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Telia Company AB and Its Uzbek Subsidiary Enter Into a Global Foreign Bribery Resolution of More Than $965 Million for Corrupt Payments in Uzbekistan

Stockholm-based Telia Company AB, an international telecommunications company that was formerly an issuer of publicly traded securities in the U.S., and its Uzbek subsidiary, Coscom LLC, entered into a global foreign bribery resolution and agreed to pay a combined total penalty of more than $965 million to resolve charges arising out of a scheme to pay bribes in Uzbekistan.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Joon H. Kim of the Southern District of New York, Chief Don Fort of Internal Revenue Service-Criminal Investigation (IRS-CI) and Special Agent in Charge Patrick J. Lechleitner of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) Washington, D.C., Field Office made the announcement.

“This resolution underscores the Department’s continued and unwavering commitment to robust FCPA and white-collar criminal enforcement. It also demonstrates the Department’s cooperative posture with its foreign counterparts to stamp out international corruption and to reach fair, appropriate and coordinated resolutions,” said Acting Assistant Attorney General Blanco. “Foreign and domestic companies that pay bribes put honest companies at a disadvantage and distort the free and fair market and the rule of law. Today’s resolution reflects the significant efforts of law enforcement, the Criminal Division and the U.S. Attorney’s Office for the Southern District of New York to bring such companies to justice, and to maintain a competitive and level playing field for companies to do business, create jobs and thrive.”

“Today, we announce one of the largest criminal corporate bribery and corruption resolutions ever, with penalties totaling just under a billion dollars,” said Acting U.S. Attorney Kim. “Swedish telecom company Telia and its Uzbek subsidiary Coscom have admitted to paying, over many years, more than $331 million in bribes to an Uzbek government official. Telia, whose securities traded publicly in New York, corruptly built a lucrative telecommunications business in Uzbekistan, using bribe payments wired around the world through accounts here in New York City. If your securities trade on our exchanges and you use our banks to move ill-gotten money, then you have to abide by our country’s laws. Telia and Coscom refused to do so, and they have been held accountable in Manhattan federal court today.”

“Today marks the second resolution of proceedings against corporate entities who have engaged in a global bribery scheme of government officials,” said Chief Fort. “It also further demonstrates the dedication we have to identifying illegal financial transactions being used for bribery in the international community. It is important that the global economy remain on a fair playing field and IRS-CI will remain committed in our efforts to dismantle these kinds of corrupt financial schemes.”

“Today’s resolution marks a win against a foreign corruption scheme where millions of dollars in bribery funds were paid to Uzbekistan officials and laundered through the U.S. financial system.” said Special Agent in Charge Lechleitner. “HSI, working hand in hand with our partners at IRS Criminal Investigation, leveled the playing field for publicly traded companies by exposing these corrupt practices and helped the U.S. government collect nearly $275 million in criminal penalties”

Telia entered into a deferred prosecution agreement in connection with a criminal information filed today in the Southern District of New York charging the company with conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA). The case is assigned to U.S. District Judge George B. Daniels. In addition, Coscom pleaded guilty and was sentenced by Judge Daniels on a one-count criminal information charging the company with conspiracy to violate the anti-bribery provisions of the FCPA. Pursuant to its agreement with the Department, Telia agreed to pay a total criminal penalty of $274,603,972 to the U.S., including a $500,000 criminal fine and $40 million in criminal forfeiture that Telia agreed to pay on behalf of Coscom. Telia also agreed to implement rigorous internal controls and cooperate fully with the Department’s ongoing investigation, including its investigation of individuals.

