Archive for July, 2013

Introducing: The WhistleBlawger

James Hoyer’s team of qui tam attorneys have launched a blog to provide information on the False Claims Act, updates in industry, and other important considerations for whistleblowers and potential whistleblowers.  Click here to read the blog and check back regularly for updates and insights.


Obiageli Agbu Owner of California Medical Equipment Supply Company Found Guilty of $11 Million Medicare Fraud

The daughter of a church pastor and owner of a California-based durable medical equipment (DME) supply company was found guilty by a jury of Medicare fraud charges for her role in a Medicare fraud scheme that resulted in over $11 million in fraudulent billings to Medicare.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney André Birotte Jr. of the Central District of California; Special Agent in Charge Glenn R. Ferry of the Los Angeles Region of the U.S. Department of Health and Human Services’s Office of Inspector General (HHS-OIG); Assistant Director in Charge Bill Lewis of the FBI’s Los Angeles Field Office; and Special Agent in Charge Joseph Fendrick of the California Department of Justice’s Bureau of Medi-Cal Fraud and Elder Abuse made the announcement.

Obiageli Agbu, 26, of Carson, Calif., was found guilty on July 19, 2013, of one count of conspiracy to commit health care fraud and eight counts of health care fraud following a two-week trial.

The evidence introduced at trial showed that Agbu owned Ibon Inc., a fraudulent DME supply company that she operated from a nondescript office building in Carson. Agbu’s father and co-defendant, Charles Agbu, a church pastor who pleaded guilty to Medicare fraud and money laundering charges in December 2012, ran a fraudulent DME supply company called Bonfee Inc. from the same office building that housed Ibon. The trial evidence showed that from Ibon and Bonfee, Agbu, her father and others working with them submitted more than $11 million in fraudulent claims from Ibon and Bonfee to Medicare for expensive, high-end power wheelchairs, hospital beds, braces and other DME that customers either did not need or receive.

Read rest of story here


Employment Cases and False Claims Act Cases: What Happens When They Overlap?

Qui tam attorneys are often approached by potential whistleblowers who have already contacted an employment attorney after being terminated or harassed on the job as a result of blowing the whistle on suspected fraud.  Sometimes the whistleblower has already filed an employment case, and other times he or she is planning to file the employment case at the same times as a False Claims Act (“FCA”) case.  Although every case is unique and must be carefully evaluated by experienced qui tam counsel, there are several potential complications that should be considered when filing parallel cases.

The most significant concern is whether the employment case will jeopardize the FCA’s statutory seal, which requires that the FCA case be filed confidentially and not disclosed to the public or to the defendant company during the initial investigation.  Employment cases often move much more rapidly than FCA cases, so there is a strong possibility that the defendant company may take the employee’s deposition in the employment case while the FCA case is still sealed.  When this situation is unavoidable, there are certain strategies to protect the employee in the deposition, such as claiming a privilege to avoid answering inappropriate questions and then explaining the basis for the privilege in a sealed or ex parte communication to the employment judge.

However, that strategy is far from fool-proof, and risks still exist.

An on-going case in California highlights the potential hazards of parallel cases, though the issue arose in a slightly unique context.  A former employee named Kelly Nelson filed a wrongful termination case against a company called Millennium Laboratories, in which one of Nelson’s colleagues named Ryan Uehling was a witness.  As it turned out, Millennium believed that Uehling had filed an FCA case against the company so, Uehling claims, it sought to use Nelson’s case as an avenue to take an aggressive deposition of Uehling to find out more about the potential FCA case.[1]

Uehling was subjected to a two-day deposition that produced a transcript totaling more than 400 pages.  Notably, Millennium sent its qui tam defense counsel to take the deposition rather than the employment attorney who had been working Nelson’s case.  Millennium’s counsel asked probing questions clearly designed to elicit information about a potential FCA case, such as “Are you familiar with something called the False Claims Act?” and “Do you know what the anti-kickback statute prohibits?”  When Uehling refused to answer certain questions based on an unspecified “statutory privilege,” Millennium asked the court to force him to respond to more than 60 of the questions.  A magistrate judge ordered Uehling to respond, and threatened sanctions for non-compliance, without revieing any sealed documents which might have explained the basis for Uehling’s position.

