For-Profit Education Company to Pay $13 Million to Settle Whistleblower Allegations of False Claims for Federal Student Aid

A for-profit education company has agreed to pay $13 million to settle whistleblower allegations that it submitted false claims to the Department of Education for federal student aid. Education Affiliates (EA) of White Marsh, Maryland provides post-secondary education training programs in several professions at the company’s 50 campuses throughout the U.S.

education-affiliatesFive whistleblowers filed suit against EA, claiming that employees at the company’s All State Career campus in Baltimore were altering admissions test results in order to admit unqualified students. These employees were also accused of creating fraudulent high school diplomas and falsifying students’ federal aid applications. These claims resulted in criminal convictions for two All State Careers admission representatives and a test proctor.

The whistleblower lawsuits further contend that multiple EA schools were referring prospective students to “diploma mills” (unaccredited higher education institutions offering illegitimate diplomas for a fee) in order to qualify for federal student aid. EA campuses in Birmingham, Houston and Cincinnati also allegedly violated bans on incentive-based compensation for their enrollment personnel, made various misrepresentations concerning graduation and job placement rates, and altered attendance records and enrollment of unqualified students.

Today’s settlement provides repayment of $1.9 million in liabilities that resulted from EA awarding federal financial aid to students with invalid high school credentials that were issued by a diploma mill. As for the five whistleblowers who filed qui tam lawsuits against EA, they will share a reward of $1.8 million.

The Department of Education has made it clear that abusive behavior on the part of for-profit education companies will not be tolerated, and that it will continue to work with the DOJ and other federal agencies to hold post-secondary institutions accountable when they break the law.

The conduct outlined in these whistleblower claims represent predatory conduct that victimizes students and bilks money from taxpayers. Unfortunately, this type of behavior has become all too common among for-profit education companies. We need more people like these whistleblowers who exposed alleged wrongdoing at EA to come forward and report fraud. It is the right thing to do, it saves taxpayer money and can result in a sizable whistleblower reward if the government recovers stolen funds.

DaVita to Pay $450 Million to Resolve Whistleblower Allegations Claiming it Sought Reimbursement for Unnecessary Drug Wastage

The nation’s largest provider of dialysis services announced yesterday that it has agreed to pay $450 million to resolve whistleblower claims that the company violated the False Claims Act by seeking reimbursement from federal health care agencies in connection with unnecessary drug wastage.

CompanyLogos_davita logoDaVita Healthcare Partners, Inc., headquartered in Denver, has dialysis clinics in 46 U.S. states and the District of Columbia. The company is accused of knowingly creating unnecessary waste in the administration of two diabetes drugs, Zemplar and Venofer. Zemplar, a Vitamin D supplement usually administered at every dialysis session, is packaged in single-use vial sizes of 2 mcg, 5 mcg, and 10 mcg. Venofer is an iron supplement packaged at the time of these allegations only in a single-use vial size of 100 mg. Occasionally, the amount of the drug in the vials didn’t match the dosage specified by a doctor, resulting in the remainder of the drug needing to be discarded.

When the alleged fraud was taking place, Medicare would reimburse dialysis providers for certain waste if the providers (acting in good faith) discarded what was left of the drug contained in single-use vials after they had administered the requisite dose to a Medicare patient.

According to the whistleblower allegations, DaVita had protocols in place specifically designed to create unnecessary waste of Zemplar and Venofer. DaVita allegedly required its employees to provide the maximum amount of Zemplar to patients. The company would then turn around and bill the government for the amount of Zemplar administered to patients plus the amount “wasted.”

With regard to Venofer, DaVita had similar protocols in place that required nurses to administer the drug in small amounts and at frequent intervals in order to maximize wastage. In an example cited in the complaint, DaVita called for a patient to receive 25 mg of Venofer per week, resulting in 300 mg of waste per month that ended up being billed to the government. But if the order had been properly filled to give the patient the entire 100 mg vial once per month, there wouldn’t have been any waste.

Medicare eventually changed its single–vial waste reimbursement policies in 2011 to mitigate this problem. Once this change was made and the single-vial waste was no longer profitable for DaVita, it changed its practices and waste produced by the vials went down.

