Archive for November, 2013

Ensign Group Inc. a Skilled Nursing Facility Based in Mission Viejo, Calif. to Pay $48 Million to Resolve Allegations That Six Facilities Billed for Unnecessary Therapy

The Ensign Group Inc., a skilled nursing provider based in Mission Viejo, Calif., that operates nursing homes across the western U.S. has agreed to pay $48 million to resolve allegations that it knowingly submitted to Medicare false claims for medically unnecessary rehabilitation therapy services, the Justice Department announced today. Six of Ensign’s skilled nursing facilities in California allegedly submitted the false claims: Atlantic Memorial Healthcare Center, located in Long Beach; Panorama Gardens, located in Panorama City; The Orchard Post-Acute Care (a.k.a. Royal Court), located in Whittier; Sea Cliff Healthcare Center, located in Huntington Beach; Southland, located in Norwalk; and Victoria Care Center, located in Ventura.

“Skilled nursing facilities that place their own financial interests above the needs of their patients will be held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “We will continue to advocate for the appropriate use of Medicare funds and the proper care of our senior citizens.”

Between January 1, 1999, and August 31, 2011, these six Ensign skilled nursing facilities allegedly submitted false claims to the government for physical, occupational and speech therapy services provided to Medicare beneficiaries that were not medically necessary. Specifically, Ensign provided therapy to patients whose conditions and diagnoses did not warrant it, solely to increase its reimbursement from Medicare. The government further alleged that Ensign created a corporate culture that improperly incentivized therapists and others to increase the amount of therapy provided to patients to meet planned targets for Medicare revenue. These targets were set without regard to patients’ individual therapy needs and could only be achieved by billing at the highest reimbursement levels. The government also alleged that Ensign billed for inflated amounts of therapy it had not provided and that certain patients were kept in these facilities for periods of time exceeding what was medically necessary for treatment of their conditions.

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FreshPoint Inc. to Pay $4.2 Million for Overbilling the Department of Defense for Produce

The Justice Department announced today that FreshPoint Inc., a Houston, Texas-based food distribution company and wholly owned subsidiary of Sysco Corp., has agreed to pay $4.2 million to resolve allegations that it overcharged the Department of Defense for fresh fruit and vegetables purchased under 15 separate contracts. The contracts were awarded to East Coast Fruit Company and subsequently performed by FreshPoint following FreshPoint’s acquisition of East Coast Fruit Company in 2007.

“The Department of Justice is committed to ensuring the integrity of federal contracts and will pursue contractors that knowingly overcharge the government for goods or services,” said Assistant Attorney General for the Department of Justice’s Civil Division Stuart F. Delery. “Contractors that do business with the government must do so honestly and fairly or suffer the consequences of their misconduct.”

“This settlement demonstrates one of the many types of fraud inflicted upon the American taxpayers,” said U.S. Attorney for the Southern District of Georgia Edward Tarver. “The U.S. Attorney’s Office will honor our commitment to vigorously enforce the False Claims Act in order to protect the financial soundness of our nation and its military.”

The settlement resolves allegations that from Dec. 17, 2007, through Sept. 11, 2009, FreshPoint overcharged the government on hundreds of sales of fresh fruit and vegetables by improperly inflating its prices to the government to reflect FreshPoint’s view of the prevailing market price of the goods at the time of sale. The government alleged that this practice violated FreshPoint’s contracts with the government that required FreshPoint to provide the produce at cost, plus a pre-established mark-up for profit, and did not allow FreshPoint to make additional price adjustments based upon perceived changes in market prices.
The allegations arose from a lawsuit filed under the whistleblower provisions of the False Claims Act, which allow private individuals to sue on behalf of the government and to share in the proceeds of any settlement or judgment. The whistleblower in this case, former FreshPoint employee Charles Hall, will receive $798,000.

 This settlement was the result of a coordinated effort by the Justice Department’s Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the Southern District of Georgia; the Defense Criminal Investigative Service; the Defense Contract Audit Agency and the Defense Logistics Agency Office of General Counsel. The claims settled by this agreement are allegations only, and there has been no determination of liability. The case is captioned U.S. ex rel. Hall v. SYSCO Corp., et al., Case No: 4:11-CV-57 (S.D. Ga.).