Uehling’s attorneys have asked the district court judge to reconsider the magistrate’s decision based on several significant errors that they believe the magistrate made.  Not the least among those concerns is the magistrate’s confused holding that sealing the deposition transcript from the public would somehow preserve the goals of the False Claims Act’s seal requirement.

The magistrate’s ruling is a prime example of a court failing to understand the sanctity of the seal in a FCA case and therefore jeopardizing a relator’s confidentiality obligations.  Regardless of how the case is ultimately resolved, the decision is a critical warning of the potential dangers of a FCA relator being deposed in an employment suit while his or her case is under seal.  Although cases like Uehling’s (where he was merely a non-party witness in an unrelated case) may be difficult to avoid, relators should recognize this case as a cautionary tale of why it is important to avoid initiating parallel employment and FCA cases when possible.

This is not to say that relators should simply accept negative employment actions as a result of engaging in protected conduct.  As we have discussed on this blog before, the FCA includes an anti-retaliation provision which protects individuals who bring FCA cases.  The so-called “Section H” claim incorporates the anti-retaliation claim into the FCA case so that both will proceed together and there is no risk of exposure.

If you are a potential relator who is considering bringing an employment case in addition to a FCA case, or if you have already filed an employment case and are now considering a FCA case also, please contact James Hoyer for an evaluation of your claims.  Click here for more information about our firm and to submit your information electronically, or you can contact us by phone at 800-651-2502.

Written by Jillian Estes

[1] James Hoyer has no knowledge of whether Uehling has actually filed a False Claims Act case against Millennium and, if such a case does exist, the allegations or claims contained therein.


Detroit-area resident Javed Rehman Pleads Guilty for Role in $13.8 Million Medicare Fraud Scheme

Detroit-area resident Javed Rehman pleaded guilty today for his role in a $13.8 million Medicare fraud scheme, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Robert D. Foley III of the FBI’s Detroit Field Office and Special Agent in Charge Lamont Pugh III of the Chicago Regional Office for the U.S. Department of Health and Human Service’s Office of Inspector General (HHS-OIG).

 Rehman, 50, of Farmington Hills, Mich., pleaded guilty before U.S. District Judge Gerald E. Rosen in the Eastern District of Michigan to one count of conspiracy to commit health care fraud. At sentencing, scheduled for Nov. 7, 2013, Rehman faces a maximum penalty of 10 years in prison.

According to information contained in plea documents, in or around May 2009, Rehman purchased Quantum Home Care Inc. with co-conspirators Tausif Rahman and Muhammad Ahmad. Rehman paid kickbacks to recruiters to obtain Medicare beneficiary information used to bill Medicare for home health services – including physical therapy and skilled nursing services – that were never rendered. Rehman was the administrator of Quantum and was responsible for the submission of false and fraudulent claims to Medicare based on falsified files created by the co-conspirators.

 Medicare paid approximately $1.7 million to Quantum for physical therapy and skilled nursing services that Quantum purported to render between approximately June 2009 and September 2011. According to court documents, between 2008 and 2009, Rehman’s co-conspirators acquired control of three other home health care companies. The four companies, including Quantum, received approximately $13.8 million from Medicare in the course of the conspiracy.

Read rest of story here



Filing a False Claims Act Complaint: Does Motivation Matter?


Al Scudieri – James Hoyer Chief Investigator

For the past 35 years, I have been working with False Claims Act whistleblowers (also known as “relators”) first as an FBI agent and later as the Chief Investigator for the James Hoyer law firm.  I have found that relators can be just about anyone:  doctors, public servants, mechanics, accountants, investigators, members of the military, clerical personnel, CEOs, reporters, nurses, engineers – in short, anyone who has knowledge that the government is being cheated.

When complainants contact me, they often ask the same questions, one of which is: “Will my motivation matter to the government?”  Here are a few insights I have shared in response:

Why are you coming forward?

