The pharmacy benefit management company (PBM) operated by CVS Caremark Corporation will pay $6 million to settle whistleblower allegations of fraud. Whistleblower Donald Well, a former manager at Caremark LLC, accused his former employer of knowingly failing to reimburse Medicaid for prescription drug costs paid on behalf of “dual eligible” Medicaid beneficiaries.
A person is considered “dual eligible” when they are covered by both Medicaid and a private insurer. Under federal law, private insurers assume the cost of health care for dual eligibles, not Medicaid. In the event that Medicaid pays for the prescription claim of a dual eligible, Medicaid is entitled to seek reimbursement from either the private insurer or its PBM, which administers and manages prescription drug benefits under a private insurer’s health plan.
According to Well, Caremark’s billing platform improperly deducted co-pays and deductible amounts when calculating prescription drug payments for dual eligibles. The lawsuit claims that this caused Medicaid to pay for prescription drug costs for dual eligibles when Caremark should have been footing the bill.
Well discovered the billing irregularities when performing an audit on Medicaid claims. He worked at Caremark between 2001 and 2006. According to the Justice Department, Well will receive a little over $1 million plus interest for his role in exposing the fraud.
U.S. Attorney General Eric Holder would like to see the government boost rewards given to whistleblowers in the financial sector who come forward with inside information on corporate wrongdoing. Holder gave a speech last week at New York University in which he called the current maximum payout for a financial whistleblower under the Financial Institutions Reform, Recover and Enforcement Act (FIRREA) a “paltry sum.” Larger rewards are needed, according to A.G. Holder, in order to induce high paying executives to come forward.
At present, financial whistleblowers that come forward with fraud tips can only receive a maximum payout of $1.6 million, which is a far cry from what whistleblowers are eligible to receive under False Claims Act lawsuits, which reward whistleblowers with 15 to 25 percent of any recovered money. When one considers that the median pay for an executive in the financial sector is upwards of $15 million per year, it doesn’t take a genius to see that $1.6 million simply isn’t enough for someone to risk such a lucrative career.
Despite the Department of Justice (DOJ) bringing over 60 fraud cases against financial firms over the last five years resulting in recoveries of roughly $85 billion, DOJ realizes the need to go after individuals responsible for fraud rather than just going after the companies that employ them. This, according to Holder, enhances accountability because companies don’t exclusively commit corporate fraud by themselves, company officials who engage in misconduct commit corporate fraud, and they need to be held responsible for their decision-making.
This is where the Justice Department finds itself hamstringed: discovering prosecutable evidence of an individual’s intent to deceive in a financial fraud case is usually only possible if there are cooperating witnesses, and cooperating witnesses are only going to come forward if they have incentive to do so. “Many financial criminals are savvy enough to avoid using email, which may leave a trail for investigators to follow,” said Holder in his speech. “And intent may only be evidenced sometimes in the form of verbal instructions – evidence that can provide the sort of “smoking gun” that is needed to secure a conviction: but that can only be attained from a cooperating witness.”
Holder closed his speech by highlighting the need to change the whistleblower provision in FIRREA (“perhaps to False Claims Act levels”) in order to incentivize financial whistleblower cooperation. “This could significantly improve the Justice Department’s ability to gather evidence of wrongdoing while complex financial crimes are still in progress – making it easier to complete investigations and to stop misconduct before it becomes so widespread that it foments the next crisis.”
The Securities and Exchange Commission (SEC) announced today that a whistleblower will receive a $30 million reward for providing valuable information that led to a successful enforcement action. The action in question and the whistleblower’s identity have not been made public, though the SEC noted Monday that the reward was the fourth for an international whistleblower participating in the SEC program. The $30 million total is more than double the previous record for highest reward given to an SEC whistleblower.
According to Andrew Ceresney, director of the SEC’s enforcement team, the unidentified whistleblower came forward with valuable information about ongoing fraud that would have been exceedingly difficult for the SEC to detect. He added that such a large reward should go a long way toward demonstrating the SEC’s “commitment to whistleblowers and the value they bring to law enforcement.”
The total reward for SEC whistleblowers commonly falls between 10 and 30 percent of any money recovered by the government in their case against the fraud perpetrator. If the government later recovers additional money from the defendant, the whistleblower could be eligible to receive future payments.