James Hoyer Creative Director Premieres JFK Documentary

VCI_JFK_Biboard_43857.inddJames Hoyer Creative Director Larry Wiezycki is the director and editor of a fascinating, new PBS documentary about President John F. Kennedy’s visit to Tampa just days before he was assassinated.

JFK in Tampa: The 50th Anniversary premiered November 7th at the Tampa Theatre to a standing room only crowd and will air multiple times on PBS stations throughout Florida, including WUSF TV channel 16 in Tampa.

The one hour documentary is the culmination of a two year project on which Larry collaborated with Tampa producer and writer Lynn Marvin Dingfelder.

Larry Wiezycki - Creative Director

Larry Wiezycki, and Lynn Marvin Dingfelder at the premiere. Introduced by documentary narrator Frank Robertson

Capturing the Moment

The documentary team captured the stories of more than 50 people — dignitaries, members of the media, and average citizens who were touched by President Kennedy’s visit.

“It takes you back to November 18, 1963.  A time capsule of home movies, photos and stories told by those who were in Tampa on that special day 50 years ago,” Larry said.   “Our hope is to make you feel like you were there.  You’ll see the excitement ignited in Tampa by one of our country’s most charismatic presidents ever and learn a lot along the way, too.”


Larry Wiezycki and wife Kim at “JFK in Tampa: The 50th Anniversary” premiere at The Tampa Theatre

The documentary also serves as the foundation for a new exhibit opening on November 8th at the Tampa Bay History Center called “JFK in Tampa: The Exhibition.”

We are proud to congratulate Larry for such an amazing achievement!



Click on the video below to see a story about the documentary from WTSP TV in Tampa:


Overcoming a Rule 9(b) Challenge in the 11th Circuit

After a qui tam complaint is filed, the Department of Justice investigates the relator’s allegations and then decides whether to intervene and join the action, or whether to decline. If the government declines to join in the lawsuit, the relator and his or her counsel may decide to proceed forward with the case on their own.

So what are some of the challenges a relator faces when moving forward with a declined case?

If the government declines to intervene in a relator’s case, one of the challenges the relator may likely face if he or she decides to continue to litigate is a defendant’s motion to dismiss asserting failure to satisfy Rule 9(b). Claims brought under the False Claims Act must be stated with particularity pursuant to Rule 9(b) of the Federal Rules of Civil Procedure. Particularity means that “a plaintiff must plead ‘facts as to time, place, and substance of the defendant’s alleged fraud,’ specifically ‘the details of the defendant[‘s] allegedly fraudulent acts, when they occurred, and who engaged in them.” United States ex rel. Clausen v. Laboratory Corporation of America, 290 F.3d 1301, 1310 (11th Cir. 2002).

The consequences of a Rule 9(b) challenge depend on the law of the Circuit in which the relator’s complaint has been filed. For example, in the Eleventh Circuit defendants often argue that a complaint cannot survive Rule 9(b) scrutiny under the Clausen case and its progeny if there are no facts to support the allegations that false claims were presented to the Government. It is true that one way relators can satisfy Rule 9(b) is to identify specific false claims. However, even though some defendants attempt to assert otherwise, relators should note that the law in the Eleventh Circuit does not require that complaints identify specific false claims, only that they contain “some indicia of reliability” to support the allegation that false claims were submitted.  Clausen, at 1311.

In Clausen, the court held that the Rule 9(b) standard applies to claims brought under the False Claims Act and requires details of both the false claim and the submission of that claim.  Id. at 1311.  In dismissing the complaint because the relator—a corporate outsider who had never worked for the defendant—offered no “stated reason for his belief [that] the claims requesting illegal payments must have been submitted, were likely submitted, or should have been submitted to the Government,” the court determined that “some indicia of reliability must be given in the complaint to support the allegation of an actual false claim for payment being made to the Government.” Id. at 1311.  (emphasis added).  The court further explained that “indicia of reliability” can be found in the actual dates or dollar amounts of fraudulent submissions or even “second-hand information about billing practices.”  Id. at 1312.

