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Articles Posted in Whistleblower Lawsuits

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.

The Foreign Corrupt Practices Act (FCPA) was enacted in 1977 and is the most widely enforced anti-corruption law in the United States.  The Act was passed in response to the discovery of widespread corruption of foreign officials by companies based in the United States.  Within the FCPA, there are two main provisions: the anti-bribery component and the accounting component.  The anti-bribery clauses prohibit bribery to foreign officials in order to gain new business or keep existing business.  The accounting clauses require issuers to keep up to date and accurate records thereby maintaining secure internal accounting controls.  The FCPA applies to two distinct groups, those with formal relations to the United States and those who participate in violating the FCPA within territory of the United States.  Outside U.S. territory, “issuers” and “domestic concerns” must also adhere to the FCPA.  An “issuer” is a person or company that has securities within the U.S. or is required to occasionally file reports with the SEC.  “Domestic concerns” include anyone who is a citizen, national, or resident of the United States, as well as businesses that are based in the U.S. or a territory, possession, or commonwealth of the U.S.  The FCPA is enforced by the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ).

The FCPA prohibits five “elements” which the government must prove a person or organization guilty of in order to show FCPA violation.   These elements are 1) a payment, offer authorization, or promise to pay money or anything of value; 2) to a foreign government official (including a party official or manager of a state-owned concern), or to any other person, knowing that the payment or promise will be passed on to a foreign official; 3) with corrupt motive; 4) for the purpose of (a) influencing any act or decision of that person, (b) inducing such person to do or omit any action in violation of his lawful duty, (c) securing an improper advantage, or (d) inducing such person to use his influence to affect an official act or decision; 5) in order to assist in obtaining or retaining business for or with, or directing any business to, any person.  Persons or organizations found guilty of all five elements may be have to answer to criminal charges by the DOJ, resulting in prison time or fines.  The SEC can add further penalties of up to $500,000 on top of any punishment decided upon by the DOJ.  One point to note is that a bribe does not need to actually be paid in order to violate the FCPA, just the promise or offer of a bribe violates the Act.  Additionally, the individual making or approving the payment must have a “corrupt intent” meaning the payment would influence the beneficiary to exploit his official position to direct business unlawfully to the payer or someone else.  The FCPA specifies that the recipient of the payment only extends to “a foreign official, a foreign political party or party official, or any candidate for foreign political office” in terms of violating the Act.

In recent years, the SEC and the DOJ have participated in an increasing rate of enforcement actions regarding violations of the Foreign Corrupt Practices Act.  More and more cases are surfacing of violations of the FCPA.  This makes it essential for attorneys of insurers and insureds are familiar with the Act so that they may be able to most effectively defend their clients.

A truck driver is receiving thousands in compensation after his employer recently fired him after he refused to violate federal safety regulations in order to make his delivery on time.  The driver was making a delivery from Massachusetts to New Jersey when he became concerned he would not complete the delivery on schedule without breaking safety regulations and putting his safety and the safety of others at risk.  The driver thought he planned a route that would allow him to run on time without breaking regulations, but his employer fired him as a result.  His employer, NFI Interactive Logistics Inc., violated the anti-retaliation clauses of the Surface Transportation Assistance Act, as found by the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA).  As a punishment, OSHA is demanding the company reinstate the driver, as well as pay him over $276,000 in back wages and damages.

The driver was assigned by NFI to deliver a truckload of Poland Spring bottled water from Northborough, Massachusetts to Jersey City, New Jersey on August 15, 2012.  The trip was prolonged to due severe weather, including thunderstorms, flooding, heavy traffic, and multiple accidents.  With the delay, the driver did not believe that he would be able to make the delivery and still get home without violating the hours of service restrictions included in the U.S. Department of Transportations Federal Motor Carrier Safety Administration regulations.  Specific hours of service rules depend on if the driver is carrying property or passengers, but all rules limit the amount of hours a truck driver can drive consecutively.  When the driver realized that he would be driving longer than he was technically permitted, he arranged to deliver the water to a closer customer facility near Kearny, New Jersey.  NFI opposed that the driver making the delivery Kearny.  It was later arranged that another driver would pick the load up from Kearny and drive it to its final destination in Jersey City.

