Whistleblower Qui Tam Lawyer Blog
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Dignity Health (“Dignity”), formerly known as Catholic Healthcare West, has agreed to settle allegations by a whistleblower in a qui tam lawsuit that 13 of its hospitals submitted false claims to Medicare and TRICARE in violation of the False Claims Act.

According to its website, Dignity, headquartered in San Francisco, California, is the largest hospital provider in California and the fifth largest health system in the nation.  The whistleblower’s allegations involved 13 of Dignity’s 39 hospitals in California, Arizona, and Nevada.

In 2009, Kathleen Hawkins, a former employee of Dignity, filed a whistleblower lawsuit under the qui tam provisions of the False Claims Act in the Northern District of California. According to the whistleblower, 13 of Dignity’s hospitals knowingly overcharged government healthcare programs, such as Medicare and TRICARE (the military healthcare program), for inpatient admissions when care should have been given on an outpatient basis.

The government claims that from 2006 to 2010, the hospitals submitted claims for inpatient services provided to patients who underwent elective cardiovascular procedures when the procedures should have been submitted as outpatient procedures.  In addition, the complaint alleged that four of the hospitals also knowingly overcharged the government for minimally-invasive kyphoplasty procedures used to treat compression fractures by billing them as inpatient, rather than outpatient, procedures.

Dignity will pay $37 million to settle the False Claims Act violation allegations.  In addition, Dignity has entered into a five-year corporate integrity agreement with the U.S. Department of Health and Human Services-Office of Inspector General.

The whistleblower will receive approximately $6.25 million of the settlement proceeds as her reward under the qui tam provisions of the False Claims Act.

Click here to read our Frequently Asked Questions about False Claims Act and Whistleblower cases.

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The Department of Justice announced that DaVita Healthcare Partners, Inc. (“DaVita”) has agreed to settle allegations that it violated the False Claims Act and the Anti-Kickback Statute for $350 million, plus the civil forfeiture of $39 million. The allegations were first made in a lawsuit filed under the qui tam provisions of the False Claims Act by whistleblower, David Barbetta, a former Senior Financial Analyst in DaVita’s mergers and acquisitions department.

According to DaVita’s website, it is one of the leading providers of dialysis services to patients with chronic kidney disease and end stage renal failure. It has 2,119 outpatient dialysis centers in 46 states and the District of Columbia.  DaVita is headquartered in Denver, Colorado and acquired Healthcare Partners, an operator of medical groups in several states, in 2012.

In his qui tam complaint, the whistleblower alleged that DaVita violated the False Claims Act by submitting claims for payment involving the referral of patients from physicians with whom DaVita had illegal kickback arrangements.  According to the government, DaVita engaged in multiple complicated schemes to provide improper compensation to physicians to induce them to refer patients to DaVita’s dialysis centers.  For example, the government alleged that DaVita identified medical practices with a significant number of patients in a specific geographical area suffering from renal disease and offered to engage in joint venture dialysis clinics to which the physicians groups would then refer their dialysis patients.  The government claimed the joint ventures consisted of DaVita either acquiring an interest in an existing dialysis clinic owned by the physician or the sale of an interest in a DaVita clinic to the physician. The complaint stated that the physicians were often paid to serve as medical directors of the joint venture clinics.  The government also alleged that DaVita entered into non-compete and non-disparagement agreements with the physicians in which the physicians agreed that they would not refer their patients to any non-DaVita dialysis provider.

The Anti-Kickback Statute prohibits offering or providing anything of value to physicians in order to induce patient referrals. DaVita has agreed to pay $350 million to settle the civil allegations of violation of the False Claims Act and the Anti-Kickback Statute.  In addition, DaVita has agreed to a civil forfeiture of $39 million in settlement of the Justice Department’s criminal investigation.

The whistleblower will receive a percentage of the settlement proceeds as his reward under the qui tam provisions of the False Claims Act.

Check out our video for more information on the False Claims Act.

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The Justice Department announced that the Boeing Company has agreed to settle four whistleblowers’ qui tam claims alleging violations of the False Claims Act.  Boeing has agreed to pay the federal government $23 million to resolve the allegations that it submitted false claims to the United States for work on government contracts.

