Three Companies and Their Executives Pay $19.5 Million to Resolve False Claims Act Allegations Pertaining to Rehabilitation Therapy and Hospice Services

Monday, July 17, 2017

Ohio based Foundations Health Solutions Inc. (FHS), Olympia Therapy Inc. (Olympia), and Tridia Hospice Care Inc. (Tridia), and their executives, Brian Colleran (Colleran) and Daniel Parker (Parker), have agreed to pay approximately $19.5 million to resolve allegations pertaining to the submission of false claims for medically unnecessary rehabilitation therapy and hospice services to Medicare, the Department of Justice announced today.

“Clinical decisions should be based on patient needs rather than corporate profits,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “This settlement reflects the Department’s continuing commitment to safeguarding patients and the Medicare system.”

FHS is the corporate successor to Provider Services Inc. (PSI), which provided management services to skilled nursing facilities. In 2010, PSI was merged into BCFL Holdings Inc. (BCFL), which was renamed FHS in 2013. Olympia provided rehabilitation therapy services to patients at the skilled nursing facilities managed by PSI and BCFL. Tridia Hospice Care Inc. provided hospice care services. Colleran and Parker partially controlled or owned PSI, BCFL, FHS, Olympia, and Tridia between 2008 and 2013.

The settlement resolves allegations that, from January 2008 through December 2012, Olympia and PSI/BCFL submitted, or caused the submission of, false claims to Medicare for medically unnecessary rehabilitation therapy services at 18 skilled nursing facilities. The government contended that the therapy services were provided at excessive levels to increase Medicare reimbursement for those services.

The settlement further resolves allegations that, from April 2011 through December 2013, Tridia submitted false claims to Medicare for hospice services provided to patients who were ineligible for the Medicare hospice benefit because Tridia failed to conduct proper certifications or medical examinations. The settlement also resolves allegations that from January 2008 through December 2012, Colleran and Parker solicited and received kickbacks to refer patients from skilled nursing facilities managed by PSI or BCFL to Amber Home Care LLC, a home health care services provider.

“This is one of the largest nursing home operations in Ohio,” said U.S. Attorney Benjamin C. Glassman for the Southern District of Ohio. “It is unacceptable for an entity entrusted to care for our most vulnerable and elderly citizens to make decisions based on profit, not quality of care. Subjecting the elderly to inappropriate levels of therapy can be physically harmful, and failing to properly certify and re-certify hospice patients can have a devastating impact on the patients and their families.”

As part of the settlement, FHS and Colleran have entered into a five-year Corporate Integrity Agreement (CIA) with the HHS Office of Inspector General (HHS-OIG). The CIA is designed to increase the accountability and transparency of FHS and Colleran so that they will avoid or promptly detect future fraud and abuse.

“Medicare providers have a legal and moral obligation to provide only those services that are medically necessary and to ensure that claims seeking payment accurately reflect the services that are actually provided,” said Special Agent in Charge Lamont Pugh III of the U.S. Department of Health & Human Services, Office of Inspector General (HHS-OIG). “The misrepresentation or falsification of those claims not only violates provisions of the False Claims Act but the public’s trust. The OIG will continue to aggressively investigate allegations of potential violations of this nature.”

The settlement resolves allegations filed in two separate lawsuits by Vladimir Trakhter, a former Olympia employee, and Paula Bourne and La’Tasha Goodwin, former Tridia employees, in federal court in Columbus, Ohio. The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. Mr. Trahkter will receive approximately $2.9 million and Ms. Bourne and Ms. Goodwin collectively will receive $740,000.

The settlement is the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the Southern District of Ohio, with assistance from HHS-OIG, the HHS Office of Counsel to the Inspector General, and the Ohio Medicaid Fraud Control Unit.

These cases are captioned United States ex rel. Trakhter v. Provider Services, Inc., n/k/a BCFL Holdings, Inc., et. al., Case No. 1:11-CV-217, and United States ex rel. Bourne and Goodwin v. Brian Colleran, et. al., Case No. 1:12-CV-935. The claims resolved by the settlement are allegations only, and there has been no determination of liability.

