Category Archives: Fraud

CCC’s: Antitrust Division DAAG Delivers Remarks at International Conference

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The Antitrust Division’s Deputy Assistant Attorney General for International Affairs, Roger Alford delivered a speech on October 3, 2017 in San Paolo, Brazil. (here).  There were no groundbreaking announcements in the speech, but since it was the first delivered since Makan Delrahim took over as head of the Antitrust Division, I thought it might be of interest.

There were two aspects of the talk worth noting.  First, Mr. Alford highlighted the Division’s longstanding focus on holding individuals accountable:

As my colleagues at the Antitrust Division have explained before, “[h]olding companies accountable and assessing large fines, alone, are not the only means, or even the most effective way, to accomplish our goal of deterring and ending cartels. Individuals commit the crimes for which corporate offenders pay. Every corporate crime involves individual wrongdoing.” For that reason, we at the Antitrust Division have a long history of holding individuals accountable for antitrust crimes, and we have consistently touted prison time for individuals as the single most effective deterrent to criminal collusion.

The other item that caught my eye in the speech was the Mr. Alford’s reference to two Antitrust Division recent prosecutions:

  • In June of this year, Yuval Marshak was sentenced to 30 months in prison for participating in a scheme to defraud the U.S. Department of Defense.
  • In 2016, we tried and obtained the conviction of John Bennett for fraud against the United States as a result of a kickback scheme in the procurement of environmental clean-up services. He was ultimately sentenced to five years in prison.

These examples of “fraud prosecutions” are interesting because there is sometimes an internal debate in the Antitrust Division about whether only Sherman Act, (i.e. price fixing or bid rigging) charges should be brought or whether the Division has a broader mandate to prosecute what is sometimes called “corruption of the bidding process.” A “corruption of the bidding process” example would be bribing a procurement official to tailor bid specifications to favor one company.  In a hybrid case, there may be both a bribe of a procurement official and collusion among the favored bidders.

At times, investigation and prosecution of collusion on public contracts such as defense, roads, and schools has been a priority for the Division.  Public contracts are typically where collusion and bribery turn up–and jail sentences tend to be long.  The Division has limited resources, however, so when international cartels dominate, there may be few resources left to devote to public contracts.

The interesting thing about public contract investigations, is that the Division has some ability to be proactive in generating new investigations (as opposed to being reactive to leads/leniencies that come into the Division.)  When resources are available, the Division will often beat the bushes talking to federal agents and procurement officials looking for tips on possible worthwhile investigations.  It will be worth watching to see if there is any noticeable shift in emphasis under the new Antitrust Division leadership.

Thanks for reading.

Oklahoma Doctor Agrees to Pay $580,000 to Settle Allegations of Submitting False Claims to Medicare

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Monday, August 28, 2017

Oklahoma City, Oklahoma – Dr. Gordon P. Laird has agreed to pay $580,000 to settle civil claims stemming from allegations that he violated the False Claims Act by submitting false claims to the Medicare program, announced Mark A. Yancey, United States Attorney for the Western District of Oklahoma.

Laird is a physician licensed in the State of Oklahoma. He is a former owner and employee of the companies Blackwell Feet Plus, LLC, and Feet Plus, LLC, which later did business as Prevention Plus.

The United States alleges Laird caused false claims to be submitted to the Medicare Program for services he did not provide or supervise. First, the United States alleges that in 2011, he allowed Prevention Plus to use his National Provider Identifier numbers (NPIs) to bill Medicare for evaluation and management physical therapy services that he did not provide or supervise. Second, the United States alleges that in December 2011, he separated from Prevention Plus, did not provide any additional services for Prevention Plus, and deactivated his NPIs associated with Prevention Plus. However, Laird reactivated his NPIs associated with Prevention Plus around March 2012 so Prevention Plus could use them to bill Medicare for services in January and February 2012 that he did not perform or supervise.

