Signature HealthCARE to Pay More Than $30 Million to Resolve False Claims Act Allegations Related to Rehabilitation Therapy

June 8, 2018

Signature HealthCARE, LLC (Signature), a Louisville, Kentucky based company that owns and operates approximately 115 skilled nursing facilities, including 7 in middle Tennessee, has agreed to resolve allegations that it violated the False Claims Act by knowingly submitting false claims to Medicare for rehabilitation therapy services that were not reasonable, necessary and skilled, the Department of Justice announced today.  The settlement also resolves allegations that Signature submitted forged pre-admission certifications of patient need for skilled nursing to the state of Tennessee’s Medicaid program.  Under the settlement agreements, Signature has agreed to pay more than $30 million.  As part of the resolution, the State of Tennessee will receive a portion of the overall settlement.

“Today’s settlement demonstrates our continuing efforts to protect patients and taxpayer by ensuring that the care provided to beneficiaries of government-funded healthcare programs is dictated by clinical needs, not a provider’s fiscal interests,” said Acting Assistant Attorney General Chad A. Readler for the Justice Department’s Civil Division.  “Nursing home facilities provide important services to our elderly, and those facilities must uphold the trust placed in them by billing the government only for reasonable and necessary services.”

The government alleged that Signature engaged in various practices that resulted in the submission of claims for unreasonable, unnecessary, and unskilled services to Medicare patients, including: (1) presumptively placing patients in the highest therapy reimbursement level, rather than relying on individualized evaluations to determine the level of care most suitable for each patient’s clinical needs; (2) providing the minimum number of minutes required to bill at a given reimbursement level while discouraging the provision of additional therapy beyond that minimum threshold; and, (3) pressuring therapists and patients to complete the planned minutes of therapy even when patients were sick or declined to participate in therapy.

“Health care providers who engage in deceptive practices place patients at unnecessary risk and contribute to the financial distress of our federal healthcare programs,” said U.S. Attorney Cochran for the Middle District of Tennessee.  “Our dedicated teams of civil enforcement attorneys will work tirelessly with the relators who report fraud such as this and with our law enforcement partners who investigate healthcare fraud.  When we determine that companies are cheating the taxpayers, we will hold them accountable as we have in this case.”

“Our most vulnerable citizens are put at risk when healthcare providers put their financial interests above their patients’ needs and valuable federal funds are diverted from where they are surely needed,” said U. S. Attorney Byung J. “BJay” Pak for the Northern District of Georgia. “This settlement demonstrates our commitment to pursuing healthcare providers who provide unnecessary care to advance their bottom line.”

“Signature was charged with illegally boosting profits by providing excessive amounts of therapy to patients whether they needed it or not,” said Special Agent in Charge Derrick L. Jackson for the U.S. Department of Health and Human Services, Office of Inspector General. “The decision to provide therapy should never be based on corporate financial considerations rather than a patient’s medical needs.”

The settlement resolves allegations filed in a lawsuit by Kristi Emerson and LeeAnn Tuesca, former Signature therapy employees, in federal court in Nashville, Tennessee.  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.  The Act also allows the government to intervene and take over the action, as it did in this case.  Ms. Emerson and Ms. Tuesca will receive a portion of the recovered funds.

The settlements were the result of a coordinated effort by the Civil Division of the Department of Justice, the United States Attorney’s Offices for the Middle District of Tennessee and the Northern District of Georgia, the Office of Inspector General of the Department of Health and Human Services, the Tennessee Bureau of Investigation. Department of Defense, Office of Inspector General, the Defense Criminal Investigative Service, and the Department of Health and Human Services, Office of the Inspector General.  Trial Attorneys Christelle Klovers and Denise Barnes of the Civil Division of the Department of Justice, Assistant United States Attorney Sarah K. Bogni of the Middle District of Tennessee, and Assistant United States Attorney Lena Amanti of the Northern District of Georgia represent the United States.  Assistant Attorney General Philip Bangle represents the State of Tennessee.

  The case is captioned United States ex rel. Emerson and Tuesca v. Signature HealthCARE, LLC, et al., Case No. 1:15-cv-00027 (M.D. Tenn.).  The claims resolved by the settlements are allegations only, and there has been no determination of liability.

Two Tennessee Health Care Executives Charged for Role in $4.6 Million Medicare Kickback Scheme

April 9, 2018

Two Tennessee health care executives were charged in an indictment unsealed today for their alleged participation in a $4.6 million Medicare kickback scheme involving durable medical equipment (DME).

Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, U.S. Attorney Don Cochran of the Middle District of Tennessee, Special Agent in Charge Derrick Jackson of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Atlanta region, Special Agent in Charge John F. Khin of the U.S. Department of Defense Criminal Investigative Service’s (DCIS) Southeast Field Office and Director Mark Gwyn of the Tennessee Bureau of Investigation (TBI) Medicaid Fraud Control Unit made the announcement.

John Davis, 40, of Brentwood, Tennessee, and Brenda Montgomery, 69, of Camden, Tennessee, were each charged with one count of conspiracy to defraud the United States and to pay and receive health care kickbacks, and seven counts of paying and receiving health care kickbacks.  Davis is the former CEO of Comprehensive Pain Specialists (CPS), a large, multi-state pain management company.  Montgomery is the owner, founder and CEO of CCC Medical Inc., a DME company with five locations in Tennessee and headquartered in Camden.  Davis and Montgomery were arrested this morning and appeared this afternoon before U.S. Magistrate Judge Alistair E. Newbern of the Middle District of Tennessee.

“The charges against John Davis and Brenda Montgomery, alleging almost three quarters of a million dollars in illegal health care kickbacks and the submission of over $4.6 million in fraudulent claims to Medicare, demonstrate the Department of Justice’s commitment to protect taxpayer dollars and to hold corporate executives accountable for fraudulent and abusive conduct,” said Acting Assistant Attorney General Cronan.  “Kickbacks such as those alleged in the indictment distort markets and undermine public trust.  The Criminal Division and our law enforcement partners will continue to root out fraud, waste and abuse in our health care programs, no matter how complex the schemes.”

“Our Medicare program is designed to help those who are most vulnerable and in need of medical services and equipment,” said U.S. Attorney Cochran.  “Stealing funds from our health care system places the vulnerable at greater risk and diverts public funds into the pockets of the greedy individuals who exploit those with the greatest need.  We will be un-relenting in our efforts to bring to justice, those individuals and corporations who choose to profit at the expense of the health of those individuals with the greatest need.”

“Kickback schemes like this one do not benefit patients or the Medicare program,” said Special Agent in Charge Jackson.  “These arrangements are simply designed to line the pockets of the defendants at the expense of the taxpayer.”

“In concert with our partner agencies, DCIS aggressively investigates fraud and corruption that undermines the integrity of Department of Defense programs,” said DCIS Special Agent in Charge Khin.  “These defendants selfishly put greed and personal gain before the safety and well-being of our military members, their families, and retirees, who deserve the best medical care available.”

“Having the support and cooperation of our partner local, state and federal agencies is critical in our combined efforts to protect Tennesseans from individuals attempting to derive a personal benefit at the expense of patients and taxpayers,” said TBI Director Gwyn.

The indictment alleges that from at least June 2011 until at least June 2017, Montgomery agreed to pay Davis, the CEO of CPS, illegal kickbacks in exchange for Medicare referrals for DME ordered by CPS employees that Davis referred to CCC Medical.  As alleged in the indictment, Montgomery agreed to pay Davis 60 percent of Medicare proceeds collected on claims billed for DME ordered by CPS providers and referred by Davis.  In addition, the indictment alleges that Davis and Montgomery took a number of steps to conceal their illegal agreement, including making kickback payments through a nominee, creating and filing false tax documents, and, for Davis, intervening as CEO to prevent the owners of CPS from obtaining their own Medicare DME supplier numbers that would have allowed CPS to bill for its own Medicare DME orders.

Beginning in or around May 2015, according to the indictment, Davis and Montgomery renegotiated their illegal agreement to further obscure their personal contract from Medicare and from CPS owners and employees.  The indictment alleges that from approximately May 2015 until approximately November 2015, Montgomery agreed to pay Davis $200,000 for the sham purchase of a shell entity known as ProMed Solutions LLC (ProMed).  Davis and Montgomery renegotiated the sham transaction after Montgomery complained that her referrals from CPS had been lower than expected, and Montgomery ultimately paid $150,000 for the shell, ProMed, according to allegations in the indictment.  The true purpose of this payment was to induce Davis to continue driving CPS referrals to CCC Medical, the indictment alleges.

The indictment alleges that Montgomery, through CCC Medical, submitted over $4.6 million in fraudulent claims to Medicare, and that Medicare paid a total of $2.6 million on those claims.  Further, the indictment alleges that Montgomery paid more than $770,000 in illegal kickbacks to Davis.

An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

This case was investigated by HHS-OIG, DCIS and the Tennessee Bureau of Investigation Medicaid Fraud Control Unit.  Trial Attorney Anthony Burba of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Ryan Raybould of the Middle District of Tennessee and are prosecuting the case.

