The Securities and Exchange Commission (SEC) has awarded more than $300,000 to an audit and compliance whistleblower who filed a claim in connection with allegations of high-level insider trading. The SEC whistleblower reward is the first given out to an audit and compliance professional. Under SEC rules, potential whistleblowers working in audit and compliance functions must file an internal complaint within their company, then wait 120 days before they become eligible to come forward with information to the SEC.
According to an SEC press release, the whistleblower in this case first reported the wrongdoing to the appropriate personnel within the company, including a supervisor. The company failed to act, and ultimately the whistleblower reported the same information to the SEC.
The information provided by the whistleblower involved a former executive and chairman at CECO Environmental Corp. and API Technologies Corp. The executive in question was accused of insider trading and a host of other violations. He agreed to settle the case for $1.5 million without having to admit or deny any wrongdoing alleged in the case.
Sean McKessy, chief of the SEC’s Whistleblower Office, said people working in audit, compliance and legal functions of companies are in a unique position to expose fraud and wrongdoing because they often have knowledge of very specific information that can be used to prevent fraud or stop existing fraud. If you work in an audit and compliance function and have knowledge of wrongdoing at your company, it is in your best interest to consult with an experienced whistleblower attorney who can help you decide the best course of action. As evidenced by this case, your information could produce a considerable reward. If you have a potential whistleblower case and would like a free case evaluation, please contact Baum, Hedlund, Aristei & Goldman.
The Justice Department announced last week that a New Rochelle, New York nursing and rehabilitation facility submitted over 62,000 false claims for Medicare reimbursement between 2002 and 2006. Relax Services Inc. and its owner, Leah Friedman, have been ordered to return the $2.2 million the company made by submitting false claims over the span of four years. Relax Services operates the Glen Island Center for Nursing and Rehabilitation, which is where the alleged fraud took place.
According to claims made by the Justice Department, the nursing and rehab facility routinely used inflated payment rates in their reimbursement claims to Medicare. Nurses at the facility would falsely represent the degree of care required for some of the Glen Island patients, in some cases exaggerating their diagnoses and conditions in order to bill Medicare for more expensive services. For example, the facility billed for oxygen and suctioning when the treatments were either medically unnecessary or never actually performed.
The defendants attempted to cover their tracks by either forging or making changes to patients’ medical records to coincide with their false claims. Two Glen Island nurses allegedly participated in “tampering parties” where patients’ records were changed. These two nurses have since been convicted by the attorney general’s office, according to Westfair Online.
The settlement is the culmination of an investigation conducted by the Medicare Fraud Control Unit and the U.S. Attorney’s Office for the Eastern District of New York.
The American division of Samsung (Samsung Electronics America Inc.) has agreed to pay the U.S. government $2.3 million to settle allegations that the company violated trade agreements by lying about where Samsung products purchased under government contracts were manufactured. The settlement resolves whistleblower allegations filed by former Samsung employee Robert Simmons. At this time, it is unclear what Simmons’ share of the recovered money will be.
The terms of Government Service Administration (GSA) Multiple Award Schedule (MAS) contracts require that any products purchased should be either manufactured in the United States or a country that the U.S. has a trade agreement with. According to the Justice Department, Samsung provided the government with “inaccurate information” when federal agencies purchased Samsung products thought to be made in countries like South Korea or Mexico. In fact, the products were made in China, a country not part of a trade agreement.
“It is unacceptable to sell unauthorized foreign electronics to the United States,” said GSA Acting Inspector General Robert C. Erickson. “We expect all companies doing business with the federal government to comply with contracting laws.”
Tuesday’s settlement was reached due to the efforts of the U.S. Attorney’s Office for the District of Maryland, the Commercial Litigation Branch of the Justice Department’s Civil Division and the Government Service Administration’s Office of Inspector General.
The case is United States ex rel. Simmons v. Samsung Electronics America, Inc. et al., No. AW-11-2971 (D. Md.)
Carondelet Health Network has agreed to pay $35 million to settle health care fraud allegations initially filed by a whistleblower. The settlement represents the largest amount recovered by the state of Arizona under the False Claims Act.
Two Carondelet Health Network hospitals were accused of knowingly eimbursement from Medicare and other government health agencies between 2004 and 2011. According to the complaint, the rehab services were not reimbursable because the patients were not eligible to receive them.
