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.


Whistleblower to Receive $2.66 Million Reward for Bringing Medicare Fraud Allegations to Government

Sixteen hospitals and their parent companies will pay over $15 million to resolve whistleblower allegations claiming the hospitals submitted claims for Medicare services that were inappropriate and medically unnecessary. The Justice Department announced that the whistleblower who brought the alleged fraud to the government’s attention will receive a $2.66 million reward.

ambulance-1334534-mThis case centered on Intensive Outpatient Psychotherapy (IOP) services, which are continued outpatient psychiatric services and treatments for individuals with mental disorders. Medicare will pay for IOP treatment if it is medically reasonable and necessary for diagnosing and treating a patient’s condition.

Starting in 2005 and in some cases continuing into 2013, the Justice Department claims that the hospitals in question billed Medicare for services even though patient conditions did not qualify for IOP. In other cases, the care provided was deemed inappropriate for patients, or not therapeutic. Allegiance Health Management—a post-acute healthcare management company based in Louisiana—typically provided IOP services on the hospitals’ behalf. Nonetheless, it was the hospitals that billed Medicare for the services.

Below are the providers that were included in the settlement agreement:

-    Health Management Associates Inc. and 14 other hospitals the company owns and operates in Mississippi, North Carolina, Georgia, Arkansas, Florida, Texas and Oklahoma will collectively pay $15 million.

-    North Texas Medical Center in Texas will pay $480,000.

-    Community Health Systems and subsidiary Wesley Medical Center in Mississippi will pay $210,000.

Similar charges against LifePoint Hospitals Inc. were settled for $4.67 million in 2013.

This case was initially brought to the government’s attention after a whistleblower filed a qui tam lawsuit under the False Claims Act, which allows individuals (known as relators) to file a lawsuit on the government’s behalf and share in any money recovered. If the government intervenes in a qui tam claim, the relator is typically entitled to between 15 and 25 percent of the recovered damages. In successful cases where the government does not intervene, that percentage can reach as high as 30 percent.

Kentucky Optometrist to Pay $1.2 Million Back to Government Over False Claims

A federal jury has found a Kentucky optometrist liable for seeking Medicare reimbursement for more than 11,000 medically unnecessary eye examinations. The U.S. Attorney’s Office announced last Friday that Somerset optometrist Dr. Phillip Robinson bilked over $400,000 from the government and will be required to pay back just over $1.2 million.

optometry-903400-mDr. Robinson provided optometry services between 2007 and 2012 at roughly a dozen nursing facilities scattered throughout Kentucky. According to evidence presented at the trial, Dr. Robinson performed eye examinations once a month for the vast majority of his nursing home patients, regardless of their medical needs. Medical experts that testified at Robinson’s trial said they did not know of any other optometrist that provided eye exams with such regularity.

Medicare will only pay for care that helps improve a patient’s health and is considered medically necessary. According to Lex 18, Dr. Robinson intentionally submitted roughly 11,085 claims for Medicare reimbursement based on thousands of eye exams that the jury found were not medically necessary.

In a related matter, Dr. Robinson’s practice group—Associates in Eye Care—agreed to pay the government $800,000 earlier this year to settle similar claims against it, thereby avoiding trial. In that case, the government claimed that Dr. Robinson saw so many patients on a daily basis that it was impossible for all to receive legitimate eye exams.

When health care providers are found liable for fraud under the False Claims Act, they are usually excluded from participating in federal health care programs like Medicare and Medicaid. The Department of Health and Human Services, Office of Inspector General (HHS-OIG) will soon decide whether Dr. Thompson will be allowed to continue participating in Medicare and Medicaid.

If you have firsthand knowledge of Medicare fraud, contact an experienced whistleblower law firm to discuss your options.

South Florida Doctor Facing Criminal Charges Over Medicare Advantage Fraud Allegations

A criminal case against a south Florida doctor is taking aim at the Medicare Advantage industry. Isaac Kojo Anakwah Thompson, a doctor affiliated withstethoscope-942045-m—one of the largest providers of private Medicare Advantage plans in the country—was indicted in February on eight counts of health care fraud. Thompson allegedly claimed that his patients were sicker than they actually were, allowing him to overbill the government for medically unnecessary care. In total, he’s accused of bilking over $2 million from Medicare.

Medicare Advantage is different than standard Medicare, which pays doctors in accordance with each service they provide. In contrast, Medicare Advantage plans are offered by private companies and based on a set monthly fee for each patient. Each patient’s fee is based on a complex formula known as a risk score. Generally speaking, the government pays higher rates for sicker patients and lower rates for those in good health.

According to the Center for Public Integrity, Medicare Advantage overcharges have cost taxpayers billions of dollars over the last few years. In the face of these overcharges, whether intentional or not, the Obama administration has proposed $36 billion to be cut from Medicare Advantage plans over the next decade. As expected, the industry has mounted a massive campaign in D.C. to stop government attempts to reduce Medicare Advantage funding.

