U.S. Files New Complaint Against City Of Los Angeles and a Former Redevelopment Agency to Recover Millions of Federal Grant Dollars Allegedly Obtained by Making False Promises to Provide Housing to Persons with Disabilities

Tuesday, August 1, 2017

The United States late yesterday filed a complaint in intervention against the City of Los Angeles and the CRA/LA (formerly the Community Redevelopment Agency of the City of Los Angeles) alleging that together they fraudulently obtained millions of dollars in housing grants from the U.S. Department of Housing and Urban Development (HUD) by falsely certifying that the money was being spent in compliance with federal accessibility laws.

The complaint in intervention – which replaces a complaint previously filed on behalf of the United States by a “whistleblower” – alleges the city and CRA/LA received federal money by falsely promising to create accessible housing for people with disabilities. Instead of creating accessible housing, they used the money to create inaccessible housing that deprived people with disabilities an equal opportunity to find housing of their choice.

The city repeatedly certified its compliance with federal accessibility laws to obtain the federal funds without taking the required steps to ensure it complied, according to the complaint, which further alleges that many of the HUD-assisted apartment buildings failed to meet minimal accessibility requirements. The city allegedly approved the design and construction of inaccessible buildings, with, among other things:

  • slopes and ramps that are too steep for safe passage by persons with mobility disabilities;
  • door thresholds that are too tall for wheelchairs to roll over;
  • steps that prohibit access to common areas;
  • kitchen cabinets, shelves and surfaces that are outside of the accessible reach ranges of persons who use wheelchairs;
  • sinks, grab bars, mailboxes and circuit breakers mounted beyond the reach of wheelchair users;
  • pipes below sinks and lavatories that are not insulated, thereby posing a physical threat of burns to people who use wheelchairs; and
  • insufficient numbers of accessible parking spaces in garages and lots.

“The complaint filed yesterday underscores the Department’s commitment to ensure that people with disabilities are provided equal access to federally-funded public housing, as required by law,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.

“Despite the federal government investing hundreds of millions of dollars in Los Angeles to create housing for everyone, the City of Los Angeles instead created housing only for some,” said Acting U.S. Attorney Sandra R. Brown for the Central District of California. “For 17 years, the city falsely certified that it had complied with federal law and covered up its repeated disregard of historic and important civil rights laws.”

The city and the CRA/LA allegedly violated Section 504 of the Rehabilitation Act, the Americans with Disabilities Act and the Fair Housing Act, as well as failed to fulfill their duty to affirmatively further fair housing. Congress passed these accessibility laws to ensure people with disabilities have an opportunity to live in an integrated society, achieve independent living, and have the same opportunities for economic and social self-sufficiency as other citizens.

By law, the city and the CRA/LA are required to comply with the federal accessibility laws. They could not – neither directly, nor through contractual or other arrangements – deny people with disabilities the opportunity to benefit from housing services or subject them to discrimination based on disability.

The accessibility laws require recipients of federal funds to operate their housing programs in a manner that is accessible to people with disabilities. Among other things, they must have a system in place to ensure compliance with the laws. They are required to develop non-discriminatory policies and practices, hire a coordinator knowledgeable about accessibility, and implement a grievance procedure that allows for just resolution of complaints. They also must maintain a publicly available list of accessible units and their accessibility features so that people who require those features are able to find housing.

The federal accessibility laws also require that recipients of federal monies have a method in place to avoid giving accessible units needed by people with disabilities to people who do not need accessibility features. The laws also require that recipients of federal monies monitor apartment buildings to ensure they are designed, constructed and altered in compliance with the law so that, among other things, five percent of all units in certain multifamily housing will be accessible to people with mobility impairments, and an additional two percent will be accessible to people with visual and auditory impairments.

The United States’ lawsuit alleges that the city and CRA/LA failed to meet these legal obligations.

The lawsuit, United States ex rel. Ling, et al. v. City of Los Angeles, et al., CV11-974-PG, was originally filed in U.S. District Court by whistleblowers Mei Ling, a resident of Los Angeles who uses a wheelchair, and the Fair Housing Council of San Fernando Valley, a nonprofit civil rights advocacy group. The United States elected to intervene in the lawsuit and take over the litigation, which prompted the unsealing of the whistleblowers’ complaint in June. The case is pending before U.S. District Judge Philip S. Gutierrez.

