Texas Home Health Agency Defrauding Medicare

The owners, the director of nursing and patient recruiters of a home-health agency based in Houston were arrested for their alleged roles in conspiracies to defraud Medicare, to pay illegal healthcare kickbacks and to commit money laundering. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Kenneth Magidson of the Southern District of Texas, Special Agent in Charge Perrye K. Turner of the FBI’s Houston Field Office, Special Agent in Charge C.J. Porter of the U.S. Department of Health and Human Services-Office of the Inspector General Dallas Regional Office and Special Agent in Charge D. Richard Goss of the Internal Revenue Service-Criminal Investigation Division Houston Field Office made the announcement.

According to the indictment, Ebong Tilong, 51, and Marie Neba, 51, both of Sugar Land, Texas, used the Texas-based, home-health agency that they owned to bill Medicare for home-health services that were not provided or not medically necessary.  They allegedly orchestrated this scheme by paying kickbacks to a series of individuals.  First, Tilong and Neba allegedly paid illegal kickbacks to physicians in exchange for authorizing medically unnecessary home-health services.  Using the money that Medicare paid for such fraudulent claims, Tilong and Neba allegedly paid illegal kickbacks to Daisy Carter, 56, of Wharton, Texas, and Connie Ray Island, 48, of Houston, in exchange for referring Medicare beneficiaries for home-health services.  Finally, all four defendants allegedly paid illegal kickbacks to Medicare beneficiaries, in exchange allowing Tilong and Neba to bill Medicare using their Medicare information for home-health services that were not medically necessary or not provided.  Neba, who also served as the company’s director of nursing, also allegedly falsified medical records to make it appear that Medicare beneficiaries qualified for and received home-health services.  From in or around February 2006 to in or around June 2015, Tilong and Neba received approximately $13 million for these allegedly fictious or unnecessary home-health services. 

GM Being Blindsided By The Number Of Lawsuits

 

 

General Motors Co. (GM), which as we all know has been under intense media, congressional and courtroom scrutiny over fatalities caused by its defective ignition switches, is now defending 104 death and injury lawsuits brought by victims whose accidents were caused by defects in the company’s cars. Another 108 suits seeking class action status over depressed car prices are pending in federal and state courts. GM released the numbers in early February in a filing with the U.S. Securities and Exchange Commission (SEC). The company is also the target of investigations by state and federal agencies. GM had this to say in the SEC filing:   Such lawsuits and investigations could in the future result in the imposition of damages, substantial fines, civil lawsuits and criminal penalties. We cannot currently estimate the potential liability, damages or range of potential loss as a result of the legal proceedings and governmental investigations.

GM spent $2.9 billion last year on recalls and loaner cars after calling in 36 million vehicles for repairs worldwide. Recalls in the United States were a record 26.9 million. GM recalled 2.59 million vehicles because the ignition switch in some cars can slip out of the “run” position, shutting off the engine and safety features including air bags while the car is moving. GM now admits to at least 57 deaths having been linked to the defective switch. Based on what we have learned in the GM litigation, we believe the number to be much higher. The program set up by GM to settle claims by victims of accidents related to faulty ignition switches in the U.S. has paid out $93 million so far. We have learned that GM estimates the settlement program will eventually cost $600 million. GM had net income of $2.8 billion in 2014.

GM received another 33 claims for compensation for ignition switch defects in its cars during the week of Feb. 11-22, bringing the total to 4,345. This comes from a report by Ken Feinberg, the administrator of the company’s compensation program. At press time, GM had received 479 claims for death, 292 for catastrophic injuries and 3,574 for less-serious injuries requiring hospitalization. This puts the total injury claims at 3,866. According to the Feinberg report, the number of claims found to be eligible for compensation so far is 151. So far, Mr. Feinberg has determined that 57 deaths, nine severe injuries and 85 other injuries are eligible for compensation.

The report also said 666 claims have been deemed ineligible, while 1,457 are still under review. Another 1,104 lacked sufficient paperwork or evidence and 967 had no documentation at all. The deadline for filing claims was Jan. 31, but any claims postmarked by that date are eligible for review.

Detroit-based GM was aware of faulty ignition switches on Chevrolet Cobalts and other small cars for more than a decade, but it didn’t recall them until 2014. Fienberg’s office has said that it likely will take until late spring to sort through all of the claims it has received. It should be noted that those who agree to payments give up their right to sue the automaker.

While GM set aside $400 million to make payments, it has now conceded that the payouts could grow to $600 million. GM placed no cap on the amount of money that the Feinberg fund can spend. At the end of last year, Feinberg had paid out $93 million in claims, according to GM’s annual report. But it should be noted that GM still faces 104 wrongful death and injury lawsuits due to the faulty ignition switches, as well as 108 class-action lawsuits alleging that the ignition switch debacle reduced the value of customers’ cars and trucks. The lawsuit filed by Ken and Beth Melton got all of this started and it’s the one case—out of hundreds—that GM has no answer for.

$4 Million Medicare Fraud Scheme Medical Supply Company in LA

A federal jury in Los Angeles convicted a Los Angeles man and owner of a medical supply company today for his role in a $4 million Medicare fraud scheme. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Eileen M. Decker of the Central District of California, Special Agent in Charge Christian J. Schrank of the U.S. Department of Health and Human Services-Office of Inspector Generals  Los Angeles Region and Assistant Director in Charge David L. Bowdich of the FBI’s Los Angeles Field Office made the announcement.

According to evidence presented at trial, Valery Bogomolny, 43, used his company, Royal Medical Supply, to bill Medicare $4 million between January 2006 and October 2009 for power wheelchairs, back braces and knee braces that were medically unnecessary, not provided to beneficiaries or both.  The evidence further showed that Bogomolny created false documentation to support his false billing claims, including creating fake reports of home assessments that never occurred.  Bogomolny personally delivered PWCs to beneficiaries who were able to walk without assistance and signed documents stating that he had delivered equipment when the equipment was not actually delivered.  Bogomolny ultimately received $2.7 million from Medicare on these false claims.

HCA Settles Shareholders Lawsuit For $215 Million

Hospital giant HCA Holdings has reached a preliminary agreement to pay $215 million to settle a class action lawsuit filed by shareholders who alleged the company used false and misleading information to sell stock during its 2011 initial public offering.

Those behind the 2011 lawsuit alleged that HCA sold more than $4.3 billion of HCA common stock at $30 a share based on a misleading registration statement it filed with the Securities and Exchange Commission.

They allege that the registration statement omitted important facts, including that at the time of the IPO, the company's Medicaid revenue was “suffering from adverse trends,” and that the Medicaid revenue was suffering from declining demand for cardiovascular and other services because of physician attrition and changes in Medicare regulations. They also alleged improper accounting led to HCA overstating its earnings by $790 million.

HCA also announced Wednesday in an SEC filing that it had reached preliminary agreements to settle several shareholder derivative cases also related to the 2011 IPO. Shareholder derivative cases are those in which a shareholder sues a third party, often a company director or officer, on behalf of the company. HCA estimated it would face legal claim costs of about $120 million for the settlements of the shareholder action and shareholder derivative cases.

Hospitals Pay United States $250 + Million to Resolve False Claims Act Allegations Related to Implantation of Cardiac Devices

The Department of Justice has reached 70 settlements involving 457 hospitals in 43 states for more than $250 million related to cardiac devices that were implanted in Medicare patients in violation of Medicare coverage requirements, the Department of Justice announced.

An implantable cardioverter defibrillator, or ICD, is an electronic device that is implanted near and connected to the heart.  It detects and treats chaotic, extremely fast, life-threatening heart rhythms, by delivering a shock to the heart, restoring the heart’s normal rhythm.  Only patients with certain clinical characteristics and risk factors qualify for an ICD covered by Medicare. 

Medicare coverage for the device, which costs approximately $25,000, is governed by a National Coverage Determination.  The Centers for Medicare and Medicaid Services implemented the NCD based on clinical trials and the guidance and testimony of cardiologists and other health care providers, professional cardiology societies, cardiac device manufacturers and patient advocates.  The NCD provides that ICDs generally should not be implanted in patients who have recently suffered a heart attack or recently had heart bypass surgery or angioplasty.  The medical purpose of a waiting period -40 days for a heart attack and 90 days for bypass/angioplasty - is to give the heart an opportunity to improve function on its own to the point that an ICD may not be necessary.  The NCD expressly prohibits implantation of ICDs during these waiting periods, with certain exceptions.  The Department of Justice alleged that from 2003 to 2010, each of the settling hospitals implanted ICDs during the periods prohibited by the NCD.  