At present there are several ongoing whistleblower lawsuits involving Medicare Advantage fraud allegations:

  • Florida doctor Olivia Graves claims that a Humana medical center knowingly misdiagnosed patients to seem in poorer health than they actually were, all in the name of overbilling the government.
  • A whistleblower lawsuit claims that a California company abused the diagnosis process to inflate risk scores.
  • A former official in the Bush administration has accused a provider in Puerto Rico of overbilling Medicare hundreds of millions by misdiagnosing patients.

All of the above companies have denied any wrongdoing.

While it is important that companies be held accountable for any wrongdoing, it is unlikely that civil settlements alone will have the desired impact. But bringing criminal charges that carry a maximum jail sentence of up to 10 years ups the ante dramatically for health care fraudsters. Hopefully this will carry a message—if you steal from the government, you will face jail time.

Compliance Officers Blowing the Whistle Could Become New Trend

The Securities and Exchange Commission (SEC) announced last week that a compliance officer received one of the largest SEC whistleblower rewards to date. In a press release issued last Wednesday, the SEC said the anonymous compliance professional received in excess of $1.4 million for helping to bring a successful enforcement action against the whistleblower’s company.

securities-and-exchange-commissionSince the launch of the SEC’s whistleblower program, there has been a significant upswing in the number of compliance professionals blowing the whistle on corporate misconduct. Last week’s whistleblower reward represents the 16th handed out to a compliance officer since 2011. Many feel like the trend will continue to grow in the coming years, especially with payouts reaching the seven-figure mark.

Companies have expressed concern that the rise of the compliance officer-turned-whistleblower will undermine internal compliance functions—the argument being that rather than finding ways to correct company misconduct, compliance officers will think of the money to be made by reporting the wrongdoing to the SEC. But would-be whistleblowers are required to report any wrongdoing internally, and in most cases, are forced to wait up to 120 days before they can come forward and report the information to the SEC.

In the most recent case, the 120-day rule was not applied because the relator believed that the reported misconduct could have had significant financial implications for both the company and investors. Nonetheless, the whistleblower reported the misconduct internally and the company reportedly failed to take action.

Internal compliance programs—like the SEC—are there to ensure that companies don’t step out of line. Companies have an opportunity to act when misconduct is reported internally, and yet we’ve seen time and again that many are unwilling to change their behavior. This is why the SEC needs whistleblowers to come forward if they are privy to misconduct, regardless of what type of job they hold. This is also why whistleblowers need to be compensated—handsomely if their actions help return millions gained through corporate fraud and misconduct.


Georgia Hospital to Settle Medicare Fraud Charges for $20 Million

The second largest hospital in the state of Georgia has agreed to pay $20 million to resolve claims that it submitted false claims to Medicare, which caused the government to pay significantly more than it should have for the hospital’s services. Based in Macon, the Medical Center of Central Georgia (MCCG) allegedly billed Medicare for expensive inpatient care when it was actually providing less costly outpatient care.

Hospitals generally receive significantly higher Medicare reimbursement for inpatient services as opposed to outpatient services. The government contends that between 2004 and 2008, MCCG knowingly billed Medicare for medically unnecessary inpatient admissions when the care that it actually provided should have been billed as outpatient or observation services.

usa-dollar-bills-1431130-mIn addition to the $20 million, the settlement also requires the company to maintain an independent review organization for a period of five years to ensure the accuracy of its claims for services provided to Medicare beneficiaries.

Today’s settlement shows what can happen when health care companies provide services based on financial rewards rather than the health and wellbeing of their patients. Medicare beneficiaries should feel secure in knowing that the care they are receiving is beneficial and medically necessary. When providers choose care based solely on what generates the most revenue, it jeopardizes the health of Medicare beneficiaries who are some of our most vulnerable citizens and makes taxpayers pay for it.

This case highlights the need for whistleblowers to come forward and expose corporate wrongdoing. If you have inside information about health care fraud, you should speak to an experienced whistleblower attorney as soon as possible to discuss your claim. Those who come forward and blow the whistle on health care fraud are eligible to receive sizable financial rewards if a claim is successful. They also play an integral role in saving taxpayer dollars and preserving the integrity of government programs like Medicare and Medicaid.

HCR ManorCare Accused of Submitting False Claims to Medicare Worth Millions

The Justice Department announced today that it has intervened in a whistleblower lawsuit claiming that HCR ManorCare engaged in a nationwide scheme designed to bilk millions of dollars from Medicare. Kansas-based HCR ManorCare, which operates hundreds of skilled nursing and rehabilitation facilities across the country, allegedly submitted over 1,200 false claims for Medicare reimbursement worth millions between 2006 and 2012.

hcrmanorcareAccording to the Toledo Blade, HCR ManorCare is accused of subjecting patients to treatment that was medically unnecessary and in some cases harmful, all in the name of increasing Medicare reimbursement rates. Company executives allegedly put pressure on facility staff to meet corporate quotas for billing by increasing the number of patients that met top Medicare reimbursement rates.