To resolve these allegations, Laird agreed to pay $580,000. In reaching this settlement, he did not admit liability, and the government did not make any concessions about the legitimacy of the claims. The agreement allows the parties to avoid the delay, expense, inconvenience, and uncertainty involved in litigating the case.

This case was investigated by the United States Department of Health and Human Services, Office of Inspector General, and the Federal Bureau of Investigation. Assistant United States Attorneys Scott Maule and Ronald R. Gallegos prosecuted the case.

Pain Management Doctor Pleads Guilty in Health Care Fraud Case

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Thursday, August 31, 2017

Acting United States Attorney Steve Butler of the Southern District of Alabama announced today that Dr. Rassan M. Tarabein, 58, a neurologist residing in Fairhope, Alabama, pled guilty before Chief United States District Judge Kristi K. DuBose to one count of health care fraud and one count of unlawful distribution of a schedule II controlled substance.  As part of his plea agreement, Dr. Tarabein will no longer be able to practice medicine and prescribe controlled substances in the United States.  Chief Judge DuBose has scheduled sentencing for March 2, 2018.  Dr. Tarabein faces up to ten years in prison for health care fraud and up to twenty years in prison for unlawfully distributing a controlled substance.

On June 28, 2017, a federal grand jury for the Southern District of Alabama returned a 22–count superseding indictment against Dr. Tarabein, charging him with health care fraud, making false statements relating to health care matters, lying to a federal agent, unlawfully distributing schedule II controlled substances, and money laundering.   He was arrested two days later.

Dr. Tarabein previously operated the Eastern Shore Neurology and Pain Center, a private clinic in Daphne, Alabama where he offered services relating to neurology and pain management, such as spinal injections.  In his plea agreement, Dr. Tarabein admitted that from around 2004 to May 2017, he ran an insurance scam in which he induced patients to visit his clinic so that he could bill health care benefit programs for medically unnecessary tests and procedures.  The purpose of Dr. Tarabein’s admitted scheme was to maximize personal financial gain by fraudulently seeking payments from health care benefit programs such as Medicare, Medicaid, Blue Cross Blue Shield of Alabama, Humana, UnitedHealthcare, and other private insurers.  As part of his guilty plea, Dr. Tarabein admitted to violating the traditional standards of care in his medical practice by, for example, failing to provide informed consent to patients about procedures, discriminating against Alabama Medicaid patients in services rendered, fraudulently documenting patient records, submitting false claims to insurance companies, and issuing prescriptions for schedule II controlled substances without a legitimate medical purpose.

Dr. Tarabein has pending state criminal charges in Montgomery County, Alabama.  On June 16, 2017, a state grand jury returned a 2–count indictment against Dr. Tarabein, charging him with Medicaid fraud and theft of property in the first degree, each a felony offense.  On September 20, 2017, Dr. Tarabein is expected to plead guilty in state court to Medicaid fraud.

Acting United States Attorney Butler stated, “Today’s guilty plea reinforces our office’s dedication to protecting the public from corrupt physicians.  Doctors who exploit patients through medically unnecessary services to line their own pockets have no place in our health care system.  I commend the investigators who unraveled Dr. Tarabein’s scam for their commitment to uproot health care fraud.”

Attorney General Steve Marshall stated, “I am pleased that my Medicaid Fraud Control Unit had the opportunity to team with our federal law enforcement colleagues to investigate and bring to justice this defendant who not only violated his oath to his patients, but stole taxpayer money set aside to provide care for our most vulnerable citizens.  I am grateful to the U.S. Attorney’s Office for the Southern District of Alabama for its speedy resolution of the federal charges, as this defendant is held to account for his actions.”

Federal Bureau of Investigation (FBI) Special Agent in Charge Robert E. Lasky stated, “The FBI stands ready to work alongside our state, local, and federal partners to eliminate prescription drug abuse.  When doctors place money before the well-being of their patients, this task becomes nearly impossible.  This guilty plea is a testament to all the hard work and cooperation between the agencies that conducted this investigation.”