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 United States when they believe that a party has submitted false claims for government funds, and to receive a share of any recovery.

This matter was investigated by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Central District of California and the HUD Office of Inspector General.

The claims asserted against the City of Los Angeles and the CRA/LA are allegations only; there has been no determination of liability.

SEC Announces Whistleblower Award of More Than $1.7 Million

Washington D.C., July 27, 2017

The Securities and Exchange Commission today announced a whistleblower award of more than $1.7 million to a company insider who provided the agency with critical information to help stop a fraud that would have otherwise been difficult to detect.  Millions of dollars were returned to harmed investors as a result of the SEC’s ensuing investigation and enforcement action.

”When whistleblowers tip the SEC, it not only can bring wrongdoers to justice but also relief to investors,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower.  ”This whistleblower’s valuable information enabled us to stop further investor harm and ultimately return money to victims.”

Approximately $158 million has now been awarded to 46 whistleblowers who voluntarily provided the SEC with original and useful information that led to a successful enforcement action.

By law, the SEC protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity.  Whistleblowers may be eligible for an award when they voluntarily provide the SEC with original, timely, and credible information that leads to a successful enforcement action.

Whistleblower awards can range from 10 percent to 30 percent of the money collected when the monetary sanctions exceed $1 million.  All payments are made out of an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violators. No money has been taken or withheld from harmed investors to pay whistleblower awards.

For more information about the whistleblower program and how to report a tip, visit www.sec.gov/whistleblower.

Celgene Agrees to Pay $280 Million to Resolve Fraud Allegations Related to Promotion of Cancer Drugs For Uses Not Approved by FDA

Monday, July 24, 2017

LOS ANGELES – Celgene Corp., a manufacturer of pharmaceuticals headquartered in Summit, New Jersey, has agreed to pay $280 million to settle fraud allegations related to the promotion of two cancer treatment drugs for uses not approved by the Food and Drug Administration, the Justice Department announced today.

Celgene agreed to pay the settlement to resolve a “whistleblower” lawsuit that alleged it had violated the federal False Claims Act by submitting false claims to Medicare. The lawsuit also alleged that Celgene violated the laws of 28 states and the District of Columbia by submitting fraudulent claims to state health care programs, including California’s Medi-Cal program.

Pursuant to the settlement, which was finalized last week, Celgene will pay $259.3 million to the United States and $20.7 million to the 28 states and the District of Columbia. California will receive $4.7 million, more than any other state.

The settlement resolves allegations brought in a “whistleblower” lawsuit that Celgene promoted two cancer drugs – Thalomid and Revlimid – for uses that were not approved by the FDA and not covered by federal health care programs. The allegations included the use of false and misleading statements about the drugs, and paying kickbacks to physicians to induce them to prescribe the drugs.

“Patients deserve to know their doctors are prescribing drugs that are likely to provide effective treatment, rather than drugs marketed aggressively by pharmaceutical companies,” said Acting United States Attorney Sandra R. Brown.

The whistleblower lawsuit was filed in United States District Court by Beverly Brown, who was employed as a sales manager by Celgene, under the qui tam provisions of the False Claims Act and similar laws of the District of Columbia and the 28 states included in the lawsuit. Under the False Claims Act, private citizens can bring suit on behalf of the United States and share in any recovery. The United States may intervene in the lawsuit, or, as in this case, the whistleblower may pursue the action.

“Today’s recovery again spotlights the importance of the False Claims Act in preserving precious government health plan resources,” said Christian J. Schrank, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “This invaluable law enlists all in the battle against fraudulent health care schemes.

The case, United States ex rel. Brown v. Celgene Corp., CV10-3165, was monitored by the United States Attorney’s Office, the Civil Division’s Commercial Litigation Branch, and HHS-OIG.

The claims settled by this agreement are allegations only, and the defendant did not admit liability in settling the action.

Owner Of Tampa Parathyroid Practice Agrees To Pay $4 Million To Resolve False Claims Act Allegations

Monday, July 24, 2017

Tampa, FL  – Dr. James Norman, the owner and operator of James Norman, MD, PA, a/k/a James Norman, MD, PA Parathyroid Center, d/b/a Norman Parathyroid Center (collectively, Norman) has agreed to pay $4 million to resolve allegations that he violated the False Claims Act by knowingly engaging in various unlawful billing practices with respect to Medicare and other federal health care programs and their beneficiaries.

