Whistleblower Qui Tam Lawyer Blog
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According to the Department of Justice, United Parcel Service, Inc. (“UPS”) has agreed to settle allegations that it submitted false claims to the United States in connection with contracts to deliver packages for next day delivery.  The Justice Department alleged that UPS knowingly concealed that it had not complied with its delivery guarantees in violation of the False Claims Act.

In 2011, a former UPS employee, Robert Fulk, filed a whistleblower lawsuit under the qui tam provisions of the False Claims Act in the U.S. District Court for the Eastern District of Virginia.  The allegations in the whistleblower’s complaint related to hundreds of contracts UPS had with the U.S. General Services Administration and the U.S. Transportation Command to provide delivery services to federal agencies.  The contracts required guaranteed delivery by UPS before specific times the next day.  The whistleblower alleged that when UPS didn’t meet the delivery deadline by the specified time, it falsified delivery documentation to make it appear as though it had met the delivery deadline.  Under the contracts, federal agencies would have been eligible to request a refund for the late delivery of packages. By falsifying the documents, the government contended that UPS deprived the federal government of those refunds.

In the complaint, the whistleblower specifically alleged that, from 2004 to 2014, UPS knowingly recorded inaccurate delivery times on packages to make it appear that the packages were delivered on time when in fact, they were not.  In addition, the whistleblower alleged that UPS applied exception codes to excuse late deliveries such as “security delay,” “customer not in,” or “business closed” when UPS knew those exception codes did not apply, and provided incorrect performance data under the federal contracts for delivery services.

UPS has agreed to pay $25 million to the federal government, and $740,000 to the state of New Jersey to settle the claims.  According to the Justice Department, the case remains pending as to the claims asserted by California, Delaware, Florida, Hawaii, Illinois, Indiana, Massachusetts, Minnesota, Nevada, New Hampshire, New Mexico, New York, North Carolina, Rhode Island, Tennessee, Chicago, New York City, and Washington, D.C.

The whistleblower, Robert Fulk, will receive approximately $3.75 million of the settlement proceeds as his reward under the qui tam provisions of the False Claims Act.

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The U.S. Department of Justice announced that Westchester County Health Care Corporation d/b/a Westchester Medical Center (“WMC”) has agreed to settle allegations first raised by a whistleblower that it violated the Anti-Kickback Statute, the Stark Law, and the False Claims Act.  According to the U.S. Attorney for New York, WMC will pay $18.8 million in settlement of the claims.

According to the government, WMC, the clinical affiliate of New York Medical College, operates a tertiary and quaternary care hospital in Valhalla, New York.  Tertiary care is the most specialized form of healthcare involving sophisticated technology and medical specialists.  Tertiary care may include complex surgery, such as neurosurgery, cardiac surgery, plastic surgery, and organ transplantation, as well as neonatology, psychiatry, cancer care, and intensive care. Quaternary care may involve experimental treatments and procedures.

In 2006, whistleblower Dan Bisk, a resident of Westchester County, New York and former compliance officer for WMC, filed a complaint under the qui tam provisions of the False Claims Act.  Mr. Bisk passed away in 2009 while the case was pending.  His wife pursued the case on his behalf after his death.   According to the complaint filed by the whistleblower and the complaint-in-intervention filed by the government, WMC violated the Anti-Kickback Statute and the Stark Law in connection with its relationship with Cardiology Consultants of Westchester, P.A.  (“CCW”).

According to the complaint-in-intervention, from approximately January 2001 to December 2007, WMC advanced monies to CCW to open a practice for the express purpose of generating referrals to the hospital. The government alleged that when CCW began “repaying” WMC, WMC entered into retroactive, no-work consulting agreements pursuant to which it paid CCW tens of thousands of dollars and it allowed CCW to use WMC’s fellows in CCW’s private office free-of-charge.  According to the Justice Department, this arrangement was violative of the Anti-Kickback Statute and the Stark Law.  The government also alleges that claims submitted to Medicare for services rendered to patients referred to WMC by CCW violated the False Claims Act.

According to the Justice Department, WMC will pay $18.8 million to settle the allegations. The estate of the whistleblower will receive approximately $3.71 million of the settlement proceeds as a reward under the qui tam provisions of the False Claims Act.

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The Department of Justice announced that PharMerica Corporation, headquartered in Louisville, Kentucky, will pay $31.5 million to settle allegations in a qui tam suit that PharMerica violated the Controlled Substances Act and the False Claims Act.