The U.S. Securities and Exchange Commission (SEC) and the Public Prosecution Service of the Netherlands (Openbaar Ministrie, or OM) announced separate settlements with Telia in connection with related proceedings. Under the terms of its resolution with the SEC, Telia agreed to a total of $457,169,977 in disgorgement of profits and prejudgment interest, and the SEC agreed to credit any disgorged profits that Telia pays to the Swedish Prosecution Authority (SPA) or OM, up to half of the total. Telia agreed to pay the OM a criminal penalty of $274,000,000 for a total criminal penalty of $548,603,972, and a total resolution amount of more than $1 billion. The Department of Justice agreed to credit the criminal penalty paid to the OM as part of its agreement with the company. The SEC agreed to credit the $40 million in forfeiture paid to the Department as part of its agreement with the company. Thus, the combined total amount of criminal and regulatory penalties paid by Telia and Coscom to the U.S., Dutch, and Swedish authorities will be $965,773,949.

According to the companies’ admissions, Telia and Coscom, through various managers and employees within Telia, Coscom and affiliated entities, paid approximately $331 million in bribes to an Uzbek government official, who was a close relative of a high-ranking government official and had influence over the Uzbek governmental body that regulated the telecom industry. The companies structured and concealed the bribes through various payments including to a shell company that certain Telia and Coscom management knew was beneficially owned by the foreign official. The bribes were paid on multiple occasions between approximately 2007 and 2010, so that Telia could enter the Uzbek market and Coscom could gain valuable telecom assets and continue operating in Uzbekistan. Certain Telia and Coscom management also contemplated structuring an additional bribe payment in late 2012, after Swedish media began reporting about Telia’s corrupt payments in Uzbekistan, Swedish authorities began a criminal investigation and Telia opened an internal investigation.

A number of significant factors contributed to the Department’s criminal resolution with the companies. Among these, the companies received significant credit for their extensive remedial measures and cooperation with the Department’s investigation. Specifically, the criminal penalty reflects a 25 percent reduction off the bottom of the U.S. Sentencing Guidelines fine range. However, the companies did not receive more significant mitigation credit, either in the penalty or the form of resolution, because the companies did not voluntarily self-disclose their misconduct to the Department.

The resolution, reached in coordination with the SEC and authorities in the Netherlands, marks the second such resolution by a major international telecommunciations provider for bribery in Uzbekistan. On Feb. 18, 2016, Amsterdam-based VimpelCom Limited and its Uzbek subsidiary, Unitel LLC, also entered into resolutions with the Department of Justice and admitted to a conspiracy to make more than $114 million in bribery payments to the same Uzbek government official between 2006 and 2012. The investigation has thus far yielded a combined total of over $1.76 billion in global fines and disgorgement, including over $500 million in criminal penalties to the Department of Justice. In related actions, the Department has also filed civil complaints seeking the forfeiture of more than $850 million held in bank accounts in Switzerland, Belgium, Luxembourg and Ireland, which constitute bribe payments made by VimpelCom, Telia and a third telecommunications company, or funds involved in the laundering of those corrupt payments, to the Uzbek official.

Law enforcement colleagues within the OM and the SPA provided significant cooperation and assistance in this matter. Law enforcement colleagues in Austria, Belgium, Cyprus, France, Ireland, Latvia, Luxembourg, Norway, Switzerland, the Isle of Man and the United Kingdom have also provided valuable assistance. The Criminal Division’s Office of International Affairs provided significant assistance, as well. The SEC referred the matter to the Department and also provided extensive cooperation and assistance.

The IRS-CI and ICE-HSI are investigating the cases as part of the IRS Global Illicit Financial Team in Washington, D.C. Senior Litigation Counsel Nicola J. Mrazek and Trial Attorney Ephraim Wernick of the Criminal Division’s Fraud Section, and Assistant U.S. Attorney Edward Imperatore of the Southern District of New York are prosecuting the criminal case, with substantial assistance from the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS). MLARS Trial Attorney Michael Khoo is prosecuting the forfeiture case with substantial assistance from the Fraud Section and former MLARS Trial Attorney Marie M. Dalton, now an Assistant U.S. Attorney in the Western District of Washington.

If you are aware of foreign corruption, contact us now.