“The abuse of prescription drugs is a serious problem in our communities.  All too often, this abuse leads to addiction, shattered lives, and even death.  For the health and safety of our citizens, DEA and our law enforcement partners will continue to target those who illegally distribute these potentially dangerous drugs.  We hope that the conviction of Dr. Tarabein serves as a reminder to anyone who might illegally divert pharmaceuticals that they will be held accountable for the harm they cause,” said Stephen G. Azzam, Special Agent in Charge of DEA’s New Orleans Field Division.

“Today’s plea should serve as a wake-up call to those who intend to bill the government for medically unnecessary services and thereby enriching their own bottom line,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services Office of Inspector General (OIG).  “The nation is facing a very serious prescription drug crisis and the OIG, along with our state and federal law enforcement partners, take allegations such as these very seriously.”

The FBI, DEA, OIG, and Alabama Medicaid Fraud Control Unit are investigating the federal case.  Assistant United States Attorneys Sinan Kalayoglu and Gregory A. Bordenkircher are prosecuting the federal case in coordination with the Office of the Alabama Attorney General, Medicaid Fraud Control Unit.  Assistant Attorney General Bruce M. Lieberman is prosecuting the state case.

Former Social Security Administrative Law Judge Sentenced to Four Years in Prison for Role in $550 Million Social Security Fraud Scheme

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Friday, August 25, 2017

A former social security administrative law judge (ALJ) was sentenced today to four years in prison for his role in a scheme to fraudulently obtain more than $550 million in federal disability payments from the Social Security Administration (SSA) for thousands of claimants.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Special Agent in Charge Michael McGill of the Social Security Administration-Office of Inspector General’s (SSA-OIG) Philadelphia Field Division, Special Agent in Charge Amy S. Hess of the FBI’s Louisville Field Division, Special Agent in Charge Tracey D. Montaño of the IRS Criminal Investigation (IRS-CI) Nashville Field Office and Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services-Office of the Inspector General (HHS-OIG) Atlanta Regional Office made the announcement.

David Black Daugherty, 81, of Myrtle Beach, S.C., was sentenced by U.S. District Judge Danny C. Reeves of the Eastern District of Kentucky, who also ordered Daugherty to pay restitution of over $93 million to the SSA and HHS. Daugherty pleaded guilty in May 2017 to two counts of receiving illegal gratuities.

According to admissions made as part of his guilty plea, beginning in 2004, Daugherty, as an ALJ assigned to the SSA’s Huntington, W. Va., hearing office, sought out pending disability cases in which Kentucky attorney Eric Christopher Conn represented claimants and reassigned those cases to himself. Daugherty then contacted Conn and identified the cases he intended to decide the following month and further solicited Conn to provide medical documentation supporting either physical or mental disability determinations. Without exception, Daugherty awarded disability benefits to individuals represented by Conn – in some instances, without first holding a hearing. As a result of Daugherty’s awarding disability benefits to claimants represented by Conn, Conn paid Daugherty an average of approximately $8,000 per month in cash, until approximately April 2011. All told, Daugherty received more than $609,000 in cash from Conn for deciding approximately 3,149 cases.

As a result of the scheme, Conn, Daugherty, and their co-conspirators obligated the SSA to pay more than $550 million in lifetime benefits to claimants based upon cases Daugherty approved for which he received payment from Conn.

Daugherty was indicted last year, along with Conn and Alfred Bradley Adkins, a clinical psychologist. The defendants were charged with conspiracy, fraud, false statements, money laundering and other related offenses in connection with the scheme.

Conn pleaded guilty on March 24, to a two-count information charging him with theft of government money and paying illegal gratuities, and was sentenced in absentia on July 14 to 12 years in prison. Conn absconded from court ordered-electronic monitoring on June 2, and is considered a fugitive. He remains under indictment. On June 12, Adkins was convicted after a jury trial of one count of conspiracy to commit mail fraud and wire fraud, one count of mail fraud, one count of wire fraud and one count of making false statements. Adkins is scheduled to be sentenced on September 22.