In this particular case, the percentage allotted to the whistleblower was not disclosed, though according to Fortune, the whistleblower challenged the percentage claiming that it was below average for an SEC whistleblower reward. In response, the SEC said the award percentage would have been higher had the whistleblower brought the information to the government’s attention in a more timely fashion
A Detroit doctor is facing a statutory maximum of 175 years in jail for administering unnecessary chemotherapy to patients and submitting false claims to government health care agencies and private health insurance companies. Dr. Farid Fata of Oakland Township, Michigan today pleaded guilty before U.S. District Judge Paul Borman for his role in a health care fraud scheme that allowed him to submit roughly $225 million in Medicare reimbursement claims over the span of six years.
Dr. Fata owned and operated Michigan Hematology Oncology, P.C. a cancer treatment clinic with locations scattered throughout the greater Detroit area. He also owned United Diagnostics PLLC, a diagnostic testing facility. According to court documents, Dr. Fata put his patients through unnecessary chemotherapy and other cancer treatments in an effort to submit millions in billings to Medicare and private insurance companies. He also used United Diagnostics to administer expensive services that were not medically necessary. These services too were fraudulently billed to government health care agencies and private insurers.
Between August 2007 and July 2013, he submitted $109 million in chemotherapy and other cancer treatment billings to Medicare, for which Medicare paid Dr. Fata $48 million. In addition to the false claims for reimbursement, Dr. Fata also admitted to soliciting kickbacks from area hospice and nursing facilities in exchange for referring patients.
Officials from the U.S. Attorney’s Office said Dr. Fata exploited his patients, causing them to suffer both physically and emotionally in the name of profit. Assistant Attorney General Leslie R. Caldwell called Fata’s actions “chilling.”
According to an FBI press release, Fata is facing 13 counts of health care fraud, two counts of money laundering and one count of conspiracy to pay or receive kickbacks. The 49-year-old M.D. will be sentenced next February.
The owner of an X-ray company has been accused of bilking over $7.5 million from government health care agencies. Rafael Chikvashvili, the 67-year-old owner of Alpha Diagnostics, allegedly overbilled Medicare and Medicaid by submitting false claims for services that were not performed by licensed doctors, among other illegal activities.
According to a federal indictment unsealed today, Chikvashvili had employees who were not licensed physicians interpret X-rays, cardiology exams, ultrasounds and other medical tests instead of paying a licensed physician to provide those services. Chikvashvili also directed those under his employment to create fake doctor examination reports and forge doctor signatures. If a report was questioned, Chikvashvili would use a licensed physician to interpret the medical test without explaining that his company had already provided the service.
In addition to these allegations, Chikvashvili and Alpha Diagnostics have been accused of exaggerating work performed by technicians in claims for Medicare and Medicaid reimbursement, as well as overcharging for transportation costs, performing unnecessary services and lying about a physician supervising the company. Chikvashvili, who holds a doctorate in mathematics, allegedly had employees lie to make people believe he was a medical doctor.
If Chikvashvili is convicted, he could face a 10-year prison sentence for health care fraud, as well as five years for each count of making false statements and a mandatory two years for two counts of aggravated identity theft. The government is also seeking $7.5 million in forfeited assets, according to the Baltimore Sun.
A 43-year-old woman who owns and operates a Shreveport, Louisiana-based intensive outpatient company is facing 30 years of jail time over charges of health care fraud and wire fraud. Sharon Monroe, the owner of Monroe Medical Management LLC (MMM), pleaded guilty today before U.S. District Judge S. Maurice Hicks Jr. to charges of bilking money from Medicare.
According to the U.S. Attorney’s Office for the Western District of Louisiana, Monroe and her company submitted for approximately $6 million in fraudulent Medicare reimbursement claims between 2007 and 2011. Medicare paid out $2 million of that total.
Here are some examples of the egregious claims made by Monroe and MMM:
- The company submitted claims were for psychotherapy services that were never performed.
- Monroe admitted that her employees rendered services for longer than 24 hours a day.
- MMM billed for services performed by employees not qualified to perform the services.
- MMM submitted claims for services purportedly in medical offices when they were not.
- Monroe used doctors’ Medicare provider numbers to submit claims without their knowledge.
If convicted, Monroe could face up to 10 years in prison for the health care fraud count and up to 20 years in prison for the wire fraud count. She is also looking at restitution for both counts and a potential fine of $250,000.