Pacific Architects and Engineers, LLC to Pay $5 Million In False Claims Act Settlement

Pacific Architects and Engineers, LLC (“PAE”) has agreed to pay the United States $5 million to resolve allegations that it knowingly failed to follow vetting requirements for personnel working in Afghanistan under a State Department contract for labor services. PAE is a Virginia-based contractor that provides personnel and other support to various federal government agencies.

The settlement was announced recently by U.S. Attorney Channing D. Phillips and Steve A. Linick, Inspector General for the U.S. Department of State.

The agreement resolves claims relating to PAE’s Civilian Police “CIVPOL” contract in support of State Department missions in Afghanistan, Haiti, Lebanon, Liberia, South Sudan, and elsewhere. In 2007, the State Department awarded PAE a task order under the CIVPOL contract to provide training and mentoring personnel to counter-narcotics and drug interdiction police and investigators in Afghanistan. The task order required PAE to conduct extensive background checks on U.S. personnel that were in high risk or armed positions, including independently developed reference checks. For local, national, and third party national employees working on the task order, PAE was obligated to submit their names to the State Department’s Regional Security Office in Afghanistan for additional security clearance. According to the government’s evidence, PAE was aware of these contractual requirements but did not comply with them for extended periods. The United States asserts that invoices PAE submitted to the State Department for the labor services of improperly vetted personnel were false.

“This settlement affirms our commitment to hold government contractors accountable for properly screening employees, particularly those who work alongside our government’s personnel in fragile areas of the world,” said U.S. Attorney Phillips. “In this particular matter, it is alleged that PAE failed to conduct the appropriate vetting for personnel working in Afghanistan under a State Department contract for labor services for which invoices were later submitted. Our Office will continue to investigate and seek appropriate recoveries from contractors who do not meet their obligations.”

“The OIG special agents and staff assigned to this case should be commended for their excellent investigative work,” said Inspector General Linick. “Rooting out waste, fraud, and abuse is at the heart of any OIG mission, as is ensuring that contractors are accountable for every taxpayer dollar they receive.”

The settlement also resolves a lawsuit filed in the U.S. District Court for the District of Columbia by former PAE manager Robert J. Palombo under the qui tam, or whistleblower provisions, of the False Claims Act. Under the False Claims Act, private citizens may bring suit on behalf of the United States and share in any recovery obtained by the government. Mr. Palombo will receive $875,000 as his share of the government’s recovery. The case is captioned United States ex rel. Robert J. Palombo v. PAE, Inc., et al.

The claims settled by this agreement are allegations only, and there has been no determination of liability.

This settlement was the result of an investigation into Mr. Palombo’s allegations by the United States Attorney’s Office for the District of Columbia and the Department of State, Office of Inspector General.

If you know of or suspect governmental or defense contractor fraud, contact us now.

Christus St. Vincent Regional Medical Center and Christus Health to Pay $12.24 Million to Settle Medicaid False Claims Act Allegations

CHRISTUS St. Vincent Regional Medical Center (St. Vincent) and its partner, CHRISTUS Health (CHRISTUS), have agreed to resolve allegations that they violated the False Claims Act by making illegal donations to county governments, which were used to fund the state share of Medicaid payments to the hospital, the Department of Justice announced today. Under the settlement agreement, St. Vincent and CHRISTUS have agreed to pay $12.24 million, plus interest. St. Vincent is located in Santa Fe, New Mexico. CHRISTUS is based in Irving, Texas.

“Congress expressly intended that states and counties use their own money when seeking federal matching funds,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Using local funds provides an incentive for the counties and states to, among other things, hold down costs rather than rely on non bona-fide donations by private providers.”

New Mexico’s Sole Community Provider (SCP) program, which was discontinued in 2014, provided supplemental Medicaid funds to hospitals in mostly rural communities. The federal government reimbursed the state of New Mexico for approximately 75 percent of its health care expenditures under the SCP program. Under federal law, New Mexico’s 25 percent “matching” share of SCP program payments had to consist of state or county funds, and not impermissible “donations” from private hospitals. This restriction on the use of private hospital funds to satisfy state Medicaid obligations was enacted by Congress to curb possible abuses and ensure that states have sufficient incentive to curb rising Medicaid costs.

