Archive for October, 2013

SEC Awards Maximum to Whistleblower

FOR IMMEDIATE RELEASE                                                                              2013-231

  

SEC REWARDS WHISTLEBLOWER WITH $150,000 PAYOUT

 

 Washington D.C., Oct. 30, 2013 – The Securities and Exchange Commission today announced an award of more than $150,000 to a whistleblower whose tips helped the agency stop a scheme that was defrauding investors. 

 The award recipient, who does not wish to be identified, provided significant information that allowed the SEC to quickly open an investigation and obtain emergency relief before additional investors were harmed.  By law, the SEC must protect the confidentiality of whistleblowers and cannot disclose any information that might directly or indirectly reveal an identity.

 The award amount represents 30 percent of the money collected by the SEC in the successful enforcement action, the maximum permitted under the law. 

 “This is continued momentum and success for the SEC’s whistleblower program that is bringing our investigators valuable and timely information to stop ongoing frauds before additional investors can be harmed,” said Sean McKessy, chief of the SEC’s Office of the Whistleblower. 

 This is the sixth whistleblower to be awarded through the SEC’s whistleblower program since it began two years ago.  The largest award was announced earlier this month when a whistleblower was awarded more than $14 million.

 

 

US Government Intervenes in F.C.A. Lawsuit Against USIS for Failing to Perform Required Quality Reviews of Background Investigations

The government has intervened in a lawsuit filed under the False Claims Act against United States Investigations Services LLC (USIS) in the U.S. District Court for the Middle District of Alabama, the Department of Justice announced today.  The lawsuit alleges that USIS, located in Falls Church, Va., failed to perform quality control reviews in connection with its background investigations for the U.S. Office of Personnel Management (OPM).

The lawsuit was filed by a former employee of USIS, Blake Percival, under the qui tam or whistleblower provisions of the False Claims Act, which permit private parties, known as relators, to sue on behalf of the government when they believe false claims for government funds have been submitted.  The private party is entitled to receive a share of any funds recovered through the lawsuit.  The False Claims Act also permits the government to investigate the allegations made in the relator’s complaint and to decide whether to intervene in the lawsuit, and to recover three times its damages plus civil penalties.  The government is intervening now based on the results of its investigation of the relator’s allegations and has requested that the court give it until Jan. 22, 2014, to file its own complaint.

            “We will not tolerate shortcuts taken by companies that we have entrusted with vetting individuals to be given access to our country’s sensitive and secret information,” said Stuart F. Delery, Assistant Attorney General for the Justice Department’s Civil Division.  “The Justice Department will take action against those who charge the taxpayers for services they failed to provide, especially when their non-performance could place our country’s security at risk.”

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Alex Kapri and Russ Muratov,Owners and Supervisor of Alpha Ambulance Inc. Plead Guilty in Los Angeles for Role in Ambulance Fraud Scheme

The owners and supervisor of Alpha Ambulance Inc. (Alpha), a now-defunct Los Angeles-area ambulance transportation company, have pleaded guilty in connection with an ambulance fraud scheme.

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 Office of Inspector General (HHS-OIG); and Assistant Director in Charge Bill L. Lewis of the FBI’s Los Angeles Field Office made the announcement.

Alex Kapri, aka Alex Kapriyelov or Alexander Kapriyelov, 56; Aleksey Muratov, aka Russ Muratov, 32; and Danielle Hartsell Medina, 36, pleaded guilty on Oct. 28, 2013, before U.S. District Court Judge Audrey B. Collins in the Central District of California to conspiracy to commit health care fraud.  They face a maximum penalty of 10 years in prison when they are sentenced on Feb. 24, 2014.

Kapri and Muratov were owners and operators of Alpha, an ambulance transportation company that operated in the greater Los Angeles area and that specialized in the provision of non-emergency ambulance transportation services to Medicare-eligible beneficiaries, primarily dialysis patients.  Medina was employed by Alpha and ultimately supervised the training and education of its employees.

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Study Finds Increased Use of Radiation Therapy When Doctors Use Their Own Machine

A new study, published in the New England Journal of Medicine, examined the use of intensity-modulated radiation therapy (IMRT) that has been integrated into urology practices. Specifically, the researchers looked at how owning IMRT equipment correlated with the utilization of IMRT to treat prostate cancer. The study was based on Medicare claims from 2005 to 2010. Ownership of IMRT equipment in private practice showed an increase in the use of IMRT to treat prostate cancer by 19.2 percentage points. In practices that were part of the National Comprehensive Cancer Network, there was an increase of 33 percentage points.

This study is part of a law with renewed controversy known as the Stark Law and the in-office ancillary services exception. According to the American Medical Association, the law prohibits physicians from referring patients back to their selves for items or services payable under Medicare. There are certain exceptions to the general rule, which includes the in-office ancillary services exception. Non-physician services owned by the physician or the practice are excepted, allowing the referring physician to make his own practice.