The Fraud Section leads the Medicare Fraud Strike Force, which is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws throughout the country.  The Medicare Fraud Strike Force operates in nine locations nationwide.  Since its inception in March 2007, the Medicare Fraud Strike Force has charged over 3,500 defendants who collectively have collectively billed the Medicare program for over $12.5 billion.

Former CEO of Tennessee-Based Telemarketing Company Pleads Guilty to Misrepresenting Health Insurance Plans

Wednesday, March 7, 2018

The former owner and chief executive officer of a Nashville, Tennessee-based telemarketing company pleaded guilty this morning to overseeing a fraudulent scheme in which limited-benefit health plans were sold to consumers as traditional health insurance, and to violating a federal court order that in 2010 froze his assets and shut down the company, announced Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division and U.S. Attorney Don Cochran of the Middle District of Tennessee.

Timothy Thomas, 55, of Brentwood, Tennessee, pleaded guilty to one count of mail fraud and one count of contempt before U.S. District Judge David Lawson, sitting by designation in the Middle District of Tennessee.  He is scheduled to be sentenced by Judge Lawson on June 25.  Thomas was charged in a 15-count indictment filed in October 2014.

According to admissions made as part of his plea, Thomas operated and controlled United Benefits of America (UBA) LLC, which was known at various times as United States Benefits (USB) and Health Care America.  From at least 2007 to 2010, Thomas hired salespeople to sell over the phone so-called “association memberships” created by third-party companies such as International Association of Benefits and Consumer Driven Benefits of America.  These memberships included bundled benefits, such as limited benefit health plans, prescription drug discount cards, accidental death and dismemberment benefits and lifestyle benefits, such as rental car discounts.  Thomas targeted his sales to customers who had been denied traditional health insurance because of preexisting conditions, he admitted.  The sales script used by Thomas attempted to portray the memberships as equal in quality to traditional health insurance, omitting the fact that limited benefit health plans left customers with the vast majority of the financial risk.

Thomas admitted that salespeople working for him made even more flagrant misrepresentations and omissions and used terms such as “deductibles” and “copays” to make customers believe they were buying traditional health insurance.  Customer service employees and the Better Business Bureau routinely notified Thomas about customers complaining that they had been deceived into believing the plans were similar to traditional health insurance.  Thomas oversaw a lax compliance program that was understaffed, with usually one employee monitoring up to 60 or 70 salespeople, and levied only occasional fines to salespersons who misrepresented or omitted key details of the plans.  Despite knowing of the rampant misrepresentations and omissions, Thomas rarely fired salespeople for lying to customers, but routinely fired salespeople for low sales numbers, he admitted.  When in 2009 a local news station, WSMV, ran a critical story on UBA featuring undercover footage of salespeople discussing misleading sales tactics, Thomas did not institute any meaningful changes in business practices.  He merely changed the name of his company from UBA to USB and instructed a subordinate to sign a letter to the Better Business Bureau falsely claiming that the companies had nothing to do with each other.

When the Federal Trade Commission (FTC) filed a lawsuit against Thomas and his company in August 2010, a federal judge in the Middle District of Tennessee issued an order freezing Thomas’s assets and placing his company into receivership.  Immediately after being informed of the court’s order, Thomas violated it by withdrawing more than $100,000 from a brokerage account and convincing a friend to deposit checks totaling $528,647, constituting proceeds of the scheme, into the friend’s bank account, he admitted.

As part of his plea agreement, Thomas agreed to forfeit $1.5 million, representing the amount he personally gained through the fraudulent scheme.

The case was investigated by the FBI, the U.S. Postal Inspection Service, the Department of Labor’s Office of Inspector General and the Department of Labor’s Employee Benefits Security Administration.  The FTC and Tennessee Division of Insurance provided substantial assistance.  Trial Attorney William E. Johnston of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Cecil VanDevender of the Middle District of Tennessee are prosecuting the case.

Pain Management Group Agrees To Pay $312,000 To Resolve False Claims Act And Overpayment Allegations

Monday, July 24, 2017

Pain Management Group P.C. (“PMG”), based in Antioch, Tenn., has agreed to pay $312,000 to settle federal and state False Claims Act and overpayment allegations, announced Jack Smith, Acting United States Attorney for the Middle District of Tennessee.