The SSA-OIG, FBI, IRS-CI and HHS-OIG investigated the case. Trial Attorney Dustin M. Davis of the Criminal Division’s Fraud Section and Trial Attorney Elizabeth G. Wright of the Criminal Division’s Money Laundering and Asset Recovery Section are prosecuting the case, with previous co-counsel including Assistant U.S. Attorney Trey Alford of the Western District of Missouri and Investigative Counsel Kristen M. Warden of the Justice Department’s Office of the Inspector General.

CHRISTUS St. Vincent Regional Medical Center and CHRISTUS Health to Pay $12.24 Million to Settle Medicaid False Claims Act Allegations

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Friday, September 1, 2017

CHRISTUS St. Vincent Regional Medical Center (St. Vincent) and its partner, CHRISTUS Health (CHRISTUS), have agreed to resolve allegations that they violated the False Claims Act by making illegal donations to county governments, which were used to fund the state share of Medicaid payments to the hospital, the Department of Justice announced today. Under the settlement agreement, St. Vincent and CHRISTUS have agreed to pay $12.24 million, plus interest. St. Vincent is located in Santa Fe, New Mexico. CHRISTUS is based in Irving, Texas.

“Congress expressly intended that states and counties use their own money when seeking federal matching funds,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Using local funds provides an incentive for the counties and states to, among other things, hold down costs rather than rely on non bona-fide donations by private providers.”

New Mexico’s Sole Community Provider (SCP) program, which was discontinued in 2014, provided supplemental Medicaid funds to hospitals in mostly rural communities. The federal government reimbursed the state of New Mexico for approximately 75 percent of its health care expenditures under the SCP program. Under federal law, New Mexico’s 25 percent “matching” share of SCP program payments had to consist of state or county funds, and not impermissible “donations” from private hospitals. This restriction on the use of private hospital funds to satisfy state Medicaid obligations was enacted by Congress to curb possible abuses and ensure that states have sufficient incentive to curb rising Medicaid costs.

Between 2001 and 2009, St. Vincent and CHRISTUS allegedly made non-bona fide donations and thus caused the presentment of false claims by the state of New Mexico to the federal government under the Medicaid program.

“Protecting the integrity of the Medicaid program is crucial because millions of Americans, including hundreds of thousands of New Mexicans, depend on the program for medical care and related services,” said Acting U.S. Attorney James D. Tierney for the District of New Mexico. “This case illustrates our commitment to ensuring that government funds are legally obtained and used for their intended purposes. We will use all available civil remedies to recover the ill-gotten gains obtained by those who defraud government health care programs.”

The settlement resolves allegations originally brought in a lawsuit filed by a former Los Alamos County, New Mexico Indigent Healthcare Administrator under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery. The whistleblower will receive $2.249 million as her share of the recovery in this case.

The case was handled by the U.S. Attorney’s Office for the District of New Mexico with assistance from the Justice Department’s Civil Division and the U.S. Department of Health and Human Services Office of Inspector General.

The lawsuit is captioned U.S. ex rel. Stepan v. Christus St. Vincent Regional Medical Center Corp. et al., Civil Action No. 11-cv-572 (D.N.M.). The claims settled by this agreement are allegations only; there has been no determination of liability.

Former Janesville Pharmacy Owner Sentenced for Health Care Fraud

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Friday, September 1, 2017

Madison, Wis. – Jeffrey M. Anderson, Acting United States Attorney for the Western District of Wisconsin, announced that Mark Johnson, 55, Janesville, Wis., was sentenced today by U.S. District Judge James Peterson to 24 months in federal prison for health care fraud.  Johnson will begin serving his sentence in October.

