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Articles Posted in Whistleblower Lawsuits

“All tyranny needs to gain a foothold is for people of good conscience to remain silent.” – Thomas Jefferson

The role of a whistleblower is indispensable in any truly democratic, free society. Whistleblowers throughout history have put aside their own fears of persecution, belittlement and, in some cases, imprisonment or death in order to stand tall as purveyors of truth and justice.

A whistleblower is defined as any person or persons which reveals information pertaining to harmful or illicit actions taken by an individual or a governmental, corporate or private group, which may in turn lead to a criminal investigation and/or penalties levied against that group. An essential part of the whistleblowing definition is the distinction that such information would not likely otherwise become known if not for the action of the whistleblower.

The act of fraud – knowingly deceiving an individual, government entity or business, usually for personal profit – is unfortunately a common practice across the world, from something as small-time as selling a knock-off designer brand purse to something as high-profile as widespread corporate revenue schemes.

Sometimes, perpetrators of fraud are only brought to light with the help of a whistleblower, usually through a program operated by the Securities Exchange Commission (SEC) or the Internal Revenue Service (IRS). Both governmental organizations have robust whistleblowing programs that help catch fraudsters.

The following is a summary of three types of fraud, usually committed by bigger businesses.

The Internal Revenue Service (IRS) is the federal governmental body responsible for collecting taxes from individual citizens as well as companies. Failing to pay taxes, criminally misreporting your wages or conducting other acts of tax fraud are serious crimes that can result in heavy fines and jail time.

The IRS also contains an office that deals entirely with assisting whistleblowers – essentially any person or persons who help bring an act of tax fraud or tax evasion to the attention of the IRS – in bringing charges against individual offenders of tax law.

Being a whistleblower for the IRS can be an incredibly lucrative endeavor, as well as a just thing to do, since the people getting the whistle blown on them are almost certainly in clear, knowing violation of the law. A whistleblower can be awarded up to 30 percent of the additional taxes, penalties and other amounts collected by the IRS as a result of the crime coming to light.

Cases involving doctors, hospital staff, patients and administrators defrauding the federal government out of large amounts of money through healthcare scams are, unfortunately, almost a monthly occurrence. Medicare fraud results in higher healthcare costs for everyone, and it is estimated that the government loses billions of dollars every year as the result of fraud.  Multi-million dollar, and in sometimes over $1 billion, cases are publicized by government enforcement agencies – such as The U.S. Department of Health and Human Services’ Health Care Fraud Prevention and Enforcement Action Team (HEAT) and their targeted strike force teams – to try and inform the public about these schemes and serve as a warning to others who may try to perform similar unscrupulous acts.

Generally speaking, there are three main types of Medicare fraud – all of which involve either an individual or collective of co-conspirators falsifying official government documents with their own best interests in mind, usually at the expense of patients, the government or other healthcare professionals. The three main types of Medicare fraud are:

Phantom Billing

Phantom billing occurs when a hospital, treatment center or other kind of healthcare facility bills Medicare for services, drugs, treatments or any billable item that the patient did not knowingly authorize or did not receive. The fraudster may bill Medicare for a test that the patient did not require, and did not even undergo. In this type of fraud, the patient is not aware that the unauthorized billing is taking place.

Patient-involved Billing

In this form of fraud, the patient or patients are actually in on the scam. They will provide their Medicare information and then knowingly falsify claims that the healthcare provider makes about their treatment, usually for financial or medical-related kickbacks.

Upcoding and unbundling schemes

“Upcoding” schemes involve the healthcare provider pretending that a patient needs more expensive treatments and services than actually necessary by falsifying the Medicare billing codes. “Unbundling” refers to when a healthcare facility splits a series of tests or procedures into individually-billed items, which results in higher Medicare costs than if the tests or procedures were billed as a “bundle.”