Both NFI and the customer approved this change.  The driver made the delivery to Kearny and successfully returned to Northborough, MA without violating the hours of service restrictions.  However, the following day, NFI terminated him for “insubordination”.  Afterward, the driver filed a whistleblower complaint with OSHA to which the agency found the driver had a valid complaint.  In a statement made by Kim Stille, OSHA’s New England regional administrator, “The driver found a way to do his job and ensure motor carrier safety. Rather than receiving credit for doing the right thing, he received a link slip. The law is clear: Drivers have the right to raise legitimate safety concerns to their employee—including refusing to violate safety regulations—without fear of termination or other retaliation.”  OSHA is ordering NFI Interactive Logistics respond to a laundry list of remedial actions including: Continue reading

What if revealing information could land you with millions in rewards?  The IRS can award money to those who provide “specific and credible information” to the IRS if the material yields collection of taxes, penalties, interest or other forms of collection from the defiant taxpayer.  The IRS is specific in noting that the information needs to be concrete and proven, not simply “educated guesses” and that proves a substantial Federal tax issue.  The information must also be relatively new, as the statute of limitations on corporate and individual cases can be as short as three years.  There is no statute of limitations for fraud, but these issues are more difficult, and therefore are often avoided by the IRS.

If a case is strong, there are two types of potential awards granted by the IRS.  First are awards issued to those who report cases with total values less than $2 million or with individuals who earn less than $200,000 annually.  These awards are smaller but still can be substantial.  The IRS can offer a maximum reward of 15 percent up to $10 million.  These awards are discretionary and therefore cannot be appealed to the Tax Court.  In 2006, the IRS instituted a new whistle-blower program to attempt to catch more “big cheaters”.  In these cases, the total amount in dispute must surpass $2 million in addition to a few other requirements.

If the case involves an individual, his or here annual gross income must be upwards of $200,000.  If the case adheres to these clauses, the IRS will pay 15 to 30 percent of the amount collected to the whistleblower.  In these cases, the whistleblower can appeal the claim to the Tax Court.  Since new incentives have been implemented, the IRS has received various tips from about 476 individuals identifying 1,246 taxpayers in 2008, the first full year the program was implemented.  These tips have been well supported with documentation involving billions of dollars in taxes, penalties, and interest.

Most often, the individuals who contact the IRS with tips are disgruntled middle-ranking employees at large corporations.  It is believed that these workers inform on those in upper management because they feel stuck in their positions at work and frustrated with the tax evasion that they know to be occurring.  Informant identity is not made public, but often times the person’s name is obvious based on the information provided.  This fact which might incite retaliation, along with the extensive amounts of information that are required to complete the forms in a report to the IRS (i.e. the accused’s social security number) often deter individuals from making reports.  Continue reading

Often times after older citizens suffer an incapacitating illness or stroke, they require some time to recover in a rehabilitation center.  However, there are some cases in which these skilled nursing facilities (SNFs) partake in fraudulent behavior.  The way this scam works is often through a type of billing fraud called “upcoding”.  Upcoding is when a provider, such as an SNF, bills a health insurance payer, in this case Medicare, using a false current procedural terminology (CPT) code for a more costly service than was performed.  Upcoding is understandably illegal because it forces individual patients and taxpayers to pay more so that the providers get paid more money.  In addition to stealing money from patients, it also puts false information on their medical records.  This is not only dangerous, but it may affect the patient’s future ability to get insurance.  SNFs also may place patients into the highest Resource Utilization Group (RUG) category.  This is another scam used by SNFs because by doing this, the center receives the most Medicare money paid by the government.  In this group, patients receive excessive physical and occupational therapy, which is often unnecessary and can even be unsafe for the patient.

