Monthly Archives: May 2014

KBR and Halliburton Must Face Fraud Claims

A federal judge ruled today that Kellogg, Brown & Root (KBR) and Halliburton must face whistleblower claims that they bilked money from the government. A former KBR employee filed the whistleblower lawsuit in 2005, claiming that KBR, Halliburton, Service Employees International, KBR Services Inc. and KBR Technical Services inflated the amount of soldiers using KBR facilities in Iraq in order to boost the fees they could bill the government.

downloadThe defendants in the case had been contracted by the government to provide logistical and life-support services for the military in Iraq. This included camp construction, power generation, water services, laundry, dining facilities, fire protection and recreational facilities, among other things.

Relator Julie McBride was a coordinator at a KBR recreational facility (also known as Morale, Welfare and Recreation, or MWR facility) where she was responsible for keeping a head count of the soldiers that entered MWR facilities in Camp Fallujah. The head counts, according to McBride, were used to decide on staffing numbers as well as how much KBR could bill the government. AcFcording to the lawsuit, McBride claims that KBR instructed her to inflate the head counts by asking soldiers to sign in when they entered a facility, then she would take an hourly count of people in each room. She also counted equipment as military personnel, in some cases counting ping pong sets, towels or water bottles in the head counts. McBride claims that this artificially inflated the total head count, resulting in the government footing the bill for troops being counted multiple times.

McBride claims that she was fired in March 2005 after reporting the alleged fraud. She filed her whistleblower lawsuit in April 2005. In 2007, U.S. District Judge Henry Kennedy Jr. stripped away some of McBride’s allegations but allowed her to pursue her allegations of head count inflation.

In the most recent proceedings, KBR urged U.S. District Judge Frederick J. Scullin Jr. to toss all of McBride’s claims. According to Courthouse News, Judge Scullin dismissed one of McBride’s claims that KBR violated the False Claims Act by “siphoning” equipment meant for MWR facilities for company use. But in the end, the judge allowed McBride’s allegation of head count inflation to proceed.


New Hampshire Drywall Company Sued for Misclassifying Contractors

A New Hampshire drywall company and its owner are being sued for allegedly misclassifying workers as independent contractors. According to the lawsuit filed last week, Universal Drywall LLC and its owner, Richard Pelletier violated the Massachusetts Consumer Protection Act and the Massachusetts False Claims Act by misclassifying workers in order to gain unfair advantage over other companies in Massachusetts.

“Employers are required to pay employees a lawful wage for each hour of work on construction projects, maintain accurate payroll records and produce those records upon demand,” said Massachusetts Attorney General Martha Coakley in a statement. “We enforce these laws not only to protect workers, but to level the playing field for all businesses that play by the rules.”

The Fair Labor Division of the Attorney General’s Office began investigating Universal’s hiring practices at a residential construction project in 2013 after receiving reports that the company was hiring workers from New Hampshire and misclassifying them as independent contractors, a violation of the Massachusetts Independent Contractor Law. The reports were similar in scope to those received in 2011 and 2012, where Universal allegedly misclassified workers on two publicly funded projects.

According to Banker and Tradesman, Universal allegedly engaged in the practice of misclassifying employees in order to save costs. The company received more contracts by underbidding their competition because the workers, not the company, absorbed the burden of an employer’s overhead cost.

Former WellCare CEO to Serve Prison Time for Health Care Fraud

Todd S. Farha, the former Chief Executive Officer of WellCare, was sentenced today in the Middle District of Florida to serve three years in prison for defrauding Florida’s Medicare program. A federal jury convicted the 45-year-old Tampa resident on two counts of health care fraud on June 10, 2013.

wellcare_286WellCare operates health maintenance organizations (HMOs) in several states providing services through government health care programs like Medicaid. Two WellCare HMOs operating in Florida – StayWell and Healthease – contracted with the Agency for Health Care Administration (AHCA), which is the agency that administers the Medicaid program to provide recipients with various health care services, including behavioral health care services.

In 2002, the state of Florida enacted a statute requiring Medicaid HMOs to expend 80 percent of the Medicaid premium paid for certain behavioral health services. If the HMO expended less than 80 percent of the premium, the difference was to be repaid to the AHCA.

According to the Justice Department, Farha and others were involved in a scheme to defraud Florida’s Medicare program between 2003 and 2007 by making false claims related to expenditures for behavioral health care services. The scheme involved submitting inflated expenditure claims in the company’s annual reports to the AHCA, which reduced WellCare’s contractual repayment obligations for behavioral health care services.

The government filed related charges in a deferred prosecution agreement (DPA) against WellCare in 2009. WellCare was forced to pay $40 million in restitution, forfeit another $40 million to the U.S. government and cooperate in the government’s criminal investigation. WellCare also settled a related qui tam lawsuit, agreeing to pay $137.5 million in civil fines and penalties.

Patient Recruiter Sentenced for Role in $14.5 Million Medicare Fraud Scheme

The U.S. Justice Department announced on Wednesday that a 41-year-old patient recruiter has been sentenced to over seven years in prison for his role in a scheme to defraud Medicare of roughly $14.5 million. Richard Shannon was found guilty of conspiracy to commit health care fraud and sentenced to serve 86 months in prison followed by three years of supervised release. He was also ordered to pay more than $1.6 million in restitution, jointly and severally with his co-conspirators.

usa-dollar-bills-1431130-mAccording to evidence presented at trial, Shannon and his co-conspirators caused two Oak Park-based home health care companies to submit false and fraudulent claims to Medicare. The companies – All American and Patient Choice – purported to provide skilled nursing and physical therapy services to Medicare beneficiaries.