On August 4, 2016, Johnson’s arrest was announced in conjunction with the unsealing of a 46-count indictment returned by the grand jury, charging him with health care fraud, making false statements in a health care fraud audit, and identity theft.

On May 24, 2017, Johnson entered a guilty plea to Count 1 of the indictment. Pursuant to the Federal Sentencing Guidelines, all the charged conduct was considered by the court at sentencing. Johnson defrauded Medicare and Medicaid from approximately January 2008 to March 2014. During this time-period, he was a licensed pharmacist, and the owner and president of Kealey Pharmacy and Home Care, Inc., a pharmacy located in Janesville, Wisconsin. Kealey Pharmacy was a retail pharmacy providing, among other things, prescription drugs to customers. Kealey was reimbursed for these prescriptions in a number of ways, including reimbursement payments under Medicare and Medicaid.

Johnson submitted false and fraudulent claims to Medicare and Medicaid obtaining reimbursement for medication that was not, in fact, provided to beneficiaries. On occasion, also created false prescription orders using the identities of physicians and then submitted claims for reimbursement for medication pursuant to these false prescription orders. also lied in his responses to an audit being conducted by the State of Wisconsin Department of Health Services of paid Medicaid claims in 2013. obtained approximately $740,000 in fraudulent prescription reimbursements during his fraud scheme.

At sentencing, Judge Peterson noted that Johnson’s criminal conduct caused a considerable financial loss to the Medicare and Medicaid programs, which are designed to protect the sick and the vulnerable.

The charges against Johnson were the result of a lengthy investigation conducted by the U.S. Department of Health and Human Services, Office of Inspector General, and the U.S. Postal Inspection Service. Federal investigators began investigating Johnson after being alerted to the possible fraud by two employees who worked at the pharmacy.

Acting U.S. Attorney Anderson commended the outstanding work of the investigators in the case and praised the two former employees who came forward with concerns about possible fraud. Anderson said, “Johnson’s case is an example of this U.S. Attorney’s Office’s commitment to prosecuting those in the health care profession who abuse the public trust by defrauding the Medicare and Medicaid programs.”

The prosecution of this case is being handled by Assistant U.S. Attorney Meredith P. Duchemin.

National Dental Clinic Chain to Pay $1.3 Million to Resolve Allegations of Overbilling Medicaid

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Tuesday, September 5, 2017

BOSTON – The U.S. Attorney’s Office and the Massachusetts Attorney General’s Office announced today that Dental Dreams, LLC, a national dental chain with locations in Massachusetts, has agreed to pay $1.375 million to resolve allegations that it improperly billed the Massachusetts Medicaid program (MassHealth) for unnecessary and unjustifiable dental procedures.

“Dental Dreams enriched itself at taxpayer expense by improperly billing Medicaid,” said Acting U.S. Attorney William D. Weinreb. “We will continue to work with our law enforcement partners to ensure that federal and state health care dollars are spent properly.”

“This dental chain’s extensive improper billing violated state regulations and cost our state’s Medicaid program more than a million dollars,” said Massachusetts Attorney General Maura Healey. “As a result of this joint investigation, today’s settlement provides restitution to MassHealth and ensures that these funds are properly used to benefit its members.”

“Medicaid is designed to provide health care services to some of the most vulnerable members of our society and it’s our agency’s mission to ensure government health funds are spent properly,” said Special Agent in Charge Phillip M. Coyne of the U.S. Department of Health and Human Services Office of Inspector General. “Working with our Federal and State partners, we will continue to hold accountable any medical professional who, just to enrich themselves, bills Medicaid for more intensive and expensive services than those actually provided.”

“The company took advantage of a vulnerable patient population when it submitted claims to MassHealth for medically unnecessary and unreasonable dental procedures,” said Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division. “Today’s settlement underscores the FBI’s commitment to investigate health care providers who overbill federal and private health insurance programs to maximize profits. We urge anyone with information regarding overbilling practices to contact us.”