According to a New York Times article published in September 2015, Inspector General Levinson reported SNFs have been classifying patients in the highest level of therapy group at an increasing rate.  The article states that increases in SNF billing for placing patients in RUG accounted for $1.1 billion in Medicare payments in 2012 and 2013.  Additionally, fraudulent SNF billings in 2009 resulted in $1.5 billion of inappropriate Medicare payments.

Fraud in skilled nursing facilities is relatively prevalent.  This year, the country’s largest nursing home therapy provider, Kindred/Rehabcare, paid $125 million to resolve False Claims Act allegations.  The providers RehabCare Group Inc., RehabCare Group East Inc. and their parent, Kindred Healthcare Inc. were involved in a government lawsuit in which they were accused of allowing their SNFs to submit false claims to Medicare.  Nationally, RehabCare provides rehabilitation therapy to patients through more than 1,000 SNFs in 44 states.  The government filed a complaint, which claimed that RehabCare’s policies were directed at receiving the highest reimbursement level regardless of the clinical needs of its patients.  U.S. Attorney Carmen M. Ortiz for the District of Massachusetts claimed RehabCare was involved in several schemes in which they “engaged in a systematic and broad-ranging scheme to increase profits by delivering, or purporting to deliver, therapy in a manner that was focused on increasing Medicare reimbursement rather than on clinical needs of patients.”  Along with the initial $125 million paid by Kindred/RehabCare, there were also settlements with four SNFs for their role in submitting fraudulent claims.  Continue reading

A Pennsylvania-based manufacturer of sleep apnea masks is on the hook for millions of dollars due to alleged violations of the False Claims Act. According to the Department of Justice, Respironics Inc. has agreed to pay $34.8 million for paying illegal kickbacks to durable medical equipment (DME) suppliers that purchased its sleep apnea masks. The kickbacks came in the form of free call center services for the DME suppliers. The DOJ said the company provided some suppliers with the free service between April 2012 and November 2015 while charging other suppliers a monthly fee “based on the number of patients who used masks manufactured by a competitor of Respironics.” Contact a Boston Whistleblower Lawyer Today.

South Carolina Whistleblower to Receive $5.38 Million for Exposing Fraud

The whistleblower who exposed the violations being committed by Respironics Inc. was a South Carolina pharmacist by the name of Gibran Ameer. Ameer worked for various DME suppliers. Of the total $348.8 million settlement, $34.14 million will go to the federal government, $660,000 will go to state governments based on Medicaid participation, and $5.38 million will go to Ameer for his role in exposing the company’s fraudulent activities. Under the qui tam provisions of the False Claims Act, private citizens with knowledge of fraudulent acts against the government are permitted to file a lawsuit on behalf of the U.S. government and share in any recovered funds.

“The payment of illegal remuneration in any form to induce patient referrals threatens public confidence in the health care system,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Americans deserve to know that when they are prescribed a device to treat a serious health care problem, the supplier’s judgment has not been compromised by illegal payments from equipment manufacturers.”

False Claims Act has Helped Recover Billions in Health Care Fraud Since 2009

The U.S. government is coming down hard on health care fraud. The lawsuit against Respironics Inc. is yet another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT), which was launched in 2009 to combat health care fraud. HEAT, a partnership between the Secretary of Health and Human Services and the Attorney General, focuses primarily on reducing and preventing fraud against Medicare and Medicaid. As a result of the False Claims Act, more than $17.4 billion has been recovered in health care fraud cases since 2009. Continue reading

The U.S. unit of well-known camera and medical device manufacturer, Olympus, has agreed to pay more than $623 million in civil and criminal penalties for violating the U.S. government’s False Claims Act. Prosecutors are calling this the largest anti-kickback settlement to date. The U.S. attorney’s office for the District of New Jersey alleges that Olympus paid almost $3 million to government health practitioners in Latin America to increase sales of its product in that part of the world. Olympus admitted that these kickbacks violated the Foreign Corrupt Practices Act. John Slowik, Olympus’ former chief compliance officer, brought the violations to light in 2010 as part of a whistleblower lawsuit against the company. Contact a Massachusetts Whistleblower Attorney Today.