Specifically, the government alleges that, from April 2008 through December 2016, Dr. Norman submitted fraudulent claims to Medicare, TRICARE, and the Federal Employee Health Benefits Program for pre-operative examinations performed on the day before or the day of surgery, and charged and collected extra fees from federal health care beneficiaries for services for which he had already received payment from the government. These extra fees ranged from $150 to $750 for Florida residents, to $1,750 or more for patients who lived out-of-state. Collectively, Dr. Norman and his practice pocketed hundreds of thousands of dollars as a result of these illicit billing practices.

“Fraudulent billing of the government, while also charging Medicare and other federal health care beneficiaries extra fees for services that the government has already paid for victimizes taxpayers, military veterans, the elderly, and other members of our community, and will not be tolerated,” said Acting U.S. Attorney Muldrow. “This lawsuit and today’s settlement demonstrates our office’s ongoing efforts to safeguard federal health care program beneficiaries from the effects of such illegal conduct.”

In addition to paying $4 million, Norman has also agreed to enter into an integrity agreement with the Inspector General of the U.S. Department of Health and Human Services.

“Physicians who systematically overbill Federal health care programs and their vulnerable patients will be held responsible for this fraudulent behavior,” said Special Agent in Charge Shimon R. Richmond of HHS-OIG. “Those who engage in such schemes can expect a thorough investigation and strong remedial measures such as those in the Integrity Agreement we signed with Dr. Norman.”

The settlement concludes a lawsuit originally filed by a former patient of Dr. Norman, Myra Gross, and her husband, Dr. David Gross, in the United States District Court for the Middle District of Florida. The lawsuit was 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. Act also allows the government to intervene and take over the action, as it did in this case. Ms. Gross and her husband, Dr. Gross, will receive roughly $600,000 of the proceeds from the settlement with Norman.

The government’s action in this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).

The settlement was the result of a coordinated effort by the U.S. Attorney’s Office for the Middle District of Florida and the U.S. Department of Health and Human Services – Office of Inspector General. It was handled Assistant U.S. Attorney Christopher Tuite.

The case is captioned United States ex rel. Gross, et al. v. James Norman, MD, PA, et al., Case No. 8:14-cv-978-T-33EAJ. The settlement resolves the United States’ claims in that case. The claims resolved by the settlement are allegations only, and there has been no determination of liability.

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.

Manhattan U.S. Attorney Announces $4.4 Million Settlement Of Civil Lawsuit Against VNS Choice For Improper Collection Of Medicaid Payments

Monday, July 17, 2017

VNS Choice Admits to Collecting Medicaid Payments for Hundreds of Beneficiaries Who It Failed to Timely Disenroll From Its Managed Long-Term Care Plan

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that the United States has settled a civil fraud lawsuit against VNS CHOICE, VNS CHOICE COMMUNITY CARE, and VISITING NURSE SERVICE OF NEW YORK (collectively, “VNS”) for improperly collecting monthly Medicaid payments for 365 Medicaid beneficiaries whom VNS Choice failed to timely disenroll from the VNS Choice Managed Long-Term Care Plan (“Choice MLTCP”). Most of the beneficiaries who should have been disenrolled from the Choice MLTCP were no longer receiving health care services from VNS. Under the terms of the settlement approved today by United States District Judge Ronnie Abrams, VNS Choice must pay a total sum of $4,392,150, with $1,756,860 going to the United States and the remaining amount to the State of New York. In the settlement, VNS admits that VNS Choice failed to timely disenroll 365 Choice MLTCP members and, as a result, received Medicaid payments to which it was not entitled.

Acting Manhattan U.S. Attorney Joon H. Kim said: “VNS Choice failed to timely disenroll individuals from its managed care plan and continued to collect Medicaid payments for their care, even when it provided no medical services to them. This Office is committed to holding accountable those who receive government health care program dollars to which they are not entitled.”