Senior Executives Of Medical Drug Re-Packager Plead Guilty To Defrauding Healthcare Providers

Friday, July 14, 2017

President and Pharmacist-in-Charge Distributed Cancer Drugs Contaminated With Mold

Earlier today, in federal court in Brooklyn, Gerald Tighe, the president and owner of Med Prep Consulting Inc. (Med Prep), and Stephen Kalinoski, its director of pharmacy and registered pharmacist-in-charge, pleaded guilty to wire fraud conspiracy in connection with their operation of the now-defunct Tinton Falls, New Jersey-based medical drug re-packager and compounding pharmacy. The pleas were entered before United States District Judge I. Leo Glasser.

The guilty pleas were announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, and Mark McCormack, Special Agent-in-Charge of the U.S. Food and Drug Administration’s Office of Criminal Investigations, Metropolitan Washington Field Office (FDA/OCI).

According to court filings and facts presented during the plea proceeding, Med Prep processed numerous drugs, including oncology and dialysis drugs, pain medications, anesthesia drugs, and operating room drugs, in purportedly aseptic conditions. In an effort to gain market share, Med Prep repeatedly misrepresented to its customers, who consisted of hospitals and other healthcare providers, that it adhered to, and in some areas exceeded, industry standards and laws applicable to sterile drug preparation. In fact, Med Prep produced drugs in a facility that fell far short of basic industry standards of cleanliness, creating a risk to the health of already ill patients. Tighe and Kalinoski lied to healthcare providers about Med Prep’s failures to comply with basic sterility practices. Med Prep halted its production of drug products in the summer of 2013, following an incident in which it had distributed intravenous drugs containing visible mold to a Connecticut hospital.

“Today’s guilty pleas mark an important step in our continuing effort to hold accountable those who pursue corporate profits over the health and safety of vulnerable patients suffering from disease,” said Acting United States Attorney Rohde. In announcing the guilty plea, Ms. Rohde gratefully acknowledged the assistance and cooperation of the United States Department of Health and Human Services, Office of the Inspector General, Office of Investigations; the United States Office of Personnel Management, Office of the Inspector General; the Department of Justice, Civil Division, Consumer Protection Branch and Commercial Litigation Branch; the FDA’s Office of the Chief Counsel; the Office of the Attorney General of New Jersey; and the New Jersey Board of Pharmacy.

“Producing unsafe and contaminated drugs poses a serious threat to the U.S. public health and cannot be tolerated,” stated FDA/OCI Special Agent-in-Charge McCormack. “The FDA remains fully committed to aggressively pursuing those who place unsuspecting American consumers at risk by distributing adulterated drugs.”

The sentencing, Tighe and Kalinoski each face up to five years in prison, a fine and the forfeiture of criminal proceeds. They will also be required to make full restitution to their victims.

The case is being prosecuted by Assistant United States Attorneys Alixandra E. Smith, Ameet B. Kabrawala and Erin E. Argo.

The Defendants:

GERALD TIGHE

Age: 59

West Long Branch, New Jersey

STEPHEN KALINOSKI

Age: 53

Middletown, New Jersey

E.D.N.Y. Docket No. 15-CR-62 (ILG)

Hospice Company To Pay $2 Million To Resolve Alleged False Claims Related To Unnecessary Hospice Care

Thursday, July 6, 2017

NEWARK, N.J. – A hospice company in Bensalem, Pennsylvania, has agreed to pay to the United States $2 million to resolve allegations that it provided unnecessary hospice services, Acting U.S. Attorney William E. Fitzpatrick announced today.

Compassionate Care of Gwynedd Inc. is a hospice provider based in Bensalem and a subsidiary of Compassionate Care Hospice Group Inc., a Florida corporation with its principal place of business in Parsippany, New Jersey. The settlement announced today follows an investigation by the U.S. Attorney’s Office for the District of New Jersey and the Commercial Litigation Branch of the Justice Department’s Civil Division. The allegations arose from a whistle-blower suit filed under the False Claims Act.

The United States alleges that from Jan. 1, 2005, through Nov. 15, 2011, Compassionate Care of Gwynedd admitted patients who did not need hospice care and billed Medicare for these medically unnecessary services. The government alleges that the company admitted these patients by using a diagnosis of “debility” that was not medically justified.

The relators, or whistler-blowers, in the underlying qui tam will receive more than $350,000 as their statutory share of the recovery under the False Claims Act. The civil lawsuit was filed in the District of New Jersey and is captioned United States, et al., ex rel. Jane Doe and Mary Roe v. Compassionate Care Hospice, et al.