The settlement resolves allegations that PMG caused the submission of false claims to Medicare and TennCare for medically unnecessary urine drug tests. The settlement also resolves allegations that PMG caused the submission of false claims to Medicare and TennCare for non-Food & Drug Administration (“FDA”) approved pharmaceuticals Botox, Supartz, and Eufflexa, which PMG purchased from foreign-based suppliers. The United States contends that PMG administered the non-FDA approved pharmaceuticals to Medicare and TennCare patients and then billed Medicare and TennCare for the pharmaceuticals.

The United States’ investigation was initiated after extensive data analysis identified PMG as a potential outlier in the provision of urine drug testing to Medicare patients. Over the course of the investigation, the United States discovered information regarding PMG’s administration of non-FDA approved drugs to Medicare and TennCare patients. Once informed of the investigation, PMG cooperated and instituted remedial measures to address the United States’ allegations. The alleged conduct occurred during 2014-2015.

This matter was investigated by U.S. Department of Health and Human Services-Office of Inspector General and the Tennessee Bureau of Investigation. Assistant U.S. Attorney Jason Ehrlinspiel represented the United States.

The claims settled by this agreement are allegations only, and there has been no determination of liability.

Careall Companies Agree to Pay $25 Million to Settle False Claims Act Allegations

CareAll Management LLC and its affiliated entities (collectively “CareAll”) have agreed to pay $25 million, plus interest, to the United States and the state of Tennessee to resolve allegations that CareAll violated the False Claims Act by submitting false and upcoded home healthcare billings to the Medicare and Medicaid programs, the Department of Justice announced today.  CareAll is based in Nashville, Tennessee, and is one of Tennessee’s largest home health providers.

“Home health agencies may only bill Medicare and Medicaid for care that is necessary and covered by the programs,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division.  “This settlement is another example of the department’s commitment to ensuring that home health care dollars – which are so vital to ensure the care of homebound patients – are spent for their intended purposes.”

This settlement resolves allegations that between 2006 and 2013, CareAll overstated the severity of patients’ conditions to increase billings and billed for services that were not medically necessary and rendered to patients who were not homebound.

“This case demonstrates that enforcement of the False Claims Act is a priority of the U.S. Attorney’s Office for the Middle District of Tennessee,” said U.S. Attorney David Rivera for the Middle District of Tennessee.  “The U.S. Attorney’s Office and our law enforcement partners are committed to protecting the public and vigorously pursuing all those who knowingly submit false claims affecting the Medicare and Medicaid programs.”

This is CareAll’s second settlement of alleged False Claims Act violations within the last two years.  In 2012, CareAll paid nearly $9.38 million for allegedly submitting false cost reports to Medicare.  As part of the settlement announced today, the companies agreed to be bound by the terms of an enhanced and extended corporate integrity agreement with the Department of Health and Human Services-Office of Inspector General (HHS-OIG) in an effort to avoid future fraud and compliance failures.

“Fraudulent home-based services are surging across the country,” said Special Agent in Charge Derrick L. Jackson of HHS-OIG in Atlanta.  “We will continue to protect both Medicare and taxpayers, and ensure that funds are not siphoned off by companies more concerned with the bottom line than patient care.”

Under the False Claims Act, private citizens, known as relators, can bring suit on behalf of the United States and share in any recovery.  The relator in this case, Toney Gonzales, will receive more than $3.9 million as his share of the recovery.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of HHS.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $23.1 billion through False Claims Act cases, with more than $14.8 billion of that amount recovered in cases involving fraud against federal health care programs.

The settlement was the result of a coordinated effort by the Civil Division, the U.S. Attorney’s Office for the Middle District of Tennessee, HHS-OIG and the Tennessee Bureau of Investigation.

The case is docketed as United States ex rel. Gonzales v. J.W. Carell Enterprises, Inc., et al., No. 12-0389 (M.D. Tenn.).  The claims resolved by the settlement are allegations only; there has been no determination of liability.

Tennessee Substance Abuse Treatment Facility Agrees to Resolve False Claims Act Allegations for $9.25 Million

The Department of Justice announced today that CRC Health Corp. (CRC) has agreed to pay $9.25 million to the federal government and the State of Tennessee to settle allegations that CRC knowingly submitted false claims by providing substandard treatment to adult and adolescent Medicaid patients suffering from alcohol and drug addiction at its facility in Burns, Tenn.  CRC,  based in Cupertino, Calif., is a nationwide provider of substance abuse and mental health treatment services.

“Medicaid patients who enter residential treatment programs for alcohol and drug addiction deserve to have treatment provided by qualified personnel according to the appropriate standard of care,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “We will not tolerate health care providers who prioritize profit margins over the needs of their patients.”