Since the Clausen ruling, the Eleventh Circuit and the district courts have interpreted and applied the “some indicia of reliability” language to subsequent False Claims cases.  See Cade v. Progressive Cmty. Healthcare, Inc., 2011 WL 2837648 at *7 (“the Eleventh Circuit itself has moved away from Clausen’s most exacting language, accepting less billing detail in a case where particular allegations of a scheme offered indicia of reliability that bills were presented.” )  In Hill v. Morehouse Med. Assocs., Inc., 2003 WL 22019936 (11th Cir. Aug.15, 2003), it was determined that “Rule 9(b)’s heightened pleading standard may be applied less stringently … when specific factual information about the fraud is peculiarly within the defendant’s knowledge or control.” Id. at *4 (internal citations omitted).  The relator in Hill did not plead any specific details about how the defendants submitted false claims to the Government, but because she had been employed in the billing and coding department, she “was privy to [the defendant’s] files, computer systems, and internal billing practices that [were] vital to her legal theory,” and “witnessed firsthand the alleged fraudulent submissions.” Id. at *4–5.  Her allegations, therefore, possessed the necessary “indicia of reliability” to satisfy ClausenHill, at *4-5.

In United States ex rel. Walker v. R & F Properties of Lake County, Inc., 433 F.3d 1349 (2005), the court ruled that in cases involving a corporate insider with particularized information regarding the alleged fraudulent schemes, Rule 9(b) can be satisfied without identifying any individual false claims. There is no requirement that actual hospital records be attached to the complaint. Walker involved a nurse practitioner who had worked for the defendant, and the complaint did not plead with particularity that the defendant had submitted a false claim.  Id. at 1360.  Instead, the relator’s beliefs were inferred from the circumstantial evidence of the defendant’s billing practices combined with conversations between the relator and other employees of the defendant.  Id.   Finding that the complaint survived Rule 9(b) scrutiny, the court distinguished Walker from Clausen because, among other things, the Walker relator was not a corporate outsider, and that the nature of her employment with the defendant gave rise to allegations that were “sufficient to explain [why] she believed” the defendant submitted false claims for services.  Id.; see also U.S. ex rel. Matheny v. Medco Health Solutions, Inc., 2012 WL 555200, at *10 (11th Cir. 2012) (interpreting Walker to hold that “we are more tolerant toward complaints that leave out some particularities of the submissions of a false claim if the complaint also alleges personal knowledge or participation in the fraudulent conduct.”).

It is true that identification of the specific false claims submitted is extremely beneficial to the success of a relator’s case. Yet, relators for various reasons may not be in possession of documents or other evidence that constitute or identify the actual false claims submitted. A relator does not have to automatically abandon his attempt to litigate a case simply because he does not have copies of the specific false claims submitted by the defendant.  If a relator can satisfy the indicia of reliability standard, then he can survive a Rule 9(b) challenge by the defendant and he can continue to pursue his case.

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.




GRAND RAPIDS, MICHIGAN – U.S. Attorney Patrick A. Miles, Jr., announced today that LG Chem Michigan, Inc. (“LGCMI”) will pay the United States $1,231,319 to resolve allegations, under the federal False Claims Act, that the company improperly sought and obtained federal funds to pay employees who were engaged in recreational and volunteer activities. This amount is in addition to $842,189 that LGCMI refunded to the U.S. Department of Energy (“DOE”) in January 2013 based on the same allegations. LGCMI did not admit liability as part of this settlement, and the Government did not make any concessions regarding the legitimacy of its claims.

In 2010, DOE awarded LGCMI over $150 million in funds under the American Recovery and Reinvestment Act of 2009 to construct and operate a lithium-ion battery manufacturing plant in Holland, Michigan. The United States alleged that during the first three quarters of 2012, before LGCMI transitioned battery production from foreign sources to the Michigan plant, LGCMI submitted claims to obtain the federal share of wages and benefits paid to domestic workers who were engaged in non-work activities such as watching movies, playing games, and performing volunteer work. The United States further alleged that in response to governmental inquiries about those activities—and particularly in corporate executives’ written communications to DOE and statements made during a DOE audit—LGCMI failed to fully disclose the number of employees involved in those activities, the nature and scope of those
activities, and the resulting losses to the government.

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Orlando Area Hospice Pays $3 Million to Settle Medicare Fraud Charges

Hospice of the Comforter Inc. (HOTCI) was accused of billing Medicare for patients who were not terminally ill, according to the Department of Justice.   The company has agreed to pay $3 million to resolve the allegations.  The government says evidence showed HOTCI violated the False Claims Act by submitting false claims to the Medicare program for hospice services provided to patients who were not eligible for the Medicare hospice benefit. HOTCI is headquartered in Altamonte Springs, Fla., and provides hospice services to patients residing in Seminole, Osceola and Orange counties in Florida.