This case hinged on the sacrifice and courage of two whistleblowers, Dr. Alon Vanier and nurse Daniel Barbir. Both will share an as yet undetermined reward based on the amount recovered by the government.

New Attorney General Focuses her Attention on Medicare/Medicaid Fraud

The Department of Justice, in a nationwide sweep of Medicaid/Medicare cheaters, charged 243 people today with crimes related to their alleged involvement in health care fraud schemes that generated over $712 million in false billings. Attorney General Loretta E. Lynch and Department of Health and Human Services (HHS) Secretary Sylvia Mathews Burwell announced the nationwide sweep, led by the Medicare Fraud Strike Force, which was the largest takedown in the history of the Strike Force, both in terms of defendants charged and amount in fraudulent billings.

dept_justiceRevealing a possible change in policy, those indicted included forty-six physicians and other healthcare providers. In addition to the criminal charges, the Centers for Medicare & Medicaid Services (CMS) also suspended a number of providers from participating in government health care programs, cutting off their source of funding.

According to the Justice Department, the sweep caught doctors, patient recruiters, home health care providers, pharmacy owners, and a host of others. The defendants have been accused of various crimes, including money laundering, violations of anti-kickback statutes, aggravated identity theft and conspiracy to commit health care fraud.

The scams allegedly involved fraudulent billing for treatments ranging from psychotherapy to home health care. Those who participated in the scams allegedly submitted claims to Medicare and Medicaid for equipment that wasn’t provided, treatments that weren’t medically necessary and services that were never rendered.

During her speech today, Lynch described one example of a medical professional charged in the sweep:

A Michigan doctor allegedly prescribed narcotic pain medications to patients who didn’t need them. When the physician obtained the patients’ personal data, they billed additional charges as if the patient was obtaining the needed medications and services. If a patient tried to withdraw from the scheme, the doctor allegedly threatened to stop giving them the pain medications to which they had become addicted.

In Miami, Florida, 73 defendants were charged for their alleged involvement in schemes that accounted for over $263 million in false billings. In one example, the administrators of a Miami mental health center submitted nearly $64 million in billings between 2006 and 2012 for purported intensive mental health treatment to Medicare beneficiaries. The administrators allegedly paid kickbacks to patient recruiters and assisted living facility owners throughout the South Florida area.

The whistleblower law firm of Baum, Hedlund, Aristei & Goldman applauds the government’s effort in bringing these alleged criminals to justice. Many people depend on our nation’s health care system, especially those living through their most vulnerable moments. Health care fraud takes valuable resources from the sick and the suffering, and our firm is determined to help whistleblowers expose schemes that steal from State and Federal health care programs.


Hebrew Homes Whistleblower Receives $4.25 Million Reward in Landmark Case

A skilled nursing facility and its former president has agreed to settle a whistleblower lawsuit filed by a former executive who claimed that  the facility was engaged in paying illegal kickbacks to several physicians.  The Florida healthcare provider, Hebrew Homes Health Network Inc. and its affiliates, including all of  its operating subsidiaries and its former president and executive director, have agreed to pay $17 million to the United States government to resolve allegations that it violated the Anti-Kickback Statute.  The Relator claimed that the nursing facility paid doctors in exchange for Medicare patient referrals. Stephen Beaujon, the former CFO of Hebrew Homes, who filed the whistleblower lawsuit, will receive $4.25 million for bringing the alleged fraud to the government’s attention.

dept_justiceAccording to the Justice Department, Hebrew Homes allegedly operated a sophisticated kickback scheme between 2006 and 2013 in which they hired a number of doctors that were given the title of ‘medical director.’ These medical directors were under contracts that specified numerous job duties and hourly requirements, for which they were paid thousands of dollars per month.

The government alleged that these medical director positions only existed on paper, and that most of the medical directors were not actually required to perform their contracted job duties.  Rather, each was allegedly paid for patient referrals to Hebrew Homes facilities. Once the facility put the medical directors on the payroll, the government claims that Medicare patient referrals increased exponentially.

In addition to the $17 million, the settlement requires former Hebrew Homes president William Zubkoff to resign as its Executive Director and leave the company. It further requires Hebrew Homes to enter into a five-year corporate integrity agreement with the Department of Health and Human Services, Office of Inspector General (HHS-OIG). The Agreement also requires the company to change its policies concerning the hiring and maintaining of medical directors.

