Earlier this week, we profiled some of the Justice Department’s largest mortgage fraud settlements from 2014, including the largest civil settlement from a single entity (Bank of America agreed to pay a record $16.65 billion under a global resolution). In addition to recoveries in the financial sector, DOJ was able to successfully recover roughly $2.3 billion in health care fraud cases, largely due to the help of health care whistleblowers.
The year saw two massive cases settle involving Johnson & Johnson and Omnicare. Both cases accounted for a substantial portion of the total recovered in 2014.
- Johnson & Johnson – $1.1 Billion: J&J and a couple of subsidiaries agreed to pay $1.1 billion to resolve claims that they promoted several drugs for off label use. J&J allegedly promoted Risperdal, Natrecor and Invega for uses not deemed safe by the U.S. Food and Drug Administration by paying kickbacks to physicians in exchange for writing off-label prescriptions. This caused health care providers to submit hundreds of millions in alleged false claims for reimbursement through government health care agencies. In addition to the $1.1 billion to the federal government, J&J paid over $600 million to state Medicaid programs and $485 million in criminal fines and forfeitures. The settlement, one of the largest in the nation’s history, could not have been possible without the brave men and women who blew the whistle on the pharmaceutical giant. One particular whistleblower from Northern California received $28 million for filing suit against J&J.
- Omnicare – $116 Million: Omnicare agreed to settlement terms with the DOJ after the nation’s largest provider of pharmaceuticals to nursing homes was accused of paying kickbacks to entice nursing homes into choosing Omnicare as their pharmacy provider. The allegations were in violation of the Anti-Kickback Statute, which prohibits companies from offering, soliciting, paying or receiving payment to induce referrals for goods or services covered by government health care agencies. Omnicare paid an additional $8.2 million to state Medicaid programs that were affected by the alleged fraud. Much like the J&J case, this case was assisted by multiple whistleblowers who came forward and helped the government build a case against Omnicare. One of the whistleblowers, a former Omnicare employee, walked away with $17.24 million for his role in exposing the alleged fraud.
In fiscal year 2014, the Justice Department obtained roughly $3.1 billion in recoveries stemming from the housing and mortgage fraud claims, the most ever recovered in a fiscal year for that sector. The government has now recovered $4.65 billion over the last five years from financial institutions whose misconduct contributed to housing and mortgage crisis.
Below are the top four housing and mortgage fraud claims settled in 2014:
- Bank of America – $1.85 Billion: BofA acknowledged that it submitted false claims to Freddie Mac, Fannie Mae and the Federal Housing Administration (FHA) in connection with the underwriting, origination and quality control of residential mortgages. The $1.85 billion was just another part of the settlement that included a $5 billion fine under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) and $7 billion in relief for BofA consumers who lost their homes due to the alleged fraud. BofA’s global resolution was worth $16.65 billion total.
- JPMorgan Chase – $614 Million: JPMC allegedly submitted false claims through the origination and underwriting of non-compliant mortgages that were submitted for insurance coverage through the Department of Housing and Urban Development (HUD), the FHA and the Department of Veterans Affairs (VA). These non-compliant mortgages led to substantial losses for the FHA and VA.
- SunTrust – $418 Million: Between 2006 and 2012, SunTrust allegedly originated and underwrote non-compliant mortgages to be insured by the FHA. It also failed to use effective quality control measures to identify non-compliant mortgages, and failed to report the non-compliant loans the company did identify to FHA. SunTrust also paid out $500 million in relief to consumers, $40 million to state governments and $10 million to the federal government in addition to the $418 million to settle civil mortgage fraud charges, bringing the total paid under the settlement to $968 million.
- U.S. Bank – $200 Million: Between 2006 and 2011, U.S. Bank effectively ignored lending requirements by originating and underwriting mortgages that didn’t meet FHA requirements. U.S. Bank acknowledged that its conduct caused the FHA to insure thousands of bad loans that later resulted in substantial losses.
The financial sector of the nation’s economy continues to be a hotbed for misconduct and fraud. Now more than ever the government is relying on whistleblowers to expose any wrongdoing by financial institutions. In a successful case, a whistleblower is eligible to receive a share of any recoveries as well as the gratitude of the nation for helping save taxpayer dollars.
Sevenson Environmental Services Inc. has agreed to pay $2.72 million to settle a lawsuit claiming that it violated the False Claims Act and the Anti-Kickback Statute by rigging contract bids, accepting kickbacks and inflating charges to the U.S. Environmental Protection Agency (EPA).
The New York-based environmental remediation company was the primary contractor responsible for cleanup at the Federal Creosote Superfund Site in Manville, New Jersey. According to the Justice Department, Sevenson solicited and accepted kickbacks from various subcontractors in exchange for work at the Federal Creosote Site. The lawsuit further claims that Sevenson and the subcontractors conspired to pass the kickbacks on to the EPA and in one case inflated the charges for soil disposal to fund the kickbacks.
A whistleblower who reports a fraud scheme like this to the government may be entitled to a reward of up to 25 percent of any money recovered. If you are thinking about reporting fraud or wrongdoing to the government, it is wise to first consult with an experienced whistleblower attorney to evaluate your case and ensure that your rights are protected.
