Minnesota-Based Hospice Provider to Pay $18 Million for Alleged False Claims to Medicare for Patients Who Were Not Terminally Ill

The Department of Justice announced yesterday that Evercare Hospice and Palliative Care will pay $18 million to resolve False Claims Act allegations that it claimed Medicare reimbursement for hospice care for patients who were not eligible for such care because they were not terminally ill.  Evercare, now known as Optum Palliative and Hospice Care, is a Minnesota-based provider of hospice care in Arizona, Colorado and other states across the United States.

Hospice care is special end-of-life care for terminally ill patients intended to comfort the dying.  When a terminally ill Medicare patient elects hospice, Medicare no longer covers traditional medical care designed to improve or heal the patient.  Only Medicare patients who have a life expectancy of six months or less are considered terminally ill and eligible for the Medicare hospice benefit.

“Today’s settlement reflects the Justice Department’s continuing efforts to combat health care fraud and protect the nation’s elderly and most vulnerable citizens,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Our seniors rely on the hospice program to provide them with quality care, dignity and respect when they are terminally ill and need end-of-life care.  It is, therefore, critically important that we hold accountable those hospice providers that bill for medically unnecessary services in order to get higher reimbursements from the Medicare program. Such abuses threaten a vulnerable population and jeopardize this important benefit for others under the program.  The Justice Department will continue to protect taxpayer dollars and ensure that this critical benefit is available for Medicare patients who truly need it.”

This settlement resolves a lawsuit brought by the government alleging that Evercare knowingly submitted or caused to be submitted false claims to Medicare for hospice care from Jan. 1, 2007, through Dec. 31, 2013, for Medicare patients who were not eligible for the Medicare hospice benefit because Evercare’s medical records did not support that they were terminally ill.  The government’s complaint alleged that Evercare’s business practices were designed to maximize the number of patients for whom it could bill Medicare without regard to whether the patients were eligible for and needed hospice.  These business practices allegedly included discouraging doctors from recommending that ineligible patients be discharged from hospice and failing to ensure that nurses accurately and completely documented patients’ conditions in the medical records.

The allegations resolved by this settlement arose from whistleblower lawsuits initially filed by former employees of Evercare 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 Act allows the United States to intervene in the lawsuits, which it did in this case.  The share to be awarded in this case has not yet been determined.

“The decision to put someone into hospice care is an emotionally wrenching one for the patient and the patient’s family,” said U.S. Attorney John Walsh for the District of Colorado.  “When hospice companies exploit and overbill Medicare by having people in hospice when they do not belong there, it jeopardizes this important benefit for others.  We will not tolerate such conduct.  The District of Colorado and the Department of Justice’s Civil Fraud Section deserve substantial credit for achieving this result in this Evercare Hospice case.”

“Hospice care is only medically necessary and reimbursable by Medicare for terminally ill patients with a life expectancy of six months or less,” said Special Agent in Charge Steven Hanson of the Department of Health and Human Services’ Office of Inspector General (HHS-OIG).  “We will continue to vigorously investigate health care companies that put their own profits above the medical needs of patients to ensure that companies bill Medicare only for reimbursable health care services.”

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 the Attorney General and the Secretary of Health and Human Services.  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 $30 billion through False Claims Act cases, with more than $18.3 billion of that amount recovered in cases involving fraud against federal health care programs.

This settlement is the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the District of Colorado and HHS-OIG.

The lawsuits resolved by this settlement, which were consolidated in the District of Colorado, are captioned United States ex rel. Fowler and Towl v. Evercare Hospice, Inc., et al., No. 11-cv-00642 (D. Colo.) and United States ex rel. Rice v. Evercare Hospice, Inc., No. 14-cv-01647 (D. Colo.).  The claims resolved by the settlement are allegations only, and there has been no determination of liability.

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

Drayer Physical Therapy Institute, LLC Settle False Claims Act Case for $7,000,000

On Tuesday, Acting United States Attorney Beth Drake announced that the U.S. Attorney’s Office for the District of South Carolina has settled claims of health care fraud with Drayer Physical Therapy Institute, LLC (“Drayer”). Drayer has locations in South Carolina and 14 other states from Pennsylvania to Oklahoma. The United States contended that Drayer submitted claims to Medicare, TRICARE, and Federal Employee Health Benefit Programs for services being provided to multiple patients simultaneously as though the services were being provided by a physical therapist or physical therapist assistant to one patient at a time.