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Jacob Kilgore, Former Owner of Salt Lake City Medical Equipment Supply Co. Indicted and 3 Company Employees Plead Guilty for Roles in Medicare Fraud

A former owner of a Salt Lake City medical equipment supply company has been indicted and three former company employees have pleaded guilty for allegedly engaging in a $20 million Medicare fraud scheme.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney David B. Barlow of the District of Utah, Special Agent in Charge Mary Rook of the FBI’s Salt Lake City Field Office, Special Agent in Charge Gerry Roy of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Kansas City Regional Office, and Special Agent in Charge Janice M. Flores of the Defense Criminal Investigative Service’s (DCIS) Southwest Field Office made the announcement.

Jacob Kilgore, 34, of Fruit Heights, Utah, was indicted in the District of Utah on three counts of health care fraud, three counts of false statements relating to health care matters, and three counts of wire fraud.

According to court documents, Kilgore was the co-owner, vice president, and regional sales manager of Orbit Medical Inc. (Orbit), a durable medical equipment supplier located in Salt Lake City specializing in power wheelchairs.  From approximately September 2008 through June 2011, Kilgore allegedly directed a scheme to defraud Medicare by submitting false and fraudulent claims to Medicare for power wheelchairs.  Court documents allege that Kilgore and others falsified medical records – including power wheelchair prescriptions and chart notes obtained from physicians – to make it appear that beneficiaries qualified to receive power wheelchairs when they did not and that the claims otherwise met all Medicare requirements.  Kilgore and others then used these falsified documents to support false and fraudulent claims from Orbit to Medicare.

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Las Vegas Newspaper Editorial Highlights James Hoyer Whistleblower Case

Tim_Head Shot

Lt. Col Timothy Ferner

An editorial in the Las Vegas Review-Journal shined the spotlight on waste and abuse exposed by military whistleblower and James Hoyer client Lt Col Timothy Ferner.  Lt Col Ferner’s case against defense contractor SAIC exposed systemic problems with how Nellis Air Force Base in Las Vegas secured contractors and spent taxpayer money.

The Las Vegas Review-Journal editorial pointed to this case as an example of a bigger problem of government waste which continues to plague the country.  Here is an excerpt:

The Coalition and Irregular Warfare Center was launched at Nellis Air Force Base in 2006 with the charge of finding ways to counteract the improvised explosive devices and roadside bombs that were killing and maiming American troops in Iraq and Afghanistan. Unfortunately, as is the case with far too many government entities these days, the warfare center’s primary mission became plowing through piles of taxpayer money.

As reported Oct. 13 by the Review-Journal’s Keith Rogers, in a 54-month period, $42 million was funneled through the CIWC and its partner in the project, the 505th Command and Control Wing. It was unclear how much of that money supported the improvement of irregular warfare capabilities, but there was plenty of off-point spending, including $427,000 for an effort to develop passwords for monitoring finances of an Army warfare group.

According to retired Lt. Col. Tim Werner, whose whistle-blower complaint got him fired in 2009 but ultimately uncovered the large-scale contract abuse, there were also unauthorized money transfers between the 505th Command and CIWC contractors, and misappropriation of funds for items such as “switchblades, high-intensity laser lights, body armor, retractable batons, handcuffs and other illegally purchased equipment, tens of thousands of dollars of equipment, some of which went missing.”

Click here to continue reading the Las Vegas Review-Journal Editorial.

 

 

Health-Care False Claims Cases Reap $18.3 Billion, Report Shows

Whistleblower Award

Health-Care False Claims Cases Reap $18.3 Billion, Report Says

Stack Of CashFederal and state governments recovered $18.3 billion between 2008 and 2012 from lawsuits and criminal cases claiming health-care companies overbilled, according to an advocacy group that encourages whistle-blowers.

Taxpayers Against Fraud, a Washington-based group, released a study showing total health-care recoveries, excluding whistleblower payments, rose to $5.8 billion last year from $1.5 billion in 2008. Those totals include criminal fines and state false claims recoveries, two figures not normally tallied.

Still, recoveries are a small fraction of the $2.8 trillion the U.S. spends annually on health care, or 17.8 percent of the gross domestic product, according to the World Health Organization. Senator Charles Grassley, an Iowa Republican who sponsored a 1986 amendment that propelled the U.S. law forward, said the Justice Department should do more to deter companies than collect payments.

“Right now, it’s a cost of doing business,” Grassley said in an interview. “When it’s a cost of doing business, behavior isn’t going to change and criminal prosecution needs to be pursued. When you jail somebody, it makes a bigger point than any fine you’re going to get.”

The health-care recoveries involve dozens of companies, including Pfizer Inc. (PFE:US), the world’s biggest drugmaker; GlaxoSmithKline Plc (GSK), the biggest U.K. drugmaker; Merck & Co. (MRK:US), the second-biggest U.S. drugmaker by sales; and McKesson Corp. (MCK:US), the largest U.S. pharmaceutical distributor. Many of the settlements involve corporate integrity agreements pledging compliance with the law.