Boeing is a leading manufacturer of commercial jetliners and defense systems and the largest global aerospace company.  According to its website, Boeing, headquartered in Chicago, Illinois, employs approximately 169,000 people in 65 countries. According to the whistleblowers, in 2005, over 50% of Boeing’s revenues were generated from contracts with the United States government.

In 2007, present and former Boeing employees residing in Texas, filed a qui tam complaint under the provisions of the False Claims Act against Boeing.  The whistleblowers alleged that Boeing improperly charged the federal government for labor costs associated with contracts with the United States Air Force performed at Boeing’s Aerospace Support Center in San Antonio, Texas.  The contracts related to maintenance and repair of the C-17 Globemaster aircraft, used by the military to carry large equipment, supplies and troops worldwide.

Specifically, the complaint alleged that Boeing knowingly misrepresented that work was performed on one task when, in reality, the work was performed on a different task payable under a different contact type. The whistleblowers claimed that Boeing shifted costs and tasks in this manner to increase its profits, to the detriment of the federal government.  According to the government, the knowing submission of invoices containing improperly coded charges violated the False Claims Act.

The four whistleblowers, Clinton Craddock, Fred Van Shoubrouek, Anthony Rico, and Fernando de la Garza, will share in $3,910,000 of the settlement proceeds as their reward under the qui tam provisions of the False Claims Act.  Craddock and Van Shoubrouek are current Boeing employees.  De La Garza is a former Boeing employee.  Rico was employed by a Boeing subcontractor, Aerotek.

What is Procurement Fraud?

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Extendicare Health Services, Inc. (“Extendicare”) and its subsidiary Progressive Step Corporation (“ProStep”) have agreed to settle two whistleblowers’ qui tam claims that they violated the False Claims Act by billing government health care programs for substandard nursing services and billing for rehabilitation therapy services that were not medically necessary or reasonable.

According to the Extendicare website, its United States operations are headquartered in Milwaukee, Wisconsin.  Through its subsidiaries, it is made up of 156 skilled nursing, assisted living, and rehabilitation facilities in eleven states.   ProStep provides inpatient rehabilitation services, such as physical and occupational therapy and speech-language pathology services, through Extendicare’s skilled nursing facilities.

Skilled nursing facilities, most often called “nursing homes,” are licensed healthcare facilities that offer short-term care for individuals who need rehabilitation services and long-term care for patients with serious or persistent health conditions, such as Alzheimer’s Disease, who cannot be cared for at home or in an assisted living facility.

According to the Justice Department, two whistleblowers brought separate cases under the qui tam provisions of the False Claims Act alleging that Extendicare had violated the False Claims Act. Tracy Lovvron and Donald Gallick, both former employees of Extendicare, filed the qui tam complaints in Pennsylvania and Ohio, respectively.

According to the government, between 2007 and 2013, Extendicare billed Medicare and Medicaid for materially substandard skilled nursing services (e.g., it failed to have an adequate number of skilled nurses for the number of skilled nursing residents, and it failed to follow the appropriate protocols to prevent falls and pressure sores) and submitted claims for rehabilitation services that were not medically necessary.

The government claims that the violations occurred in 33 nursing homes in eight states:  Indiana, Kentucky, Michigan, Minnesota, Ohio, Pennsylvania, Washington, and Wisconsin. The Justice Department announced that Extendicare and ProStep have agreed to pay $32.3 million to the federal government to settle the allegations.  The Medicaid programs of the eight states will share in a $5.7 million settlement.  In addition, Extendicare and ProStep will enter into a facility-wide five-year corporate integrity agreement.

As their reward under the qui tam provision of the False Claims Act, the whistleblowers will share in approximately $2 million.

To find out how to blow the whistle on healthcare fraud, click here.

