Archive for 2017

James Hoyer Partner Joins U.S. Attorney’s Office

Sean P. Keefe

Sean P. Keefe

After seven years with the James Hoyer law firm, Partner Sean Keefe is making a big move. Sean is joining the U.S. Attorney’s Office for the Middle District of Florida. He will work in the False Claims Act unit, continuing to fight fraud against the government, just as he did here at James Hoyer.

While at James Hoyer, Sean worked in the whistleblower/False Claims Act division, represented the receiver in major Ponzi scheme litigation, and handled multiple financial complaints with the SEC, IRS, and CFTC.  We’ll miss Sean’s daily presence here at the firm, but are glad to have such a talented friend and colleague in the federal prosecutor’s office.

This is a return to government work for Sean.  Prior to joining James Hoyer, he worked as an Assistant State Attorney for the Thirteenth Judicial Circuit for Hillsborough County for nearly a decade. In his career as a state prosecutor, Sean gained extensive trial experience prosecuting white collar crimes, drug trafficking cases, and homicides, including death penalty cases.

The Middle District of Florida office is headquartered right here in Tampa.  It is the same office where James Hoyer founding partner Chris Hoyer worked during his days with the government.  The office serves 35 of the 67 counties in Florida, which is more than half the population of Florida from Jacksonville in the north, Orlando in the center of the state, through Tampa on the West Coast, and south to the Ft. Myers area.

We wish Sean the very best and look forward to partnering with the U.S. Attorney’s office on whistleblower cases in the months and years ahead.


D.C. Case May Impact IRS Whistleblower Program Awards

IRS Whistleblower Claims

IRS Whistleblower ClaimsWorking its way through the appellate system in the D.C. Circuit is a case that could have a major impact on the IRS Whistleblower Program.

Since 2006, the IRS has had discretion to provide awards to whistleblowers who report information that leads to the IRS collecting proceeds of $2 million or less.  For cases where the collected proceeds exceed $2 million, the IRS was required to provide an award of 15-30%.

The question presented by the appeal of Whistleblower 21276-13w v. Commissioner of Internal Revenue, 147 T.C. 121 (2016), is what exactly does “collected proceeds” mean? Read More…


Whistleblower in IU Health Case Speaks at Annual TAF Conference

Dr. Judy Robinson speaks on TAF whistleblower panel

Dr. Judy Robinson, James Hoyer client and whistleblower in the $18 million IU Health/HealthNet case, spoke on the whistleblower panel at the annual Taxpayers Against Fraud Conference in Washington D.C. on November 3rd.  Dr. Robinson gave a powerful presentation talking about the important and sometimes difficult road whistleblowers face in order to do the right thing.

Dr. Robinson with James Hoyer Investigator & Communications Director Angie Moreschi

Dr. Robinson with James Hoyer Investigator & Communications Director Angie Moreschi

Dr. Robinson is a prominent Indianapolis Ob/Gyn and former employee of both IU Health and HealthNet, a Federally Qualified Health Center (FQHC) which primarily provides services to low income populations. She came forward as a whistleblower to expose what she believed was substandard care being provided to pregnant women and babies on Medicaid.  Her case was featured prominently in both local and national media, drawing attention to the need to protect those women and babies.  The Indiana Trial Lawyers Association will name her Consumer Advocate of the Year at their annual luncheon on November 7th.

Dr. Robinson’s qui tam suit alleged that IU Health and HealthNet violated Indiana Medicaid rules to save money by using CNMs, instead of doctors, to care for medically high-risk pregnant women.  She documented three instances of babies suffering permanent neurological damage and 17 “near misses” in just six months, as a result of care to high risk patients by CNMs. When her efforts to change the system fell on deaf ears, Dr. Robinson was ostracized and ultimately fired.  She then learned that billing for CNM care of high risk patients violates Indiana Medicaid rules and felt compelled to bring her information forward to the government.