PharMerica is a long-term care pharmacy that dispenses prescription medications to residents of nursing homes and skilled nursing facilities. According to its website, PharMerica serves over 300,000 patients in 45 states and fills approximately 40 million prescriptions per year.  It employs roughly 6,000 employees across the country.

In 2009, a former PharMerica employee, Jennifer Bluth f/k/a Jennifer Denk, filed a whistleblower complaint under the qui tam provisions of the False Claims Act alleging that PharMerica violated the Controlled Substances Act by dispensing Schedule II controlled drugs without a valid prescription.  The whistleblower further alleged that all submissions of claims to Medicare for payment of these improperly dispensed mediations were made in violation of the False Claims Act. The whistleblower was previously employed as the Pharmacy Operations Manager in PharMerica’s facility in Pewaukee, Wisconsin.

According to the Drug Enforcement Agency, Schedule II controlled drugs are dangerous drugs with a high potential for abuse and the potential to lead to severe psychological or physical dependence by users.  Some examples of Schedule II drugs are Vicodin, cocaine, fentanyl, methamphetamine, morphine, methadone, Demerol, oxycodone, Adderall, and Ritalin.

The government intervened in the whistleblower’s complaint and filed its own complaint in 2013.  In its complaint, the government alleged that between January 2007 and December 2009, PharMerica derived approximately 45% of its revenue from prescription medications billed to Medicare Part D, many of which were for Schedule II drugs. According to the government’s complaint, during this period, PharMerica dispensed prescriptions for controlled substances based on requests from the long-term care facility, rather than upon a valid prescription from a medical practitioner as required by the Controlled Substances Act. The complaint alleges that PharMerica filled prescriptions based solely on order forms it received from staff at long-term care facilities; based on a resident’s previous hospital discharge order provided by the long-term care facility staff; or after receiving replenishment stickers that PharMerica had previously provided to the long-term care facility.

According to the Justice Department, PharMerica will pay $8 million to resolve the allegations that it violated the Controlled Substances Act and $23.5 million to resolve the False Claims Act allegations.  The whistleblower will receive approximately $4.3 million of the proceeds as her reward under the qui tam provisions of the False Claims Act.

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The Department of Justice announced that five ambulance companies in California have agreed to collectively pay $11.5 million to settle allegations in a whistleblower’s qui tam complaint that they violated the False Claims Act and the Anti-Kickback Statute.  The Anti-Kickback Statute prohibits the exchange of anything of value in an effort to induce the referral of federal health care program business.

According to the government, the California ambulance companies that were named in the whistleblower’s complaint are: Pacific Ambulance, Inc. and Bowers Companies, Inc. (collectively “Pacific-Bowers”); Care Ambulance Service, Inc.; Balboa Ambulance Services, Inc.; and E.R. Ambulance, Inc.

According to the Pacific-Bowers website, the companies, based in Orange County, are California’s largest independent regional provider of non-emergency ambulance services.  The pair was acquired by Rural/Metro Corporation in December 2011 (after the alleged wrongdoing took place).

According to their respective websites, Care Ambulance Service, Inc. provides services to residents of Orange, Los Angeles and Riverside Counties; Balboa Ambulance Services has been operating in San Diego County since 1989, and E.R. Ambulance is also based in San Diego.

According to the Justice Department, in 2009, then-CEO of Care Medical Transportation, Inc., Kelvin Carlisle, filed a whistleblower complaint under the qui tam provisions of the False Claims Act.  In the complaint, the whistleblower alleged that the defendant companies were engaged in a so-called “swapping” kickback scheme.  According to the government, the scheme involved providing deeply discounted (50-100% off) the cost of non-emergency ambulance services provided under Medicare Part A to hospital and skilled nursing home patients.  In return, the hospitals and skilled nursing homes agreed to use the defendant ambulance companies for rides covered under Medicare Part B.  The government claims this arrangement violated the Anti-Kickback Statute and the False Claims Act.

The whistleblower, Kelvin Carlisle, will receive approximately $1.7 million of the settlement proceeds as his reward under the qui tam provisions of the False Claims Act.

If you know of fraud on the government and want more information on False Claims Act and whistleblower cases, click here to read our Frequently Asked Questions and view the video Whistleblower Awards Work for the Benefit of All by the Taxpayers Against Fraud.