The government does not play around with Medicare fraud

The United States Department of Health and Human Services, the Attorney General’s Office, the Office of the Inspector General and the United States Department of Justice combined resources in 2007 to create task forces specifically designed to go after all types of Medicare fraud in the country. They are based out of Florida, California, Michigan, Texas, New York, Louisiana and Illinois. These task forces, in accordance with their parent government agencies, relentlessly pursue fraud and have garnered some impressive results. According to their data, the task forces have found over 1,500 criminal actions, leading to 2,185 indictments and a grand total of nearly $2 billion in recovered money. Continue reading

The Occupational Safety and Health Administration (OSHA) maintains a robust whistleblowing program which encourages and protects individuals who wish to report a safety concern from retaliatory penalties placed on them by their employers.

You may submit a whistleblower report multiple ways, including an online form, a document which you may print, fill out and mail in, or by telephoning or writing a letter to your local OSHA office. OSHA will then conduct an interview with the whistleblower to assess whether or not an investigation is necessary.

OSHA has official protections legislation in place for a large variety of different hazardous situations to employees. They prevent retaliation against employees who report hazardous safety conditions or safety violations. Some of them include:

  • The Asbestos Hazard Emergency Response Act
    • Protects employees that report incidents of asbestos
  • The Clean Air Act
    • Prohibits retaliation against employees that report issues regarding air quality
  • Federal Water Pollution Control Act
    • Prohibits retaliation against employees that report incidents of polluting water sources
  • Solid Waste Disposal Act
    • Protects employees that report violations relating to the disposal of solid and hazardous waste
  • Federal Railroad Safety Act/ National Transit Systems Security Act
    • Protects employees of railroad carriers and contractors and transit employees who report hazardous safety or security conditions
  • Pipeline Safety Improvement Act
    • Protects employees who report violations regarding pipeline safety and security
  • Surface Transportation Assistance Act
    • Protects truck drivers and transit employees that refuse to violate safety regulations
  • Affordable Care Act
    • Protects employees who report violations regarding discrimination, denial of coverage based on preexisting conditions or insurance company violations
  • Consumer Financial Protection Act
    • Provides protections for employees that violate financial policies placed by the Bureau of Consumer Financial Protection, such as Wall Street infractions or fraudulent activity
  • Consumer Product Safety Improvement Act
    • Protects employees that report violations of consumer product safety, including manufacturers, importers, distributors, private labelers, and retailers
  • FDA Food Safety Modernization Act
    • Protects employees of food manufacturers, distributors, packers, and transporters that report any violation regarding the Food, Drug, and Cosmetic Act.

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Although there is no perfect system that can prevent all types of criminal activity, the United States federal government has secured some huge victories in recent times prosecuting enormously large healthcare companies found to be committing fraud and taking advantage of patients for their own financial gain.  Both Tenet Healthcare Inc., a multinational healthcare services conglomerate worth $18 billion, and Life Care Centers of America, the largest private nursing care company in the United States, have been caught red-handed this year defrauding the federal government and putting the needs of their patients second by deferring them to out-of-the-way healthcare centers and administering unnecessary services respectively.

Tenet Healthcare was found to be purposefully deferring pregnant patients to certain subsidiary facilities for profitable kickbacks, while also overcharging for unnecessary services. Life Care Centers of America was found to be overcharging for unnecessary services and keeping patients longer than necessary to squeeze more money out of patients and the federal government.  As a result of these infractions, Tenet Healthcare has agreed to settle for $513 million and Life Care Centers of America has agreed to pay $145 million as a result of the lawsuits levied against them by state and federal prosecutors, awarding millions of dollars back to the government and taxpayers across the country.

The depth and scale of these fraudulent activities is alarming. In Tenet Healthcare’s case, it is the fourth major healthcare scandal they have faced since the early 1990s. In the case of Life Care Centers of America, their fraudulent activities were tracked between 2006 and 2013. In both cases, the criminal activities involved taking advantage of the patients that place their trust in their services for their own personal profit.

Life Care Centers of America has agreed to pay out $145 million in a settlement with the United States government after it was discovered that they has been defrauding Medicare and TRICARE by overcharging for rehabilitation and therapy services that their patients did not require between 2006 and 2013.  Through their more than 220 skilled nursing care centers across the country, Life Care Centers of America engaged in fraudulent activities that involved overbilling elderly for services they did not request or did not require and also billing patients with less serious care requirements as though they needed the highest level of necessary care – “Ultra high” – which netted them more money from the federal government.