Between 2001 and 2009, St. Vincent and CHRISTUS allegedly made non-bona fide donations and thus caused the presentment of false claims by the state of New Mexico to the federal government under the Medicaid program.

“Protecting the integrity of the Medicaid program is crucial because millions of Americans, including hundreds of thousands of New Mexicans, depend on the program for medical care and related services,” said Acting U.S. Attorney James D. Tierneyfor the District of New Mexico. “This case illustrates our commitment to ensuring that government funds are legally obtained and used for their intended purposes. We will use all available civil remedies to recover the ill-gotten gains obtained by those who defraud government health care programs.”

The settlement resolves allegations originally brought in a lawsuit filed by a former Los Alamos County, New Mexico Indigent Healthcare Administrator under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery. The whistleblower will receive $2.249 million as her share of the recovery in this case.

The case was handled by the U.S. Attorney’s Office for the District of New Mexico with assistance from the Justice Department’s Civil Division and the U.S. Department of Health and Human Services Office of Inspector General.

The lawsuit is captioned U.S. ex rel. Stepan v. Christus St. Vincent Regional Medical Center Corp. et al., Civil Action No. 11-cv-572 (D.N.M.). The claims settled by this agreement are allegations only; there has been no determination of liability.

United States Recovers More Than $12 Million In False Claims Act Settlements For Alleged Kickback Scheme

Acting United States Attorney Gregory G. Brooker recently 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.”

According to the complaint, brought by a whistleblower, Sightpath and Precision Lens supply intraocular lenses, as well as ophthalmic surgical equipment and services to medical facilities. These products and services are used by ophthalmologists in connection with eye surgeries, including cataract surgeries performed in Ambulatory Surgical Centers and hospitals for which federal payers, such as Medicare, provide reimbursements. The complaint alleges that Precision Lens, EHLEN and the Sightpath Entities paid kickbacks to physicians in various forms, including travel, entertainment and improper consulting agreements. The complaint identifies multiple examples of trips including luxury skiing vacations and high-end fishing, golfing and hunting trips. The complaint also alleges that these various items of value were provided in order to induce the physicians to use Precision Lens’ and the Sightpath Entities’ products and services.

According to the settlement agreements, the United States contends that between January 1, 2006 and January 1, 2015, the Sightpath Entities provided physicians items of value to induce the use of Sightpath Entities’ products and services, which resulted in the submission of false claims to the United States for ophthalmological products and services. These items of value included hunting, skiing, fishing, and golf trips. Additionally, the Sightpath Entities entered into consulting agreements with physicians and physician practices for services that were never performed or not properly tracked, resulting in payments in excess of fair market value.

According to the settlement agreements, the United States further alleged that TIFFANY directed much of the conduct at issue, particularly between 2010 and 2013 when he was CEO of Sightpath and TLC, and that TIFFANY was directly involved in setting up and participating in several of the trips with physicians who were either Sightpath customers or potential customers. In addition, TIFFANY directly participated in establishing and continuing the lucrative consulting agreements with physicians and physician practices. The United States contends that by providing these items of value, the Sightpath Entities and TIFFANY knowingly induced physicians to utilize the Sightpath Entities’ products and services and submit false claims to the federal government. The claims were false because they were tainted by illegal kickbacks to the physicians, in violation of the Anti-Kickback Statute and the False Claims Act.

These settlements resolve allegations filed in a civil lawsuit originally brought by a whistleblower under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government for false claims and to share in any recovery. The government often relies on whistleblowers to bring fraud schemes to light that might otherwise go undetected. The whistleblower in this matter, Kipp Fesenmaier, will receive 19.5 percent of the amounts recovered in connection with the settlement agreements.