Acting U.S. Attorney Fitzpatrick credited special agents from the Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert, with the investigation leading to the settlement.

The government is represented by Assistant U.S. Attorney Charles Graybow of the Health Care and Government Fraud Unit of the U.S. Attorney’s Office for the District of New Jersey and Trial Attorney Justin Draycott of the Department of Justice’s Civil Division. The Office of Inspector General and the Office of the General Counsel for the Centers for Medicare and Medicaid Services of the Department of Health and Human Services also participated in the investigation and settlement.

The U.S. Attorney’s Office for the District of New Jersey reorganized its health care practice in 2010 and created a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since that time, the office has recovered more than $1.36 billion in health care and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act, and other statutes.

The claims settled by this agreement are allegations only; there have been no admissions of liability.

Counsel for relators: Britton D. Monts Esq., Austin, Texas; Timothy J. McInnis Esq., New York

Counsel for defendant: Sean C. Cenawood Esq., New York

Defunct Philly Hospice’s Owners/Operators to Pay Millions to Settle Civil False Claims Suit

Thursday, July 6, 2017

PHILADELPHIA – Acting United States Attorney Louis D. Lappen announced today that Matthew Kolodesh, Alex Pugman, Svetlana Ganetsky, and Malvina Yakobashvili have agreed to pay millions of dollars to settle False Claims Act allegations that they and their now-defunct company, Home Care Hospice, Inc. (HCH), falsely claimed and received taxpayer dollars for hospice services that were either unnecessary or never provided. Previously, a federal jury found Kolodesh guilty on, and Pugman and Ganetsky pleaded guilty to, related criminal charges.

Kolodesh was HCH’s de facto co-owner; Pugman was HCH’s Executive Director and co-owner; Ganetsky was HCH’s Development Executive; and Yakobashvili was HCH’s CEO and President. Kolodesh and Yakobashvili are husband and wife, as are Pugman and Ganetsky.

The civil settlements with Kolodesh, Pugman, and Ganetsky specifically resolve False Claims Act allegations that HCH and they, between January 2003 and September 2008: knowingly submitted false claims and records (including fabricated records) to Medicare for purported hospice care for patients who were not terminally ill and thus not eligible for the Medicare hospice benefit; and/or knowingly submitted or caused the submission of false claims and records (including fabricated records) to Medicare for crisis care services that were not necessary or not actually provided; and, as a result of this conduct, violated the False Claims Act and cost the Medicare Program millions of dollars. The settlements with these defendants, as well as Yakobashvili, also resolve federal common law allegations that all five defendants were unjustly enriched as a result of such conduct.

As part of the settlements, the United States will retain the full value of multiple financial accounts that were restrained in a related civil injunction action filed by the United States in the Eastern District of Pennsylvania. The estimated current value of those interests is approximately $8.8 million. The defendants have further agreed: (1) to make cash payments to the government ($400,000 from Pugman and Ganetsky, and $425,000 from Kolodesh and Yakobashvili); and (2) to transfer to the United States various assets, including Pugman’s and Kolodesh’s interests in condominium properties that they co-own.

Under qui tam (whistleblower) provisions of the federal False Claims Act, certain private citizens may bring civil actions on behalf of the United States and may share in any recovery. This suit was originally filed on behalf of the United States by Maureen Fox and Cathy Gonzales, former HCH employees who discovered the alleged fraud. The settlements announced today include False Claims Act whistleblower awards for Ms. Gonzales and for the Estate of Ms. Fox, who passed away after filing suit.

As the result of the United States’ related criminal investigation, 22 persons employed by or associated with HCH were criminally convicted in the Eastern District of Pennsylvania.

“The Medicare hospice benefit is intended to provide patients nearing the end of life with pain management and other palliative care to make them as comfortable as possible,” Lappen said. “Too often, however, we hear reports of companies that abuse this critical service by enrolling patients who do not qualify for the hospice benefit, do not provide claimed services, or who push patients into services they don’t need in order to get higher government reimbursements. The Department of Justice, including this office, will take swift action to protect the public welfare and taxpayer dollars and to make sure that Medicare benefits are available to those truly in need.”