The settlement resolves allegations that Dental Dreams overbilled the Massachusetts Medicaid program for surgical extractions of teeth and for a specific kind of oral examination.

The settlement resolves a lawsuit filed by a former employee under the whistleblower provisions of the False Claims Act, which permits private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery.

Acting U.S. Attorney Weinreb, Massachusetts Attorney General Healey, HHS-OIG SAC Coyne and FBI SAC Shaw made the announcement today. The case was handled by Assistant U.S. Attorneys Michelle Leung, Sonya Rao, and Kriss Basil of Weinreb’s Civil Division and Assistant Attorney General Stephany Collamore of Healey’s Medicaid Fraud Division.

Novo Nordisk Agrees to Pay $58 Million for Failure to Comply with FDA-Mandated Risk Program

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Tuesday, September 5, 2017

Payments Resolve Allegations Highlighted in DOJ Civil Complaint and Recently Unsealed Whistleblower Actions

Pharmaceutical Manufacturer Novo Nordisk Inc. will pay $58.65 million to resolve allegations that the company failed to comply with the FDA-mandated Risk Evaluation and Mitigation Strategy (REMS) for its Type II diabetes medication Victoza, the Justice Department announced today. The resolution includes disgorgement of $12.15 million for alleged violations of the Federal Food, Drug, and Cosmetic Act (FDCA) from 2010 to 2012 and a payment of $46.5 million for alleged violations of the False Claims Act (FCA) from 2010 to 2014. Novo Nordisk is a subsidiary of Novo Nordisk U.S. Holdings Inc., which is a subsidiary of Novo Nordisk A/S of Denmark. Novo Nordisk’s U.S. headquarters is in Plainsboro, New Jersey.

“Today’s resolution demonstrates the Department of Justice’s continued commitment to ensuring that drug manufacturers comply with the law,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “When a drug manufacturer fails to share accurate risk information with doctors and patients, it deprives physicians of information vital to medical decision-making.”

In a civil complaint filed today in the U.S. District Court for the District of Columbia asserting claims under the FDCA, the government alleged that, at the time of Victoza’s approval in 2010, the Food and Drug Administration (FDA) required a REMS to mitigate the potential risk in humans of a rare form of cancer called Medullary Thyroid Carcinoma (MTC) associated with the drug. The REMS required Novo Nordisk to provide information regarding Victoza’s potential risk of MTC to physicians. A manufacturer that fails to comply with the requirements of the REMS, including requirements to communicate accurate risk information, renders the drug misbranded under the law.

As alleged in the complaint, some Novo Nordisk sales representatives gave information to physicians that created the false or misleading impression that the Victoza REMS-required message was erroneous, irrelevant, or unimportant. The complaint further alleges that Novo Nordisk failed to comply with the REMS by creating the false or misleading impression about the Victoza REMS-required risk message that violated provisions of the FDCA and led some physicians to be unaware of the potential risks when prescribing Victoza.

As alleged in the government’s complaint, after a survey in 2011 showed that half of primary care doctors polled were unaware of the potential risk of MTC associated with the drug, the FDA required a modification to the REMS to increase awareness of the potential risk. Rather than appropriately implementing the modification, the complaint alleges that Novo Nordisk instructed its sales force to provide statements to doctors that obscured the risk information and failed to comply with the REMS modification. Novo Nordisk has agreed to disgorge $12.15 million in profits derived from its unlawful conduct in violation of the FDCA.

“Novo Nordisk’s actions unnecessarily put vulnerable patients at risk,” said U.S. Attorney Channing D. Phillips for the District of Columbia. “We are committed to holding companies accountable for violating the integrity of the FDA’s efforts to ensure that doctors and patients have accurate information that allows them to make appropriate decisions about which drugs to use in their care. Working with the FDA and other law enforcement partners, we have sent a strong signal to the drug industry today.”