HHS-OIG Special Agent in Charge Scott J. Lampert said: “As State Medicaid Programs increasingly have moved to managed care arrangements, we have adapted our investigative tools accordingly. We will continue to work closely with our state and federal law enforcement partners to unravel these schemes, and hold health care providers accountable for the money they receive.”

VNS Choice administers a Managed Long-Term Care Plan for Medicaid beneficiaries pursuant to a contract with the New York State Department of Health (“MLTC Contract”). VNS Choice receives payments for each member enrolled in the Plan (called “capitation payments”) in exchange for arranging and providing certain community-based long-term care services, such as care management, skilled nursing services, physical therapy, speech therapy, occupational therapy, and preventive services. During the relevant period, VNS Choice received a monthly capitation payment of $3,800 to $4,200 for each Choice MLTC member.

The MLTC Contract sets forth various circumstances under which members must be disenrolled. For example, VNS Choice is required to disenroll Choice MLTCP members when it knows that a member no longer resides in the service area, a member has been absent from the service area for a specified number of consecutive days, a member is hospitalized for 45 consecutive days or longer, a member is no longer eligible to receive Medicaid benefits, or a member is deemed to be no longer eligible for managed long-term care. VNS Choice also must initiate disenrollment upon a member’s voluntary request.

As alleged in the United States’ Complaint filed in Manhattan federal court, VNS Choice failed to timely disenroll 365 Choice MLTCP members as required by the MLTC Contract and regulatory requirements during the period January 1, 2011, through March 31, 2015. In many instances, VNS Choice continued to collect capitation payments for several months after the date the member should have been disenrolled, during which time VNS Choice provided no health care services to the member. Approximately half of the 365 members moved out of VNS Choice’s service area or left the service area for extended periods of time. Other members notified VNS Choice of their desire to disenroll from the Choice MLTCP or repeatedly refused services but were not timely disenrolled. VNS Choice also failed to promptly disenroll members after determining that they no longer met managed long-term care eligibility criteria. Although VNS Choice eventually disenrolled the 365 members, it kept the Medicaid payments it had improperly received for these members while delaying their disenrollment.

As part of the settlement, VNS admits, acknowledges, and accepts responsibility for the following conduct:

  • VNS Choice failed to identify and disenroll 365 Choice MLTCP members in a timely manner and, as a result, received monthly capitation payments to which it was not entitled.
  • With respect to a number of these 365 Choice MLCTP Members, VNS Choice was aware at the time it ultimately disenrolled the members that the members should have been disenrolled earlier, but failed to repay Medicaid for the monthly capitation payments that VNS Choice had improperly received for those members.

In connection with the filing of the lawsuit and settlement, the Government joined a private whistleblower lawsuit that had been filed under seal pursuant to the False Claims Act. The Government previously partially intervened in this whistleblower lawsuit and entered into a settlement with VNS to resolve allegations relating to the use of social adult day care centers to enroll ineligible members in the Choice MLTCP.

* * *

Mr. Kim thanked the Office of the Inspector General for HHS for its assistance. Kim also thanked the Medicaid Fraud Control Unit of the New York State Attorney General’s Office for its investigative efforts and work on the case.

The case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorney Jeffrey K. Powell is in charge of the case.

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.

Wal-Mart Pays $1.65M to Settle False Claims Act Allegations of Improper Medi Cal Billings

Friday, July 7, 2017

SACRAMENTO, Calif. — Wal-Mart Stores Inc. has paid $1.65 million to resolve allegations that it violated the federal False Claims Act when it knowingly submitted claims for reimbursement to California’s Medi‑Cal program that were not supported by applicable diagnosis and documentation requirements, U.S. Attorney Phillip A. Talbert announced today.

“These Medi-Cal regulations are essential to protect both patients and limited heath care funding,” said U.S. Attorney Talbert. “My office will continue to hold pharmacies accountable when they fail to comply with regulations like these.”

Walmart, headquartered in Bentonville, Arkansas, operates over 290 retail stores in California; approximately 283 of these locations have pharmacies. The Medi-Cal program is administered by the California Department of Health Care Services (DHCS) and relies on both federal and state funding to provide health care to millions of Californians, including those with low incomes and disabilities.