29 States

Most cases were filed under the federal False Claims Act, the law that lets citizens sue on behalf of the government and share in any recovery. Twenty-nine states have similar laws. Most of the recoveries by the U.S. between 1987 and 2012 were in health-care cases, where the government recovered $24.1 billion, according to Justice Department statistics.

Between 2008 and 2012, the civil U.S. recoveries amounted to $9.4 billion, according to the Justice Department. The TAF report shows that criminal fines associated with false claims recoveries over the same period were $4.5 billion, while state recoveries were $4.4 billion. Taken together, the civil, criminal and state false claims recoveries account for the five-year total of $18.3 billion.

Whistle-Blowers

Whistleblowers over that period collected $1.4 billion beyond the $9.4 billion paid to the U.S. The law allows whistle-blowers to recover between 15 and 30 percent. Not every case settled by the U.S. was initiated by whistle-blowers.

The TAF report argues that the federal government recovers about 20 times more than it spends on investigations and prosecutions of health-care fraud cases.

Whistleblowing is increasing in other sectors, including finance and taxation. With programs in place at the Securities and Exchange Commission, the Internal Revenue Service, and the U.S. Commodity Futures Trading Commission, many more cases are coming, according to Patrick Burns, co-executive director of TAF.

“We are on the edge of a new era of incentivized integrity programs,” said Burns. “It takes a long time to investigate, negotiate and litigate these cases, but I think we will see billions recovered under these programs in the years ahead.”

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.

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. – See more at: http://www.jameshoyer.com/supreme-court-denies-cert-in-allison-engine-retroactivity-case/#sthash.PgY15ire.dpuf

 

 

Glenn English and Richard Hogan, Operators of Michigan Adult Day Care Centers Convicted in $3.2 M Medicare Fraud

A federal jury in Detroit today convicted the owner and the program coordinator of two Flint, Mich., adult day care centers for their participation in a $3.2 million Medicare fraud scheme.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan; Acting Special Agent in Charge John Robert Shoup of the FBI Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Detroit Office made the announcement.

Glenn English, 53, was found guilty in U.S. District Court for the Eastern District of Michigan of one count of conspiracy to commit health care fraud and seven counts of health care fraud for directing a psychotherapy fraud scheme through New Century Adult Day Program Services LLC and New Century Adult Day Treatment Inc. (collectively known as New Century).

Richard Hogan, 67, an unlicensed social worker who worked as a program coordinator at New Century, was found guilty of one count of conspiracy to commit health care fraud.

The defendants were charged in a superseding indictment returned Dec. 11, 2012. Another individual charged in the superseding indictment, Donald Berry, awaits trial at a later date.

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Las Vegas Paper Profiles Case of James Hoyer Military Whistleblower

The Las Vegas Review-Journal did an in-depth profile on the case Lt Col Timothy Ferner, the military officer who came forward to blow the whistle on fraud, waste and abuse he witnessed at Nellis Air Force Base.  Information exposed by Ferner, a James Hoyer client, led to a nearly $6 million settlement with giant defense contractor SAIC.

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Former Los Angeles-area Pastor Sentenced for Role in $11 Million Medicare Fraud Scheme

A pastor and owner of a Los Angeles-area medical supply company was sentenced today for his role in a power wheelchair fraud scheme that defrauded Medicare out of more than $11 million.

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 Office of Inspector General (HHS-OIG); Assistant Director in Charge Bill L. Lewis of the FBI’s Los Angeles Field Office; and Special Agent in Charge Joseph Fendrick of the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse made the announcement.

Charles Agbu, 58, of Carson, Calif., was sentenced by U.S. District Judge George H. Wu to serve 87 months in prison and was ordered to pay $5,788,725 in restitution to Medicare.  In December 2012, Agbu pleaded guilty to conspiracy and money laundering charges based on his role as owner and operator of Bonfee Inc., a fraudulent durable medical equipment (DME) supply company that Agbu operated with his daughter and co-defendant, Obiageli Agbu, and members of his family from a nondescript office building in Carson.  Agbu admitted that he paid patient recruiters and doctors to provide him with fraudulent prescriptions for expensive, highly specialized power wheelchairs and other DME that he, Obiageli Agbu and their co-conspirators used in submitting more than $11 million false claims to Medicare.  Agbu billed the power wheelchairs to Medicare at a rate of approximately $6,000 per wheelchair even though he paid approximately $900 wholesale per wheelchair.  In many cases, the Medicare beneficiaries to whom Agbu and his co-conspirators claimed they supplied the power wheelchairs and DME did not have any legitimate medical need for the medical equipment, and, in some cases, never received the medical equipment from Agbu’s company.  At the time Agbu engaged in this fraud, he was a pastor at Pilgrim Congregational Church in South Central Los Angeles.

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