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Shire Pharmaceuticals, LLC (“Shire”) has agreed to settle two qui tam lawsuits brought by whistleblowers alleging violations of the False Claims Act for allegedly making false and unsupported claims related to Adderall XR, Vyvanse, Daytrana, and promoting off-label uses of its drugs Pentasa, and Lialda.  According to the Department of Justice, Shire will pay $56 million to resolve the civil allegations that it violated the False Claims Act.

According to its corporate website, Shire develops and markets products for use in the fields of neuroscience, rare diseases, gastrointestinal, and internal medicine.  It has locations in 29 countries and markets its products in over 50 countries.

“Off-label” means the medication is being used in a manner not specified in the U.S. Food and Drug Administration (“FDA”) approved packaging label or insert.  In the United States, no law prohibits physicians from prescribing medications for off-label uses.  However, pharmaceutical companies are not allowed to promote a drug for off-label uses without formal FDA approval.

According to the Justice Department, former Shire employees Gerardo Torres, Anita Hsieh, Kara Harris and Ian Clark brought whistleblower lawsuits under the qui tam provisions of the False Claims Act alleging that Shire was making false and misleading claims regarding certain drugs and promoting others for off-label uses. Specifically, it was alleged that Spire promoted Adderall XR for uses unsupported by clinical data and overstated the efficacy of Adderall XR relative to other drugs used to treated attention deficit hyperactivity disorder (“ADHD”.)  In addition, the whistleblowers claimed that Shire made false and misleading statements that Vyvanse and Daytrana, other drugs used to treat ADHD, were less abuseable than other ADHD medications.

The qui tam complains also alleged that between January 2006 and June 2010, Shire’s sales representatives promoted Lialda for off-label uses. The FDA approved Lialda for the treatment of ulcerative colitis.  Allegedly, Shire promoted the use of Lialda to prevention of colorectal cancer.

Of the settlement proceeds, the federal government will receive $35,713,965 and state Medicaid programs will receive $20,786,034.  As his reward under the qui tam provisions, the initial whistleblower, Dr. Gerardo Torres, will receive approximately $5.9 million of the total settlement proceeds.

Click here to learn What is Pharmaceutical Fraud?

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A Plus Home Health Care, Inc. (“A Plus”), a Ft. Lauderdale home health care agency, and its owners have agreed to settle a qui tam case brought by a whistleblower alleging violations of the False Claims Act and payment of illegal kickbacks.  Specifically, it was alleged that A Plus, through its owners, Tracy Nemerofsky and her father Stephen Nemerofsky, engaged in an improper kickback arrangement with the spouses of referring physicians.

According to the government, A Plus hired at least seven spouses of physicians and one physician’s boyfriend, purportedly to perform marketing duties.  The government alleged that the group performed few, if any, actual job duties.  The complaint filed in the United States District Court for the Southern District of Florida alleges that the salaries paid to the physicians’ spouses and boyfriend were, in reality, illegal kickbacks intended to induce the physicians to refer Medicare patients to A Plus rather than to another home health care agency.  Federal law prohibits the exchange of anything of value in an effort to induce or reward the referral of federal health care program business.

A former director of development for A Plus, William Guthrie, filed a qui tam complaint in 2012 alleging that A Plus engaged in the improper kickback scheme and submitted false claims to Medicare for the treatments provided to the improperly referred Medicare patients.   According to the False Claims Act complaint, two physicians’ spouses were terminated because their physician husbands did not refer a certain number of Medicare patients to A Plus.  The whistleblower also claimed that, in 2010 alone, Tracy Nemerofsky received a salary of $685,000 from A Plus due to the increase in the number of Medicare referrals A Plus received.

A Plus, Tracy Nemerofsky, and Stephen Nemerofsky have agreed to pay $1.65 million to settle the allegations.  According to the Department of Justice, the government previously settled with individuals who allegedly received improper payments from A Plus, Nuria Rodriguez, Keifer Wyble,  Mark Rogovin, Meredith Rogovin, Sam Sareh, Christy Sareh, Steven Hornreich, Fortuna Hornreich, Stacy Wolfson and Gary Wolfson.

The whistleblower will receive a percentage of the settlement proceeds as his reward under the qui tam provisions of the False Claims Act.

Click for more information on What is the Anti-Kickback Statute?