“Novo Nordisk Inc. sales representatives misled physicians by failing to accurately disclose a potential life threatening side effect of a prescription drug, and needlessly increased risks to patients being treated with this drug,” said Assistant Director in Charge Andrew W. Vale of the FBI’s Washington Field Office. “The FBI is committed to ensuring that the private industry provides honest and accurate risk information to the public and will continue to work closely with our law enforcement partners to investigate companies who do not comply with FDA-mandated policies.”

“We need to trust that pharmaceutical companies truthfully represent their products’ potential risks,” said Special Agent in Charge Nick DiGiulio for the U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG). “We will continue to work with our partners to ensure federal health care dollars are spent only on drugs that are marketed honestly.”

Novo Nordisk will pay an additional $46.5 million to the federal government and the states to resolve claims under the FCA and state false claims acts. This portion of the settlement resolves allegations that Novo Nordisk caused the submission of false claims from 2010 to 2014 to federal health care programs for Victoza by arming its sales force with messages that could create a false or misleading impression with physicians that the Victoza REMS-required message about the potential risk of MTC associated with Victoza was erroneous, irrelevant, or unimportant and by encouraging the sale to and use of Victoza by adult patients who did not have Type II diabetes. The Food and Drug Administration (FDA) has not approved Victoza as safe and effective for use by adult patients who do not have Type II diabetes.

As a result of today’s FCA settlement, the federal government will receive $43,129,026 and state Medicaid programs will receive $3,320,963. The Medicaid program is funded jointly by the state and federal governments.

The FCA settlement resolves seven lawsuits filed under the whistleblower provision of the federal FCA, which permits private parties to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery. The civil lawsuits are captioned as follows: United States, et al. ex rel. Kennedy, v. Novo A/S, et al., No. 13-cv-01529 (D.D.C.), United States, et al. ex rel. Dastous, et al. v. Novo Nordisk, No. 11-cv-01662 (D.D.C), United States, et al., ex rel. Ferrara and Kelling v Novo Nordisk, Inc., et al., No. 1:11-cv-00074 (D.D.C.), United States, et al., ex rel. Myers v. Novo Nordisk, Inc., No. 11-cv-1596 (D.D.C.), United States, et al. ex rel Stepe v. Novo Nordisk, Inc., No. 13-cv-221 (D.D.C.), United States et al. ex rel Doe, et al. v. Novo Nordisk, Inc., et al., No. 1:17-00791 (D.D.C.), and United States ex rel. Smith, et al. v. Novo Nordisk, Inc., Civ. Action No. 16-1605 (D.D.C.). The amount to be recovered by the private parties has not been determined.

The settlements were the result of a coordinated effort among the U.S. Attorney’s Office for the District of Columbia and the Civil Division’s Consumer Protection Branch and Commercial Litigation Branch, with assistance from the FDA’s Office of Chief Counsel. The investigation was conducted by the FDA’s Office of Criminal Investigations, the FBI, HHS-OIG, the Defense Criminal Investigative Service and the Office of Personnel Management, Office of the Inspector General.

For more information about the Consumer Protection Branch and its enforcement efforts, visit its website at http://www.justice.gov/civil/consumer-protection-branch. For more information on the Commercial Litigation Branch’s Fraud Section, visit https://www.justice.gov/civil/fraud-section. For more information about the U.S. Attorney’s Office for the District of Columbia, visit https://www.justice.gov/usao-dc.

California Resident Sentenced for Conspiracy to Commit Healthcare Fraud

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Thursday, September 7, 2017

Acting U.S. Attorney Duane A. Evans announced that SUNYUP KIM, age 41, of Granada Hills, CA, was sentenced today after previously pleading guilty to conspiracy to commit healthcare fraud.

U.S. District Judge Eldon E. Fallon sentenced KIM to 1 year and 1 day in prison along with $93,927 in restitution.

On June 11, 2015, KIM was indicted along with three other defendants in an 8-count indictment charging approximately $38 million in Medicare fraud.