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According to the Justice Department, specialty pharmacy, Accredo Health Group, has agreed to pay $60 million to settle allegations that it violated the False Claims Act in connection with a kickback scheme involving the prescription drug Exjade.  The government announced that it has intervened in the portion of the case against Novartis Pharmaceuticals Corp. involving the same alleged conduct.

Exjade is a prescription medication used to treat hemosiderosis – a chronic condition caused when a person has too much iron in their blood.  The body stores excess iron in the heart and liver, which can cause damage to those organs.  According to the Exjade website, it is used to help reduce iron levels in the blood. The main cause of chronic iron overload is receiving multiple blood transfusions. Sickle cell disease is one condition that requires frequent transfusions.

In 2011, a former Novartis area sales manager, David Kester of Raleigh, North Carolina, filed a qui tam action alleging that pharmaceutical giant Novartis engaged in an illegal kickback scheme involving Exjade and other medications.  According to the whistleblower’s Complaint, between 2007 and 2012, Novartis provided kickbacks to specialty pharmacies, including Accredo, in the form of patient referrals and cash remuneration styled as “performance rebates” or “performance discounts” in return for recommending that pharmacy customers refill Exjade.  In addition, the government claimed that Accredo’s employees knowingly understated the serious and potentially life-threatening side effects of Exjade when promoting the drug to patients.  The government alleges that each submission to Medicaid, Medicare, or other government health care program that resulted from the kickback scheme was a violation of the False Claims Act.

The Justice Department announced that Accredo has agreed to settle the False Claims Act allegations.  It will pay $45 million to the federal government for the false claims submitted to Medicare and $15 million to the states for the false claims submitted to the states’ various Medicaid programs.  The government intervened as to the allegations against Novartis.  The trial of those claims is set for November.

The whistleblower will be entitled to a portion of the monies received by the government as his reward under the qui tam provisions of the False Claims Act.

 

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According the U.S. Department of Justice, Family Dermatology, P.C. (“Family Dermatology”), based in Lilburn, Georgia, has agreed to settle allegations that it violated the Stark Law and False Claims Act.  The government said the allegations concerned financial relationships Family Dermatology and its affiliated companies had with dermatologists they employed as independent contractors.

According to the government, three whistleblowers brought separate qui tam actions under the False Claims Act against Family Dermatology; its sole shareholder and CEO, Paula Nelson, M.D., individually and doing business as Nelson Dermatopathology and Pathology Laboratory; Family Dermatology’s CFO and secretary, Adeyinka “Yinka” Adesokan, who is also the husband of Paula Nelson, M.D.; Databased, Inc.; and approximately 59 current or former Family Dermatology practices in 9 states.  The whistleblowers, Dr. Scott M. Ross, Dr. Mark F. Baucom, and Dr. Harold Milstein, and the federal government alleged that Family Dermatology had improper financial relationships with dermatologists at its various offices across the Eastern United States.

According to the whistleblowers, Family Dermatology expanded its business by purchasing other dermatology practices and then contracting with the dermatologists who sold the practices to stay on and continue to work for Family Dermatology as independent contractors.  Allegedly, the independent contractors were paid based on a percentage of the professional services rendered by the physicians.  The whistleblowers claimed that this compensation arrangement encouraged the over-utilization of dermatology and/or dermatopathology services and was a violation of the Stark Law and False Claims Act.

In addition, the government alleged that the independent contractor dermatologists were required by Family Dermatology to send all of their skin samples to Nelson Dermatopathology and Pathology Laboratory, the laboratory in Atlanta, Georgia owned by Paula Nelson, for processing.   The government alleged that these referrals of pathology services were improper and violated the False Claims Act and resulted in the submission of false claims to government healthcare programs such as Medicare and Medicaid.

According to one of the whistleblower’s complaints, Databased, Inc., owned by Adesokan, sells a comprehensive practice management and electronic medical records system tailored to dermatology practices.  The whistleblower alleged that Databased would sell its software to dermatologists at a steep discount and after a few months when the practices were dependent on the system, Adesokan would allegedly threaten to increase the price dramatically unless the practices referred all of the their dermatopathology work to Nelson Dermatopathology and Pathology Laboratory. The whistleblower alleged that this conduct also violated the False Claims Act.

According to the Justice Department, Family Dermatology will pay $3.2 million to settle the allegations that it violated the False Claims Act.  The whistleblowers will share in $584,000 of the settlement proceeds as their reward under the qui tam provisions of the False Claims Act.