This represents the largest settlement in U.S. history involving alleged violations of the Anti-Kickback Statute by a skilled nursing facility. The Anti-Kickback Statute is intended to ensure that a doctor’s medical judgment is based solely on the wellbeing of a patient, not financial rewards.

The Hebrew Homes case highlights the government’s interest in encouraging whistleblowers to report fraud in skilled nursing home facilities.  This fraud preys on the elderly and infirm and is egregious.  Whistleblowers are incentivized to come forward if they have firsthand knowledge of fraud. The wellbeing of our country’s elderly population is compromised when health care providers put profit over patient health. Whistleblowers, who come forward and expose kickbacks and fraud, protect both the integrity of government health care programs and the health of our seniors.

If you have knowledge of health care fraud, it is in your best interest to consult with an experienced whistleblower attorney as soon as possible. The whistleblower law firm of Baum, Hedlund, Aristei & Goldman can help you decide the best way to move forward with a claim. Contact a whistleblower attorney today for a free case evaluation.

Whistleblowers Need to Know About This Key Legal Protection

You may not know this, but anti-retaliation provisions in the False Claim Act protect employees who were fired after their employer found out that the employee had been a whistleblower in a qui tam action against a previous employer. Put simply—your current employer can’t fire you because you filed a whistleblower lawsuit against your former employer.

PrintMatthew Cestra was hired by drug manufacturer Mylan Inc. in early 2011. During his first couple of months working as vice president of marketing, Cestra’s performance reviews said things like “exceeds expectations.”

Cestra would be fired in May of the same year. The company’s explanation: poor performance “over the last few weeks.” It makes you wonder—how was Cestra able to surpass expectations on the job, then take a such a dramatic performance nosedive so quickly?

According to Cestra, he wasn’t fired because of poor performance—he was fired because months after Mylan hired him, the company learned that he had filed a qui tam lawsuit against his previous employer, Cephalon Inc., now a subsidiary of Teva Pharmaceuticals. In that lawsuit, filed in 2010, Cestra claimed that Cephalon submitted thousands of false claims to Medicare and Medicaid for off-label uses of two of the company’s drugs.

After Cestra’s name became public in connection with the Cephalon lawsuit, he claims that his superiors created a hostile work environment before he was finally shown the door. He later filed a lawsuit against Mylan in Pennsylvania, claiming his termination violated anti-retaliation provisions of the False Claims Act.

Mylan fought the lawsuit and moved to have it dismissed by claiming it couldn’t be responsible under 31 U.S.C. §3730(h)(1) of the False Claims Act because it was not investigated for any violations of the False Claims Act and was unaffiliated with Cephalon. The statute protects “persons who assist the discovery and prosecution of fraud and thus to improve the federal government’s prospects of deterring and redressing crime.”

The Pennsylvania court sided with Cestra, claiming that he possessed a cause of action. His suit will move forward.


Former Chief Financial Officer at Georgia Hospital Receives Whistleblower Reward for Role in Exposing Kickback Scheme

It’s not every day that you hear about a hospital executive filing a qui tam claim against their former employer. Ralph D. Williams, the former chief financial officer of Walton Regional Medical Center in Monroe, Georgia, did just that and will receive a whistleblower reward of roughly $120,000 for his role in exposing a kickback scheme.

WRMC_logoBIGThe Department of Justice announced today that Health Management Associates (HMA) and Clearview Regional Medical Center (formerly Walton Regional) have agreed to pay $595,155 to settle Williams’s whistleblower claims that the hospital paid kickbacks to Hispanic Medical Management (DBA Clinica de la Mama) between 2008 and 2009. Clinica de la Mama is an obstetric clinic that primarily serves undocumented Hispanic women. HMA owned Walter Regional during the time of the allegations.

In return for the kickbacks, the hospital would receive patient referrals from Clinic de la Mama for labor and delivery at Walton Regional. The hospital would then submit false claims to the state Medicaid program of Georgia. According to the complaint, the kickbacks were disguised as payments for a variety of services purportedly provided by Clinica de la Mama.