This case highlights the need for whistleblowers to come forward with health care fraud information. In cases of this kind, a whistleblower may be entitled to a reward of up to 25 percent of any money successfully recovered by the government.
The owner of a Miami home health care company was sentenced to 75 months behind bars for her role in a Medicare fraud scheme worth over $6.5 million. The Justice Department announced the sentencing of 64-year-old Cruz Sonia Collado in a press release issued Monday. In addition to prison time, Collado will serve three years of supervised release and pay $6,536,657 in restitution.
Collado owned and operated the now-defunct Nestor’s Health Services Inc., which purportedly provided home health care and physical therapy services to patients receiving Medicare benefits. According to the DOJ, Collado doled out kickbacks to patient recruiters in exchange for the recruiters referring patients to Nestor’s Health Services. Patients that were supposed to be receiving home health care or physical therapy services were either never provided the services or the services were considered medically unnecessary, according to court documents.
This didn’t stop Collado from billing Medicare for the illegitimate services. Between 2009 and 2014, Nestor’s Health Services submitted over $6.5 million in Medicare reimbursement claims. Medicare paid out $6.1 million of that total.
Collado pleaded guilty in June to one count of conspiracy to offer and pay health care kickbacks and one count of offering and paying health care kickbacks.
Two northern California nursing homes, owned by Arba Group, are the subjects of a False Claims lawsuit that claims they “severely overmedicated” their patients, causing injuries and death. The two homes allegedly received over $20 million in Medicare and Medicaid reimbursements between 2007 and 2012. During this time, the both homes allegedly overmedicated their patients in order to ease their workload.
The lawsuit cites numerous instances in which patients at Country Villa Watsonville East Nursing Center (now called Watsonville Nursing Center) and Country Villa Watsonville West Nursing and Rehabilitation Center (now called Watsonville Post-Acute Center) were harmed by overused medications such as antidepressants, antipsychotics and painkillers.
In 2009, one of the nursing facilities allegedly administered a double dose of Xanax, an anti-anxiety drug, and ordered two new antipsychotics for an 86-year-old man that had recently been admitted the facility. Eight days later, the man was in an emergency room with symptoms of heart failure. Doctors said he had an infected bed sore, a blood infection and was suffering from malnutrition and dehydration.
The same year, a 101-year-old woman was given a drug cocktail shortly after being admitted consisting of antidepressants Paxil and Trazodone, an antipsychotic called Zyprexa, a sedative called Ativan and painkiller morphine. Two days later, the woman lost consciousness, fell and died.
According to the complaint, medication costs at these facilities were in the tens of thousands of dollars per patient. In addition to Arba, the lawsuit names Country Villa Health Service Corp., which acted as a management consultant for the two Watsonville nursing facilities. Arba has filed a cross-complaint against Country Villa, alleging that the management consultant made false statements concerning how the nursing facilities were run during the time the alleged fraud took place.
The whistleblower law firm of Baum, Hedlund, Aristei & Goldman has announced a multi-million dollar settlement with San Diego Hospice & Palliative Care Corporation. The settlement resolves a 2012 qui tam lawsuit filed by whistleblower attorneys Mark H. Schlein and Diane Marger Moore on behalf of a former hospice nurse who claimed that San Diego Hospice knowingly submitted false claims for Medicare reimbursement.
San Diego Hospice billed for and received Medicare reimbursement based on care provided to patients that did not meet federal eligibility criteria for hospice care. In order to qualify for Medicare’s $172-per-day hospice care, a patient must have a diagnosis of six months or less to live. According to the San Diego Union Tribune, San Diego Hospice officials occasionally changed patient records to make it appear as though patients were dying when in fact they were getting better. The hospice also had an “open access” policy in 2005, opening their doors to “virtually all” patients, even if they were not eligible for hospice care according to federal rules.
The qui tam law suit led to a federal investigation and a comprehensive audit of patient records. The audit and investigation, coupled with admissions by its officers, resulted in the San Diego Hospice filing for bankruptcy and ceasing operations. Despite the bankruptcy, the U.S. has received an initial recovery of $1 million pursuant to the terms of the settlement agreement. When distribution of all bankruptcy funds is completed, it is expected that the government will recover millions more.