Generally speaking, relators are responding to one or more of four essential motivations: profit, moral outrage, self-protection, and revenge.  Although some motivations may be regarded as more palatable than others, if the relator’s facts and proof are solid, then the motivation for coming forward is often of little consequence to the government.  Nevertheless, when relators are deciding if they should file a False Claims Act (“FCA”) complaint, it is of value for them to come to terms with their motives.


Since successful relators stand to receive a reward of anywhere between 15% and 30% of government FCA recoveries, there is an assumption most relators are “in it for the money.”  Empirical research has shown this is not necessarily true. [1]   In fact, this research indicates although profit can be a significant motivating factor, the majority of successful FCA relators are principally motivated by a sense of moral outrage.

Moral outrage

Many relators possess a heightened sense of integrity and are truly disturbed by their discovery of unethical behavior.  They come forward with no other motivation than that of concerned taxpayers.  I find that relators in the health-care arena are generally more concerned with the impact of fraudulent behavior on patient safety than any potential monetary reward.  Relators in the defense arena who detect fraud are often more concerned with the safety of our armed forces and the fraud’s impact on national security than they are with getting rich.


Occasionally, relators are willing to give the benefit of the doubt to the perpetrators of fraud and choose to assume the improper conduct they discovered may be inadvertent.  They believe corrective action will certainly be taken based upon complaints filed through proper internal channels.  Before contacting me, many relators have pursued this course of action – often to no avail.  To their surprise and disappointment, management may even have retaliated against them for merely raising legitimate concerns.

In other cases, employees are worried that sometime in the future, a finger may be pointed at them as being responsible for the improper conduct.  They feel it would be better to go on record with a preemptive complaint setting the record straight than to one day receive a knock on the door from investigators accusing them of wrongdoing.


In some cases, relators come to our law firm after already having lost their jobs when they raised concerns about improper conduct.  These individuals quite rightly resent that they and their families are being punished for having done the right thing.

I have also seen a number of cases wherein business owners contracting with government agencies want to report wrongdoing by competitors who gained an unfair advantage by engaging in fraud.  These relators are not only morally outraged, but also resent the negative impact of this conduct on their businesses.


No prospective relator should ever feel their motivation is insufficiently worthy to justify the filing of an FCA complaint.  However, such concerns should be discussed with the relator’s counsel during the initial consultation period.  The simple fact is, we are all motivated by something – and the government (which plays a major role in the success or failure of any FCA case) is well-aware of that fact.  During the initial meeting with the relator, government attorneys will almost always explore the issue of motivation as it helps place the relator’s complaint in the proper context.  Since the filing of an FCA complaint can be the beginning of a lengthy partnership between the government and the relator, it is incumbent upon relators to reach an honest determination as to their motivation and be prepared to share that information with their attorneys and the government.

If you believe you have information regarding fraud against the government and are considering bringing a False Claims Act case, please contact James Hoyer for an evaluation of your claims.  Click here for more information about the firm and to submit your information electronically, or you may contact our office at 813-397-2300.

Written by Al Scudieri

[1] Kesselhim, “Whistle-Blowers’ Experiences in Fraud Litigation Against Pharmaceutical Companies 362:19 NeJM 1832-34, 2010.


Sound Inpatient Physicians Inc of Tacoma, Washington to Pay $14.5 Million to Settle Overbilling Allegations

Sound Inpatient Physicians Inc. will pay $14.5 million to settle allegations that it overbilled Medicare and other federal health care programs, the Justice Department announced today. Sound Physicians is a Tacoma, Wash.-based provider of hospitalists and other physicians to hospitals and other medical facilities. It employs more than 700 hospitalists and post-acute physicians, who provide services at 70 hospitals and a growing network of post-acute facilities in 22 states.
“Physicians who participate in Medicare and other federal health care programs must document and bill for their services accurately and honestly,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division. “The Department of Justice is committed to ensuring that Medicare and other federal funds are expended appropriately.”
Today’s settlement addresses allegations that, between 2004 and 2012, Sound Physicians knowingly submitted to federal health benefits programs inflated claims on behalf of its hospitalist employees for higher and more expensive levels of service than were documented by hospitalists in patient medical records. Hospitalists are physicians, typically trained in internal medicine, who provide care exclusively to hospital inpatients and have no office or outpatient practice.