TAF Chairman Neil Getnick, Dr. Robinson, and fellow whistleblowers Eben Steele & Don Galmines

TAF Chairman Neil Getnick, Dr. Robinson, and fellow whistleblowers Eben Steele & Don Galmines

Dr. Robinson, along with her attorneys from the James Hoyer Firm, ultimately secured an $18 million settlement from two of Indiana’s largest healthcare providers to resolve illegal kickback claims and and an additional $1.4 million for false billing claims.  In addition, HealthNet agreed to a Corporate Integrity Agreement with the federal government related to the kickback allegations, which required the clinic to restructure and maintain complete independence from IU Health.  In a written agreement, HealthNet also agreed to follow the rules and change its practice of having CNMs care for high risk pregnant women.  IU Health must submit to regular monitoring.


Attorney Jesse Hoyer Warns of For Profit College Dangers in TV Report

James Hoyer Law Firm Partner Jesse Hoyer is an expert on for-profit colleges. She’s led multiple lawsuits against these school for misleading students and ripping off taxpayers.  Watch the video above to see an excerpt from the report which includes attorney Jesse Hoyer’s interview.

Attorney Jesse Hoyer Interview

Attorney Jesse Hoyer Interviewed

In the report, Florida Investigator Reporter Katie LaGrone examines why public schools allow for-profit colleges in to their college fairs to recruit students, when these schools have a history of predatory behavior.

“We’ve seen first hand the way they mislead students, the way they rip off tax payer,” said Hoyer who sued EDMC (owner of the Art Institutes) a few years ago for fraud.

You can watch the entire report if you click here. Or read more by clicking here.


Western New York Contractors Pay More Than $3 Million to Settle False Claims Act Allegations

Alden, New York-based contractors, Zoladz Construction Company Inc. (ZCCI), Arsenal Contracting LLC (Arsenal), and Alliance Contracting LLC (Alliance), along with two owners, John Zoladz of Darien, New York, and David Lyons of Grand Island, New York, have agreed to pay the United States more than $3 million to settle allegations that they violated the False Claims Act by improperly obtaining federal set-aside contracts designated for service-disabled veteran-owned (SDVO) small businesses, the Justice Department announced today.

“Contracts are set aside for service-disabled veteran-owned small businesses so to afford veterans with service-connected disabilities the opportunity to participate in federal contracting and gain valuable experience to help them compete for future economic opportunities,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Every time an ineligible contractor knowingly pursues and obtains such set-aside contracts, they are cheating American taxpayers at the expense of service-disabled veterans.”

To qualify as a SDVO small business, a service-disabled veteran must own and control the company. The United States alleged that Zoladz recruited a service-disabled veteran to serve as a figurehead for Arsenal, which purported to be a legitimate SDVO small business but which was, in fact, managed and controlled by Zoladz and Lyons, neither of whom is a service-disabled veteran. The United States alleged that Arsenal was a sham company that had scant employees of its own and instead relied on Alliance and ZCCI employees to function. After receiving numerous SDVO small business contracts, Arsenal is alleged to have subcontracted nearly all of the work under the contracts to Alliance, which was owned by Zoladz and Lyons, and ZCCI, which was owned by Zoladz. Neither Alliance nor ZCCI were eligible to participate in SDVO small business contracting programs. Zoladz and Lyons are alleged to have carried out their scheme by, among other things, making or causing false statements to be made to the U.S. Department of Veterans’ Affairs (VA) regarding Arsenal’s eligibility to participate in the SDVO small business contracting program and the company’s compliance with SDVO small business requirements.

Click here to read more from the Department of Justice.


New York Hospital Operator Agrees to Pay $4 Million to Settle Alleged False Claims Act Violations Arising from Improper Payments to Physicians

MediSys Health Network Inc., which owns and operates Jamaica Hospital Medical Center and Flushing Hospital and Medical Center, two hospitals in Queens, New York, has agreed to pay $4 million to settle allegations that it violated the False Claims Act by engaging in improper financial relationships with referring physicians, the Justice Department announced today.

The settlement resolves allegations that the defendants submitted false claims to the Medicare program for services rendered to patients referred by physicians with whom the defendants had improper financial relationships. These relationships took the form of compensation and office lease arrangements that did not comply with the requirements of the Stark Law, which restricts the financial relationships that hospitals may have with doctors who refer patients to them.