Carondelet officials purportedly discovered the improper billing during an internal investigation in 2010, characterizing the finding as a “billing discrepancy,” according to the Arizona Daily Star. The investigation concluded that, in some cases, “documentation was lacking to fully support billing of inpatient rehabilitation services to federal health care programs.” However, the U.S. contends that the two hospitals continued to knowingly submit false claims to government health care agencies for at least a year after the improper billing was discovered.
The whistleblower that initially filed suit against Carondelet is Jacqueline Bloink, a former employee. Bloink will receive roughly $6 million for blowing the whistle on her former employer. Her case demonstrates the need for brave men and women to come forward with information of fraud and wrongdoing. Carondelet’s alleged fraud might have cost taxpayers millions had it not been for Bloink’s integrity and bravery.
The former owner of a Los Angeles area medical clinic management company entered a guilty plea today for his role in a Medicare fraud scheme worth $3.2 million. Mihran “Mike” Meguerian pleaded guilty to one count of conspiracy to commit health care fraud before U.S. District Judge Beverly R. O’Connell of the Central District of California.
Meguerian owned Med Serve Management, a Van Nuys-based medical clinic management company. The 37-year-old Glendale resident admitted to being involved in a health care fraud scheme between 2008 and 2009 that involved writing prescriptions for power wheelchairs and other durable medical equipment (DME) that were not medically necessary. Meguerian and fellow conspirators sold the phony prescriptions to DME companies, which then submitted false claims to Medicare. In total, DME companies that purchased phony prescriptions from Med Serve submitted $3,367,661 in false claims. Of that total, Medicare paid out $1,438,760.
According to the Justice Department, Meguerian’s sentencing is scheduled for November. The case was investigated by the Federal Bureau of Investigation and was brought as part of the Medicare Fraud Strike Force, which is now operating in nine U.S. cities and has charged nearly 2,000 defendants since 2007.
The U.S. Department of Health and Human Services (HHS) says that Medicare spent over $30 million in 2012 on possibly dubious AIDS medication costs. The HHS investigation flagged 1,578 Medicare beneficiaries that questionably received AIDS medications. More than half of those flagged had never received an HIV diagnosis, had not visited labs to monitor the use of the prescribed medications, or received medical services from any of the prescribers.
The report highlights the lax oversight of Medicare Part D – which cost taxpayers $65 billion in 2013 – and the billions wasted on needlessly dispensed drugs.
Below are some of the most egregious instances of AIDS medication Medicare fraud cited in the investigation:
- A fraudster in Miami visited nearly 30 different pharmacies to fill prescriptions of HIV drugs. Sixteen different health care practitioners wrote the scripts. The amount of drugs dispensed was roughly 10 times what the average patient gets in a year and worth nearly $200,000.
- One patient received $17,500 worth of AIDS medication in one day then did not fill a single prescription for the same medication for the rest of the year. The patient was prescribed double the recommended dose of five HIV drug ingredients.
- A 77-year-old Detroit woman reportedly filled prescriptions for 10 different AIDS medications worth $33,500. No official record exists of the woman having HIV or visiting the doctors that prescribed the meds.
- Two Miami pharmacies filled prescriptions for HIV medications to 321 Medicare beneficiaries, collecting over $350,000 for the meds. Most of the prescriptions were for women around the age of 74, who are more than two decades older than the average HIV patient receiving meds through Medicare.
The issue of AIDS medication exploitation extends beyond pharmacies and doctors, though the report is quick to highlight that, occasionally, fraudulent pharmacies will bill for AIDS meds, not dispense them, then bill a second time for them. Patients themselves are also abusing the system, as the report noted, because some of the AIDS meds have psychoactive effects that can enhance the effect of certain painkillers.
“These patterns may indicate that a beneficiary is receiving inappropriate drugs and diverting them for sale on the black market,” the report states. “They may also indicate that a pharmacy is billing for drugs that a beneficiary never received, or that a beneficiary’s identification number was stolen.”
The report highlights the need for whistleblowers to step up and report fraud if they see it, especially among practitioners and pharmacies. Blowing the whistle on egregious fraud like this saves taxpayer money and could provide you with a generous financial reward. If you have seen instances of overbilling for prescriptions or billing for drugs that were never dispensed, you should contact an experienced whistleblower attorney to discuss the matter.