“This settlement is a result of the Justice Department’s continuing efforts to prevent the abuse of the taxpayer-funded Medicare hospice program, which is intended to provide comfort and care to terminally ill persons during the last six months of their lives,” said Assistant Attorney General for the Civil Division Stuart F. Delery. “We will pursue those who seek to misuse this important benefit for their own enrichment.”

The government alleged that between December 2005 and December 2010, HOTCI engaged in practices that resulted in billing Medicare for patients who were not terminally ill. Specifically, HOTCI allegedly directed its staff to admit all referred patients without regard to whether they were eligible for the Medicare hospice benefit, falsified medical records to make it appear that certain patients were eligible for the benefit when they were not, employed field nurses without hospice training, established procedures to limit physicians’ roles in assessing patients’ terminal status and delayed discharging patients when they became ineligible for the benefit.

As part of this settlement, HOTCI has agreed to enter into a Corporate Integrity Agreement with the Inspector General of the Department of Health and Human Services that provides for procedures and reviews to be put in place to promptly detect and prevent future conduct similar to that which gave rise to the settlement. In addition, HOTCI’s former Chief Executive Officer Robert Wilson has agreed to a three-year, voluntary exclusion from Medicare, Medicaid and other federal health care programs.

“This settlement represents a fair and appropriate resolution of this troubling matter,” said Acting U.S. Attorney for the Middle District of Florida A. Lee Bentley III. “Hospice providers in our district should be on notice that our office will do what it takes to protect our citizens from this kind of misconduct.”

“Hospice care is a sacred trust from which no provider should fraudulently profit,” said Inspector General of the U.S. Department of Health and Human Services Daniel R. Levinson. “Claiming tax dollars for people who are not terminally ill  and therefore ineligible for hospice care cannot be tolerated.”

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $16.7 billion through False Claims Act cases, with more than $11.9 billion of that amount recovered in cases involving fraud against federal health care programs.

The allegations settled today arose from a lawsuit filed by a former HOTCI employee, Douglas Stone, under the qui tam, or whistleblower, provisions of the False Claims Act. Under the act, private citizens can bring suit on behalf of the government for false claims and share in any recovery. Stone’s share of the recovery has not been determined.

 Click here to read more about the settlement on the DOJ website.




Attorney General Eric Holder Delivers Remarks at the Johnson & Johnson Press Conference Announcing $2.2B Settlement

Good morning – and thank you all for being here. I am joined by Associate Attorney General [Tony] West; Assistant Attorney General for the Civil Division [Stuart] Delery; U.S. Attorney for the Eastern District of Pennsylvania [Zane] Memeger; U.S. Attorney for the District of Massachusetts [Carmen] Ortiz; First Assistant U.S. Attorney for the Northern District of California [Brian] Stretch; and Deputy Inspector General for Investigations at the Department of Health and Human Services [Gary] Cantrell.

We are here to announce that Johnson & Johnson and three of its subsidiaries have agreed to pay more than $2.2 billion to resolve criminal and civil claims that they marketed prescription drugs for uses that were never approved as safe and effective – and that they paid kickbacks to both physicians and pharmacies for prescribing and promoting these drugs. Through these alleged actions, these companies lined their pockets at the expense of American taxpayers, patients, and the private insurance industry. They drove up costs for everyone in the health care system and negatively impacted the long-term solvency of essential health care programs like Medicare.

This global settlement resolves multiple investigations involving the antipsychotic drugs Risperdal and Invega – as well as the heart drug Natrecor and other Johnson & Johnson products. The settlement also addresses allegations of conduct that recklessly put at risk the health of some of the most vulnerable members of our society – including young children, the elderly, and the disabled.

In the criminal information filed today, we allege that Johnson & Johnson subsidiary Janssen Pharmaceuticals Incorporated violated the Federal Food, Drug, and Cosmetic Act by introducing Risperdal into the market for unapproved uses. In its plea agreement, Janssen admits that it promoted this drug to health care providers for the treatment of psychotic symptoms and associated behaviors exhibited by elderly, non-schizophrenic patients who suffered from dementia – even though the drug was approved only to treat schizophrenia.

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