Monthly Archives: June 2014

Oncology Clinic Charged with Using Unapproved Cancer Drug

A Kentucky cancer clinic pleaded guilty to charges of knowingly receiving and distributing non-FDA approved foreign source cancer drugs. The Hematology and Oncology Center in Somerset, Kentucky pleaded guilty to knowingly receiving a misbranded cancer drug, and is facing up to five years of probation and a maximum fine of $200,000. The center’s former office manager, Natarajan Murugesan, is facing up to a year behind bars and a maximum fine of $100,000 for aiding and abetting the sale of the misbranded drugs.

The clinic has already paid $2 million to resolve alleged violations of the False Claims Act by submitting for Medicare reimbursement based on misbranded and unapproved cancer drugs. One of the clinic’s owners, Dr. N. Mullai, was involved with the civil settlement but was not charged with any crime. According to the Courier-Journ1314902_medical_doctoral, the clinic and Murugesan admitted to purchasing “substantial amounts” of various chemotherapy and cancer treatment medications from a foreign distributor between January 2010 and July 2011. The drug packaging didn’t have labeling, the dosage information was in foreign languages, and the drugs themselves were manufactured in India, Turkey and other countries.

This kind of behavior is deplorable, as it puts patients at risk. In situations like this, patients and taxpayers can benefit from someone with knowledge of fraud coming forward and exposing the wrongdoing. Whistleblowers not only help save taxpayers money by reporting fraud, they may also receive a percentage of any money returned to the government. If you have any knowledge of health care fraud, get in touch with an experienced whistleblower attorney to help you through the process.

Omnicare to Pay $124 Million to Settle False Claims Allegations

download (1)The Justice Department announced today that Omnicare Inc. will pay $124 million to resolve allegations that the pharmacy company provided skilled nursing homes with illegal discounts in return for the opportunity to continue to provide drugs to Medicare and Medicaid beneficiaries. The discounts allegedly resulted in Omnicare making false claims for Medicare and Medicaid reimbursement.

The alleged scheme worked like this: Omnicare entered into contracts with skilled nursing facilities to provide prescription medication below cost. In return, the skilled nursing homes would select Omnicare to provide drugs for their Medicare and Medicaid patients, as the facilities would save money on drug costs. Omnicare would then overcharge for the prescription drugs it billed to the government.

Providing a break on price represents a violation of the Anti-Kickback Statute, which prohibits the offering, paying, soliciting or receiving of payment in exchange for referrals for items or services covered by government health care agencies. This regulation is in place to make sure that health care suppliers like skilled nursing homes choose suppliers based on the best interest of patients, not financial perks.

According to the Justice Department, the settlement resolves allegations initially filed by two whistleblowers. One of the whistleblowers, former Omnicare employee Donald Gale, will receive $17.24 million for his role in exposing Omnicare’s alleged fraud.

Florida Patient Recruiter Guilty for Role in $205 Million Health Care Fraud Scheme

637885_-top_secret-A health care fraud scheme involving seniors who lived in assisted living facilities cost taxpayers more than $205 million dollars and was uncovered by federal criminal investigators in South Florida. The scheme, perpetuated by experienced healthcare professionals, has resulted in two criminal convictions. Yesterday, one of those men, a patient recruiter, was convicted for his role in the scheme. Michael Mendoza, the former president of Florida-based Network Resource Consultant, Inc., pleaded guilty before a federal magistrate-judge in the Southern District of Florida. Mendoza pled guilty to one count of conspiracy to commit health care fraud and will be sentenced later this summer.

According to the Justice Department, while Mendoza was president of Network Resource Consultant, he also served as a patient recruiter for American Therapeutic Corporation (ATC), a defunct partial hospitalization program that purportedly provided intensive psychiatric services to Medicaid and Medicare patients. Mendoza referred residents of assisted living facilities to ATC for psychiatric services in exchange for substantial illegal kickbacks. The kickback scheme involved the president of ATC, Lawrence Duran, Mendoza and others.

In order to increase the number of Medicare and Medicaid patients and billings, ATC paid millions of dollars in kickbacks to Mendoza and others to refer vulnerable senior citizens to ATC for unnecessary psychiatric services. Most of the patients referred to ATC had no psychiatric disorders that required the treatments that ATC provided, were not qualified to receive these services, or attended programs not approved by the government.

The government was prepared to prove that Medicare was billed more than $205 million for these medically unnecessary claims by ATC. The government also contends that as a result of Mendoza’s efforts, ATC submitted about $500,000 in false claims to Medicare from Mendoza’s referrals alone.

The president of ATC, Lawrence Duran was previously convicted in the scheme. Duran is serving a 50 year prison sentence.

Although this was a criminal prosecution, it is reasonable to believe that employees of ATC, some of the health care professionals who provided the unnecessary services and employees of Mendoza’s company, Network Resources Consultant, Inc., knew about the scheme before the criminal investigation began. Those employees could have reported these crimes to the government. Those whistleblowers could also have sought the assistance of qualified Qui Tam (Federal False Claims Act) attorneys who would have filed a civil claim as well. If those employees had come forward, a reward of up to 30% of the $205 million dollar loss to the government, if recovered, may have been awarded to them. Taxpayers may have been spared much of the hundreds of millions of dollars lost.

We applaud the government’s efforts to prosecute these criminals. We also encourage those willing to come forward and report fraud to ensure that it is stopped, to contact an experienced whistleblower law firm. We at Baum Hedlund Aristei and Goldman are here to assist whistleblowers.