  Most of the settling defendants were named in a qui tam, or whistleblower, lawsuit brought under the False Claims Act, which permits private citizens to bring lawsuits on behalf of the United States and receive a portion of the proceeds of any settlement or judgment awarded against a defendant.  The lawsuit was filed in federal district court in the Southern District of Florida by Leatrice Ford Richards, a cardiac nurse, and Thomas Schuhmann, a health care reimbursement consultant.  The whistleblowers have received more than $38 million from the settlements.  The Department of Justice is continuing to investigate additional hospitals and health systems.

 

Mesothelioma Asbestos Exposure Lawsuit By Victims Family Nets $3.5 Million

The family of a mesothelioma victim is awarded $3.5 million in a recent asbestos lung cancer lawsuit.

Plaintiff Barbara B. contracted mesothelioma from second-hand exposure to asbestos allegedly caused by washing her husband’s work clothes. Barbara claimed she would regularly wash his clothes for his next shift at Brown’s Ferry Nuclear Plant in Limestone County.

She was diagnosed with mesothelioma in 2011 and claimed that it had been directly caused by the asbestos fibers on her husband’s clothes. The plaintiff’s husband died from asbestosis in 1997, while Barbara died from mesothelioma on Sept. 7, 2013.

Before her death, Barbara filed an asbestos mesothelioma lawsuit against Tennessee Valley Authority (TVA) which was then carried out by her daughters after her demise.

According to the mesothelioma lawsuit, TVA should have provided James B., the decedent’s husband, proper safety equipment and protection masks when working with the hazardous material.

Additionally, the asbestos lung cancer lawsuit claims that TVA should have warned employees of the possible health risks associated with working with the cheap material.

The presiding judge agreed with the allegations and awarded the decedent’s family $3.5 million judgment against TVA, which owns and operates Brown’s Ferry. 

One of the most prominent problems plaguing elderly citizens in America is contending with the long-term consequences of asbestos exposure. In particular, it is estimated that 4,800 people die from asbestos lung cancer per year in the United States, which represents 4 percent of all fatalities in the country related to lung cancer.

Since the late 1800s, manufacturing companies have used asbestos for construction and insulation purposes. It was cheap and easy to use and soon become a popular construction material for its fire and chemical resistant qualities. While it is harmless in a dormant state, problems start arising when the asbestos sites are disturbed, which are then released.

After experts had officially linked asbestos exposure to lung cancer in the 1940s, the Occupational Safety and Health Administration (OSHA) proclaimed that asbestos lung cancer was a prominent risk to workers who were exposed to asbestos.  Asbestos lung cancer attacks the mucus lining of the lungs rather than the actual organs, this condition is typically diagnosed at a latent stage due to how long it takes symptoms to show. 

Asbestos lung cancer can take years for victims to experience any symptoms leaving few treatment options and short life survival expectancies for patients. Experts warn that it can take up to 50 years before any signs of asbestos cancer to show, as the fibers can sit generations in the lungs before festering.

 

Lumber Liquidators Guilty Plea Costs Them $13 Million

According to the Department of Justice-Virginia-based hardwood flooring retailer Lumber Liquidators Inc. pleaded guilty today in federal court in Norfolk, Virginia, to environmental crimes related to its illegal importation of hardwood flooring, much of which was manufactured in China from timber that had been illegally logged in far eastern Russia, in the habitat of the last remaining Siberian tigers and Amur leopards in the world, announced the Department of Justice.

Lumber Liquidators was charged earlier this month in the Eastern District of Virginia with one felony count of importing goods through false statements and four misdemeanor violations of the Lacey Act, which makes it a crime to import timber that was taken in violation of the laws of a foreign country and to transport falsely-labeled timber across international borders into the United States.  The charges describe Lumber Liquidators’ use of timber that was illegally logged in Far East Russia.  This is the first felony conviction related to the import or use of illegal timber and the largest criminal fine ever under the Lacey Act.

“Lumber Liquidators’ race to profit resulted in the plundering of forests and wildlife habitat that, if continued, could spell the end of the Siberian tiger,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division.  “Lumber Liquidators knew it had a duty to follow the law, and instead it flouted the letter and spirit of the Lacey Act, ignoring its own red flags that its products likely came from illegally harvested timber, all at the expense of law abiding competitors. Under this plea agreement, Lumber Liquidators will pay a multi-million dollar penalty, forfeit millions in assets, and must adhere to a rigorous compliance program.  We hope this sends a strong message that we will not tolerate such abuses of U.S. laws that protect and preserve the world’s endangered plant and animal species.”

According to a joint statement of facts filed with the court, from 2010 to 2013, Lumber Liquidators repeatedly failed to follow its own internal procedures and failed to take action on self-identified “red flags.”  Those red flags included imports from high risk countries, imports of high risk species, imports from suppliers who were unable to provide documentation of legal harvest and imports from suppliers who provided false information about their products.  Despite internal warnings of risk and non-compliance, very little changed at Lumber Liquidators.

On other occasions, Lumber Liquidators falsely reported the species or harvest country of timber when it was imported into the United States.  In 2013, Lumber Liquidators imported Mongolian oak from Far East Russia which it declared to be Welsh oak and imported merpauh from Myanmar which it declared to be mahogany from Indonesia. 

The illegal cutting of Mongolian oak in far eastern Russia is of particular concern because those forests are home to the last 450 wild Siberian tigers, Panthera tigris altaica.  Illegal logging is considered the primary risk to the tigers’ survival, because they are dependent on intact forests for hunting and because Mongolian oak acorns are a chief food source for the tigers’ prey species.  Mongolian oak forests are also home to the highly endangered Amur leopard Panthera pardus orientalis, of which fewer than 50 remain in the wild.  In June 2014, in response to illegal logging and the decline in tiger populations, Mongolian oak was added to the Convention on the International Trade in Endangered Species.

Under the plea agreement, Lumber Liquidators will pay $13.15 million, including $7.8 million in criminal fines, $969,175 in criminal forfeiture and more than $1.23 million in community service payments.  Lumber Liquidators has also agreed to a five year term of organizational probation and mandatory implementation of a government-approved environmental compliance plan and independent audits.  In addition, the company will pay more than $3.15 million in cash through a related civil forfeiture.  The more than $13.15 million dollar penalty is the largest financial penalty for timber trafficking under the Lacey Act and one of the largest Lacey Act penalties ever.  The company is scheduled to be sentenced on Feb. 1, 2016.

 

Sears and Whirlpool Settle Dangerous Dishwasher Claims

According to The Jere Beasley Report Sears Holdings Corp. and Whirlpool Corp. have agreed to pay for repairs and post public warnings to settle a class action accusing the companies of hiding a defective circuit board that caused name-brand dishwashers to burst into flames.

The full estimated value of the proposed settlement hasn’t been made public, but the companies agreed to pay out about $200 apiece to owners of Kenmore, KitchenAid and Whirlpool home dishwashers to cover repairs or rebates to use toward buying a new dishwasher. The parties have also proposed an arrangement in which the Defendants would also pay for repairs of dishwashers that aren’t part of the class but still had fire problems. Some customers can have the full cost of their repairs covered, according to the proposal.

The Plaintiffs filed suit in November 2011 saying that the Defendants knew, or were reckless in not knowing, that certain household dishwashers contained defective electronic control boards that spontaneously overheated, which caused them and other components in the dishwashers to melt, emit smoke and fumes, and combust.

The 10 named Plaintiffs – residents of California, Maryland, Georgia, New Jersey and Massachusetts – all purchased Kenmore, KitchenAid or Whirlpool dishwashers for their homes from 2002 to 2007 that subsequently malfunctioned due to a defective circuit board.

In the case of California residents David and Bach-Tuyet Brown, their KitchenAid dishwasher overheated while they were sleeping in April 2010, filling the house with smoke and causing them to spend $70,000 to replace the entire kitchen and to lose an additional $3,000 in rental income as a result of having to vacate the property for three weeks, according to their complaint.

The proposed settlement calls for different answers to different Plaintiffs, according to the filing. For example, people who have already had to repair or replace a dishwasher that caught on fire will get $200 minimum, but if they kept documentation of the costs of repairs they can ask for more, according to the proposed settlement.

Tuomey Healthcare Settles Violations for $237 Million

The Department of Justice announced that it has resolved a $237 million judgment against Tuomey Healthcare System for illegally billing the Medicare program for services referred by physicians with whom the hospital had improper financial relationships.  Under the terms of the settlement agreement, the United States will receive $72.4 million and Tuomey, based in Sumter, South Carolina, will be sold to Palmetto Health, a multi-hospital healthcare system based in Columbia, South Carolina.