In addition to the $595,155, HMA and Clearview will pay an additional $396,770 to settle the state of Georgia’s claims under the Georgia False Medicaid Claims Act. Undocumented immigrants are not eligible to receive Medicaid coverage, though the program does provide coverage for certain emergency situations, such as childbirth.

When hospitals pay kickbacks to solicit referrals for undocumented pregnant patients, it takes advantage of vulnerable women and compromises the integrity of taxpayer-funded programs like Medicaid. The whistleblower law firm of Baum, Hedlund, Aristei & Goldman applauds Mr. Williams for coming forward and bringing these allegations to the government’s attention.

Detroit Doctor Pleads Guilty in Two Criminal Cases, Admits to Defrauding Medicare and Causing Bodily Harm to Patients

A Detroit-area neurosurgeon has pleaded guilty to two criminal cases claiming he collected over $11 million in fraudulent Medicare claims and caused serious bodily harm to patients who were forced to endure medically unnecessary surgeries. Dr. Aria O. Sabit, 39, pleaded guilty last Friday to four counts of health care fraud, one count of conspiracy to commit health care fraud and one count of unlawful distribution of a controlled substance at a hearing before U.S. District Judge Paul D. Borman of the Eastern District of Michigan. Sabit, a Birmingham, Michigan resident, will be sentenced on September 15.

hospital-room-449234-mAccording to the Justice Department, Sabit owned and operated the Michigan Brain and Spine Physicians Group, with locations scattered throughout the greater Detroit area. He admitted to fraudulently obtaining significant profits by convincing his patients to undergo spinal fusion surgeries using medical devices designed to stabilize and strengthen the spine. Many of these surgeries didn’t include the use of medical devices, but that didn’t stop Sabit from billing Medicare and Medicaid for the fraudulent surgeries.

Sabit admitted that his operative reports contained false statements concerning the procedures he was performing, as well as the instrumentation he used. He further admitted to billing for implants that were never actually provided.

Before Sabit moved to begin practicing in Michigan, he was involved in a physician-owned distributorship (POD) called Apex Medical Technologies while on staff at a California hospital. During this time, Apex paid out kickbacks to physicians who performed spinal surgeries and used their devices. Sabit admitted to the Justice Department that he convinced his hospital to buy Apex products in exchange for the opportunity to invest in the company and share in its profits. This conflict of interest caused Sabit to think more about profit than the wellbeing of his patients. In fact, he admitted to using more Apex devices than he should have in surgeries, which resulted in serious injuries to his patients.

This case is a tragic example of a doctor forsakes the Hippocratic oath and puts profits over the health and safety of his patients. It also demonstrates some of the inherent conflicts that can exist in PODs. If you have firsthand information concerning health care fraud or misconduct on the part of doctors involved in a POD, contact a whistleblower attorney to discuss your options.

Five Global Banks Agree to Pay Over $5 Billion to Resolve Criminal Charges of Conspiring to Manipulate Currency Prices

The U.S. Attorney’s Office announced today that Barclays, Citi, J.P. Morgan and the Royal Bank of Scotland (RBS) will plead guilty to charges of conspiracy to manipulate foreign currency prices. The five global banks have agreed to pay a combined $5.6 billion in penalties to state, U.S. and U.K. authorities to resolve a longstanding U.S. led investigation into foreign exchange and Libor manipulation.

usa-dollar-bills-1431130-mU.S. Attorney General Loretta Lynch said J.P. Morgan, Citi, Barclays and RBS will plead guilty to charges of conspiring to manipulate the price of the euro and the U.S. dollar. The fifth bank—UBS, AG—received immunity for being the first bank to report possible antitrust violations. Nonetheless, UBS will plead guilty to charges of manipulating the Libor benchmark (also known as the Intercontinental Exchange London Interbank Offered Rate, it is the benchmark rate that some of the world’s leading banks charge each other for short-term loans) and pay a fine.

In a related matter, Bank of America will pay a $205 million fine to resolve a Fed investigation into similar foreign currency and Libor-related corruption allegations. All of the fines come in addition to the $4.3 billion that most of the same banks were forced to pay last November in order to resolve similar charges.