In some cases, the nursing care centers would keep patients for much longer than necessary to extend their stay and bleed more money out of the patients and the government. The lone shareholder of Life Care Centers of America, Forrest L. Preston, was implicated in a separate lawsuit for his profiting from the widespread scam.  “Billing federal healthcare programs for medically unnecessary rehabilitation services not only undermines the viability of those programs, it exploits our most vulnerable citizens,” said Eastern District of Tennessee U.S. Attorney Nancy Stallard Harr. “We are committed to working with our federal partners to protect both.”

Life Care Centers of America, the largest private nursing care company in the country, based in Tennessee, in addition to paying the hefty settlement, is now the subject of a five-year Corporate Integrity Agreement with the federal government, which means they are now required to be reviewed by independent agencies to assess the necessity of their rendered services for the next five years.  The allegations, legal action, and eventual settlement was brought to light by two former Life Care employees, who made authorities aware of the scheme via the whistleblowing protections of the False Claims Act. Tammie Taylor and Glenda Martin will receive a share of $29 million for their part in exposing the crime.

Tenet Healthcare Inc., a multinational healthcare services conglomerate worth over $18 billion, and two of its subsidiary companies have committed to pay out a total of $513 million to the United States government after it was revealed to be defrauding federal and state government agencies through an egregious scheme where kickback payments were doled out in exchange for patient referrals.

The two subsidiary companies, Atlanta Medical Center Inc. and North Fulton Medical Center Inc., will plead guilty to a healthcare kickback scheme that unnecessarily funneled pregnant patients to Tenet Healthcare facilities for kickback payments, which is in direct violation of the Anti-Kickback Statute, which “prohibits the exchange (or offer to exchange), of anything of value, in an effort to induce (or reward) the referral of federal health care program business.”  Tenet Healthcare Inc. agreed to pay out $368 million to the federal government, the state of Georgia and the state of South Carolina in response to multiple civil court claims brought against them under the authority of the federal False Claims Act and Georgia’s local statute equivalent. The federal government will receive over $244 million of that, Georgia will receive over $122 million, South Carolina will receive $892,125 and Ralph D. Williams, who filed the initial case in Georgia, will receive about $85 million.

“Using their positions of trust, health providers – after receiving payments from Tenet – sent expectant women specifically to Tenet hospitals,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services-Office of Inspector General. “Patients were often directed to Tenet facilities miles and miles from their homes and on their journeys passed other hospitals that could have provided needed care.  These women were thereby placed at increased risk during one of the most vulnerable points in their lives.”  The depth and scale of the illicit operation is unprecedented in the area and is amongst the most lucrative of such schemes ever brought to light in the United States. The Attorney General’s office praised collaborative work from local, state and federal litigators in helping shed light on the corruption.

“Our Medicaid system is premised on a patient’s ability to make an informed choice about where to seek care without undue interference from those seeking to make a profit,” said U.S. Attorney John Horn of the Northern District of Georgia.  “Tenet cheated the Medicaid system by paying bribes and kickbacks to a pre-natal clinic to unlawfully refer over 20,000 Medicaid patients to the hospitals.  In so doing, they exploited some of the most vulnerable members of our community and took advantage of a payment system designed to ensure that underprivileged patients have choices in receiving care.”

No company, regardless of size, can toy with its patients’ care for profit

The Tenet case is another sad reminder of how companies of considerable wealth, breadth and success just cannot seem to resist greedy, shady and illegal tactics to earn more patients and secure more profits. This scheme directly put patients second and profit margins for the parent and subsidiary companies first.  This is not Tenet’s first major scandal either. Since the early 1990s, Tenet has been involved in scandals involving hospitalizing and overcharging patients for unnecessary psychiatric care, performing dangerous and unnecessary heart surgeries on over 600 patients, and was caught in another Medicare fraud scandal in 2006. In all of these cases, rather than accept blame or go to court, they settled for hundreds of millions of dollars combined to avoid admitting any fault. Continue reading

Skilled nursing facilities are institutions that provide rehabilitation, medical, and nursing services for patients on a short or long-term basis. Under the Social Security Act, these types of services are covered by Medicare if they are medically necessary. Unfortunately, some skilled nursing facilities and nursing homes put profits above the health and safety of patients and residents. In some cases, they even commit insurance fraud. If you suspect that a skilled nursing facility is committing Medicare fraud, contact a Boston whistleblower law firm today.