The judgment against Tuomey related to violations of the Stark Law, a statute that prohibits hospitals from billing Medicare for certain services (including inpatient and outpatient hospital care) that have been referred by physicians with whom the hospital has an improper financial relationship.  The Stark Law includes exceptions for many common hospital-physician arrangements, but generally requires that any payments that a hospital makes to a referring physician be at fair market value for the physician’s actual services, and not take into account the volume or value of the physician’s referrals to the hospital.

The government argued in this case that Tuomey, fearing that it could lose lucrative outpatient procedure referrals to a new freestanding surgery center, entered into contracts with 19 specialist physicians that required the physicians to refer their outpatient procedures to Tuomey and, in exchange, paid them compensation that far exceeded fair market value and included part of the money Tuomey received from Medicare for the referred procedures.  The government argued that Tuomey ignored and suppressed warnings from one of its attorneys that the physician contracts were “risky” and raised “red flags.”

On May 8, 2013, after a month-long trial, a South Carolina jury determined that the contracts violated the Stark Law.  The jury also concluded that Tuomey had filed more than 21,000 false claims with Medicare.  On Oct. 2, 2013, the trial court entered a judgment under the False Claims Act in favor of the United States for more than $237 million.  The United States Court of Appeals for the Fourth Circuit affirmed the judgment on July 2, 2015. 

The case came from a lawsuit filed on Oct. 4, 2005, by Dr. Michael K. Drakeford, an orthopedic surgeon who was offered, but refused to sign, one of the illegal contracts.  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 allows the government to intervene and take over the action, as it did in this case.  Dr. Drakeford will receive approximately $18.1 million under the settlement.

As part of the settlement, Tuomey will be required to retain an independent review organization to monitor any arrangements it makes with physicians or other sources of referrals for the duration of the five-year Corporate Integrity Agreement.

QLasers False Claims Verified

A permanent injunction has been granted to the Food and Drug Administration (FDA) against Robert “Larry” Lytle, doing business as QLasers PMA and 2035 PMA based on evidence of false and misleading claims regarding the health benefits of these lasers, which in some cases, reportedly cause health problems.

According to the complaint for injunction filed by the Department of Justice on behalf of the FDA, Lytle has been manufacturing and distributing QLaser devices for more than a decade and markets the devices through private membership associations. Lytle and his businesses promote the devices with false and misleading claims that they treat cancer, cardiac arrest, HIV/AIDS, diseases and disorders of the eye and ear, venereal disease, diabetes and many other health conditions.

Although the FDA cleared two of the QLaser devices for providing temporary relief of pain associated with osteoarthritis of the hand (as diagnosed by a physician or other licensed medical professional), the FDA has not cleared or approved any of the devices to treat any other medical conditions. Further, as demonstrated by the evidence presented at trial, use of the QLaser devices according to the labeling could be dangerous to the health of the consumer.

PharMerica Corp. to Pay $9.25 Million for Depakote Kickback

According to the Department of Justice the nation’s second-largest nursing home pharmacy, PharMerica Corp., has agreed to pay $9.25 million to resolve allegations that it solicited and received kickbacks from pharmaceutical manufacturer Abbott Laboratories in exchange for promoting the prescription drug Depakote for nursing home patients.  PharMerica is headquartered in Louisville, Kentucky.

“Elderly nursing home residents suffering from dementia have little control over the medications they receive and depend on the unbiased judgment of healthcare professionals for their daily care,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Kickbacks to entities making drug recommendations compromise their independence and undermine their role in protecting nursing home residents from the use of unnecessary drugs.”

Nursing homes rely on consultant pharmacists, such as those employed by PharMerica, to review their residents’ medical charts at least monthly and make recommendations to their physicians about what drugs should be prescribed for those residents.  The settlement announced today resolves allegations that in exchange for recommending that physicians prescribe Depakote, an anti-epileptic drug manufactured by Abbott, to nursing home residents, PharMerica solicited and received kickbacks from Abbott.  The government alleges that the kickbacks were disguised as rebates, educational grants and other financial support.

In May 2012, the United States, numerous individual states and Abbott entered into a $1.5 billion global civil and criminal resolution that, among other things, resolved Abbott’s liability under the False Claims Act for alleged kickbacks to nursing home pharmacies, including PharMerica.  The settlement announced today resolves PharMerica’s role in that alleged kickback scheme.

Approximately $6.75 million of the settlement will go to the United States, while $2.5 million has been allocated to cover Medicaid program claims by states that elect to participate in the settlement.  The Medicaid program is jointly funded by the federal and state governments.

“Nursing home pharmacies accepting kickbacks from drug makers in exchange for prescribing certain prescription drugs puts vulnerable residents at risk for receiving unnecessary medications, corrupts medical decision making, and inflates health care costs,” said Special Agent in Charge Nick DiGiulio of the U.S. Department of Health and Human Services’ Office of Inspector General (HHS-OIG).  “Our agency will continue to root out such corrosive practices from our health care system.”

The settlement partially resolves allegations in two lawsuits filed in federal court in the Western District of Virginia by Richard Spetter and Meredith McCoyd, former Abbott employees.  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.  The act also allows the government to intervene and take over the action, as it did in part in this case.  As part of today’s resolution, Ms. McCoyd will receive $1 million from the federal share of the settlement amount.

Serenity Hospice and Pallative Care Guilty of Hospice-Medicare Fraud

According to the Phoenix Sun, a Phoenix hospice provider will pay $2.2 Million to the federal government for falsely billing Medicare for hospice care. 

Under the agreed terms, the founder and former president Ruth Siegel agreed to be excluded from Medicare, Medicaid and other federal health programs for 5 years. She will also, personally pay $1 Million of the $2.2 Million settlement

This lawsuit was filed by a former employee Cheryl Sifford, under the false claims act. Serenity still denied the allegations, but said it was more cost effective to settle rather than fight it.

 

Here's how the system works, Medicare pays for medical care to manage symptoms and provide relief to those with a life expectancy of less than 6 months and who have decided not to seek any further treatment, but rather prepare for death. The rate Medicare pays for this service is over 4 times the rate that should have been paid for the actual services they received. Thus boosting profits for the facility.

 

Sifford claimed in a civil lawsuit filed, that Serenity flagged patients who were referred by CareMore to ensure they were admitted as hospice patients. In addition she was also instructed to take CareMore's staff to dinner, concerts and limousine rides.

Siegel has not admitted guilt, but has insisted that this settlement is the quickest and most cost effective settlement.

The whistleblower, Cheryl Sifford will collect $440,000 for her help in this case.

If you know of any such thing taking place where you work we encourage you to contact Jim VanderLinden immediately. http://www.vanderlindenlaw.com/

BP Will Be Paying for Many Years for Their Most Recent Accident

BP has agreed to pay a record $20 billion to resolve all federal and state claims against the company over its role in the Deepwater Horizon oil spill.

Under the terms of the finalized deal announced by the Justice Department on Monday, BP won’t have to pay all the money at once. Softening the hit to its cash flow, the company is able to spread out payments over a 15-year period. The last installments are due in 2031, more than 21 years after the Deepwater Horizon disaster, which killed 11 crew members and caused the largest oil spill in U.S. waters.

The two biggest pieces of the settlement* are the $5.5 billion in Clean Water Act penalties and the $7.1 billion that BP agreed to pay to the U.S. and Gulf Coast states to cover long-term environmental damages.

Here are the payment schedules for both categories, according to the consent decree filed in federal court in New Orleans on Monday:

Department of Justice

Department of Justice

 

Attorney General Loretta Lynch called the deal “a strong and fitting response to the worst environmental disaster in U.S. history.” BP officials, as WSJ’s Devlin Barrett notes, have said previously the agreement provides the company, and the Gulf region, “a path to closure,” resolving the largest legal exposure and providing more certainty in terms of costs and payments.

 

* Total settlement figure also includes $1 billion that BP previously committed for early restoration projects; up to $700 million for any later-discovered injuries or losses or to pay for adjustments to restoration projects; $4.9 billion to five Gulf States, plus another $1 billion to localities, to settle economic-damage claims; and $600 million to settle other claims, including reimbursement for response and removal costs.

Pfizer to pay $400 Million for Off Label Drug Marketing

According to the Jere Beasely Report a New York federal judge has granted final approval of a $400 million settlement that ends a class action accusing Pfizer Inc. of misleading investors about illegal off-label drug marketing. However, some investors may not get very much, with a recovery rate of 15 cents per share. U.S. District Judge Alvin K. Hellerstein had granted early approval of the settlement in mid-March after lawyers revised notices to class members clarifying details about the litigation.

The case, because of the settlement, has now been dismissed with prejudice. The recovery rate of 15 cents per share is far less than the $1.26 per share a damages expert for the Plaintiffs had estimated.

Pfizer put the damage per share at nothing because, the company disclosed a dividend cut to fund its purchase of Wyeth on the day of the January 2009 stock drop that was central to the lawsuit. Both sides noted in February that if fewer people claim, the recovery for claimants will grow, and institutional investors will be active, claiming most of the potential recovery.