The lawsuit claims that in October of 2006, HCR ManorCare billed Medicare at the ultra high level for nearly 40 percent of rehab days. Then in November of 2009, the company billed at the same ultra high level for 80 percent of rehab days. According to the Justice Department, the drastic upswing in ultra high billing levels was not the result of the company’s patient population.

In one example cited in the lawsuit, an 85-year-old man was admitted to an HCR ManorCare facility in Florida solely for hospice care. Even though the patient wasn’t supposed to receive rehab services, the facility provided speech-language pathology services, physical therapy and occupational therapy at the ultra high level, even going so far as to provide 75 minute physical therapy sessions for the first week of the patient’s stay.

If the allegations prove to be true, HCR ManorCare will have based treatment decisions on profit rather than the health and wellbeing of their patients. HCR ManorCare has denied any wrongdoing, saying it views the lawsuit as a billing dispute and plans to fight the lawsuit.


Whistleblowers Could Start Seeing Higher Rewards for Employer Retaliation

It used to be a given that whistleblowers—especially employees of government contractors—would be the victims of retaliation and likely fired if their employers discovered that they had blown the whistle. Employees were previously covered by anti-retaliation protections only if they were investigating an actual False Claims Act action which their employer knew about, and then became the victim of retaliation because of their investigation.

That changed dramatically in May of 2009, when Congress enacted the Fraud Enforcement and Recovery Act (FERA) in an effort to expand the reach of the False Claims Act, FERA was designed to enhance protections for whistleblowers who tell their employers and/or the government about company fraud or misconduct by expanding retaliation protections to cover not just employees, but also independent contractors, agents and “associated others.” It also increased covered actions and created a three year statute of limitations from the date of the employer retaliation.

According to the National Law Journal, the protections in FERA allow for prevailing plaintiffs to recover damages, including reinstatement, two times back pay plus interest and compensation for ‘special damages’ sustained from the retaliation. This last part is especially important because ’special damages’ may include pain and suffering.

Due to the broadened reach of retaliation claims now afforded to whistleblowers post-FERA, it is very likely that we will see more employer retaliation cases brought under the False Claims Act (either accompanying a qui tam claim or not). It is also likely that employer retaliation cases will yield higher awards, especially when claims incorporate expert testimony on emotional distress (for which there is no cap on damages).

While some scattered courts across the country continue to follow pre-FERA precedent, most continue to rule in a manner consistent with Congress’ clear intent to provide whistleblowers with more anti-retaliation protection. The bottom line: employers that retaliate in violation of the False Claims Act have a lot more to lose, which is good news for whistleblowers.

South Florida Doctor Indicted in Medicare Fraud Scheme Worth Over $100 Million

A doctor in the North Palm Beach area was hit with a 76-count indictment today for his participation in a Medicare fraud scheme worth over $100 million. Dr. Salomon E. Melgen, a 61-year-old ophthalmologist and retina specialist, was charged today with 46 counts of health care fraud, 19 counts of making false and fraudulent claims and 11 counts of making false statements relating to health care.

According to a Justice Department press release, Melgen owned and operated Vitreo-Retinal Consultants (VRC), a medical clinic with four offices in south Florida that conducted business as Vitreo Retinal Consultants Eye Center and The Melgen Retina Eye Center. Melgen’s practice typically provided services to 100 or more patients per day—many of which were Medicare beneficiaries.

1305802_businesswoman_1The indictment states that between 2004 and 2013, Melgen submitted false claims and made fraudulent changes to patients’ charts in a scheme designed to bilk money from federal health care programs. The 61-year-old ophthalmologist allegedly diagnosed his patients with serious eye conditions like age-related macular degeneration (ARMD or AMD) and other retinal disorders so he could perform and bill for medically unreasonable and unnecessary tests and procedures, including unnecessary eye injections and laser surgeries.

He was able to make these fake diagnoses by allegedly making fictitious diagrams and drawings that misrepresented the condition of his patients’ eyes. When faced with government audits into his business, Melgen allegedly prepared fictitious reports that justified his abnormal billing practices.

It is also alleged that Melgen profited from the purchase and administration of Lucentis, a Genentech drug used to treat symptoms related to vision loss in elderly patients. According to the indictment, Melgen purchased the drug from Genentech and then had the single-use dose split up into multiple doses before administering to multiple patients. Once this process was completed, he allegedly billed Medicare and other health care providers separately at the full dosage reimbursement rate.

The defendant also submitted for claims for reimbursement based on services that were either never performed or not medically necessary, including angiographic studies on prosthetic eyes and blind eyes.

All told, Melgen billed Medicare for over $190 million and was paid more than $105 million. According to the Justice Department, a substantial portion of the payments Melgen received were obtained through fraudulent billing practices.