“This recovery should help to deter other health care providers from entering into improper financial relationships with physicians that can taint the physicians’ medical judgment, to the detriment of patients and taxpayers,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.

The lawsuit was filed by Dr. Satish Deshpande under the qui tam, or whistleblower, provisions of the False Claims Act. Under the Act, private citizens can bring suit on behalf of the United States and share in any recovery. Dr. Deshpande will receive $600,000 as his share of the recovery.

“Health care providers who enter into improper financial relations with referring physicians compromise the referral process and encourage over-utilization of services, to the potential detriment of both patients and taxpayers,” said Acting U.S. Attorney Bridget M. Rohde for the Eastern District of New York. “We will hold health care providers accountable for their violations of federal law.”

“When hospital operators provide financial incentives to doctors for patient referrals, individuals rightfully wonder whose best interests are being served,” said Special Agent in Charge Scott J. Lampert for U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “We will continue to investigate such entities who fraudulently bill government health programs.”

Read the rest of the story from the Department of Justice here.


The False Claims Act’s Anti-Retaliation Provision Protects Whistleblowers Who Refuse To Take Part in Fraud

Second Circuit Court of AppealsIn late July, the Second Circuit United States Court of Appeals issued an opinion captioned Fabula v. American Medical Response, Inc. that should provide some comfort for whistleblowers who are contemplating bringing a False Claims Act case in connection with their refusal to take part in a potentially fraudulent scheme.

The Fabula court was presented with two issues:

  1. whether the whistleblower had adequately pled that the defendant had submitted false claims for reimbursement to the Medicare and Medicaid programs; and
  2. whether the whistleblower engaged in protected activity when he refused to violate the False Claims Act.

We’re going to focus on issue number two in this blog, as it pertains to the breadth of whistleblower protected activity covered by the False Claims Act’s anti-retaliation provision.

The Whistleblower in Fabula

First, a little background.  The whistleblower in Fabula was an Emergency Medical Technician, or “EMT” for short, who worked for the defendant American Medical Response, Inc., or “AMR.”  He alleged that AMR defrauded Medicare by falsely certifying ambulance transports as medically necessary, and by submitting claims that it knew were not properly reimbursable by Medicare.

For example, Fabula reported that he once assisted in transporting “an obese patient who ‘had no medical reason to be sent to the hospital, he simply wanted to go there.’ The patient was able to walk himself to the stretcher and climb on unassisted.”  Opinion, page 9 (citations omitted).  Despite the lack of medical need, an “AMR supervisor instructed Fabula to insert information about the patient’s previous surgeries to justify his transport to the hospital.”  Id.

This type of instruction was allegedly part of a routine practice where AMR  required EMTs to revise Patient Care Reports, or “PCRs,” to include false statements as to the medical necessity of the service in order to try to get the claims paid.  The Fabula whistleblower knew that these false statements were being used to seek Medicare reimbursement so he refused to revise the PCRs despite being warned that his failure to revise the reports would result in his termination.  Sure enough, AMR made good on its threat and fired Fabula shortly after a final refusal to alter a PCR.

The False Claims Act’s Anti-Retaliation Provision

The False Claims Act’s anti-retaliation provision provides:

[a]ny employee…shall be entitled to all relief necessary to make that employee…whole, if that employee…is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts done by the employee…in furtherance of an action under this section or other efforts to stop 1 or more violations of [the False Claims Act].

To invoke this provision’s protection, whistleblowers generally have to show that:

  1. he or she engaged in activity protected under the statute,
  2. the employer was aware of such activity, and
  3. the employer took adverse action against the whistleblower because he or she engaged in the protected activity

The Legal Impact of Fabula

In Fabula, the issue was whether the EMT’s refusal to alter the PCRs constituted an “activity protected under the statute.”  The trial court said “no,” finding instead that “mere refusal to complete the PCR, without other affirmative acts to stop the alleged fraud, is not protected activity.”  Opinion, page 54.

The Second Circuit reversed the trial court, relying on the plain language of the anti-retaliation provision quoted above.  The Fabula court held that the whistleblower’s “refusal to engage in the fraudulent scheme, which under the facts as pled was intended and reasonably could be expected to prevent the submission of a false claim to the government, can constitute protected activity under the statute.” Opinion, page 55.