The Plaintiffs filed their claims in 2010 after Pfizer pled guilty to illegally marketing the anti-inflammatory drug Bextra and reaching a $2.3 billion settlement with the federal government in 2009. Investors alleged that the company misled them about marketing that drug, as well as Godon, Lyrica and Zyvox, and that Pfizer concealed a kickback scheme involving payments to doctors in exchange for promotion of those drugs.

Geico Surrenders $517,000 to Settle Allegations

 

According to Top Class Actions GEICO has agreed to a $517,000 class action settlement over allegations that the insurance provider received reimbursement from a third party without first obtaining a judicial determination or an agreement with car accident victims that they were “made whole” by their settlement.

Lead plaintiff Lisa Stokes filed the GEICO class action lawsuit claiming that GEICO should have waited to obtain a “made whole” statement from insured customers before they sought reimbursement of Med Pay/PIP payments.

According to the GEICO class action, in the absence of a “made whole” agreement or judicial determination, GEICO should not have received subrogation payments.

GEICO denies any liability to Stokes and Class Members on the claims asserted in the class action lawsuit. However, the insurance company agreed to settle in order to avoid the expense and uncertainty of continued litigation.

Who’s Eligible

Class Members include individuals who received medical treatment as a result of an automobile accident and (a) who were insured under an automobile insurance policy that was issued in Arkansas by GEICO and pursuant to which GEICO made a Med Pay/PIP payment to a medical provider on behalf of the insured; and (b) who settled a bodily injury claim with a third party arising out of the automobile accident “pro se” and without the assistance of an attorney; and (c) as a result of that settlement, GEICO received a subrogation payment as reimbursement for a Med Pay/PIP payment between the dates of Nov. 1, 2008 and April 3, 2015.

Potential Award Varies.

Class Members who file a valid Claim Form will receive a payment not to exceed 100% of the amount GEICO received in Med Pay/PIP subrogation on their claim. If the number of eligible claims exceeds the amount available in the class action settlement fund, distributions will be made on a pro rata basis.

To see if you qualify go to http://topclassactions.com/lawsuit-settlements/open-lawsuit-settlements/170747-geico-auto-insurance-class-action-settlement/

Lovaza's Labeling is Incomplete--Side Effects Not Accurate

Lovaza, a prescription medicine made with omega 3 fatty acids  has recently been associated with a higher risk of  bleeding complications including subdural hematomas.

The omega-3 fatty acids found in Lovaza are the same type found in fish oil. Research for dozens of years has pointed to a link between the intake of omega-3 fatty acids and a lower risk of cardiovascular disease that can cause premature death.

Research has also shown that omega-3 fatty acids have a number of other positive effects, such as decreasing triglyceride levels, slowing the growth of atherosclerotic plague, and slightly lowering blood pressure.

However, recent studies have shown that omega-3 fatty acids also inhibit the function of platelets. Platelets are part of the process that causes proper and healthy blood clotting.

When the platelets are inhibited, bleeding time can be prolonged and therefore more dangerous. Omega-3 fatty acid supplements, including Lovaza, inhibit the function of platelets in blood clotting, which puts patients at risk of extended Lovaza bleeding complications such as subdural hematomas.

For those suffering from a subdural hematoma, excess blood collects between the layers of tissue surrounding the brain. The outermost layer of this tissue around the brain is called the dura, and the layer beneath it is called the arachnoid.

Subdural hematoma causes bleeding between the dura and the arachnoid. While subdural hematoma bleeding is not inside the brain itself, it can still negatively affect the brain.

Bleeding accumulates and pressure builds, which puts an increasing amount of pressure on the brain from outside. This pressure, if allowed to reach a very high level, can cause unconsciousness and in some cases, death.

Treatment of subdural hematomas can range from simply monitoring the condition and waiting to brain surgery. In cases where there is too much pressure on the brain, surgeons may have to perform serious operations to relieve the dangerous pressure.

Lovaza’s label, approved by the FDA, includes a warning about increased Lovaza bleeding complications with omega-3 fatty acids.

According to the American Heart Association, patients who wish to treat coronary artery disease or high triglycerides with omega-3 fatty acids may not be able to intake as much as they need in a regular diet. Therefore, the AHA recommends at least one gram of fish oil per day for coronary artery disease patients, and at least two grams per day for hypertriglyceridemia patients.

People who took Lovaza or a similar omega-3 fatty acid supplement or fish oil and have since suffered a subdural hematoma may be able to file a Lovaza lawsuit. Drug manufacturers such as GlaxoSmithKline have a legal responsibility to adequately warn consumers about the potential side effects of using their drugs.

Adventist Health Systems To Pay Out $118.7 Million

Three former employees of a North Carolina hospital were the first to expose an alleged scheme by Adventist Health System to pay doctors excessive compensation to lock in their patient referrals to Adventist-owned hospitals, clinics and other outpatient services in Florida, North Carolina, Tennessee and Texas.

The US Justice Department announced today that Adventist will pay a total of $118.7 million to the federal government and four states to settle a whistleblower (qui tam) lawsuit filed in December 2012 by those former employees. The settlement agreement also covers a separate qui tam lawsuit filed in 2013 that made the same allegations as some of those made earlier in Phillips & Cohen's qui tam lawsuit.

The Adventist settlement is the largest healthcare fraud settlement ever made involving physician referrals to hospitals. It is nearly twice the previous largest settlement involving hospital kickback allegations, which was North Broward Hospital District's recent $69.5 million settlement.

It was alleged Adventist's hospitals paid doctors outrageous sums and offered overly generous benefits and lax billing oversight as part of a corporate strategy to capture and control physician referrals for inpatient and outpatient services near its hospitals. Federal law prohibits hospitals from paying doctors directly or indirectly for referrals so that doctors make recommendations for care based on what's best for the patient – not what's best for the doctor's bank account.

A substantial portion of the settlement amount is based on allegations involving Florida Hospital Medical Group, an Adventist-owned physician practice in Florida whose doctors worked at several Adventist hospitals and dozens of Adventist-owned outpatient clinics. Those hospitals include Florida Hospital Altamonte, Florida Hospital Apopka, Florida Hospital Celebration Health, Florida Hospital Kissimmee, Florida Hospital Orlando, Florida Hospital Waterman (Tavares, Fla.), Florida Hospital for Children (Orlando, Fla.) and Winter Park Memorial Hospital.

The three whistleblowers were longtime employees at Adventist's Park Ridge Health in Hendersonville, NC, where they became aware of the alleged system-wide kickback scheme. Michael Payne was a risk manager and Melissa Church was the executive director of physician services at Park Ridge. Gloria Pryor was a compliance officer for physician offices at Park Ridge.

GM Reaches Settlement

 

General Motors announced that they have reached a criminal settlement to end the current government investigation of their faulty ignition switches. GM will pay $900 million for the Department of Justice fine incurred.

Additionally, GM has reached a resolution with over half of the death and personal injury lawsuits that are a part of the current multidistrict litigation through the U.S. District Court for the Southern District of New York. General Motors also settled in a shareholder class action lawsuit filed in the U.S. District court in Michigan for two civil lawsuits. The total for these settlements will set GM back another $575 million.

GM’s ignition switch defect caused cars to suddenly turn off when driving, most notably when the car was jostled from uneven road conditions. As well as an engine shutdown, power steering and power brakes were disabled and the airbags became deactivated. This led to numerous car accidents with severe injuries and deaths.

The MDL and shareholder class action settlements resolve about 1,380 death and personal injury lawsuits in total. GM did not release the individual settlement values paid in the various settlements.

The remaining lawsuits in the multidistrict litigation include economic loss claims, 370 injury lawsuits and 84 death lawsuits. Prior to Thursday’s announcement, GM had already agreed to offer ignition switch settlements to 124 families in death lawsuits and another 275 who were injured.

The nearly $1.5 billion GM is faced with in fines and settlements so far for the defect does not include the cost of fixing the 2.6 million vehicles that have been recalled due to the GM ignition switch defect.

Some consumers oppose how the situation was handled under the law. The Justice Department was criticized for not bringing charges against individual GM employees who were believed to have direct responsibility. In general, this criticism has extended to the DOJ in general for going after companies in general rather than prosecuting individuals for their wrongdoing.

When the GM scandal first came to light over a year ago, the company fired 15 employees for failing to resolve the ignition switch problem.

As it stands, there is no law that deals with criminal penalties for auto makers failing to disclose safety problems, so broader laws such as wire fraud and false statements are used.