Read rest of story here



Can an Employer Retaliate Against an Employee for Bringing a False Claims Act Case?

Whistleblowers who come forward with information about fraud against the government are some of the nation’s most courageous and noble citizens.  These employees should be honored and coveted by employers for helping companies maintain levels of integrity and professional responsibility.  However, the reality is that not all companies respond well to reports of fraud, let alone the actual filing of a qui tam suit.  In those cases, whistleblowers may face harassment, demotions, or even termination.

Because of the very realistic concerns about workplace consequences, one of the most common questions we receive from potential whistleblowers is:

What will happen to me if I become a whistleblower?

Retaliation in the workplace is a nearly universal concern for whistleblowers.  Prior to 1986, that fear was well-founded because there were no real protections in the False Claims Act (“FCA”) to prevent whistleblowers from being harassed, demoted or terminated.  To encourage whistleblowers to come forward without fear of retribution, Congress included an anti-retaliation provision in the modern version of the FCA.  That part of the law is officially known as 31 U.S.C. § 3730(h), but it is often referred to simply as “Section H.”

Section H is designed to discourage employers from taking negative employment actions, and to make an employee “whole” again if the employer does engage in such conduct.  The law provides several remedies for an aggrieved employee: twice the amount of owed backpay plus interest, compensation for special damages, and attorney’s fees and costs related to the Section H claim.  Perhaps most importantly, an employee must be reinstated to his or her position of employment, with the same seniority status as he or she would have had if not for the negative action.

To obtain these Section H benefit, the whistleblower must show two things:

(1) that the employee engaged in protected conduct; and
(2) that the employee was discriminated against because of the protected conduct.

U.S. ex rel.  Yesudian v. Howard Univ., 153 F.3d 731, 736 (D.C.Cir.1998).

“Protected conduct” is a legal term that means that the employee engages in an act in furtherance of efforts to stop a violation of the FCA.  While that can mean actually filing a qui tam case, it can also mean simply investigating and reporting suspicions of fraud.  Hutchins v. Wilentz, et al., 253 F.3d 176, 187-88 (3d Cir. 2001).  It is important to note that an employee may have a Section H claim even without ever filing an FCA case.  Id. at 188.  Courts around the country have taken different approaches to what constitutes “protected conduct” and the analysis will always be fact-specific, so it is very important that an employee concerned about potential retribution consult with an attorney to discuss their case.

To show that the discrimination was “because of” the protected conduct, an employee must show that (1) his employer knew he was engaged in protected conduct, and (2) the retaliation was motivated – at least in part – by the employee’s protected conduct.  This part of the law exists to ensure that Section H isn’t abused by aggrieved employees who are terminated for unrelated reasons and then attempt to “cry fraud” after the fact.  Neal v. Honeywell Inc., 33 F.3d 860, 863 (7th Cir.1994).

Documenting the Process

Because the Section H elements are so fact-driven and unique to each case, the most important thing a whistleblower can do is to take meticulous notes to document the process.  For example, a whistleblower may want to document:

  • To whom did I report my concerns of fraud, and what were their reactions?
  • What other individuals, especially superiors, are aware of my investigation and concerns?
  • Has anyone expressed concerns to me about my activities or reports?
  • Have there been any unfounded complaints about my work product or performance?
  • Have I recently had a job review that did not reflect accurately reflect my performance?
  • Have I been taken off projects, excluded from meetings, excluded from emails, not been permitted to review internal documents, etc.?

All of this information will be critical in proving the elements of a Section H claim.  An employer can defend against an allegation by showing that it had no knowledge of the employee’s conduct or that the negative employment action was not related to the protected activity at all.  Careful notes, including dates and times, will aid in identifying how an employee was treated differently after the employer became aware of the protected activity.  This can rebut the employer’s contentions and give an employee the right to recovery under Section H.