Medi-Cal utilizes a formulary list, commonly known as “Code 1” drugs, which designates certain restrictions for each listed drug, including restrictions pertaining to diagnoses. Medi-Cal will reimburse certain Code 1 drugs only for approved diagnoses, taking into account criteria such as the drug’s safety, efficacy, misuse potential, and cost. Pharmacies serve the critical gatekeeping function of confirming and certifying that these Code 1 drugs are dispensed for the approved diagnoses. Walmart may bill for drugs prescribed outside of the approved diagnoses only if it submits a request to DHCS that includes a justification for the non‑approved use. Today’s settlement resolves allegations that Walmart failed to confirm and document the requisite diagnoses, and in some instances dispensed drugs for non-approved diagnoses, then knowingly billed Medi-Cal for these prescriptions.

The allegations resolved by this settlement were first raised in a lawsuit filed against Walmart under the qui tam, or whistleblower, provisions of the False Claims Act by a pharmacist who has worked at Walmart locations in the greater Sacramento area. The False Claims Act allows private citizens with knowledge of fraud to bring civil actions on behalf of the government and to share in any recovery. The whistleblower in this matter will receive approximately $264,000 of the recovery proceeds.

This settlement is the result of a joint effort by the United States Attorney’s Office for the Eastern District of California and California’s Bureau of Medicaid Fraud and Elder Abuse. Assistant U.S. Attorney Catherine J. Swann handled the matter for the United States, with assistance from the Department of Health and Human Services, Office of Inspector General, and the Federal Bureau of Investigation. The claims settled by this agreement are allegations only, and there has been no determination of liability.

Los Angeles Hospital Agrees to Pay $42 Million to Settle Alleged False Claims Act Violations Arising from Improper Payments to Physicians

Wednesday, June 28, 2017

PAMC Ltd., and Pacific Alliance Medical Center Inc., which together own and operate Pacific Alliance Medical Center, an acute care hospital located in Los Angeles, California, have agreed to pay $42 million to settle allegations that they violated the False Claims Act by engaging in improper financial relationships with referring physicians, the Justice Department announced today. Of the total settlement amount, $31.9 million will be paid to the Federal Government, and $10 million will be paid to the State of California.

The settlement announced today resolves allegations brought in a whistleblower lawsuit that the defendants submitted false claims to the Medicare and MediCal Programs for services rendered to patients referred by physicians with whom the defendants had improper financial relationships. These relationships took the form of (1) arrangements under which the defendants allegedly paid above-market rates to rent office space in physicians’ offices, and (2) marketing arrangements that allegedly provided undue benefit to physicians’ practices. The lawsuit alleged that these relationships violated the Anti-Kickback Statute and the Stark Law, both of which restrict the financial relationships that hospitals may have with doctors who refer patients to them.

“This is another example of how the False Claims Act whistleblower provisions can help protect the public fisc,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “This recovery should help to deter other health care providers from entering into improper financial relationships with physicians that can taint the physicians’ medical judgment, to the detriment of patients and taxpayers.”

The lawsuit was filed by Paul Chan, who was employed as a manager by one of the defendants, under the qui tam provisions of the False Claims Act. Under the Act, private citizens can bring suit on behalf of the United States and share in any recovery. The United States may intervene in the lawsuit, or, as in this case, the whistleblower may pursue the action. Mr. Chan will receive over $9.2 million as his share of the federal recovery.

“Federal law prohibits improper financial relationships between hospitals that receive federal health care funds and medical professionals – this is to protect the doctor-patient relationship and to ensure the quality of care provided,” said Acting U.S. Attorney Sandra R. Brown for the Central District of California. “Patients deserve to know their doctors are making health care decisions based solely on medical need and not for any potential financial benefit.”

“This settlement is a warning to health care companies that think they can boost their profits by entering into improper financial arrangements with referring physicians,” said Special Agent in Charge Christian J. Schrank of the Department of Health and Human Services, Office of Inspector General (HHS-OIG). “Working with our law enforcement partners, we will continue to crack down on such deals, which work to undermine impartial medical judgement, drive up health care costs, and corrode the public’s trust in the health care system.”

The case, United States ex rel. Chan v. PAMC, Ltd., et al., Case No. 13-cv-4273 (C.D. Cal.), was monitored by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Central District of California, and HHS-OIG. The claims settled by this agreement are allegations only, and there has been no determination of liability.

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