Slowik’s allegations helped to uncover multiple violations by Olympus executives and senior employees, including kickbacks in the form of trips to Japan, expensive meals, spa treatments, golf trips, and consulting fees. “There was a relatively widespread pattern of the company using various forms of financial benefits—cash, trips, consulting agreements—to induce doctors, hospitals and other health-care providers to buy their stuff,” said Paul J. Fishman, the U.S. attorney for New Jersey. Olympus admitted to the misconduct of its senior employees and executives.

Kickbacks Helped Olympus Generate $230 Million in Profits

According to Olympus and federal prosecutors, the kickbacks generated approximately $600 million in sales of medical equipment between 2006 and 2011, resulting in about $230 million in profits for the company. The majority of the medical device sales were for endoscopes; long tubes affixed with miniature cameras that allow physicians to perform internal examinations of patients’ lungs and colons. According to the settlement agreement, some of these endoscopes were sold for more than $20,000 each.

Whistleblower Set to Receive $51.1 Million

As compensation for his role in uncovering these violations, Mr. Slowik will receive $51.1 million. According to his attorneys, Slowik initially tried to report the violations internally, but his attempts to resolve the issues were unsuccessful.

In addition to paying hundreds of millions in penalties, as part of the settlement agreement, Olympus must also improve its compliance training and assign an independent monitor to oversee compliance for a minimum of three years. If the company violates any of the agreed upon requirements within the three-year period, the government is entitled to pursue criminal charges. Continue reading

A whistleblower is a person who exposes an individual, company, or organization engaged in illegal or illicit activity. Since 1970, whistleblowers have been protected from retaliation by the US Department of Labor’s Occupational Safety and Health Administration (OSHA). Last month, these protections were enhanced when OSHA issued a revised Whistleblower Investigations Manual for use by agency investigators to determine whether to pursue or dismiss a retaliation case. The updated manual includes a change that significantly affects the investigation process for whistleblowers, in favor of employees. Contact a Boston Whistleblower Attorney Today.

In the old manual, OSHA investigators were instructed to dismiss complaints unless the whistleblower was able to show evidence of a prima facie allegation of retaliation. This means, essentially, that upon initial examination, enough evidence must be present to support the allegations of retaliation. The updated manual eliminates the prima facie requirement. Under the new guidelines, OSHA only needs to “find reasonable cause that a complaint has merit.” Basically, the updated standard requires much less evidence. “The evidence does not need to establish conclusively that a violation did occur.” These changes have effectively tipped the scales in favor of the whistleblower.

Whistleblower FAQs

  • In order to obtain a financial reward, a whistleblower must file a lawsuit.
  • If the illegal or fraudulent activity cheats the government, a whistleblower can file suit under the Federal False Claims Act.
  • A ‘relator’ is a person who initiates a False Claims Act lawsuit.
  • The relator must be an ‘original source’ as defined by the False Claims Act: “ An individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the Government before filing an action under this section which is based on the information.”
  • Will my employer know if I file a False Claims lawsuit? The suit will remain ‘under seal’ and will not be served on the defendant for a minimum of 60 days, and as long as several years.
  • Private citizens can also receive a financial reward for reporting tax fraud or failure to pay federal taxes.

Whistleblowers May Receive Up to 30% of Recovered Funds

Blowing the whistle on government fraud can be extremely lucrative for the whistleblower. Under the False Claims Act, not only are whistleblowers given job protection, they are also typically entitled to a portion of funds recovered by the government. In fact, a whistleblower may receive up to 30% of the recovered funds. Considering that settlements can be in the tens or hundreds of millions, even in the billions, 30% can be a substantial figure. Continue reading

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