The Fabula court explained that the EMT’s allegation that he refused to falsify the PCR as demanded by his

AMR supervisor was plainly in furtherance of an effort to stop a False Claims Act violation.  This wasn’t a case where the whistleblower “did not simply omit, fail, or neglect to fill out” paperwork used in a fraud scheme. Opinion, page 55.  To the contrary, “he verbally refused to alter the document as requested by AMR and, despite AMR’s threat of termination, failed to subsequently ‘arrange a time for reconciliation and transmission of’ that PCR.”  Opinion, pages 55-56.

AMR argued that the EMT could not state a claim because he did not do enough to try to stop the false claims.  The Fabula court overcame that argument by pointing to the provision that only requires that the whistleblower make efforts “to stop 1 or more violations” of the False Claims Act.  Here, the EMT’s conduct made it “difficult, or even impossible, for AMR to file a false claim for that particular run, thus preventing or hindering at least one violation of the [False Claims Act].” Opinion, page 57.

The Second Circuit also looked to Congressman Howard L. Berman’s congressional testimony, which made the point  that § 3730(h) was amended “so that it is clear that it covers . . . retaliation against not only those who actually file a qui tam action, but also against those who plan to file a qui tam that never gets filed, who blow the whistle internally or externally without the filing of a qui tam action, or who refuse to participate in the wrongdoing.”  Opinion, pages 58-59.

The Fabula court further rejected AMR’s argument that the anti-retaliation provision only applies to “complaints to [an] employer’s management or in-house counsel, reports to the media, or a reasoned explanation to supervisors that what they were asking him to do violated the law and should cease.” Opinion, page 60.  As alluded to above, the Fabula court found that the False Claims Act “broadly protects efforts to stop even a single violation of the FCA.”  Opinion, page 61.

Finally, the Second Circuit rejected AMR’s attempt to “draw an arbitrary boundary between efforts that take the form of ‘internal reporting to a supervisor or company compliance department’ and those that amount to ‘refusals to participate in the misconduct that leads to the false claims,’” noting that “[t]here is, at best, a hair’s-breadth distinction between complaining internally that a practice is illegal under the FCA and advising a supervisor of one’s refusal to engage in that illegal practice.” Opinion, page 59.

The Fabula court’s common sense approach to establish a broad False Claims Act anti-retaliation provision should help encourage more whistleblowers to come forward by providing robust protection for when they refuse to engage in potentially fraudulent conduct.


Acting Manhattan U.S. Attorney Announces $13.4 Million Settlement Of Civil Healthcare Fraud Lawsuit Against US Bioservices Corp

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Scott J. Lampert, Special Agent in Charge of the U.S. Department of Health and Human Services’ Office of Inspector General for the New York Region (“HHS-OIG”), announced that the United States has settled a civil fraud case against US BIOSERVICES CORP. (“US BIO”) pursuant to which US BIO will pay a total of $13.4 million. The settlement resolves claims that US BIO violated the Anti-Kickback Statute and the False Claims Act by participating in a kickback scheme with Novartis PharmaceuticalS Corp. (“Novartis”) relating to the NOVARTIS drug Exjade. Specifically, the United States’ Complaint alleges that US BIO and NOVARTIS entered into a kickback arrangement pursuant to which US BIO was promised additional patient referrals and related benefits in return for refilling a higher percentage of Exjade than the two other pharmacies that also dispensed Exjade. The settlement will also resolve numerous state law civil fraud claims.

Yesterday, Chief U.S. District Judge Colleen McMahon approved a settlement stipulation to resolve the Government’s claims against US BIO. Under the settlement, US BIO is required to pay approximately $10.6 million to the United States and has made extensive admissions regarding its conduct. Further, as part of the settlement, US BIO will pay approximately $2.8 million to resolve the state law civil fraud claims. In prior lawsuits, the Government sued NOVARTIS and the two other pharmacies that participated in this same Exjade kickback scheme. The Government settled those lawsuits, pursuant to which NOVARTIS paid $390 million, the two other pharmacies paid $75 million, and NOVARTIS and the pharmacies made extensive admissions regarding their conduct.