Treasury Department Scrapping Whistleblower Rewards

The Department of the Treasury and the Internal Revenue Service (IRS) office of general counsel want to keep whistleblowers from obtaining rewards despite the IRS Whistleblower Program.  Essentially, the Rule would provide that if the fraud that a whistleblower reports is so serious as to warrant a criminal prosecution then no reward would be permitted to the whistleblower who reported the fraud.

Slave to the taxesWhile this sounds incredible—the Rule would allow rewards to whistleblowers who report minor fraud, but not to those reporting the most serious fraudulent conduct.  The rule, which is reportedly on the verge of being approved, would undermine Congress’ efforts to reward whistleblowers that report tax fraud to the government. Tax fraud whistleblowers would be eligible to receive rewards only if the information they provide leads to civil or administrative penalties. If the whistleblower produces evidence that leads to a criminal prosecution, the whistleblower would not be eligible to receive a reward.

According to the National Whistleblowers Center, the timing of the proposed rule is really bad. The NWC stated, “The IRS and the Justice Department are effectively using the threat of whistleblower disclosures to force international banks to plead guilty to tax fraud violations for illegally harboring non-disclosed offshore accounts.” “If the proposed rule is approved, the threat that international bankers will become whistleblowers will become toothless.” While most whistleblowers are not motivated solely by the reward, it is certainly an incentive to report massive fraud.  Without this incentive, most serious fraud will go unreported.

The whistleblower attorneys at Baum, Hedlund, Aristei & Goldman are joining with the NWC in demanding that the IRS refrain from approving the proposed Rule.  The exclusion of awards to those reporting criminally prosecuted tax cheats is an unlawful and inappropriate disincentive and detracts greatly from the IRS Whistleblower Program.

Read more about the proposed change to the IRS whistleblower rules and how you can help!

Government Files Complaint Against Info Tech Company Accused of Violating the False Claims Act

The government has filed a complaint against an information technology company accused of violating the False Claims Act in connection with a Government Services Administration (GSA) contract. CA Inc., a New York-based company that manufactures and sells information technology products, is accused of breaking its promise to provide the government with the same prices the company was giving its commercial customers.

downloadAccording to the lawsuit, CA entered into a GSA contract in 2002 to provide various software services, training and consulting to government agencies. The government claims that since at least 2006, CA knowingly overcharged for software licenses and maintenance in several different ways. In one example cited in a Justice Department press release, CA failed to provide complete and accurate information to GSA contracting officers during a contract negotiation. At the time, CA was required to accurately disclose how the company conducted business in the commercial marketplace so that the GSA could negotiate a fair price for government customers. Additionally, the government claims that CA failed to update the GSA on company discounting practices. CA allegedly told the government that its discounting policies had not changed during the life of a GSA contract, when, in fact, commercial customers were receiving greater discounts than government customers.

These alleged actions caused the government to overpay for CA’s information technology. “Companies doing business with the federal government on a GSA schedule must disclose current, accurate, and complete commercial discounts, so that GSA can get the best prices on behalf of American taxpayers,” said GSA Acting Inspector General Robert C. Erickson. “We will continue to investigate all allegations indicating that the federal government may have been overcharged by a contractor.”

“We expect companies that do business with the government to comply with their contractual obligations,” said Assistant Attorney General of the Justice Department’s Civil Division Stuart F. Delery. “As this case demonstrates, we will take action against those who seek to abuse the government’s procurement process.”

Some of the allegations brought forth by the government stem from a whistleblower lawsuit filed by former CA employee, Dani Shemesh, who worked for CA Israel Ltd. The government decided to intervene in Shemesh’s case, assuming primary responsibility in litigating the lawsuit. Shemesh will share a percentage of any money recovered by the government in the case.


Former Executive Claims Insurance Company Stole $1 Billion From Medicare

A former executive claims in a recently filed whistleblower lawsuit that two Puerto Rican Medicare Advantage health plans overcharged Medicare upwards of $300 million a year between 2007 and 2010. The two health plans, MMH Healthcare and PMC Medicare Choice, are owned by a subsidiary of Aveta Inc., a New Jersey-based managed healthcare services company.

image001Josh Valdez served for eight months as president of MSO of Puerto Rico, which is also owned by a subsidiary of Aveta. MSO, according to the Center for Public Integrity, worked with local doctors to coordinate coverage for hundreds of thousands of elderly and disabled people then enrolled in MMH Healthcare and PMC Medicare Choice.

Shortly after being hired, Valdez discovered that both health plans had cheated the government out of roughly a billion dollars over the span of over three years. The plans allegedly committed fraud by seeking out chronically ill patients, who were able to command the highest Medicare reimbursement rates, and overcharging for services by manipulating a billing formula called a risk score, which is medical data Medicare keeps to indicate how sick patients are. Essentially, sicker patients mean higher rates of Medicare reimbursement.

Valdez claims that the inflated risk scores for patients occurred during medical status visits, which are conducted to identify high risk patients and maximize Medicare payments for them. According to Valdez, doctors for both health plans engaged in a profit sharing arrangement that paid them 50 to 60 percent of any surplus Medicare funds that came in as a result of the annual medical status visits.

Valdez, who worked for the Department of Health and Human Services under President George W. Bush, voiced concerns about the rampant fraud to his superiors. He claims that Aveta CEO Richard Shinto fired him “in retaliation for his outspoken opposition to these illegal practices.” Valdez filed a lawsuit against Aveta in April 2011, but it remained under court seal until February. The case is currently pending.