The Justice Department announced late last week that an Oregon-based biotech company will pay nearly $5 million to settle whistleblower claims filed by a former employee. Biotronik allegedly made improper payments to doctors in an effort to entice them to use medical devices that the company manufactured and sold.
The alleged improper payments caused hospitals and ambulatory surgery centers to submit false claims to both Medicaid and Medicare for the implantation of Biotronik products, specifically defibrillators, pacemakers and cardiac resynchronization devices. According to the Justice Department, Biotronik paid physicians in Arizona and Nevada in the form of meals at expensive restaurants or inflated payments for membership on a physician advisory board.
Brian Sant, a former Biotronik employee, initially filed the allegations in a qui tam lawsuit. The government decided to intervene and take over Sant’s case. Still, he is entitled to compensation for his role in the successful recovery and will receive approximately $840,000.
The lawsuit is United States ex rel. Sant v. Biotronik, Inc., No. 2:09-CV-03617 KJM EFB (E.D. Cal.)
A New York nursing service accused of sending improper reimbursement claims to the state’s Medicaid program will pay $35 million to settle civil fraud charges. Visiting Nursing Service of New York, VNS Choice and VNS Choice Community Care (collectively VNS) allegedly enrolled roughly 1,740 Medicaid members into a managed long-term care plan when the needs of these patients did not qualify them for the care plan. In spite of their ineligibility, VNS passed the bills for caring for these patients onto New York’s Medicaid program.
Health care providers like VNS are responsible for managing long-term care services for Medicaid members, for which they are paid roughly $3,800 per month, per each member enrolled in the health plan. In order to qualify for a managed long-term health plan, Medicaid members must be eligible for nursing home level of care, and require at least 120 days of community-based long-term care.
VNS admitted that 1,740 patients were improperly referred to them by social adult day care centers (known as SADCC’s). None of the patients were eligible for the managed long-term health plan. In some cases, these patients received care primarily through the SADCC’s, many of which provided minimal or substandard care.
According to the U.S. Attorney’s Office for the Southern District of New York, the SADCC’s merely served as “a conduit” for VNS to induce the enrollment of more Medicaid members. In addition to the $35 million payment, VNS will be required to credential only with SADCCs that have been properly certified and are capable of providing levels of care consistent with regulatory requirements, monitor SADCCs in network to ensure compliance and prohibit improper marketing practices.
The Miami-based owner and administrator of two home health care companies was sentenced to 80 months in prison today and will pay $45 million in restitution after pleading guilty to one count of conspiracy to commit health care fraud. Elsa Ruiz, the 45-year-old owner of Professional Home Health Care Solutions Inc. and administrator of LTC Professional Consultants Inc., pleaded guilty in July for her role in a Medicare fraud scheme worth $74 million.
Both of Ruiz’s companies purported to provide home health care and therapy services to Medicare beneficiaries. According to the Justice Department, Ruiz and others involved in the scheme fraudulently billed Medicare between 2006 and 2012 for expensive physical therapy and home care services that were not medically necessary or never provided. According to her own testimony, Ruiz negotiated and paid out kickbacks to patient recruiters in exchange for patient referrals, prescriptions, plans of care and certifications for physical therapy and home care services that were not medically necessary. During the time when both companies were fraudulently billing Medicare, the government paid out approximately $45 million.
Individuals who file a False Claims complaint and report fraud schemes like this to the United States may be entitled to a reward of up to 25% of any money that the government recovers. It’s an opportunity to be rewarded for doing what’s right. Anyone thinking about reporting fraud to the government should consult with an attorney experienced in this area of law.
An Oklahoma-based dental company has agreed to pay $5.05 million to resolve a lawsuit claiming it submitted false Medicaid claims. Ocean Dental, which operates 28 dental clinics in seven states, provides dental services to children eligible for Medicaid. The company agreed to the settlement without admitting any wrongdoing, however, a former Ocean Dental employee named in the lawsuit was sentenced to prison time after pleading guilty to health care fraud charges.
According to News OK, Ocean Dental employee Robin Lockwood allegedly submitted false claims to Oklahoma’s Medicaid program between 2005 and 2010 for dental work that was either never provided or billed at a higher rate than the state allows. After pleading guilty in 2012, Lockwood was sentenced to 18 months in prison. She was released in April and will pay $375,000 in restitution.
After the settlement was announced, Ocean Dental released a statement saying that the allegations were centered on an employee (Lockwood) who had not worked at the company since 2010. The company added that it was “glad to get the matter resolved.”
The Ocean Dental case demonstrates that healthcare fraud, specifically Medicaid fraud, extends into the field of dentistry. Dentists are no different than other healthcare practitioners in that they are susceptible to the same kinds of fraud that regularly catch headlines, including:
- Billing for services never provided
- Misrepresenting services provided
- Waiving deductibles or copayments in an effort to build or retain patients
- Overcharging or upcoding for services
- Providing unnecessary or incorrect treatments that bring in more money