As part of the FCA Agreement and in exchange for a release of OIG’s permissive exclusion authority, Sightpath has agreed to enter into a 5-year corporate integrity agreement (CIA) with OIG. Although not a signatory to the CIA, TLC is participating in the CIA as a “covered person.”

The United States has declined to intervene in the case against the other defendants named in the complaint. The claims resolved by these settlements are allegations only; there has been no determination of liability or wrongdoing.

The case was handled by Assistant U.S. Attorney Chad A. Blumenfield of the Civil Frauds Unit of the U.S. Attorney’s Office for the District of Minnesota with assistance from the Office of Inspector General of the U.S. Department of Health and Human Services and the Federal Bureau of Investigation.

The case is United States ex rel. Fesenmaier v. Sightpath Medical, Inc. TLC Vision Corporation, The Cameron Ehlen Group, Inc. dba Precision Lens, et al., Civil No. 13-CV-3003 (RHK/FLN).

 

Celgene Agrees to Pay $280 Million to Resolve Fraud Allegations Related to Promotion of Cancer Drugs Not Approved by FDA

Celgene Corp., a manufacturer of pharmaceuticals headquartered in Summit, New Jersey, has agreed to pay $280 million to settle fraud allegations related to the promotion of two cancer treatment drugs for uses not approved by the Food and Drug Administration, the Justice Department announced yesterday.

Celgene agreed to pay the settlement to resolve a “whistleblower” lawsuit that alleged it had violated the federal False Claims Act by submitting false claims to Medicare. The lawsuit also alleged that Celgene violated the laws of 28 states and the District of Columbia by submitting fraudulent claims to state health care programs, including California’s Medi-Cal program.

Pursuant to the settlement, which was finalized last week, Celgene will pay $259.3 million to the United States and $20.7 million to the 28 states and the District of Columbia. California will receive $4.7 million, more than any other state. Celgene is expected to pay the settlement tomorrow.

The settlement resolves allegations brought in a “whistleblower” lawsuit that Celgene promoted two cancer drugs – Thalomid and Revlimid – for uses that were not approved by the FDA and not covered by federal health care programs. The allegations included the use of false and misleading statements about the drugs, and paying kickbacks to physicians to induce them to prescribe the drugs.

“Patients deserve to know their doctors are prescribing drugs that are likely to provide effective treatment, rather than drugs marketed aggressively by pharmaceutical companies,” said Acting United States Attorney Sandra R. Brown.

The whistleblower lawsuit was filed in United States District Court by Beverly Brown, who was employed as a sales manager by Celgene, under the qui tam provisions of the False Claims Act and similar laws of the District of Columbia and the 28 states included in the lawsuit. Under the False Claims Act, private citizens can bring suit on behalf of the United States and share in any recovery. The United States may intervene in the lawsuit, or, as in this case, the whistleblower may pursue the action.

“This recovery again spotlights the importance of the False Claims Act in preserving precious government health plan resources,” said Christian J. Schrank, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services (HHS-OIG). “This invaluable law enlists all in the battle against fraudulent health care schemes.”

The case, United States ex rel. Brown v. Celgene Corp., CV10-3165, was monitored by the United States Attorney’s Office, the Civil Division’s Commercial Litigation Branch, and HHS-OIG.

The claims settled by this agreement are allegations only, and the defendant did not admit liability in settling the action.

SEC Announces $2.5 Million Whistleblower Award

The Securities and Exchange Commission announced yesterday an award of nearly $2.5 million to an employee of a domestic government agency whose whistleblower tip helped launch an SEC investigation and whose continued assistance enabled the SEC to address a company’s misconduct.

”Whistleblowers can provide a wealth of information and ongoing assistance that helps our agency bring enforcement actions quicker and more efficiently,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower.  ”This whistleblower not only helped us open the case, but also provided timely ongoing assistance along with critical documents and testimony that accelerated the pace of our enforcement action.”