Weathering the Storm

It is important to recognize that a Section H claim is not preemptive, meaning it cannot prevent employers from taking negative action against a whistleblower.  Rather, Section H is a responsive remedy that kicks in after the relator has experienced negative consequences, and provides relief only once the relator has prevailed in proving the elements of the Section H claim.  The unfortunate reality is that an employee must be prepared to weather the storm for the duration of the case, but can find some comfort in knowing that there is a remedy in place to protect his or her interests in the end.

If you believe you have information regarding fraud against the government and are considering bringing a False Claims Act case, please contact James Hoyer for an evaluation of your claims.  Click here for more information about the firm and to submit your information electronically, or you may contact our office at 813-397-2300.

Written by Jillian Estes


Contrack International Inc. Agrees to Pay $3.5 Million to Resolve False Claims Act Allegations

Contrack International Inc., a global design and construction company headquartered in McLean, Va., has agreed to pay $3.5 million to settle allegations that it submitted false claims in connection with U. S. Agency for International Development (USAID) contracts, the Justice Department announced today.

“Misrepresentations during contract negotiations undermine the integrity of the government procurement process,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division. “The Justice Department will take action where contractors misrepresent their qualifications for government contracts and programs.”

The settlement concerns USAID-funded contracts for the construction of water and wastewater infrastructure projects in the Arab Republic of Egypt in the 1990s. The bidders for these contracts were required to receive prequalification and, in some cases, establish that they were U. S. companies. However, the contracts were ultimately performed by a joint venture partnership among Contrack; Washington Group International, Inc., a subsidiary of URS Corporation; and Misr Sons Development S.A.E. (Hassan Allam Sons), an Egyptian company. The government filed suit under the False Claims Act and the Foreign Assistance Act alleging that the joint venture partners evaded the prequalification requirement by concealing the identity of the joint venture partners, which prevented USAID from accurately evaluating their qualifications. As a result, the government alleged that Contrack and its partners received USAID-funded contracts for which they were ineligible.
“Proper public contracting, government efficiency and government accountability rely on complete information from contractors,” said Wendy J. Olson, U.S. Attorney for the District of Idaho. “Along with our partners at USAID and the Department of Justice’s Commercial Litigation Branch, we will aggressively seek to recover improperly awarded taxpayer dollars.”

This settlement – which resolves only Contrack’s liability – was the result of a coordinated effort by the Department of Justice, Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the District of Idaho; and the USAID Office of Inspector General. The government is continuing to pursue its claims against the other two defendants in the suit.

The case is United States v. Washington Group International Inc. f/k/a/ Morrison Knudsen, Corporation; Contrack International, Inc.; and Misr Sons Development S.A.E. a/k/a Hassan Allam Sons, No. 04-555 (N.D. Idaho). The claims resolved by this settlement are allegations only, and there has been no determination of liability.


US Joins False Claims Act Lawsuit Alleging Illegal Physician Compensation by IMC-Diagnostic a Mobile, Ala., Health Firm

The government has intervened in a False Claims Act lawsuit against Infirmary Health System Inc. and its related entities: IMC-Diagnostic and Medical Clinic P.C., Diagnostic Physicians Group P.C. and Infirmary Medical Clinics P.C., the Department of Justice announced today. The lawsuit alleges that IMC-Diagnostic and Medical Clinic, in Mobile, Ala., billed Medicare for services referred by Diagnostic Physicians Group physicians, in violation of the Stark Law and Anti-Kickback Statute. IMC-Diagnostic and Medical Clinic is owned by Infirmary Medical Clinics, a subsidiary of Infirmary Health System, also based in Mobile.

“Financial arrangements that compensate physicians for referrals encourage physicians to make decisions based on financial gain rather than patient needs,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division. “The Department of Justice is committed to preventing illegal financial relationships that corrupt the integrity of our public health programs.”