According to court documents, GM knew of the ignition switch problem a decade ago in 2004 and 2005. Rather than making a simple and inexpensive change in the part at the time, which was estimated to cost approximately a dollar per vehicle, the situation was overlooked.

U.S. Attorney Preet Bharara summarized the situation, “”They let the public down. They didn’t tell the truth in the best way that they should have — to the regulators, to the public — about this serious safety issue that risked life and limb.”

KYB Agrees to Plead Guilty and Pay $62 Million Criminal Fine for Price Fixing

According to The Department of Justice, Kayaba Industry Co. Ltd., dba KYB Corporation has agreed to plead guilty and to pay a $62 million criminal fine for its role in a conspiracy to fix the price of shock absorbers installed in cars and motorcycles sold to U.S. consumers. 

According to charges filed, KYB conspired from the mid-1990s until 2012 to fix the prices of shock absorbers sold to Fuji Heavy Industries Ltd. (manufacturer of Subaru vehicles), Honda Motor Co. Ltd., Kawasaki Heavy Industries Ltd., Nissan Motor Company Ltd., Suzuki Motor Corporation and Toyota Motor Company, including their subsidiaries in the United States. 

“KYB turned the competitive process on its head by agreeing with its competitors to fix the prices of shock absorbers installed in cars and motorcycles sold in the U.S.,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “Working with the FBI and our other law enforcement partners, the Antitrust Division will continue to protect American car buyers and hold automotive part suppliers accountable for their illegal conduct.”

“Fixing prices and rigging bids is against the law and ultimately harms consumers by artificially inflating prices and creating a corrupt marketplace,” said Special Agent in Charge Angela L. Byers of the FBI’s Cincinnati Division.  “The FBI and our partners will continue to investigate anticompetitive practices and promote fair competition.”

According to the information filed in the U.S. District Court of the Southern District of Ohio, KYB, based in Tokyo, and its two co-conspirators agreed to allocate the supply of shock absorbers sold and determine the price submitted to the targeted vehicle manufacturers.  To keep prices up, KYB and its co-conspirators also agreed to coordinate on price adjustments requested by the vehicle manufacturers and strived to keep their conduct secret. 

Jury Convicts Houston Psychiatrist in $158 Million Medicare Fraud Scheme

A Houston psychiatrist was convicted late yesterday by a federal jury of participating in a $158 million Medicare fraud scheme involving false claims for mental health treatment.

Sharon Iglehart, 58, of Harris County, Texas, was convicted of one count of conspiracy to commit health care fraud, one count of health care fraud and three counts of making false statements relating to health care matters, following a seven-day jury trial before U.S. District Judge Ewing Werlein Jr. of the Southern District of Texas.  Iglehart is scheduled to be sentenced on Dec. 5, 2015.
According to evidence presented at trial, from 2006 until June 2012, Iglehart and others engaged in a scheme to defraud Medicare by submitting, through Riverside General Hospital (Riverside), approximately $158 million in false and fraudulent claims for partial hospitalization program  services to Medicare.  A PHP is a form of intensive outpatient treatment for severe mental illness.
The evidence presented at trial showed that the Medicare beneficiaries for whom Riverside billed Medicare did not receive PHP services.  In fact, according to evidence presented at trial, most of the Medicare beneficiaries for whom Riverside billed Medicare rarely saw a psychiatrist and did not receive intensive psychiatric treatment.
In addition, evidence presented at trial showed that Iglehart personally billed Medicare for individual psychotherapy and other treatment to patients at Riverside locations – treatment that she never provided.  The evidence at trial also demonstrated that Iglehart falsified the medical records of patients at Riverside’s inpatient facility to make it appear as if she provided psychiatric treatment when, in fact, she did not.

Columbus Regional Healthcare System and Physician Ordered to Pay Over $25Million False Claims Violation

Columbus Regional Healthcare System and Dr. Andrew Pippas have agreed to pay more than $25 million to resolve allegations that they violated the False Claims Act by submitting claims in violation of the Stark Law.  Under the settlement agreement, Columbus Regional has agreed to pay $25 million, plus additional contingent payments not to exceed $10 million, for a maximum settlement amount of $35 million, and Pippas has agreed to pay $425,000.

The Stark Law prohibits physician referrals of certain health services for Medicare and Medicaid patients if the physician has a financial relationship with the entity to which he or she refers the patient.  The United States alleged that between 2003 and 2013, Columbus Regional provided excessive salary and directorship payments to Pippas that violated the Stark Law.

The United States also alleged that from May 2006 through May 2013, Columbus Regional submitted claims to federal health care programs for services at higher levels than supported by the documentation, and between 2010 and 2012, they submitted claims to federal health care programs for radiation therapy at higher levels than the therapy that was provided.

 

Of the $25.425 million that Columbus Regional and Pippas have agreed to pay to resolve their respective civil claims, they will pay $24,666,040 to the federal government for federal healthcare program losses and $758,960 to the state of Georgia for the state share of its Medicaid losses. 

Also as part of the settlement, Columbus Regional will enter into a Corporate Integrity Agreement  with the Department of Health and Human Services-Office of the Inspector General that requires Columbus Regional to implement measures designed to avoid or promptly detect future conduct similar to that which gave rise to this settlement.

 

 

Walter Investment Management Corp. Must Pay More than $29 Million

 

The Justice Department announced today that Walter Investment Management Corp. WIMC has agreed to pay $29.63 million to resolve allegations that WIMC, through its subsidiaries, Reverse Mortgage Solution Inc., REO Management Solutions LLC and RMS Asset Management Solutions LLC, violated the False Claims Act in connection with their participation in the Department of Housing and Urban Development’s Home Equity Conversion Mortgages program, which insures “reverse” mortgage loans.  WIMC, through subsidiaries such as RMS and Green Tree Servicing LLC, provides business support to the residential mortgage industry, including servicing of reverse or forward mortgages on behalf of major financial institutions.*

“The Department of Justice is committed to ensuring that those who service HUD-insured reverse mortgages are held accountable for their knowing failure to comply with important HUD requirements,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Schemes such as these undermine an important tool available to older Americans who wish to use a HUD-insured reverse mortgage loan to age in place.”

Reverse mortgage loans allow elderly people to access the equity in their homes.  To encourage reverse mortgage loans, HUD insures such loans through a program administered by HUD’s Federal Housing Administration.  Under HUD’s program, a loan becomes due and payable when the home is sold or vacant for more than 12 months or upon the death of the homeowner, whichever comes first.  The lender is repaid the amount of the loan, including the costs of servicing the loan and interest that accrues, after a loan becomes due and payable.  HUD will reimburse a lender that is unable to recoup the full amount of the loan.  In order to file a claim, the servicer is required to meet a number of requirements and deadlines.  Failure to meet these requirements and deadlines could result in denial of the insurance claim.

The government alleged that, from August 2009 to March 2015, RMS, with the knowledge and support of its corporate parent, WIMC, submitted false claims for debenture interest from HUD by failing to properly disclose that it had not met certain deadlines and, therefore, was not entitled to such interest payments.  In order to obtain such interest, HUD requires lenders and their servicers to obtain appraisals within 30 days of the loan becoming due and payable.  The significance of the 30-day appraisal requirement is, among other things, to establish a mutual understanding between the lender and HUD as to the market value of the property so that a decision can be made as to whether to proceed with foreclosure, engage in a workout with the lender or deal with estate rights issues.

The government also alleged that from July 2010 to October 2014, WIMC, through its subsidiaries, submitted false claims to HUD for the reimbursement of unlawful referral fees by falsely representing them to be lawful sales commissions.  As part of an insurance claim, HUD will reimburse lenders or their servicers for sales commissions paid to real estate agents as part of the liquidation of foreclosed properties.  HUD will not, however, reimburse lenders or their servicers for fees paid for the referral of liquidation business.  According to the government, RMS often used straw companies to liquidate foreclosed properties.  Upon sale of the foreclosed property, the straw companies split the six-percent sales commissions: the real estate agents shared a five-percent sales commission and the companies kept a one-percent referral fee.  These straw companies, in turn, deducted a small fee from the one-percent referral fee and kicked the remainder back to RMS.  Nonetheless, RMS submitted insurance claims to HUD that included payment for the full six-percent sales commission, when, in fact, the payment included a prohibited referral fee.

The settlement resolves allegations filed in a lawsuit by Matthew McDonald, a former executive of RMS, under the qui tam, or whistleblower, provisions of the False Claims Act.  The act permits private individuals to sue on behalf of the government for false claims and to share in any recovery.  The False Claims Act also permits the government to intervene in such lawsuits, as it did in this case.  Mr. McDonald will receive $5.15 million as his share of the recovery in this case.