 

 

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According to the Department of Justice, Citizens Medical Center (“Citizens”) located in Victoria, Texas has agreed to pay $21.75 million to settle a qui tam case brought by three whistleblowers alleging violations of the False Claims Act and the Stark Law.  In addition to Citizens, the whistleblowers named the hospital’s administrator, David Brown, and a cardiologist employed by Citizens, William Campbell Jr., as individual Defendants.

According to Citizens’ website, it is a 344-bed acute care hospital, specializing in cardiac care, providing services to Victoria and all of South Texas. The whistleblowers are three cardiologists who formerly had privileges at Citizens until they resigned in December 2012.

The whistleblowers’ complaint alleged that the hospital paid compensation to cardiac physicians that exceeded the fair market value of their services and paid improper bonuses to various physicians that were based, in part, on the value of their referral of patients for cardiac services. The government claims, these payments were made in violation of the Anti-Kickback Statute, the Stark Law, and the False Claims Act.

According to the three whistleblowers, Drs. Dakshesh Parikh, Harish Chandna, and Ajay Gaalla, beginning in 2007, the hospital began to retaliate against them when they refused to participate in the alleged schemes.  In August 2010, the relators initiated the whistleblower lawsuit under the qui tam provision of the False Claims Act.

The complaint contains allegations that Citizens’ payments to physicians in return for referrals of patients to the hospital resulted in the submission of false claims to Medicare and Medicaid in violation of the Anti-Kickback Statute and the Stark Law.  Specifically, the relators alleged that various physician groups including ER physicians, urologists, gastroenterologists, hospitalists, and cardiologists entered into agreements under which they received additional compensation or benefits in exchange for referring patients to Citizens.

The whistleblowers will share in $5.9 million of the settlement proceeds as their reward under the qui tam provisions of the False Claims Act.

If you know of fraud against the government and want to learn more about the different kinds of fraud that may be brought as qui tam cases under the provisions of the False Claims Act, click here to learn more.

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According to the Department of Justice, the federal government has filed a consolidated complaint intervening in three whistleblowers’ qui tam lawsuits alleging that HCR ManorCare and its affiliates violated the False Claims Act.  The Justice Department alleges that the medical providers engaged in systematic overbilling of Medicare and TRICARE, the healthcare program for U.S. military members and their families, for therapy services.  The government’s complaint names HCR ManorCare, Inc., owned by The Carlyle Group; Manor Care Inc.; HCR ManorCare Services, LLC; and Heartland Employment Services, LLC (collectively “ManorCare”) as defendants.

According to ManorCare’s website, it employees over 55,000 people and operates 280 skilled nursing facilities and rehabilitation centers nationwide under the names Heartland, ManorCare Health Services and Arden Courts.

According to the Consolidated Complaint in Intervention, the whistleblowers, also known as relators, are three former employees of three Heartland entities.  Relator Christine Ribik, a licensed occupational therapist, initiated the first lawsuit against ManorCare under the qui tam provisions of the False Claims Act in 2009 in the Eastern District of Virginia. Relator Patrick Gerard Carson, a physical therapy assistant, filed his qui tam action in 2011.  The third relator, Marie Slough, is a physical therapist who brought her qui tam suit in 2014.   All three of the whistleblower’s actions were consolidated by the Court in November 2014.

In its complaint, the government alleged that ManorCare billed federal healthcare programs, including Medicare and TRICARE, for services that were not medically necessary or were not skilled in nature and did not meet the requirements for care provided in skilled nursing facilities.

For example, the government alleged that ManorCare set Ultra High billing targets for its skilled nursing facilities without regard to its patients’ actual medical needs to maximize ManorCare’s revenue.  Ultra High billing is the highest daily rate that Medicare will pay for rehabilitation therapy.  It applies to patients who require skilled rehabilitation therapy for a minimum of 720 minutes per week from at least two therapy disciplines.  The government claims that ManorCare engaged in a nationwide scheme to bill at the Ultra High level whether it was medically appropriate or not.  The government gave an example of ManorCare’s facility in Sunnyvale, California.  In 2006, Sunnyvale billed 52.9 percent of its therapy services at the Ultra High rate. By February 2010, it billed 91 percent at the Ultra High rate, and by May 2012 it billed 94 percent of its rehabilitation services at the Ultra High level.

If the government ultimately recovers any monies from ManorCare, either through settlement or trial, the whistleblowers may be entitled to share in the proceeds as their rewards under the qui tam provisions of the False Claims Act.