“Medicare, a crucial component of our nation’s health care system, draws from a finite pool of funds,” said Michael Harpster, Special Agent in Charge of the FBI’s Philadelphia Division. “The defendants siphoned money earmarked for dying patients’ hospice care, and built their bank accounts on taxpayers’ backs. The FBI will continue to investigate and hold accountable those defrauding the U.S. government.”

“Today’s settlement returns over $8 million to our nation’s Medicare program. This money was wrongfully paid as a result of fraudulent billings and part of a massive criminal conspiracy that preyed on a program that comforts beneficiaries at the end of their lives,” said Nick DiGiulio, Special Agent in Charge of the Inspector General’s Office of the United Stated Department of Health and Human Services in Philadelphia. “In addition to this civil settlement, this investigation resulted in the criminal prosecution of 22 individuals for health care fraud or other charges. We will continue to work with our law enforcement partners and the dedicated federal prosecutors in the Eastern District of Pennsylvania to use every available tool to jail those who steal from federal health care programs and recoup cash and assets illegally acquired.”

The case was investigated by the Office of Inspector General of the U.S. Department of Health and Human Services (HHS), and the Organized Crime Section of the Federal Bureau of Investigation. The civil case was handled at the U.S. Attorney’s Office by Assistant United States Attorneys Eric D. Gill, Gerald B. Sullivan, and Colin C. Cherico. Assistance was provided by the HHS Office of Counsel to the Inspector General and the Commercial Litigation Branch of the U.S. Department of Justice’s Civil Division.

The civil claims asserted against HCH, Kolodesh, Pugman, Ganetsky, and Yakobashvili are allegations only, and there has been no determination of civil liability. The civil qui tam suit is docketed in the Eastern District of Pennsylvania as U.S.A. et al. ex rel. Fox and Gonzales v. Home Care Hospice, Inc, et al., No. 06-cv-4679.

The Eastern District of Pennsylvania is one of 10 federal districts that formed an Elder Justice Task Force as a part of the U.S. Department of Justice’s Elder Justice Initiative. (The office announced its task force here in March 2016, and maintains a publicly accessible website here.) The task force seeks to enhance government protection of vulnerable, elderly Pennsylvanians from harm and to ensure the integrity of government health care spending.

Physician and Wife to Pay $1.2 Million For False Claims Act Allegations that They Billed for Unapproved Drugs

Tuesday, June 27, 2017

Dr. Anindya Sen and Patricia Posey Sen will pay $1.208 million to resolve state and federal False Claims Act allegations that their medical practice billed Medicare and Tennessee Medicaid (TennCare) for anticancer and infusion drugs that were produced for sale in foreign countries and not approved by the U.S. Food and Drug Administration (FDA) for marketing in the United States, the Department of Justice announced today. Dr. Sen owns and operates East Tennessee Cancer & Blood Center and East Tennessee Hematology Oncology and Internal Medicine located in Greeneville and Johnson City, Tennessee. Mrs. Sen managed Dr. Sen’s medical practice from 2009 through 2012.

“Billing for foreign drugs that are not approved by the FDA undermines federal health care programs and could potentially risk patient safety,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “The Department of Justice is committed to maintaining the integrity of the health care system and ensuring that patient safety, not physician misconduct, determines health care decisions.”

“Medical providers and practitioners that distribute and disseminate unapproved and potentially unsafe drugs—especially those used in cancer treatment—put at risk the health and safety of the American consumer,” said U.S. Attorney Nancy Stallard Harr for the Eastern District of Tennessee. “This settlement reflects our ongoing commitment to safeguard the federal health care programs and vital care that they provide.”

The United States alleged that the unapproved drugs that the Sens provided to patients and billed to Medicare and TennCare were not reimbursable under those programs. The United States further alleged that the Sens purchased unapproved drugs because they were less expensive than the drugs approved by FDA for marketing in the United States. The Sens thus allegedly profitted by administering the cheaper unapproved drugs.

The United States’ investigation was a coordinated effort by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Eastern District of Tennessee, the Department of Health and Human Services Office of General Counsel, the Food and Drug Administration Office of Criminal Investigations and Office of Chief Counsel, the FBI’s Knoxville Division and the Tennessee Bureau of Investigation.