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The Sleep Medicine Center, Inc. (“Sleep Medicine”) and two physicians, Hubert Zachary and George Restea, have agreed with the federal government to settle allegations initiated by a whistleblower in a qui tam complaint that the trio violated the False Claims Act.  The federal government announced that it will move forward with its claims against two additional physicians, George Young and John DeCerce.

Sleep Medicine is a Florida corporation headquartered in Palatka.  Hubert Zachary is listed as the sleep clinic’s president.

According to the Miami Herald, the whistleblower, Donna Nichols, will proceed with her individual claims against Sleep Medicine and Hubert Zachary for allegedly terminating her employment in retaliation for raising concerns about the sleep clinic’s practices.   Ms. Nichols claims she was fired from her administrative position at Sleep Medicine in 2012.

The United States Attorney for the Middle District of Florida alleged that Sleep Medicine and the four physicians knowingly submitted false claims to government health care programs such as Medicare and TRICARE (the healthcare program for members of the United States military).  Specifically, the government alleged that Sleep Medicine and Hubert Zachary sought payment for polysomnographic sleep studies and psychological testing that were either not medically necessary, not performed by licensed individuals, or not performed at all.  In addition, the government alleged that George Restea failed to properly supervise the sleep clinic as he certified to the government he would do as a medical director of the center.

The government will move forward with its allegations that George Young and John DeCerce, also purportedly medical directors of Sleep Medicine, signed medical equipment orders for patients that they never examined or signed sleep studies performed by unqualified staff using machines that were broken.

Sleep Medicine agreed to pay the government $200,000 to settle the claims as to the federal healthcare programs.  Restea will pay approximately $100,000 to settle the government’s claims.  Both Sleep Medicine and Hubert Zachary have agreed to be excluded from participation in any federal healthcare program for a period of eight years.  As her reward under the qui tam provision of the False Claims Act, the whistleblower will receive approximately $60,000 of the government’s settlement.

For more information, read What is Healthcare Fraud?

 

 

 

 

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The Justice Department announced that the U.S. has intervened in a qui tam lawsuit brought by two whistleblowers alleging violations of the False Claims Act and filed its own lawsuit alleging violations of the Anti-Kickback Statute against physicians, a spinal implant company, and others.  According to the government, the lawsuits name the following defendants: Aria Sabit, a Michigan neurosurgeon; Reliance Medical Systems, a company that makes spinal implants; Apex Medical Technologies (“Apex”) and Kronos Spinal Technologies (“Kronos”), both distributors of Reliance products; and individuals Brett Berry, John Hoffman and Adam Pike, owners of the companies.

Two whistleblowers, Cary Savitch, M.D. and Gary Proffett , M.D., filed a lawsuit under the qui tam provision of the False Claims Act in the United States District Court for the Central District of California. The whistleblowers alleged that Apex induced Sabit to perform spinal fusion surgeries that were not medically necessary by making improper payments to him.    According to the whistleblowers, Sabit only started using Reliance implants after he acquired an ownership interest in Apex and began receiving payments from the sale of the spinal implants. The complaint alleges that Sabit received improper payments from Apex totaling $438,570 between May 2010 and July 2012.

In addition to joining the whistleblowers’ complaint, the government filed its own lawsuit alleging that Reliance, Apex, Kronos and their owners paid illegal kickbacks to Sabit and physicians Ali Mesiwala and Gowriharan Thaiyananthan in violation of the Anti-Kickback Statute.  The federal Anti-Kickback Statute prohibits the exchange of anything of value to induce the referral of patients covered by government health care programs such as Medicare. If violations of the Anti-Kickback Statute are proven, the violator may be subject to criminal penalties such as fines of up to $25,000 per violation, up to a 5 year prison term per violation and civil penalties up to three times the amount of the kickback paid and exclusion from participating in federal health care programs.

If any money is recovered in any matter brought under the qui tam provision of the False Claims Act, the whistleblowers may be entitled to share in a percentage of the proceeds.

Read further to see what compensation a whistleblower can earn. 