Approximately $156 million has now been awarded to 45 whistleblowers who voluntarily provided the SEC with original and useful information that led to a successful enforcement action.  No money has been taken or withheld from harmed investors to pay whistleblower awards.

By law, the SEC protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity.  Whistleblowers may be eligible for an award when they voluntarily provide the SEC with original, timely, and credible information that leads to a successful enforcement action.  Whistleblower awards can range from 10 percent to 30 percent of the money collected when the monetary sanctions exceed $1 million.  All payments are made out of an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violators.

If you know of or suspect securities fraud, contact us now.

Owner Of Tampa Parathyroid Practice Agrees To Pay $4 Million To Resolve False Claims Act Allegations

Dr. James Norman, the owner and operator of James Norman, MD, PA, a/k/a James Norman, MD, PA Parathyroid Center, d/b/a Norman Parathyroid Center (collectively, Norman) has agreed to pay $4 million to resolve allegations that he violated the False Claims Act by knowingly engaging in various unlawful billing practices with respect to Medicare and other federal health care programs and their beneficiaries.

Specifically, the government alleges that, from April 2008 through December 2016, Dr. Norman submitted fraudulent claims to Medicare, TRICARE, and the Federal Employee Health Benefits Program for pre-operative examinations performed on the day before or the day of surgery, and charged and collected extra fees from federal health care beneficiaries for services for which he had already received payment from the government. These extra fees ranged from $150 to $750 for Florida residents, to $1,750 or more for patients who lived out-of-state. Collectively, Dr. Norman and his practice pocketed hundreds of thousands of dollars as a result of these illicit billing practices.

“Fraudulent billing of the government, while also charging Medicare and other federal health care beneficiaries extra fees for services that the government has already paid for victimizes taxpayers, military veterans, the elderly, and other members of our community, and will not be tolerated,” said Acting U.S. Attorney Muldrow. “This lawsuit and today’s settlement demonstrates our office’s ongoing efforts to safeguard federal health care program beneficiaries from the effects of such illegal conduct.”

In addition to paying $4 million, Norman has also agreed to enter into an integrity agreement with the Inspector General of the U.S. Department of Health and Human Services.

“Physicians who systematically overbill Federal health care programs and their vulnerable patients will be held responsible for this fraudulent behavior,” said Special Agent in Charge Shimon R. Richmond of HHS-OIG. “Those who engage in such schemes can expect a thorough investigation and strong remedial measures such as those in the Integrity Agreement we signed with Dr. Norman.”

The settlement concludes a lawsuit originally filed by a former patient of Dr. Norman, Myra Gross, and her husband, Dr. David Gross, in the United States District Court for the Middle District of Florida. The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. Act also allows the government to intervene and take over the action, as it did in this case. Ms. Gross and her husband, Dr. Gross, will receive roughly $600,000 of the proceeds from the settlement with Norman.

The government’s action in this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).

The settlement was the result of a coordinated effort by the U.S. Attorney’s Office for the Middle District of Florida and the U.S. Department of Health and Human Services – Office of Inspector General. It was handled Assistant U.S. Attorney Christopher Tuite.

The case is captioned United States ex rel. Gross, et al. v. James Norman, MD, PA, et al., Case No. 8:14-cv-978-T-33EAJ. The settlement resolves the United States’ claims in that case. The claims resolved by the settlement are allegations only, and there has been no determination of liability.

Hospice to pay $2.4 Million to resolve False Claims Act Allegations

Compassionate Care Hospice Group, Inc., (“CCH Group”) has agreed to pay $2.4 million to resolve allegations that CCH Group and its subsidiary Compassionate Care Hospice of Atlanta, LLC, (“CCH Atlanta”) submitted or caused the submission of false claims to Medicare and Medicaid by engaging in improper financial relationships with contracted physicians. CCH Group is a Florida corporation with its principal place of business in Parsippany, New Jersey, and subsidiaries and affiliates in numerous states.