 

Genesis Healthcare Pays $53.6 Million to Settle False Claims Act Suit for Rehabilitation and Hospice Services

Friday, June 16, 2017

The Justice Department announced today that Genesis Healthcare Inc. (Genesis) will pay the federal government $53,639,288.04, including interest, to settle six federal lawsuits and investigations alleging that companies and facilities acquired by Genesis violated the False Claims Act by causing the submission of false claims to government health care programs for medically unnecessary therapy and hospice services, and grossly substandard nursing care. Genesis, headquartered in Kennett Square, Pennsylvania, owns and operates through its subsidiaries skilled nursing facilities, assisted/senior living facilities, and a rehabilitation therapy business.

“We will continue to hold health care providers accountable if they bill for unnecessary or substandard services or treatment,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Today’s settlement demonstrates our unwavering commitment to protect federal health care programs against unscrupulous providers.”

This settlement resolves four sets of allegations. First, the settlement resolves allegations that from April 1, 2010 through March 31, 2013, Skilled Healthcare Group Inc. (SKG) and its subsidiaries, Skilled Healthcare LLC (Skilled LLC) and Creekside Hospice II LLC, knowingly submitted or caused to be submitted false claims to Medicare for services performed at the Creekside Hospice facility in Las Vegas, Nevada by: (1) billing for hospice services for patients who were not terminally ill and so were not eligible for the Medicare hospice benefit and (2) billing inappropriately for certain physician evaluation management services.

Second, this settlement resolves allegations that from Jan. 1, 2005 through Dec. 31, 2013, SKG and its subsidiaries, Skilled LLC and Hallmark Rehabilitation GP LLC, knowingly submitted or caused to be submitted false claims to Medicare, TRICARE, and Medicaid at certain facilities by providing therapy to certain patients longer than medically necessary, and/or billing for more therapy minutes than the patients actually received. The settlement also resolves allegations that those companies fraudulently assigned patients a higher Resource Utilization Group (RUG) level than necessary. Medicare reimburses skilled nursing facilities based on a patient’s RUG level, which is supposed to be determined by the amount of skilled therapy required by the patient.

Third, this settlement resolves allegations that from Jan. 1, 2008, through Sept. 27, 2013, Sun Healthcare Group Inc., SunDance Rehabilitation Agency Inc., and SunDance Rehabilitation Corp. knowingly submitted or caused the submission of false claims to Medicare Part B by billing for outpatient therapy services provided in the State of Georgia that were (1) not medically necessary or (2) unskilled in nature.

Finally, this settlement resolves allegations that between Sept. 1, 2003 and Jan. 3, 2010, Skilled LLC submitted false claims to the Medicare and Medi-Cal programs at certain of its nursing homes for services that were grossly substandard and/or worthless and therefore ineligible for payment. More specifically, the settlement resolves allegations that Skilled LLC violated certain essential requirements that nursing homes are required to meet to participate in and receive reimbursements from government healthcare programs and failed to provide sufficient nurse staffing to meet residents’ needs.

SKG and its subsidiaries were acquired by Genesis after the conduct at issue in this settlement. Sun Healthcare Group Inc., SunDance Rehabilitation Agency Inc. and SunDance Rehabilitation Corp. were acquired by Genesis in December 2012.

“Safeguarding federal health care programs and patients is a priority,” said Acting U.S. Attorney Steven W. Myhre for the District of Nevada. “Today’s settlement is an example of the U.S. Attorney’s Office’s commitment to holding medical providers accountable for fraudulent billing of medically unnecessary treatments and services. We are committed to protecting federal health care programs, including Medicare, TRICARE, and Medicaid, which are funded by taxpayer dollars.”

“We are committed to protecting the federal health care programs and the patients who are enrolled in them,” said U.S. Attorney Brian J. Stretch for the Northern District of California. “We will continue to vigorously pursue companies and individuals who provide care that is grossly deficient or unnecessary.”

“Health care providers that falsify claims for unauthorized or unnecessary services steal precious taxpayer dollars, and we will aggressively seek to recover those funds for the program that needs them,” said U. S. Attorney John Horn for the Northern District of Georgia.

“It’s disturbing when health care companies bill Medicare and Medicaid to care for vulnerable patients, but provide grossly substandard care and medically unnecessary services just to boost company profits,” said Special Agent in Charge Steven J. Ryan of the Department of Health and Human Services, Office of Inspector General (HHS-OIG). “We will continue to crack down on medical providers who betray the public’s trust and the needs of vulnerable patients through fraudulent billing and irresponsible practices.”