$1 Billion Medicare Scam at Miami SNF Chain

In the largest health care fraud case in U.S. history, three Florida health care execs were recently charged by the Justice Department for their part in a $1 billion Medicare scam. Philip Esformes, the owner of a skilled nursing chain with more than 30 Miami-area facilities is charged with fraudulent activity against Medicare. According to the recently released 34-page indictment, Esformes conspired with two other people to provide medically unnecessary services and treatments to patients. The indictment also alleges that the trio received kickbacks for referring patients to other health care providers. To conceal their illegal actions, many of the kickbacks were paid in cash or disguised as charitable donations.

Medically-necessary admission to a skilled nursing facility is generally covered by Medicare and other government health care programs. However, several qualifying circumstances must be present to obtain reimbursement. If these requirements are not met, or the facility bills for treatment that is not medically necessary, the facility may be guilty of Medicare fraud.

RUG Upcoding

There is another common form of Medicare fraud in skilled nursing facilities: RUG upcoding. Using information provided by the facility, Medicare categorizes each patient into one of seven categories using a program called the RUG III Grouper. The assigned category is directly related to the per diem Medicare payment received by the facility. Unfortunately, some facilities falsify reported information so that Medicare places the patient in a high-paying category.

Federal False Claims Act

If you are aware of fraudulent activity in a skilled nursing facility or nursing home, you should report this information to a Boston whistleblower attorney immediately. As this type of fraud is a violation of the False Claims Act, whistleblowers who come forward with information that leads to financial recovery are often rewarded with substantial sums of money. These rewards act as an incentive to encourage individuals to report fraud and abuse against the government. Whistleblower compensation is generally a percentage of the recovered funds. Considering that some fraud cases recover tens of millions of dollars, whistleblower compensation can be quite significant.  Continue reading

Assistant attorney general Leslie Caldwell called it the “largest single criminal health care fraud case ever brought against individuals by the Department of Justice.” Over a billion dollars-worth of kickbacks, bribes and fraudulent Medicare and Medicaid charges were allegedly orchestrated by Philip Esformes, who owns dozens of retirement facilities throughout Illinois, Florida and Missouri.  The unprecedented, comprehensive scheme has landed Esformes, well-known in his area of influence for his wealth and philanthropy, in custody while awaiting trial on charges of fraud, corruption and obstruction of justice. Esformes is facing life in prison for these charges.

The charges have led various newspapers to investigate, and The Chicago Tribune recently uncovered that retirement facilities belonging to Esformes have been the subject of 20 wrongful death suits since just 2013. Three of the cases, as described by the Tribune, involve gross negligence that allowed two elderly residents to wander off to their deaths outside the facility (one by drowning, another hit by a vehicle).  In another horrifying case, a 73-year-old, terminally-ill and bedridden patient was beaten to death by his 41-year-old roommate who had a history of violent episodes and was revealed to not be taking his prescribed antipsychotic medication. It was alleged that after the perpetrator was found with his hands bloodied, he was left unattended to walk to a smoking patio, putting other residents in immediate danger.

These cases are separate from the overarching fraud accusations, which involve allegedly cycling about 14,000 patients over 14 years through various nursing homes. Some of these patients were given addicting narcotics without a prescription to keep them in the system. Some patients were used as a means to order expensive treatments they did not need to game more money out of the Medicare system.  Attorneys for Esformes and attorneys representing his retirement facilities have denied any wrongdoing, but it isn’t looking good for the wealthy retirement home magnate. The Department of Justice worked with one of Esformes’s co-conspirators to wear a wire in a conversation where Esformes talked about defrauding the federal government and ways to flee the country. This 200-page transcript was used recently by the Department of Justice to deny Esformes from posting bail before his trial, scheduled for February.