This information verified by the Dept. of Justice

FDA Cannot Prohibit the Promotion of Truthful, Off-Label Uses

Last week, a federal judge ruled that the Food and Drug Administration (FDA) cannot prohibit a pharmaceutical company from marketing its drugs for off-label uses if its claims are truthful and not misleading. This ruling, while not precedential, alters the traditional compliance regarding the legality of off-label marketing.

In 2012, the FDA approved Amarin’s drug, Vascepa®, for patients with very high triglyceride levels, a condition known to increase the risk of pancreatitis and cardiovascular disease. However, the FDA rejected a second use of the drug that would have allowed Amarin to market Vascepa to patients with persistently high triglycerides who also take statins (i.e., drugs used to lower cholesterol). Although it was undisputed that Vascepa was safe and effective in reducing such triglyceride levels, the FDA told Amarin it needed to submit additional data regarding whether lowering triglyceride levels for patients on statins actually translates to a reduced cardiovascular risk. Absent formal approval, the FDA contended that distributing information about the alternate use would constitute misbranding under the Federal Food, Drug, and Cosmetic Act (FDCA).

Amarin subsequently filed a lawsuit seeking declaratory and injunctive relief that would prevent the FDA from prosecuting it for truthful, non-misleading speech concerning Vascepa. Amarin argued that the FDA’s efforts to stop it from sharing “off-label” information would violate its free speech protections. In a 71-page opinion, Judge Engelmayer agreed with Amarin and ruled that, consistent with the First Amendment, Amarin “may engage in truthful and non-misleading speech promoting the off-label use of Vascepa.”

The FDA has 60 days to appeal Judge Engelmayer’s ruling. If the decision stands, it could continue to pave the way for pharmaceutical companies and medical device manufacturers to engage in the off-label marketing of drugs that is truthful and not misleading. While Amarin and Caronia signal a potential change in the way the government will have to approach off-label marketing cases, it is important to note that these decisions both come out of the Second Circuit, and it still is uncertain how other circuits will rule when presented with similar facts.

Kmart Guilty of False Claims Act Violation

KMART Corp. (Kmart), a discount department store chain that operates approximately 780 in-store pharmacies, has paid the United States $1.4 million to resolve allegations that it violated the False Claims Act by using drug manufacturer coupons and gasoline discounts as improper Medicare beneficiary inducements, the Justice Department announced today. 

 

The settlement resolves allegations that Kmart violated the False Claims Act by providing illegal benefits to beneficiaries of the Medicare program.  The government alleged that from June 2011 to June 2014, Kmart knowingly and improperly influenced the decisions of Medicare beneficiaries to bring their prescriptions to Kmart pharmacies by permitting the Medicare beneficiaries to use drug manufacturer coupons to reduce or eliminate prescription co-pays that they otherwise would be obligated to pay.  Federal law prohibits a person from offering beneficiaries of certain federal health programs, such as Medicare, remuneration that is intended to influence the beneficiary’s choice of provider.  The government alleged that Kmart’s conduct caused the Medicare beneficiaries to seek expensive, brand name drugs in lieu of cheaper generic drugs, which caused the government’s costs to increase without any medical benefit to the beneficiary.  The government also alleged that Kmart improperly encouraged Medicare beneficiaries to bring their prescriptions to Kmart pharmacies by offering them varying levels of discounts on the purchase of gasoline at participating gas stations based on the number of prescriptions that they filled at Kmart pharmacies.

 

The settlement resolves allegations in a lawsuit filed by Joshua Leighr, a former Kmart pharmacist, under the qui tam, or whistleblower provisions of the False Claims Act.  The act authorizes private parties, such as Mr. Leighr, to sue for fraud on behalf of the United States and to share in any recovery.  Mr. Leighr will receive approximately $248,500 of the settlement.   

 

Medtronic Infuse Bone Graft Class Action Lawsuit

Medtronic Inc., the nation’s largest medical device maker, is facing over 1,000 Infuse Bone Graft lawsuits that accuse the manufacturer of intentionally concealing dangerous side effects. These spinal surgery patients claim they suffered serious Infuse Bone Graft problems, including male sterility and other genital injuries, nerve damage, excessive bone growth, chronic pain, and difficulty breathing, swallowing, and speaking. These patients further accuse Medtronic of marketing the Infuse Bone Graft for off-label uses, putting thousands of spine surgery patients at risk for dangerous complications.

Class action lawsuit attorneys are currently looking for patients who were injured after undergoing back surgery with an Infuse Bone Graft. These patients can receive a free legal review using the form on this page and determine if they’re eligible to pursue compensation for their injuries, medical expenses, pain and suffering, and more.

  

Medtronic’s promotion of off-label uses for the Infuse Bone Graft has led to two whistleblower lawsuits and a $40 million settlement with the U.S. Department of Justice in 2006. In addition, Medtronic recently agreed to an $85 million settlement with shareholders who filed a lawsuit over the drop in stock prices related to the DOJ’s investigation.

In 2012, the Senate Finance Committee announced the results of its year-long investigation into allegations Medtronic used false advertising and kickbacks to increase sales of their products. The study revealed that Medtronic paid more than $200 million in consulting fees to authors who were supposed to be studying the efficacy of Infuse.

Hundreds of Infuse Bone Graft lawsuits have been filed in state and federal courts by plaintiffs who allege they suffered serious Infuse Bone Graft complications.

EDF Resource Capital Inc. Violates False Claims Act

 

EDF Resource Capital Inc. and its CEO, Frank Dinsmore, have agreed to resolve allegations that they violated the False Claims Act and otherwise failed to remit payments owed to the Small Business Administration (SBA) under the 504 loan program, the Department of Justice announced today.  Under the settlement agreement, EDF and Dinsmore have agreed to make payments and turn over certain assets to the United States for a total settlement of approximately $6 million.

The SBA 504 loan program provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings.  Under the program, local lenders like EDF are responsible for arranging, servicing and collecting on these small business loans, which are guaranteed, in part, by the SBA.  In return for the authority to make determinations on 504 loans without prior SBA approval, EDF was required to bear a share of any losses suffered by the SBA on such loans and to maintain a loan loss reserve fund (LLRF) to help ensure payment of its loss-sharing obligations. 

This settlement resolves claims that EDF and Dinsmore violated the False Claims Act in connection with EDF’s failure to maintain adequate reserves in its LLRF.  EDF allegedly was required to fund its LLRF at a level determined by the riskiness of its 504 loan program portfolio yet knowingly concealed from the SBA hundreds of troubled loans to avoid its obligation to fully fund its LLRF.

The settlement also resolves a lawsuit filed by the United States against EDF and a related entity, Redemption Reliance LLC, alleging that EDF failed to remit required payments to the SBA to satisfy its loss-sharing obligations.  The lawsuit also alleges that the SBA agreed to advance funds to EDF in connection with certain defaulted 504 loans but that, after EDF assigned the loan documents for these loans to Redemption Reliance, neither EDF nor Redemption Reliance remitted the monies owed on these loans to the SBA. 

“The 504 Loan Program provides small businesses with access to the capital they need to start, grow and succeed,” said General Counsel Melvin F. Williams Jr. of the SBA.  “SBA has no tolerance for fraud, waste, or abuse by participants in the 504 Loan Program.  Working with the attorneys at the Department of Justice and SBA’s Office of Inspector General, this settlement marks the successful conclusion of a major enforcement action.”        

“The defendants’ misrepresentations to SBA knowingly put the taxpayer’s money at risk,” said Inspector General Peggy E. Gustafson of the SBA.  “As stewards of the taxpayers’ money, the SBA must guard against losses within its loan portfolios.  In this instance, the actions of the defendants did not allow SBA to protect taxpayers from such losses.  I want to thank the Department of Justice and our investigative partners for achieving this settlement.”

This information confirmed via the US Dept. of Justice.

Florida Health Fraud Uncovered

A federal jury in Miami late yesterday convicted the former medical director of, and three therapists employed by this health care provider of conspiracy to commit health care fraud and related charges for their roles in a scheme to fraudulently bill Medicare and Florida Medicaid more than $63 million.

Roger Rousseau, 73, of Miami; Doris Crabtree, 62, of Miami; Angela Salafia, 68, of Miami Beach, Florida; and Liliana Marks, 48, of Homestead, Florida, were found guilty of conspiracy to commit health care fraud.  In addition, Rousseau was convicted of two counts of health care fraud.  Sentencing is scheduled for Nov. 6, 2015, before U.S. District Judge Robert N. Scola Jr. of the Southern District of Florida.

Rousseau was the former medical director of Health Care Solutions Network Inc. (HCSN), a now-closed partial hospitalization program (PHP) that purported to provide intensive treatment for mental illness.  Crabtree, Salafia and Marks were therapists who worked for HCSN.