“At a time when the cost of healthcare weighs heavy on many taxpayers, it is imperative that people who illegally bill our healthcare system are held accountable and forced to pay restitution,” said FBI Atlanta Special Agent in Charge David J. LeValley. “This case is an example of how committed the FBI and its partners are to keeping healthcare providers from abusing the system.”

The settlement, which was based on the company’s ability to pay, resolves allegations originally brought in lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act by Joanne Cretney-Tsosie, Jennifer Deaton, Kimberley Green, Camaren Hampton, Teresa McAree, Terri West, and Brian Wilson, former employees of companies acquired by Genesis. The act permits private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery. The government may intervene and file its own complaint in such a lawsuit. The whistleblowers will receive a combined $9.67 million as their share of the recovery in this case.

This matter was handled by the Civil Division’s Commercial Litigation Branch; the U.S. Attorneys’ Offices for the Northern District of California, the Northern District of Georgia, the Western District of Missouri, and the District of Nevada and HHS-OIG.

The claims resolved by the settlement are allegations only; there has been no determination of liability.

The cases are docketed as United States, ex rel. Cretney-Tsosie v. Creekside Hospice II, LLC, Case No. 2:13-cv-167-HDM (D. Nev.); United States ex rel. McAree v. SunDance Rehabilitation Corp., Case No. 1:12-CV-4244 (N.D. Ga.); United States, ex rel. West v. Skilled Healthcare Group Inc., et. al., Case No. 11-02658-ED (N.D. Cal.); United States ex rel. Deaton v. Skilled Healthcare Group, Inc. et al., Case No. 4:14-cv-00219 (W.D. Mo.); and United States ex rel. Wilson v. Skilled Healthcare Group, Inc. et al., Case No. 14-cv-860 (W.D. Mo.).

Misr Sons Development S.A.E. Agrees to Pay $1.1 Million to Resolve False Claims Act Allegations

Tuesday, June 13, 2017

Misr Sons Development S.A.E. (Hassan Allam Sons, “HAS”), a construction company with its principal place of business in Cairo, Egypt, has agreed to pay $1.1 million to settle allegations that HAS submitted false claims in connection with U.S. Agency for International Development (USAID) contracts, the Justice Department announced today.

“Contractors who misrepresent their eligibility for government contracts undermine the government procurement process,” said Deputy Assistant Attorney General Joyce R. Branda of the Civil Division. “The Justice Department will take action to protect that process and to ensure that taxpayer funds are not misused.”

“USAID Office of Inspector General extensively investigated this matter and thanks the Department of Justice for its tenacity and dedication,” said Special Agent in Charge Jonathan Schofield of USAID Office of Inspector General. “Total settlements on this matter exceed $10 million and demonstrate once again that the United States expects its contractors to execute their awards in accordance with all requisite terms and conditions, whether operating domestically or overseas.”

The settlement concerns USAID-funded contracts for the construction of water and wastewater infrastructure projects in the Arab Republic of Egypt in the 1990s. The contracts were awarded to a joint venture partnership that included Washington Group International Inc. (WGI), Contrack International Inc. (Contrack) and HAS. The United States filed suit under the False Claims Act and the Foreign Assistance Act, alleging that HAS was ineligible to participate in the joint venture but that its participation was concealed from USAID. As a result, HAS and its partners allegedly received USAID-funded contracts to which they were not entitled. The settlement resolves only HAS’ liability. The United States previously settled with Contrack and WGI.

This settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the District of Idaho and the USAID Office of Inspector General.

The case is captioned United States v. Washington Group International Inc. f/k/a/ Morrison Knudsen, Corporation, Contrack International, Inc.; and Misr Sons Development S.A.E. a/k/a Hassan Allam Sons, No. 04-555 (D. Idaho). The claims resolved by this settlement are allegations only and there has been no determination of liability.

Medicare Advantage Organization & Former COO to Pay $32.5 Million

Tuesday, May 30, 2017

Freedom Health Inc., a Tampa, Florida-based provider of managed care services, and its related corporate entities (collectively “Freedom Health”), agreed to pay $31,695,593 to resolve allegations that they violated the False Claims Act by engaging in illegal schemes to maximize their payment from the government in connection with their Medicare Advantage plans, the Justice Department announced today. In addition, the former Chief Operating Officer (COO) of Freedom Health Siddhartha Pagidipati, has agreed to pay $750,000 to resolve his alleged role in one of these schemes.