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The United States has partially intervened in two qui tam lawsuits by three whistleblowers alleging violations of the False Claims Act by Evercare Hospice and Palliative Care (“Evercare”) now known as Optum Palliative and Hospice Care.   One of the qui tam lawsuits also names UnitedHealth Group, Inc., a parent company of Evercare.

According to the whistleblowers, Evercare submitted claims to government healthcare programs for hospice benefits for patients who did not meet the criteria for hospice care.  Hospice care is intended for patients with a life expectancy of six months or less who elect palliative care.  Palliative care provides symptomatic and/or pain relief, it is not designed to cure or treat an illness.

Three former Evercare employees, Sharlene Rice, Terry Lee Fowler, and Lyssa Towl, filed whistleblower complaints in Colorado under the qui tam provisions of the False Claims Act alleging that Evercare management pressured employees and medical personnel to admit patients who did not have life expectancies of six months or less to hospice care.   According to the government, submissions to government healthcare programs, such as Medicare, for hospice care provided to patients who were not terminally ill, were false claims in violation of the False Claims Act.

According to the whistleblowers, between 2008 and 2010, up to 25% of Evercare’s hospice patients at any given time did not meet the Medicare eligibility requirements to receive hospice care.   One of the whistleblowers, Lyssa Towl, claims that she was fired for discharging patients who were ineligible for hospice care.  Terry Lee Fowler claims she was put on a corrective action plan for questing Evercare’s methods.

The False Claims Act permits citizens to bring actions on behalf of the government to recover funds that were paid as a result of fraud on the government.   The government may elect to intervene in the lawsuits as it has done in these cases.  If any money is ultimately recovered in the lawsuits, the whistleblowers may be entitled to share in a percentage of the proceeds in accordance with the qui tam provisions of the False Claims Act.

If you know of government fraud, you can get more information at Do I Have a Case?

 

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Community Health Systems, Inc. (“CHS”) has agreed to settle several whistleblowers’ qui tam lawsuits  that it violated the False Claims Act and the Stark Law. According to its website, CHS is one the nation’s largest operators of acute care hospitals.  An acute care hospital is a short-term hospital that provides diagnosis, care and treatment for a wide range of acute conditions.  Acute conditions are brief, but severe, episodes of illness that are the result of disease or trauma or recovery from surgery.  CHS’s affiliates own, operate or lease hospitals in 29 states, according to its website.

According to the Justice Department, seven different whistleblower lawsuits were filed under the qui tam provisions of the False Claims Act alleging that CHS violated the False Claims Act and that one of its affiliated hospitals, Laredo Medical Center, also violated the Stark Law.   Specifically, the government alleged that CHS knowingly billed government health care programs such as Medicare, Medicaid, and TRICARE for more costly inpatient services that should have been billed as less costly outpatient services.  The government claimed that the inpatient admissions of many government health care beneficiaries  were not medically necessary and therefore, the submission of claims for payment for the inpatient admissions were made in violation of the False Claims Act.   CHS agreed to settle these allegations for $89.15 million.

In addition, the government claimed that Laredo Medical Center wrongfully billed the government for services provided by a physician with whom the hospital had an improper financial relationship in violation of the Stark Law.  CHS agreed to settle the Stark Law claims for $9 million.

The qui tam lawsuits were brought in Texas, Tennessee, Illinois, Indiana, and North Carolina.  The whistleblowers are: Nancy Reuille, former nurse and Supervisor of Case Management in Indiana; Kathleen Bryant, the former Director of Health Information Management in Tennessee; Scott Plantz, a former emergency room physician in Texas; Rachel Bryant, formerly a nurse for CHS in Tennessee; Thomas Mason, a former emergency room physician in North Carolina; Bryan Carnithan, formerly the Emergency Medical Services Coordinator at a CHS hospital in Illinois; Amy Cook-Reska, a former employee of Laredo Medical Center; Sheree Cook, a former nurse; and James Doghramji, a former emergency room physician in Philadelphia.   In accordance with the qui tam provisions of the False Claims Act, the whistleblowers will share in a percentage of the settlement proceeds.