CRC owns and operates a residential substance abuse treatment facility in Burns, Tenn., called New Life Lodge.  The government alleged that, between 2006 and 2012, New Life Lodge billed the Tennessee Medicaid program (TennCare) for substance abuse therapy services that were not provided or were provided by therapists who were not properly licensed by the state of Tennessee.  The government also alleged that New Life Lodge failed to make a licensed psychiatrist available to patients at the facility, as required by the state’s regulations; failed to maintain patient-staffing ratios required by Tennessee Department of Mental Health regulations and billed for Medicaid patients in excess of the state-licensed bed capacity at the facility.  In addition, the government alleged that New Life Lodge double-billed Medicaid for prescription substance abuse medications given to residents at the facility.  New Life Lodge currently is not treating Medicaid patients at its facility.

“Substance abuse of varying levels is rampant here and across the country,” said U.S. Attorney for the Middle District of Tennessee David Rivera.  “Fortunately, when needed, Medicaid or TennCare covers substance abuse treatment and certain mental health assistance.  When those services are required, the government will ensure that the treatment is provided with the highest possible quality of care to those patients.  Anything less is unacceptable.”

“Safeguarding TennCare’s mental and behavioral health support system is a particular focus of this office,” said Tennessee Attorney General Bob Cooper.

The allegations covered by the settlement were raised in a lawsuit filed by Angie Cederoth, who was previously employed in New Life Lodge’s billing department, under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for the submission of false claims and to receive a share of any recovery.  Cederoth will receive $1.5 million as her share of the settlement proceeds.

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

“Providers of health care services must not place profits above patients,” said Derrick L. Jackson, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General in Atlanta.  “This was a vulnerable population of individuals who were seeking treatment for their substance abuse problems.  We will pursue these cases in order to ensure proper treatment is afforded to those seeking treatment.”

The investigation of this matter reflects a coordinated effort among the Commercial Litigation Branch of the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Middle District of Tennessee, the Federal Bureau of Investigation, the Tennessee Attorney General’s Office, the Tennessee Bureau of Investigation and the Department of Health and Human Services Office of Inspector General.

“The FBI is committed to investigating allegations of wrongdoing and false claims related to federally funded health care programs,” said A. Todd McCall, Special Agent in Charge of the Memphis Division of the FBI.  “The resolution of this matter is the result of the hard work by the individual investigators and the coordinated effort of all the agencies involved.”

“This resolution is indicative of a great collaborative effort to combat egregious and fraudulent activity against health care, which ultimately impacts everyone in Tennessee,” said Director of the Tennessee Bureau of Investigation Mark Gwyn.

The lawsuit is captioned U.S. ex rel. Cederoth v. CRC Health Corporation Inc. , CV-3-11-00897 (M.D. Tenn.).   The claims asserted against the defendants are allegations only, and there has been no determination of liability.

Two Hungarian Nationals Sentenced in Tennessee for Roles in International Fraud Scheme Involving Online Marketplace Websites

Hungarian nationals Beatrix Boka and Aleksandar Kunkin were sentenced today to serve 36 months and 48 months in prison, respectively, for their roles in moving approximately $550,000 in illicit proceeds derived from an international online marketplace fraud scheme, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Jerry E. Martin for the Middle District of Tennessee.

Boka, 34, and Kunkin, 40, were sentenced by U.S. District Judge Aleta A. Trauger in the Middle District of Tennessee.  In addition to their prison terms, Boka and Kunkin were each sentenced to serve two years of supervised release and ordered to pay $464,581 in restitution.

Boka and Kunkin each pleaded guilty in November 2012 to one count of conspiracy to commit bank and wire fraud.

According to testimony at Boka and Kunkin’s plea hearings, members of the conspiracy fraudulently listed vehicles for sale at online marketplaces such as eBay. When victims expressed interest in purchasing the vehicles, co-conspirators sent emails that directed the victims to wire payments to certain bank accounts, and victims never received the vehicles for which they paid.  From May to June 2012, Boka and Kunkin visited Bank of America branches in North Carolina and South Carolina and opened bank accounts under false identities, which were supported by fraudulent identity documents including counterfeit Hungarian passports.  In total, 36 victims sent approximately $550,102 to accounts opened by Boka and Kunkin.  Boka and Kunkin subsequently sent the bulk of the money to co-conspirators located abroad.

The case is being prosecuted by Assistant U.S. Attorney Byron M. Jones of the Middle District of Tennessee and Trial Attorney Mysti Degani of the Criminal Division’s Computer Crime and Intellectual Property Section.  The case is being investigated by the FBI, the Tennessee Bureau of Investigation, the Metropolitan Nashville Police Department and the Cobb County, Ga., Sheriff’s Department.