 Enforcement of the Stark Law and the Anti-Kickback Statute is intended to ensure that physicians’ medical judgment is not compromised by improper financial incentives. The Stark Law forbids a clinic or hospital from billing Medicare for certain services referred by physicians who have a financial relationship with the entity. The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of services or items covered by federal health care programs, including Medicare. The lawsuit alleges that the IMC-Diagnostic and Medical Clinic improperly paid Diagnostic Physicians Group physicians compensation that included a percentage of the money collected from Medicare for tests and procedures the doctors referred to the clinic. These improper payments, and resulting submission of false claims to the Medicare program, violated the Stark Law and Anti-Kickback Statute.

Read rest of story here


Members of the Military Acting as Whistleblowers in Qui Tam Cases

Can a member of the military or other government employee serve as a whistleblower in a qui tam case under the False Claims Act?


Lt. Col. Timothy Ferner
SAIC Whistleblower

The short answer is “yes” — military personnel and other government employees can serve as whistleblowers/relators in a qui tam action pursuant to the federal False Claims Act.  But, the path must be navigated carefully to ensure the relator’s success.

Case in point: the James Hoyer law firm recently announced the settlement of a qui tam case between the United States and Science Applications International Corporation (SAIC) that was filed by a member of the military.  In that case, James Hoyer had the privilege of representing a very courageous relator, Timothy Ferner, who was a lieutenant colonel in the United States Air Force when he became aware of SAIC’s efforts to obtain government contracts by circumventing the competitive bidding process.  Lt. Col. Ferner’s qui tam suit resulted in SAIC returning $5.75 million to the government, and Lt. Col. Ferner was ultimately awarded with a relator’s share of those proceeds.

The SAIC settlement would not have been possible if the federal False Claims Act (“FCA”) prevented government employees from serving as qui tam relators.  In 1991, shortly after the modern version of the False Claims Act was signed into law, the Eleventh Circuit addressed the issue of a government employee acting as a relator in a case called U.S. ex rel. Williams v. NEC Corp., 931 F.2d 1493 (11th Cir. 1991).  The court found, “[N]othing in the False Claims Act prohibits a government employee from filing a qui tam action based upon information acquired while working for the government.”  Id. at 1494.

In that case, Williams was an attorney for the Air Force when he encountered the fraud alleged in his qui tam complaint.  The United States argued that Williams was excluded from being a whistleblower because of his status as a government employee.  The Williams court conducted a lengthy analysis of the public disclosure section to determine whether any portion of the FCA precluded a qui tam suit by a government employee.  The court did acknowledge that there may be difficulties inherent in a case involving a relator who is a government employee, but determined that the plain language of the FCA permitted a government employee to serve as a relator.  Id. at 1503.  As a result, Williams’ qui tam was permitted to move forward.

The public disclosure section of the FCA has been amended in the 22 years since the Williams decision, but it has never been changed to exclude government employees from being relators.  In that time, each court that has evaluated the issue has found that the FCA does not exclude government employees, including members of the military.  As recently as 2012, the Fifth Circuit conducted a lengthy evaluation of government-employee relators and determined, “[T]here is no basis to except such an employee from personhood [which allows them to act as a relator.]”  Little ex rel. United States v. Shell Exploration & Production Co., 690 F.3d 282 (5th Cir.2012).

It is important to note that while the FCA does not prohibit a member of the military from being a relator, it does place a limitation against whom a military relator may bring a qui tam suit.  Specifically, the False Claims Act says that a former or present member of the armed forces may not bring a qui tam suit “against a member of the armed forces arising out of such person’s service in the armed forces.” 31 U.S.C. 3730(e)(1).

Despite the fact that the FCA plainly allows government-employee or military relators, the specialized nature of these cases requires experienced qui tam counsel to protect the relators’ interests.

If you are a member of the military or other government employee with knowledge of fraud against the government and you are considering bringing a qui tam case, please contact James Hoyer for an evaluation of your claims.  Click here for more information about the firm and to submit your information electronically, or you may contact our office at 813-397-2300.

Written by Elaine Stromgren