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Nursing Facility Health Provider Settles Qui Tam Case

Two executives of now defunct HealthEssentials Solutions, Inc. have agreed to settle a qui tam case filed by two whistleblowers who alleged violations of the federal False Claims Act.  HealthEssentials’ former chief executive officer, Michael Barr, has agreed to pay $1 million to resolve the whistleblowers’ allegations that he knowingly caused the submissions of false claims to government health care programs, including Medicare, between 1999 and 2004.  In addition, Norman Pfaadt, the company’s former chief financial officer agreed to pay $20,000 to resolve allegations in the whistleblowers’ qui tam complaint that he also caused the submission of improper claims to Medicare in violation of the federal False Claims Act.  In May 2011, HealthEssentials’ former director of billing, Karen Stone, pleaded guilty for her role in the company’s improper Medicare billing scheme.

The whistleblowers, Michael RoBards and his wife Leigh RoBards, filed a complaint under the qui tam provisions of the False Claims Act in 2003.  In their complaint, they alleged that from approximately 1999 to 2004, HealthEssentials billed government health care programs for services that were either not medically necessary or were billed at an inflated rate.  

According to the government, Barr and Pfaadt exerted pressure on HealthEssentials’ employees to inflate the company’s Medicare billings by conducting special medical assessments, whether or not the assessments were medically indicated.  The government contended that the sole purpose of the special medical assessments was to increase the amount the company could bill Medicare.  HealthEssentials, based in Kentucky, provided primary medical services to patients in nursing facilities and assisted living facilities from 1998 to 2005.  It filed for bankruptcy protection and ceased operations in 2005.  HealthEssentials pleaded guilty to charges that it submitted false statements to Medicare and reached a civil settlement with the Justice Department in 2008.

The whistleblowers are both former HealthEssential employees.  The whistleblowers will receive $153,000 of the settlement proceeds as their reward under the qui tam provisions of the False Claims Act. 

Individuals with knowledge of government fraud may be able to bring a whistleblower complaint under the qui tam provisions of the False Claims Act.  For more information about what is involved in bringing a government qui tam action, click here.

Business Litigation | False Claims Act & Whistle-blower Cases