“Kickbacks should never play a role in medical decision-making,” said U.S. Attorney John Horn. “When healthcare providers are paid for referrals, the costs of health services inevitably rise and ultimately are borne by taxpayers.”

“The False Claims Act settlement in this case should be a deterrent to those who would so selfishly circumvent our federal healthcare programs to their benefit,” said FBI Special Agent in Charge David J. LeValley. “Rest assured the FBI is committed to diligently investigating those who would defraud our federally funded healthcare programs, depriving those who truly depend on them.”

“It is paramount to our health care system that those seeking health care advice know that providers and treatments recommended to them are not influenced by illegal remuneration or arrangements,” said Special Agent in Charge Derrick L. Jackson, of the U.S. Department of Health and Human Services, Office of Inspector General. “The OIG is committed to working with our law enforcement partners to combat this sort of activity.”

“Our office’s Medicaid Fraud Control Unit will continue to work with our federal partners to go after any action that compromises the integrity of our health care systems,” said Georgia Attorney General Chris Carr. “This type of scheme obscures the proper relationship among those providing health care services to Medicaid members, and it diminishes the quality of health care options available to our citizens. We won’t stand for it.”

The government alleges that, between April 3, 2007 and April 29, 2011, CCH Group and CCH Atlanta paid illegal remuneration to five physicians in order to induce the providers to refer patients to CCH Atlanta for hospice services and certify individuals as eligible for hospice services. The government also alleges that CCH Atlanta and CCH Group submitted or caused the submission of claims to Medicare and Medicaid for services provided to the individuals who had been referred by the physicians because of the kickbacks. The illegal remuneration took the form of (1) payments to a medical director in exchange for referrals and (2) sham contracts with associate medical directors in exchange for referrals.

The settlement resolves allegations filed by Cathy Morris and Josie King, former CCH Atlanta employees, under the qui tam, or whistleblower, provisions of the False Claims Act, which authorizes private parties to sue for false claims on behalf of the United States and share in the recovery. The lawsuit was filed in the Northern District of Georgia and is captioned United States & State of Georgia ex rel. Morris & King v. Compassionate Care Hospice Group of Atlanta, LLC, et al., No. 1:10-cv-3450 (N.D. Ga.). Ms. Morris and Ms. King will receive a share of the settlement.

The claims resolved by the settlement are allegations only, and there has been no determination of liability.

This case was investigated by the U.S. Attorney’s Office for the Northern District of Georgia, the U.S. Department of Health & Human Services Office of Inspector General, the Federal Bureau of Investigation, and the Georgia State Attorney General’s Medicaid Fraud Control Unit.

The civil settlement was reached by Assistant U.S. Attorneys Lena Amanti and Neeli Ben-David and Georgia State Assistant Attorney General Sara Vann.

Allergan Pays $13 Million to Settle Whistleblower Lawsuit Alleging Kickbacks to Eye Care Providers

Allergan, Inc., has agreed to pay $13 million to the United States and 19 States to resolve a whistleblower lawsuit alleging it engaged in a kickback scheme in violation of multiple federal and state laws. The suit, filed and litigated by the Philadelphia law firm Pietragallo Gordon Alfano Bosick & Raspanti and Chicago law firm Goldberg Kohn, on behalf of two prominent Philadelphia-area ophthalmologists, claimed that Allergan provided business consulting and other valuable services to eye care providers to induce them to write prescriptions for Allergan eye care products.  These products were paid for by the Medicare and Medicaid health insurance programs.

The complaint was filed in 2009 under the qui tam, or whistleblower provisions of the False Claims Act and similar State False Claims laws. The False Claims Act encourages private citizens to report fraud against the government by allowing them to sue on behalf of the government and receive a share of any recovery.  After the Government elected in 2010 not to intervene in the lawsuit, the whistleblowers and their legal team continued to pursue the kickback allegations against Allergan, and ultimately secured the $13 million recovery on behalf of federal and state taxpayers.