According to the evidence presented at trial, from approximately 2004 through 2011, HCSN billed Medicare and Medicaid for mental health services that were not medically necessary or never provided, and that HCSN paid kickbacks to assisted living facility owners and operators in Miami who, in exchange, referred beneficiaries to HCSN.

The trial evidence showed that Rousseau routinely signed what he knew to be fabricated and altered medical records without reviewing the substance of the records and, in most instances, without ever meeting with the patients.  The evidence at trial also demonstrated that Crabtree, Salafia and Marks fabricated medical records to support HCSN’s false and fraudulent claims for reimbursement for PHP services.

In total, HCSN submitted approximately $63.7 million in false and fraudulent claims to Medicare and Medicaid.  Medicare and Medicaid paid approximately $28 million on those claims.

In November 2014, following a jury trial, co-defendants Blanca Ruiz and Alina Fonts were convicted of conspiracy to commit health care fraud, and Fonts also was convicted of health care fraud.  In February 2015, both Ruiz and Fonts were sentenced to serve six years in prison.

This information provided on the US Dept. of Justice website

Payday Loan Lending Scheme Uncovered

The operators of a payday lending scheme that allegedly conned millions of dollars from consumers nationwide have agreed to more than $54 million in settlements with the Federal Trade Commission . The settlements, announced on July 7, arise from allegations by the that Timothy Coppinger, Frampton Rowland III and their companies targeted online payday loan applicants – consumers seeking short-term loans to tide them over until they received their next paycheck. Approximately 400,000 consumers were affected by the scheme, and the settlement funds will be used to reimburse them for losses, according to the FTC.

Using information gathered from data brokers and lead generators, the companies allegedly deposited funds in the applicants’ bank accounts without obtaining permission. The companies subsequently withdrew money to pay recurring “finance” charges without using any of the funds to pay the total allegedly owed, the FTC alleged. The companies also allegedly misrepresented the loans’ costs, finance charges, annual percentage rates payment schedule and other data. Consumers who closed their bank accounts in an effort to stop the unauthorized debits discovered that the companies had sold the purported loans to debt-collection companies that harassed them for payment, the FTC alleged. A federal court in Missouri stopped the operation and froze the Defendants’ assets pending resolution of the FTC allegations.

The Coppinger and Frampton limited liability companies involved in the lawsuit include: CWB Services; Orion Services; Sandpoint Capital; Basseterre Capital; Namakan Capital; Anasazi Services; Anasazi Group; Vandelier Group; St. Armands Group; Longboat Group and Oread Group. The settlements, which require federal court approval, erase any consumer debt purportedly owed to the Defendants and bar them from reporting the debts to credit-reporting agencies.

The agreements, according to the FTC, also ban the Defendants “from any aspect of the consumer lending business, including collecting payments, communicating about loans and selling debt.” If approved by the court, the FTC said the settlements will impose a more than $32.1 million consumer redress judgement on the Coppinger companies agreed and a similar judgement of nearly $21.9 million on the Frampton companies. The judgments against Coppinger and Frampton will be suspended upon their surrender of certain assets, according to the FTC.

Target and Visa Work Out a Settlement

Target Corp. and Visa Inc. announced that they had reached a $67 million settlement that would compensate various card issuers for the cost of the now infamous 2013 Target data breach.

According to Target, the data breach settlement applies to a subset of card issuers that represent the majority of Visa cards determined to be at risk because of the Target data breach. These card issuers have reportedly entered into direct settlements with both Target and Visa.

A day prior to this settlement announcement, Visa informed Target that the required subset of card issuers affected by the data breach have entered into settlements to make Target’s agreement feasible. Settlement offers are currently being sent to the remaining group of Visa card issuers that would allow these institutions to receive comparable results as the issuers who have already settled with Visa and Target, the retailer states.

According to Visa, this Target data breach settlement agreement is the companies effort to leave the data breach in the past in order to focus on an industry-wide concern of fending off future breaches. On the same day that the $67 million data breach settlement was announced, a Visa representative stated: “Visa has worked to help Target reach a resolution for the expenses incurred by financial institutions as a result of the 2013 compromise. Nevertheless, the fact remains that data breaches are an unfortunate situation for all parties involved — especially consumers.”

This Visa card issuer settlement is good news for Target, as it comes on the heels of the failed May 2015 $19 million agreement brokered between the popular retailer and MasterCard Inc., that fell apart because both Target and MasterCard failed to convince enough banks to sign into the data breach payoff. This settlement would have resolved a data breach class action lawsuit filed against the companies in Minnesota federal court, which had been part of a larger Target data breach multidistrict litigation that was established following the 2013 data breach.

However, not all is lost in that case, as MasterCard recently stated that the credit card company is working closely with the retailer and that Target has suggested that this same settlement approach be used for the Visa card issuers and similar terms were to be made available to MasterCard issuers. According to MasterCard, “We will now place the revised Target settlement offer in front of our customers for their consideration.”

It is estimated that 110 million Target consumers had their personal and financial information compromised during the 2013 Target data breach, which in turn also affected 40 million credit and debit cards. The Target data breach is one of the largest personal information breaches in U.S. history.

In addition to Target’s data breach settlement agreements with Visa and MasterCard credit and debit card issuers, the retailer has also agreed to settlements with consumers. In March of this year, a $10 million data breach settlement agreement was given preliminary approval by a Minnesota federal judge, which would provide consumers with documentation of their credit or debit card losses up to $10,000 in awards each. This Target data breach settlement with consumers also requires the retailer to increase security for consumer data, which includes appointing a chief information security officer, sustaining a written information security system, and implementing a program to monitor information security events.

$13 Million Health Care Fraud Scheme

Doctor at a Brooklyn, New York, clinic was sentenced to two years in prison for his role in a $13 million health care fraud scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Kelly T. Currie of the Eastern District of New York, Special Agent in Charge Scott Lampert of the U.S. Department of Health of Human Services-Office of Inspector General New York Region and Assistant Director in Charge Diego G. Rodriguez of the FBI’s New York Field Office made the announcement.

Okon Umana, 68, of West Haven, Connecticut, pleaded guilty on Dec. 1, 2014, to conspiracy to commit health care fraud.  In addition to imposing the prison term, U.S. District Judge John Gleeson of the Eastern District of New York ordered Umana to pay $6,429,330 in restitution and to forfeit $6,550,036.

From 2009 to 2012, Umana was the medical director of Cropsey Medical Care PLLC , a health care clinic.  In connection with his guilty plea, Umana admitted that many of Cropsey’s medical services were provided by a physician’s assistant who was acting without supervision by a medical doctor, and that Cropsey nevertheless billed Medicare and Medicaid for the services using Umana’s provider number.  In addition, Umana admitted that in seeking reimbursement for costs purportedly incurred transporting certain beneficiaries to and from Cropsey by ambulance, he falsely certified that transportation by ambulette was medically necessary.

Between November 2009 and October 2012, Cropsey submitted more than $13 million in claims to Medicare and Medicaid for a wide variety of fraudulent medical services and procedures, including physician office visits, physical therapy and diagnostic tests.  Medicare and Medicaid reimbursed Cropsey more than $6 million for the claimed services and procedures.

Missouri Health Care Providers Violate False Claims Act to Pay $5.9 Million

Two Southwest Missouri health care providers have agreed to pay the United States $5.5 million to settle allegations that they violated the False Claims Act by engaging in improper financial relationships with referring physicians, the U.S. Justice Department announced today.  The two providers are Mercy Health Springfield Communities, formerly known as St. John’s Health System Inc., which owns and operates a hospital in Springfield, Missouri, and its affiliate, Mercy Clinic Springfield Communities, formerly known as St. John’s Clinic, which operates health care facilities in southwest Missouri. 

“Financial relationships between heath care providers and their referral sources must be structured to comply with all applicable laws,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, the head of the Justice Department’s Civil Division.  “When physicians are rewarded financially for referring patients to hospitals or other health care providers, it can affect their medical judgment, resulting in overutilization of services that drives up health care costs for everyone.  In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”

“This settlement protects patients and the public by enforcing the federal protections against illegal profit incentives for physicians,” said U.S. Attorney Tammy Dickinson of the Western District of Missouri. “A bonus structure that rewards physicians based on the value of their referrals is detrimental to both the quality and the cost of health care. Patients deserve assurances that they are receiving appropriate medical care, unbiased by hidden incentives. And taxpayers deserve assurances that the cost of public health care programs is not inflated by unnecessary procedures and services.”

“Health care organizations paying physicians based on referrals – as alleged in this case – undermines public trust in medical institutions and the financial integrity of federal health care programs,” said Special Agent in Charge Gerald T. Roy of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).  “We will aggressively pursue organizations that engage in conduct detrimental to taxpayers and government health programs.”