Working as a patient recruiter, Shannon paid Medicare beneficiaries to sign blank documents for physical therapy treatments that were either medically unnecessary or never provided. He recruited destitute patients from housing projects or soup kitchens in the Detroit area by offering cash and promises of prescription narcotics in exchange for providing their patient information.

The owners of All American and Patient Choice then paid doctors to sign referrals and other documents necessary to bill Medicare. Physical therapists and physical therapist assistants would then create fake medical records using the documents obtained by Shannon and other patient recruiters to make it appear as if physical therapy services had actually been provided.

The FBI, HHS-OIG and the IRS investigated this case, which was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan. Since 2007, the Medicare Fraud Strike Force has charged almost 1,900 defendants who have collectively billed the Medicare program for more than $6 billion.

Justice Department Reaches Settlement With Sallie Mae Resolving Allegations of Overcharging Military Servicemembers for Student Loans

The U.S. Justice Department has reached a $60 million settlement agreement with Sallie Mae (now known as Navient Solutions, Inc.), SLM DE Corporation (now known as Navient DE Corporation) and Sallie Mae Bank, resolving claims that the student loan owners and servicers engaged in a nationwide practice of violating the Servicemembers Civil Relief Act (SCRA), which is designed to protect men and women in the military from having to repay loans that are unfair.

downloadSallie Mae allegedly failed to provide men and women in the military with the six percent interest rate cap on student loans to which they are entitled under the terms of the SCRA. The complaint also claims that Sallie Mae improperly obtained loan default judgments against servicemembers. The Justice Department estimates that 60,000 servicemembers will receive compensation from the settlement, which resolves the federal government’s first lawsuit against student loan owners and servicers for violating the SCRA.

Aside from the $60 million, the settlement includes provisions designed to ensure that servicemembers are protected from predatory lending moving forward. Sallie Mae is also responsible for contacting all three major credit bureaus to delete any negative credit history entries that were caused as a result of any interest rate overcharges or improper default judgments. Additionally, Sallie Mae is now required to streamline the process by which servicemembers may notify Sallie Mae of their eligibility for SCRA benefits.

“Our men and women in uniform who are called to active duty should not be subjected to additional red tape to receive the benefits they’re entitled to for serving their country,” said U.S. Education Secretary Arne Duncan. “What’s more, every student who has taken out a federal student loan should have the peace of mind that the department’s servicers are following the law and treating all borrowers fairly. Federal student loans are a critical part of helping every American find the clearest path to the middle class through a higher education, so we must do everything we can to ensure quality customer service for every borrower.”

Medicare Still Paying Doctors Even After Being Sanctioned or Arrested?

A ProPublica analysis of newly released data on Medicare payments shows that some doctors are still able to receive payments from Medicare even after they have been booted from state Medicaid programs, indicted or charged with fraud, or settled allegations of submitting false claims. Payments to sanctioned doctors totaled more than $6 million in 2012, which may sound like a paltry sum considering Medicare paid out a total of $77 billion in doctor visits and outpatient services covered in its Part B system. Nonetheless, the data demonstrates a weakness in regulators’ ability to protect government health care agencies and patients from fraud, waste and abuse.

The release of Medicare payment data comes at a time when Medicare’s ability to fight fraud has been roundly criticized. Last December, the Office of the Inspector General (OIG) of the U.S. Department of Health and Human Services criticized the Centers for Medicare and Medicaid (CMS) for not reviewing the billing for the program’s most well paid providers in an effort to find any false claims. Then in March of this year, an OIG report found that roughly a third of U.S. states failed to tell the CMS when they had terminated providers from participating in Medicaid. Other states failed to provide CMS with complete information on providers. This communication breakdown clearly affected regulators’ ability to flag providers that had been sanctioned.

“If you’ve been suspended or terminated in one of the federal programs … I would think that you’d be suspended in the other programs, just as a basis of good practice,” said Louis Saccoccio, chief executive of the National Health Care AntiFraud Association. For their part, officials at CMS acknowledge that there is more the agency can do to combat fraud. “We know that there’s fraud in the system,” said CMS’ principal deputy administrator Jonathan Blum. “We want the public’s help” in reviewing Medicare physician payment data and reporting suspected wrongdoing.

Below are some examples of physicians who continued to receive Medicare payments after being sanctioned:

  • Dr. Mark Greenbain – Arrested in 2011 for allegedly running a scheme to defraud Medicare. Was suspended from participating in Michigan’s Medicaid program the same year. In 2012, Medicare paid Greenbain more than $862,000. He has since pleaded guilty to the 2011 charges and was sentenced to four years in prison.
  •  Dr. Anmy Tran – Arrested in 2011 for allegedly running a scheme to defraud Medicare. Was suspended from participating in Michigan’s Medicaid program the same year. In 2012, Medicare paid Tran $155,000. She was found guilty of the 2011 charges at trial. Tran is currently appealing a five-year prison sentence.
  • Dr. Lawrence Eppelbaum – Indicted in March 2011 for luring patients to his Atlanta clinic by paying for their travel expenses via a charity he controlled. Medicare paid him $500,000 the following year to treat 80 patients. He was convicted last year and is appealing a 50-month prison sentence.
  • Dr. Matthew Burman – Suspended by Michigan’s Medicaid program in 2009 after being convicted of a misdemeanor count of criminal sexual conduct. He surrendered his medical licenses in California and Texas, and agreed not to activate his registration in New York. In 2012, Medicare paid him $379,000.