So, how did these collusion schemes work?

The ‘Cartel’, as the foreign currency traders at these banks referred to themselves, used a chat room and coded language to communicate with each other for the purposes of moving foreign currency rates in ways that were favorable to those in their group. No individuals have been criminally charged for the misconduct, but according to a statement by the Justice Department, investigations into individuals with roles in the scheme will continue.

Here’s how the criminal fines will shake out for each bank:

  • Citi – $925 million
  • Barclays – $650 million
  • J.P. Morgan – $550 million
  • RBS – $395 million
  • UBS – $203 million

Swiss Bank to Pay $5.4 Million to Settle Tax-Related Offenses

A small Zurich-based bank has agreed to pay the Justice Department $5.4 million to settle claims that it helped U.S. citizens avoid paying taxes. Finter Bank Zurich became the third Swiss bank this year to avoid prosecution over tax-related offenses by reaching a settlement with the U.S. government.

logoThe Justice Department created a program in 2013 that allows Swiss banks to avoid prosecution by coming forward and voluntarily disclosing any international banking activities that help U.S. citizens avoid paying taxes. Banks that are already facing criminal investigations—HSBC’s Swiss private bank and Julius Baer—are excluded from the program.

According to a press release issued on Friday, Finter Bank has nearly 300 accounts belonging to U.S. citizens with a total balance of roughly $235 million. Prosecutors say that between 2008 and 2011, the bank provided U.S. citizens with services that helped them hide their assets, including assistance in setting up sham entities and eliminating paper trails.

Luigi Carnelli, Finter Bank’s CEO, said in a statement that the bank decided to settle in order to move forward from “this legacy from the past.” In addition to the penalty, the company must implement control measures to ensure that similar misconduct is stopped.

Other Swiss banks to reach similar deals within the last few months include Vadian and BSI, the latter of which paid a $211 million penalty. At the end of March, BSI admitted that for decades, it assisted thousands of U.S. citizens who opened Swiss accounts and hid assets from U.S. tax authorities. In the case of Vadian, it agreed to pay a $4.25 million penalty. The terms required the bank to demonstrate that it has implemented controls to stop cross-border banking misconduct in undeclared U.S. accounts and give full cooperation in any related civil or criminal proceedings.

One of the highest paid whistleblowers in American history helped expose tax-related offenses in a landmark case last year. Whistleblower Bradley Birkenfeld was paid $104 million for his role in exposing widespread tax fraud among U.S. clients with Swiss accounts at UBS.

Global Computer Enterprises Agrees to Pay $9 Million to Settle False Claims Charges

The Justice Department reached an agreement with Virginia-based Global Computer Enterprises and its owner to settle allegations that the company made false claims for services rendered under government contracts. GCE and its owner, 53-year-old Raed Muslimani, have agreed to pay the government $9 million to settle civil claims that the company hid the citizenship and work status of employees and engineers performing services for the company while under government contracts.

Global-Computer-Enterprises-logoGCE, a cloud-based “software as a service” provider, was under contract to provide the U.S. Department of Labor (DOL) and the Equal Employment Opportunity Commission (EEOC), the General Services Administration (GSA), the Secret Service and the Coast Guard with financial management software services. When GCE filed for Chapter 11 bankruptcy in September of 2014, the Labor Department and GSA were forced to pay $23 million in order to gain access to financial systems and data.

Court documents show that the Federal Bureau of Investigation (FBI) began investigating GCE in 2013 after false claims allegations surfaced. During the course of its investigation, the FBI found that engineers and other employees working for GCE on government contracts lacked security clearances, labor qualifications, and/or were based overseas. In response, the government filed charges against GCE and Muslimani claiming the engineers and other employees were expressly forbidden from performing services under the government contracts.

The $9 million in the settlement agreement will be paid out of GCE’s Chapter 11 proceeding. Documents show that over 150 companies and individuals claim they are owed money by GCE or Muslimani. Unbelievably, Federal News Radio reports that Muslimani’s new company, Serendipity Now (doing business as Data Analytics) has government contracts to run and the Federal Procurement Data System—Next Generation.

Under the terms of the settlement agreement, GCE and Muslimani did not admit to any wrongdoing.