The plea  agreement is subject to court approval.

In October 2011,  Bridgestone pleaded guilty and paid a $28 million fine for price-fixing and  Foreign Corrupt Practices Act violations in the marine hose industry, but did  not disclose at the time of the plea that it had also participated in the  anti-vibration rubber parts conspiracy.  Bridgestone’s  failure to disclose this conspiracy was a factor in determining the $425  million fine.

“The Antitrust Division will take a hard line when repeat offenders  fail to disclose additional anticompetitive behavior,” said Brent Snyder, Deputy  Assistant Attorney General for the Antitrust Division’s criminal enforcement  program.  “Today’s significant fine  reaffirms the division’s commitment to holding companies accountable for  conduct that harms U.S. consumers.”

According to the  charges, Bridgestone and its co-conspirators carried out the conspiracy through  meetings and conversations in which they discussed and agreed upon bids, prices  and allocating sales of certain automotive anti-vibration rubber products.  After exchanging this information with its  co-conspirators, Bridgestone submitted bids and prices in accordance with those  agreements and sold and accepted payments for automotive anti-vibration rubber  parts at collusive and noncompetitive prices.  Bridgestone’s involvement in the conspiracy to  fix prices of anti-vibration rubber parts lasted from at least January 2001  until at least December 2008.

“The Cleveland  Division of the FBI is committed to aggressively investigating price-fixing and  other antitrust violations,” said Special Agent in Charge Stephen D. Anthony.  “The illegal activity in this case threatened  the basic tenet of free competition.  We  are pleased with the acceptance of responsibility along with the significant  penalty which will be paid by Bridgestone for this conspiracy to fix prices.  Together with our partners in the Department  of Justice’s Antitrust Division, we will continue to combat illegal practices  which threaten consumers across the United States.”

Bridgestone manufactures and sells a variety of  automotive parts, including anti-vibration  rubber parts, which are comprised primarily of rubber and metal, and are  installed in suspension systems and engine mounts as well as other parts of an  automobile.  They are installed in  automobiles for the purpose of reducing road and engine vibration.

Including  Bridgestone, 26 companies have pleaded guilty or agreed to plead guilty in the department’s  ongoing investigation into price fixing and bid rigging in the automotive parts  industry.  The companies have agreed to  pay a total of more than $2 billion in criminal fines.  Additionally, 28 individuals have been  charged.

Bridgestone is  charged with price fixing in violation of the Sherman Act, which carries  maximum penalties of a $100 million criminal fine for corporations.  The maximum fine may be increased to twice the  gain derived from the crime or twice the loss suffered by the victims of the  crime, if either of those amounts is greater than the statutory maximum fine.

Today’s  prosecution is the result of an ongoing federal antitrust investigation into  price fixing, bid rigging and other anticompetitive conduct in the automotive  parts industry, which is being conducted by each of the Antitrust Division’s  criminal enforcement sections and the FBI.  Today’s charge was brought by the Antitrust  Division’s Chicago Office and the FBI’s Cleveland Field Office, with the  assistance of the FBI headquarters’ International Corruption Unit and the U.S.  Attorney’s Office for the Northern District of Ohio.  Anyone with information concerning this investigation  should contact the Antitrust Division’s Citizen Complaint Center at  1–888–647–3258, visit or call the  FBI’s Cleveland Field Office at 216-522-1400.

Allen Grunes comments on Comcast merger in Gigaom and Wall Street Journal’

Everything you need to know about the proposed $45B Comcast-Time Warner merger

“Allen Grunes, an antitrust lawyer with GeyerGorey LLP, told the Wall Street Journal: ‘There’s very little political will right now in the U.S. to keep pipes and content separate, or to limit the national reach of a cable company like Comcast. My guess is that if Comcast is able to make some serious and enforceable commitments to the FCC, the deal will go through.'” 

Army National Guard Soldier Pleads Guilty to Role in Scheme to Defraud U.S. Army National Guard Bureau

A U.S. Army National Guard soldier pleaded guilty for her role in a bribery and fraud scheme that caused $30,000 in losses to the U.S. Army National Guard Bureau.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas made the announcement.

Specialist Danielle Applin, 27, of Harker Heights, Texas, pleaded guilty to one count of conspiracy and one count of bribery.  The case against Applin arises from an investigation involving allegations that former and current military recruiters and U.S. soldiers in the San Antonio and Houston areas engaged in a wide-ranging corruption scheme to illegally obtain fraudulent recruiting bonuses.  To date, the investigation has led to charges against 27 individuals, 20 of whom have pleaded guilty.

According to court documents filed in the case, in approximately September 2005, the National Guard Bureau entered into a contract with Document and Packaging Broker Inc. (Docupak) to administer the Guard Recruiting Assistance Program (G-RAP).  The G-RAP was a recruiting program that offered monetary incentives to soldiers of the Army National Guard who referred others to join the Army National Guard.  Through this program, a participating soldier could receive bonus payments for referring another individual to join the Army National Guard.  Based on certain milestones achieved by the referred soldier, a participating soldier would receive payment through direct deposit into the participating soldier’s designated bank account.  To participate in the program, soldiers were required to create online recruiting assistant accounts.

Applin admitted that she paid an Army National Guard recruiter for the names and Social Security numbers of potential Army National Guard soldiers.  Applin further admitted that she used the personal identifying information for these potential soldiers to claim that she was responsible for referring these potential soldiers to join the Army National Guard, when in fact she had not referred them.  As a result of these fraudulent representations, Applin collected approximately $13,000 in fraudulent bonuses.

The charge of bribery carries a maximum penalty of 15 years in prison and a maximum fine of $250,000 or twice the pecuniary gain or loss.  The charge of conspiracy carries a maximum penalty of five years in prison and a maximum fine of $250,000 or twice the pecuniary gain or loss.

Applin is scheduled to be sentenced before U.S. District Judge Lee H. Rosenthal in Houston on June 11, 2014.

This case is being investigated by the San Antonio Fraud Resident Agency of Army Criminal Investigation Command’s Major Procurement Fraud Unit.  The case is being prosecuted by Trial Attorneys Sean F. Mulryne, Heidi Boutros Gesch, and Mark J. Cipolletti of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney John Pearson of the Southern District of Texas.