The settlement announced today resolved allegations that the defendants submitted false claims to the Medicare program for services rendered to patients referred by physicians who received bonuses based on a formula that improperly took into account the value of the physicians’ referrals of patients to the clinic.  Federal law restricts the financial relationships that hospitals and clinics may have with doctors who refer patients to them.

The allegations settled today arose from a lawsuit filed by a whistleblower, Dr. Jean Moore, a physician who is employed 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 government for false claims and share in any recovery.  Dr. Moore will receive $825,000 from the recovery announced today.

Biomax Pharmacy Guilty of Medicare Fraud

According to the Department of Justice

 

A Miami-area pharmacy owner pleaded guilty today to submitting almost $1.6 million in fraudulent claims to Medicare.

Tamara Esponda, 47, of Miami, pleaded guilty before U.S. District Judge James I. Cohn of the Southern District of Florida to one count of health care fraud.  Sentencing has been scheduled for Nov. 13, 2015.

Esponda owned Biomax Pharmacy Inc.  In connection with her guilty plea, Esponda admitted that, between October 2012 and September 2013, Biomax Pharmacy submitted almost $1.6 million in fraudulent claims to Medicare for prescription drugs that were not prescribed by physicians, not medically necessary, not purchased by Biomax Pharmacy and not provided to Medicare beneficiaries.  Medicare paid 100 percent of the claims.

According to Esponda’s admissions, she and her accomplices stole or illegally paid for unique identifying information of Medicare beneficiaries, and used this information to submit the fraudulent claims.  Esponda also admitted that she controlled Biomax Pharmacy’s bank accounts, and that she transferred the payments received from Medicare to herself and her accomplices.

This case is being investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Southern District of Florida.  This case is being prosecuted by Trial Attorney Timothy P. Loper of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged over 2,300 defendants who collectively have billed the Medicare program for over $7 billion.  In addition, the U.S. Department of Health and Human Services (HHS) Centers for Medicare & Medicaid Services, working in conjunction with the HHS-Office of Inspector General, are taking steps to increase accountability and decrease the presence of fraudulent providers.

Construction Boss Fraudulently Gained Control of Condos Homeowners Association

According to the US Dept. of Justice website a former construction boss from Las Vegas was sentenced today to 188 months in prison for his role in a $58,141,275 million scheme to fraudulently gain control of condominium homeowners’ associations (HOAs) in the Las Vegas area to secure construction and other contracts for himself and others.  Forty-two individuals have been convicted of crimes in connection with the scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Special Agent in Charge Laura A. Bucheit of the FBI’s Las Vegas Office, Sheriff Joseph Lombardo of the Las Vegas Metropolitan Police Department and Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI) made the announcement.

Leon Benzer, 48, pleaded guilty on Jan. 23, 2015, to one count of conspiracy to commit mail and wire fraud, 14 counts of wire fraud, two counts of mail fraud and two counts of tax evasion.  In addition to imposing the prison term, U.S. District Judge James C. Mahan of the District of Nevada ordered Benzer to pay restitution in the amount of $13,294,100.

“Leon Benzer recruited and paid off puppets to serve on homeowners’ boards so that they would steer lucrative contracts to his company and cronies,” said Assistant Attorney General Caldwell.  “Far from enjoying their corrupt proceeds, however, Benzer and his co-conspirators will serve years behind prison bars.”

“When Leon Benzer named his company, Silver Lining Construction, he probably wasn’t aware of the IRS Criminal Investigation Division and the expertise of our special agents when it comes to putting pieces of a puzzle together to build a picture of fraudulent activity,” said Chief Weber.  “Benzer manipulated and bribed HOA boards in order to enrich himself and his co-conspirators at the expense of American taxpayers.  Not only did he try to hide the proceeds of his crimes in order to evade paying taxes, but he failed to pay his employment taxes.  Today, justice was served and the “silver lining” that Benzer anticipated was not realized thanks to the work of IRS-CI and our law enforcement partners.”

In connection with his guilty plea, Benzer admitted that, from approximately August 2003 through February 2009, he and an attorney developed a scheme to control the boards of directors of HOAs in the Las Vegas area.  According to plea documents, Benzer and his co-conspirators recruited straw buyers to purchase condominiums and secure positions on HOAs’ boards of directors.  Benzer admitted that he paid the board members to take actions favorable to his interests, including hiring his co-conspirator’s law firm to handle construction-related litigation and awarding remedial construction contracts to Benzer’s company, Silver Lining Construction.

NuVasive Inc. To Pay $13.5 Million For False Claim Settlement

California-based medical device manufacturer NuVasive Inc. has agreed to pay the United States $13.5 million to resolve allegations that the company caused health care providers to submit false claims to Medicare and other federal health care programs for spine surgeries by marketing the company’s CoRoent System for surgical uses that were not approved by the U.S. Food and Drug Administration (FDA), the Justice Department announced today.  The settlement further resolves allegations that NuVasive caused false claims by paying kickbacks to induce physicians to use the company’s CoRoent System.    

 

The United States alleged that between 2008 and 2013, NuVasive promoted the use of the CoRoent System for surgical uses that were not approved or cleared by the FDA, including for use in treating two complex spine deformities, severe scoliosis and severe spondylolisthesis.  As a result of this conduct, the United States alleged that NuVasive caused physicians and hospitals to submit false claims to federal health care programs for certain spine surgeries that were not eligible for reimbursement.       

 

The settlement agreement also resolves allegations that NuVasive knowingly offered and paid illegal remuneration to certain physicians to induce them to use the CoRoent System in spine fusion surgeries, in violation of the federal Anti-Kickback Statute.  The illegal remuneration consisted of promotional speaker fees, honoraria and expenses relating to physicians’ attendance at events sponsored by a group known as the Society of Lateral Access Surgery (SOLAS).  SOLAS was allegedly created, funded and operated solely by NuVasive, despite its outward appearance of independence.      

 

“Health care providers need to be free to make medical decisions without improper influence by material or incentives from manufacturers,” said U.S. Attorney Rod J. Rosenstein of the District of Maryland.  “A medical device manufacturer violates the law if it knowingly causes physicians to use its products for purposes that are not medically reasonable and necessary and to bill federal health insurance programs.”

 

The civil settlement resolves a lawsuit filed under the whistleblower provision of the False Claims Act by Kevin Ryan, a former NuVasive sales representative.  The act permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery.  As part of today’s resolution, Mr. Ryan will receive approximately $2.2 million.

 

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 Health and Human Services.  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 $24.8 billion through False Claims Act cases, with more than $15.9 billion of that amount recovered in cases involving fraud against federal health care programs.

The settlement with NuVasive was the result of a coordinated effort among the U.S. Attorney’s Office of the District of Maryland, the Civil Division’s Commercial Litigation Branch and the National Association of Medicaid Fraud Control Units.  This matter was investigated by HHS-OIG, the Department of Defense’s Office of the Inspector General and the Office of Personnel Management’s Office of Inspector General, with assistance from the FDA’s Office of Chief Counsel and Office of Criminal Investigations. 

 

This information was brought to us by the US Dept. of Justice

Evelio Penaranda Owner of Naranja Pharmacy Guilty of Medicare Fraud

A Miami-area pharmacy owner pleaded guilty today for his role in the submission of more than $1.8 million in fraudulent claims to Medicare.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office and Special Agent in Charge Shimon R. Richmond of the U.S. Department of Health and Human Services Office of Inspector General’s Miami Regional Office made the announcement.

Evelio Fernandez Penaranda, 47, of Miami, Florida, pleaded guilty before U.S. Magistrate Judge Chris M. McAliley of the Southern District of Florida to one count of health care fraud.  Sentencing has been scheduled for Oct. 8, 2015.

Penaranda owned Naranja Pharmacy Inc.  In connection with his guilty plea, Penaranda admitted that, between May 2013 and March 2014, Naranja Pharmacy submitted fraudulent claims to Medicare for prescription drugs that were not prescribed by physicians, not medically necessary and not provided to Medicare beneficiaries.  According to admissions made in connection with Penaranda’s guilty plea, Naranja Pharmacy submitted these false claims by obtaining and using the unique identifying information of Medicare beneficiaries and doctors without their consent.

Penaranda admitted that he controlled Naranja Pharmacy’s bank accounts, and that he transferred the payments received from Medicare to himself and his accomplices.  According to admissions made in connection with Penaranda’s plea, during the course of the scheme, Naranja Pharmacy submitted to Medicare over $1.8 million in false claims for prescription drugs, and Medicare paid 100 percent of the claims.

The case is being investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Southern District of Florida.  The case is being prosecuted by Trial Attorney Nicholas E. Surmacz of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged over 2,300 defendants who collectively have billed the Medicare program for over $7 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.