“When entering into agreements with managed care providers, the government requests information from those providers to ensure that patients are afforded the appropriate level of care,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Today’s result sends a clear message to the managed care industry that the United States will hold managed care plan providers responsible when they fail to provide truthful information.”

The government alleged that Freedom Health submitted or caused others to submit unsupported diagnosis codes to CMS, which resulted in inflated reimbursements from 2008 to 2013 in connection with two of their Medicare Advantage plans operating in Florida. It also alleged that Freedom Health made material misrepresentations to CMS regarding the scope and content of its network of providers (physicians, specialists and hospitals) in its application to CMS in 2008 to expand in 2009 into new counties in Florida and in other states. The government’s settlement with Mr. Pagidipati resolves his alleged role in this latter scheme.

“Medicare Advantage plans play an increasingly important role in our nation’s health care market,” said Acting U.S. Attorney Stephen Muldrow. “This settlement underscores our Office’s commitment to civil health care fraud enforcement.”

“Medicare Advantage insurers must play by the rules and provide Medicare with accurate information about their provider networks and their patients’ health,” said Chief Counsel to the Inspector General Gregory Demske of the Department of Health and Human Services Office of Inspector General (HHS-OIG). “OIG will investigate and hold managed care organizations accountable for fraud. Moving forward, the innovative CIA reduces the risks to patients and taxpayers by focusing on compliance issues unique to Medicare Advantage plans.”

The allegations resolved by these settlements were brought in a lawsuit under the qui tam, or whistleblower, provisions of the Federal False Claims Act and the Florida False Claims Act. These statutes permit private parties to sue on behalf of the government for false claims and to receive a share of any recovery. The whistleblower in this action is Darren D. Sewell, who was a former employee of Freedom Health. The whistleblower’s share in this case has not yet been determined.

The corporate entities related to Freedom and which were part of today’s settlements are: Optimum HealthCare Inc., America’s 1st Choice Holdings of Florida LLC, Liberty Acquisition Group LLC, Health Management Services of USA LLC, Global TPA LLC, America’s 1st Choice Holdings of North Carolina LLC, America’s 1st Choice Holdings of South Carolina LLC, America’s 1st Choice Insurance Company of North Carolina Inc. and America’s 1st Choice Health Plans Inc.

Today’s settlements were the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, The U.S. Attorneys’ Office for the Middle District of Florida, HHS-OIG and the Florida Office of the Attorney General.

The claims resolved by the settlements are allegations only, and there has been no determination of liability. The case is captioned United States ex rel. Sewell v. Freedom Health, Inc., et al., Case No. 8:09-cv-1625 (M.D. Fla.).

Big Brothers Big Sisters of America to Pay $1.6 Million to Resolve Allegations of False Claims For Federal Grants

– Big Brothers Big Sisters of America Corporation (Big Brothers) has agreed to pay the United States $1.6 million to resolve allegations of false claims for funds under Department of Justice grants awarded to help children at risk, announced United States Attorney Zane David Memeger and Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. Big Brothers is a not-for-profit organization that provides mentoring services to boys and girls throughout the United States. The organization, originally based in Philadelphia, Pennsylvania, now is headquartered in Tampa, Florida.
Big Brothers is a national organization that acts through approximately 300 independent affiliate agencies across the United States. Since 2004, Big Brothers has received millions of dollars in grants from the Justice Department to support initiatives on behalf of children at risk. As a condition of those grants, Big Brothers was required to maintain sound accounting and financial management systems in accordance with federal regulations and guidelines designed to ensure that grant funds would be properly accounted for and used only for appropriate purposes.
The United States alleges that Big Brothers violated these regulations and guidelines with respect to three grants awarded by the Justice Department from 2009 to 2011, by commingling the grant funds with general operating funds, failing to segregate expenditures to ensure that the funds for each grant were used as intended, and failing to maintain internal financial controls to safeguard the proper use of grant funds. These allegations were documented in a 2013 audit of the three grants performed by the Department of Justice Office of the Inspector General. Since 2013, Big Brothers has replaced its management team and begun implementing policies aimed at correcting deficiencies in its management and accounting of federal grant funds.
“The US Attorney’s office is committed to protecting federal grants and ensuring that the funds are appropriately spent,” said Memeger. “Federal grant recipients must administer these grants with transparency and diligence, and the compliance measures implemented pursuant to this settlement agreement will help to achieve those goals.”