 

 

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The Justice Department announced that two cardiovascular testing laboratories, Health Diagnostics Laboratory, Inc. (“HDL”) and Singulex, Inc. have agreed to settle allegations that they violated the Anti-Kickback Stature and the False Claims Act.  HDL and Singulex will pay $47 million and $1.5 million, respectively.

According to its website, HDL, based in Richmond, Virginia, offers tests for the biomarkers that can indicate risk for cardiovascular disease, diabetes, and related diseases.  It has testing locations in Virginia, Colorado, Tennessee, and Texas.

Singulex is based in Alameda, California.  According to its website, it developed single molecule counting (SMC™) technology for clinical diagnostics and scientific discovery.

According to the Justice Department, three separate qui tam lawsuits were filed by whistleblowers alleging that the settling parties, HDL and Singulex, as well as others, paid illegal remuneration to physicians and hospitals in return for patient referrals.  The whistleblowers, Dr. Michael Mayes, Scarlett Lutz, Kayla Webster and Chris Reidel, alleged that the laboratories paid physicians groups and hospitals “process and handling fees” of between $10 and $17 for every patient that was referred to them for the blood tests.  In addition, the whistleblowers claimed that HDL and Singulex routinely waived patient co-pays and deductibles.

According to the whistleblowers, this remuneration was paid in violation of the Anti-Kickback Statute.  Under the Anti-Kickback Statute, it is illegal to solicit, receive, offer or pay remuneration (monetary or otherwise) in exchange for referring patients to receive certain services that are paid for by the government.

According to the qui tam complaints, many of the expensive specialty blood tests were medically unnecessary and the submission of claims to Medicare or other government healthcare programs for payment were false claims made in violation of the False Claims Act.

The whistleblowers also named other defendants in the qui tam suits: to wit, Berkeley HeartLab, Inc., BlueWave Healthcare Consultants, Inc., Floyd Calhoun Dent, J. Bradley Johnson, and Latonya Mallory.  The government announced that it has intervened as to those other defendants and those portions of the whistleblowers’ complaints remain pending.

The whistleblowers will receive a portion of the proceeds from the settlements with HDL and Singulex as their rewards under the qui tam provisions of the False Claims Act.

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The Justice Department announced that Medtronic plc and its affiliates, Medtronic, Inc., Medtronic USA Inc., and Medtronic Sofamor Danek USA Inc. (collectively “Medtronic”) have agreed to settle three whistleblowers’ qui tam complaint alleging Medtronic violated the False Claims Act.

Medtronic is a global healthcare company based in Minneapolis, Minnesota.  According to its website, Medtronic’s business units collectively employ approximately 85,000 people, operate in more than 160 countries, and serve over 53,000 patients.

The complaint filed by three whistleblowers alleged that Medtronic knowingly made false claims to the Veterans Administration and the Department of Defense concerning the country of origin of medical-surgical products sold to the United States through the VA Federal Supply Schedule Program.  Specifically, it was alleged that Medtronic certified that certain medical-surgical products were eligible for federal procurement under the Trade Agreements Act (“TAA”) because the products were either manufactured or “substantially transformed” in the United States.  The whistleblowers claimed that, in reality, the products were manufactured in China, India, Malaysia, or other “non-designated countries” and were not eligible for federal procurement under the TAA.

According to the complaint filed in the United States District Court for the District of Minnesota, whistleblowers Sonia Adams and Meayna Phanthavong were employees of Medtronic.  Ms. Adams worked in human resources at the Medtronic distribution facility in Memphis, Tennessee.  Ms. Phanthavong was a shipping and receiving clerk at the Memphis distribution facility.  Samuel Adam Cox III was as an information-technology consultant and executive in the medical device industry in 2007 and 2008. Mr. Cox began investigating country-of-origin violations by medical-surgical-supply companies with operations in Memphis after blowing the whistle on such violations by his former employer, Smith & Nephew Inc.

According to the Justice Department, the Medtronic products at issue were anchoring sleeves used to secure cardiac leads to patients, devices used in spinal surgeries, and a handheld device used in conjunction with wireless cardiac devices.  The allegations cover the period between 2007 and 2014.

The Justice Department stated that Medtronic will pay $4.41 million to settle the allegations.  The whistleblowers will share in $749,700 of the settlement proceeds as their reward under the qui tam provisions of the False Claims Act.