Acting Manhattan U.S. Attorney Joon H. Kim said: “The integrity of the federal healthcare system requires that all providers, including pharmacies like US Bioservices, refrain from entering into kickback relationships. When healthcare providers accept kickbacks, they violate the law, subject what should be health-based decision-making to the influence of profit-seeking drug manufacturers, and thereby put their own financial interests ahead of the interests of their patients. This Office will continue to use its law enforcement tools to pursue healthcare providers who accept kickbacks or otherwise put their profits ahead of patient safety.”

Click here to read the whole story from the Department of Justice.


U.S. Recovers More Than $12 Million In False Claims Act Settlements For Kickback Scheme

Acting United States Attorney Gregory G. Brooker today announced that Sightpath Medical, Inc. (n/k/a Sightpath Medical, LLC) (“Sightpath”), TLC Vision Corporation (n/k/a TLC Vision (USA, LLC)) (“TLC”) (collectively the “Sightpath Entities”) and their former CEO, JAMES TIFFANY, have agreed to pay more than $12 million to the United States to resolve kickback allegations under the False Claims Act (“FCA”). The United States also intervened in an underlying lawsuit against the Cameron-Ehlen Group, Inc. d/b/a Precision Lens (“Precision Lens”), Precision Lens’ owner PAUL EHLEN, and JITENDRA SWARUP.

“Medicare beneficiaries depend on their physicians to make decisions based on sound medical judgment,” said Assistant U.S. Attorney Chad Blumenfield. “Our office will take decisive action to address allegations that medical providers are receiving improper financial benefits that could influence medical decision making. We are grateful to our law enforcement partners for their excellent work in investigating this matter.”

“This settlement is an outstanding result and represents the third major False Claims Act case successfully handled by this Office in the last three months. These types of cases remain a top priority of our Office, I applaud the hard work and dedication of the Civil Frauds Unit and the agencies involved in the case,” said Acting U.S. Attorney Gregory Brooker.

“The FBI together with our law enforcement partners aggressively investigate companies and individuals who engage in kickback schemes at the expense of Medicare and other federal health care programs,” said FBI Special Agent in Charge Richard T. Thornton of the Minneapolis Division. “Those who seek to exploit the nation’s health care system through fraud will be held accountable.”

Click here to read the rest of the story from the Department of Justice.


Mylan Agrees to Pay $465 Million to Resolve False Claims Act Liability for Underpaying EpiPen Rebates

Pharmaceutical companies Mylan Inc. and Mylan Specialty L.P. have agreed to pay $465 million to resolve claims that they violated the False Claims Act by knowingly misclassifying EpiPen as a generic drug to avoid paying rebates owed primarily to Medicaid, the Justice Department announced today. Mylan Inc. and Mylan Specialty L.P. are both wholly owned subsidiaries of Mylan N.V., which is headquartered in Canonsburg, Pennsylvania.

“This settlement demonstrates the Department of Justice’s unwavering commitment to hold pharmaceutical companies accountable for schemes to overbill Medicaid, a taxpayer-funded program whose purpose is to help the poor and disabled,” said Acting Assistant Attorney General Chad A. Readler of the Department of Justice’s Civil Division. “Drug manufacturers must abide by their legal obligations to pay appropriate rebates to state Medicaid programs.”

“Mylan misclassified its brand name drug, EpiPen, to profit at the expense of the Medicaid program,” said Acting United States Attorney William D. Weinreb. “Taxpayers rightly expect companies like Mylan that receive payments from taxpayer-funded programs to scrupulously follow the rules. We will continue to protect the integrity of Medicaid and ensure a level playing field for pharmaceutical companies. ”

Congress enacted the Medicaid Drug Rebate Program to ensure that state Medicaid programs were not susceptible to price gouging by manufacturers of drugs that were available from only a single source. It therefore subjected such single-source, or brand name drugs, to a higher rebate that is payable to Medicaid and that increases to the extent the price of the drug outpaces the rate of inflation. In contrast, generic drugs originating from multiple manufacturers are subject to lower rebates that, at least until recently, were not subject to inflationary adjustments.

Click here to read the rest of the story from the Department of Justice.