“Organizations such as Big Brothers have an obligation to the populations they serve as well as to the taxpayer to ensure that government grant funds are used for their intended purpose,” said Mizer. “The settlement announced today exemplifies the Department’s commitment to hold those who mishandle such funds accountable.”
“We appreciate the support of the U.S. Attorney for the Eastern District of Pennsylvania and the Civil Division in working with us on these kinds of cases,” said Department of Justice Inspector General Michael E. Horowitz. “The OIG’s auditors and investigators will continue to work with each other closely to uncover misuses of grant funds, and with our law enforcement partners to ensure that justice is served.”
In addition to paying the United States $1.6 million, Big Brothers has agreed to institute a strict compliance program that requires the organization to engage in regular audits, both internally and by independent auditors; establish a compliance team, an employee code of conduct, whistleblower policies, and a disciplinary policy for employees who engage in or fail to disclose abuses of federal grant funds; provide regular employee training on these policies; and employ risk assessment tools to detect abuses that might otherwise go undetected.

The investigation was conducted by the Department of Justice Office of the Inspector General. The settlement was handled by Assistant U.S. Attorneys Joel M. Sweet and Scott W. Reid in coordination with Trial Attorney David W. Tyler of the Justice Department’s Civil Division, Commercial Litigation Branch. The claims resolved by this settlement are allegations only; there has been no determination of liability.

US Lender Pays $3.8 Million to Resolve Liability Relating to ExIm Bank Loans

The Justice Department announced today that Hencorp Becstone Capital L.C. (Hencorp) has agreed to pay $3.8 million to resolve allegations under the False Claims Act that it made false statements and claims to the Export-Import Bank of the United States (Ex-Im Bank) in order to obtain loan guarantees.  Hencorp is a Miami-based lender and financial services company that provides financing and other financial services to Latin American businesses.

“The Ex-Im Bank provides vital support for U.S. manufacturing by enabling foreign businesses to obtain financing to purchase U.S.-made goods and equipment,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “The Justice Department will continue to vigorously pursue those who attempt to take advantage of this important program.”

The Ex-Im Bank guarantees loans made by approved lenders to foreign businesses for the purchase of American-made products.  The lender is responsible for performing a credit review of the transaction to ensure that it meets applicable criteria.  The government alleged that Ricardo Maza, a Peruvian-based former Hencorp business agent, created false documentation to obtain Ex-Im Bank guarantees on fictitious transactions on which no products were sold or exported, and that Hencorp acted recklessly by outsourcing key credit review functions to Maza without adequate supervision or oversight.  The government alleged that Maza then diverted the proceeds of the loans to himself and to his friends and business associates in Peru, and that the transactions resulted in losses to the Ex-Im Bank when the loans were not repaid.  In 2012, Mario Mimbella, 64, of Miami, Florida, the purported U.S.-based exporter on three of the fraudulent transactions, pled guilty to making false records for his participation in the scheme and was later sentenced to prison.

“Lenders that use Ex-Im programs have an obligation to prevent and detect fraud,” said Acting Inspector General Michael T. McCarthy for the Ex-Im Bank.  “The Office of Inspector General will pursue accountability for all participants involved in schemes that defraud the Ex-Im Bank.”

This settlement resolves allegations made in a whistleblower lawsuit filed under the False Claims Act by Genaro Benites Caballero, the former owner of one of the purported purchasers who stated that he had no part in the scheme and that his signature was forged on key documents without his knowledge, and Patricia Doris Lee Dominguez, a former attorney for the purported purchaser.  Under the False Claims Act, private citizens can sue on behalf of the government and share in any recovery.  The whistleblowers will receive $608,000 of the settlement.

This case was handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the District of Columbia and the Office of Inspector General for the Ex-Im Bank.

The lawsuit is captioned United States ex rel. Benites Caballero, et al. v. Hencorp Becstone Capital, L.C., et al., cv-13-168 (D.D.C.).  The claims resolved by the settlement are allegations only, and there has been no determination of liability with respect to Hencorp.