According to court documents, the $38 million fraud scheme centering on the distribution of “talking glucose meters” that were not medically necessary and were often not even requested. KIM, along with the other 3 defendants, operated Care Concepts, LLC, which was based in Metairie, and Choice Home Medical Equipment and Supplies (Choice), which was based in Chatsworth, California. KIM and the other 3 defendants, paid kickbacks to workers at call centers in California and South Carolina, from which operators would cold-call Medicare recipients to convince them to accept talking glucose meters and related supplies. From 2007 through 2015, KIM and the other 3 defendants caused thousands of claims to be submitted to Medicare through Care Concepts and Choice, virtually all of which were fraudulent.

Acting U.S. Attorney Evans praised the work of the Federal Bureau of Investigation and the Office of Inspector General for the United States Department of Health and Human Services in investigating this matter. Assistant U. S. Attorneys Patrice Harris Sullivan and Jordan Ginsberg were in charge of the prosecution.

Connecticut Substance Abuse Treatment Provider Pays $627K to Settle False Claims Act Allegations

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Thursday, September 7, 2017

United States Attorney Deirdre M. Daly and Connecticut Attorney General George Jepsen today announced that a Connecticut substance abuse treatment provider and its former CEO will pay $627,000 to resolve allegations that they violated the federal and state False Claims Acts.

THE HARTFORD DISPENSARY and THE HARTFORD DISPENSARY ENDOWMENT CORPORATION (collectively, “Hartford Dispensary”) is a healthcare organization that provides behavioral health and substance use disorder treatment services. It operates various outpatient treatment programs through its nine clinics located in Connecticut. PAUL McLAUGHLIN is the former President and Chief Executive Officer of Hartford Dispensary.

To be certified as an opioid treatment provider (OTP), the OTP must formally designate a medical director, who assumes responsibility for administering all medical services performed by the OTP. The medical director is also responsible for ensuring that the OTP is in compliance with all applicable federal, state, and local laws and regulations.

The government alleges that Hartford Dispensary and McLaughlin made repeated false representations and false certifications to federal and state authorities that Hartford Dispensary had a medical director, as defined by relevant regulations, who was performing the duties and responsibilities required by federal and state law. The government further alleges that these false representations and certifications were material to false or fraudulent claims submitted to the Medicaid program.

To resolve the government’s allegations under the federal and state False Claims Acts, Hartford Dispensary and McLaughlin have agreed to pay $627,000, which covers conduct occurring from January 1, 2009 through November 20, 2015.

A complaint against Hartford Dispensary was filed in the U.S. District Court in Connecticut under the qui tam, or whistleblower, provisions of the both the federal and state False Claims Acts. The relators (whistleblowers), Russell Buchner and Charles Hatheway, former employees of Hartford Dispensary, will receive a share of the proceeds of the settlement in the amount of $112,860. The whistleblower provisions of both the federal and state False Claims Acts provide that the whistleblower is entitled to receive a percentage of the proceeds of any judgment or settlement recovered by the government.

“Health care providers must be completely honest when certifying information to the government, and the failure to do so will have serious consequences,” stated U.S. Attorney Daly. “The U.S. Attorney’s office is committed to vigorously pursuing health care providers who make false representations to federal health care programs.”

“Medicaid providers are required to comply with the applicable rules of the program and to certify honestly their compliance,” said Attorney General Jepsen. “I’m grateful to our state and federal partners for their continued cooperation and coordination as we work to protect our taxpayer-funded healthcare programs.”

This matter was investigated by the Office of Inspector General for the U.S. Department of Health and Human Services. The case is being prosecuted by Assistant U.S. Attorney Richard M. Molot and Auditor Kevin Saunders, and by Assistant Attorneys General Michael Cole and Gregory O’Connell of the Connecticut Office of the Attorney General.

People who suspect health care fraud are encouraged to report it by calling 1-800-HHS-TIPS or the Health Care Fraud Task Force at (203) 777-6311.