The unsealed complaint alleged that Allergan knowingly provided valuable business consulting services, continuing medical education, and other valuable services to eye care providers throughout the United States who enrolled in Allergan’s proprietary “Allergan Access” program. The primary purpose for providing these valuable services was to induce doctors to write prescriptions for Allergan’s eye care products, many of which had less expensive treatment alternatives.

“We are very proud to represent two prominent and highly credentialed ophthalmologists, who had the integrity and courage to come forward.  Their efforts have saved American taxpayers many millions of dollars by putting a stop to Allergan’s scheme” said Marc S. Raspanti, a principal at Pietragallo Gordon Alfano Bosick & Raspanti.

“Patients deserve to know that their medical professional is making decisions based on their best interests and not because a drug company is offering incentives to steer patients to specific drugs” said David Chizewer, a principal at Goldberg Kohn.

The legal team for the two whistleblowers was led by Michael A. Morse and Pamela Coyle Brecht from the Pietragallo firm, and Matthew Organ from the Goldberg Kohn firm.

The government’s legal team who oversaw the non-intervened settlement was led by Assistant United States Attorneys Charlene Keller Fullmer, and United States Department of Justice Trial Attorney Jennifer Cihon.  Jay Speers, Counsel to New York Attorney General, and Robert Patten, a former Assistant Attorney General for the State of Massachusetts, both played an integral role in investigating the whistleblowers’ kickback allegations against Allergan.

The lawsuit is United States of America ex rel. Herbert J. Nevyas, M.D. and Anita Nevyas-Wallace, M.D. v. Allergan, Inc., Civil Action No. 09-CV-00432 (E.D. Pa.) (United States District Court Judge Mark A. Kearney).

U.S. Reaches $8.3 Million Civil Settlement with Reliant Care Group and Reliant Affiliated Entities

The United States Attorney’s Office for the Eastern District of Missouri announced yesterday that the United States, Reliant Care Group, Reliant Care Management Company, Reliant Care Rehabilitative Services, and a number of Reliant affiliated skilled nursing facilities (Reliant) reached a civil settlement that will resolve the United States’ claims against Reliant under the False Claims Act for knowingly submitting false claims to Medicare for providing unnecessary physical, speech, and occupational therapy to nursing home residents.

According to the United States’ allegations, from January of 2008 through April of 2014, Reliant provided unnecessary physical, speech and occupational therapy to nursing home residents who had a relatively high level of independence and who were residing in a skilled nursing facility primarily because of a psychiatric condition. The United States alleged that Reliant provided the unnecessary therapy and then sought the inflated reimbursement from Medicare influenced by its own financial considerations. The United States further alleged that some Reliant Care Rehabilitative Services management pressured therapists to provide therapy to residents even when the therapists believed that the therapy was not medically necessary.

As part of the settlement, Reliant will repay the United States $8,368,878.

Reliant has also entered into a five-year Corporate Integrity Agreement with the United States Department of Health and Human Services, Office of Inspector General (HHS-OIG). Pursuant to the terms of the Corporate Integrity Agreement, Reliant must comply with a number of reporting obligations to ensure that Reliant remains compliant with Federal health care program requirements.

The settlement sends a message to those who seek to take advantage of the Medicare program. “Health care fraud is a major and increasingly serious problem that costs taxpayers millions in lost and wasted dollars while depriving vulnerable beneficiaries of the care and support they need,” said Special Agent in Charge Steven Hanson from HHS-OIG. “Every dollar that we save or recover allows us to better serve those who really need and deserve our help. We will continue to aggressively investigate these cases in an effort to eliminate the corruption in our health care system.”

This civil settlement is part of ongoing efforts by the Department of Justice and the United States Department of Health and Human Services to recover funds diverted from the Medicare Trust Account and is the result of the combined work of the U.S. Attorney’s Office for the Eastern District of Missouri, HHS-OIG, and the Federal Bureau of Investigation.

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