The investigation began with the filing of a whistleblower lawsuit called a qui tams lawsuit under the False Claims Act. The suit was filed by former employees of Drayer. The False Claim Act allows the government to recover actual damages and penalties of three times the actual damages and up to $11,000 per false claim. This settlement was reached based on Drayer’s ability to pay.

The False Claims Act allows individuals to file lawsuits with allegations that fraud has been committed against the federal government on behalf of the government. Whistleblowers, referred to as Relators in the False Claims Act, are entitled to share in any recovery received by the government. In this case, the two relators collectively will receive 24% of the funds of the settlement or $1,680,000 plus they are entitled to attorney fees. The relators performed significant work in the investigation of this case.

Ms. Drake said, “Whistle blower cases are important to the integrity of the health care system. These civil actions – targeted to routing out fraud and abuse – protect tax payers and patients by ensuring that health care decisions are made according to medical science and not based on dollar signs.”

“Health care companies must bill taxpayer-funded health programs honestly,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services, Office of Inspector General. “Those engaging in deceptive billing practices can expect our aggressive investigation to recover inappropriately obtained funds.”

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

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

University of Missouri-Columbia Agrees to Pay United States $2.2 Million to Settle Alleged False Claims Act Violations

Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that the University of Missouri-Columbia has agreed to pay the United States $2.2 million to settle allegations that it violated the False Claims Act by submitting claims for radiology services to federal programs such as Medicare, Medicaid, and TRICARE.  The United States alleged that certain attending physicians certified that they had reviewed the images associated with interpretative reports prepared by resident physicians when, in fact, they had not reviewed those images.

“Hospitals and physicians have the highest obligation to both protect patients by complying with the standard of care and to protect taxpayers by complying with the rules for billing federal programs.  This lengthy investigation by multiple agencies working together has produced a just result for both patients and taxpayers,” said United States Attorney Dickinson.

Steve Hanson, Special Agent in Charge, U.S. Department of Health and Human Services, Office of Inspector General, Kansas City Regional Office, stated, “Our office will continue to work with our law enforcement partners to ensure that qualified medical professionals are reviewing radiology exams such x-rays, MRIs, CT scans, ultrasounds, etc., to accurately diagnose our  beneficiaries’ medical conditions.”

“The Defense Criminal Investigative Service is committed to working with our partner agencies to combat fraud impacting the Department of Defense’s vital programs, operations and resources.  The victims of this kind of fraud are real people and it impacts those who have served our country the most,” said Brian J. Reihms, Special Agent in Charge, Defense Criminal Investigative Service (DCIS).

A federal investigation commenced in 2011 and led to an internal investigation by the university.  The university determined that two attending radiologists, Dr. Kenneth Rall and Dr. Michael Richards, violated Medicare and hospital rules when they certified certain interpretive reports prepared by resident physicians.  Medicare will pay claims for resident physicians to interpret radiological images but only if an attending radiologist also reviews the image and provides any necessary input to the interpretive report.  Rall and Richards left the employment of the university in June 2012.  The university cooperated throughout the lengthy investigation.  In addition to this False Claims Act settlement, the university also entered into a Corporate Integrity Agreement with HHS-OIG.

The case, United States ex rel. Galuten v. University of Missouri-Columbia, et al., Case No. 11-cv-04140-FJG (W.D. Mo.), was handled by the U.S. Attorney’s Office for the Western District of Missouri, HHS-OIG, and DCIS.  The claims settled by this agreement are allegations only, and there has been no determination of liability.

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

Medical Device Company Agrees To Pay $8 Million To Resolve Claims It Paid Illegal Kickbacks To Physicians

The Department of Justice announced yesterday that Minneapolis-based Cardiovascular Systems, Inc. (CSI), has agreed to pay $8 million to resolve allegations that it paid illegal kickbacks to induce physicians to use the company’s medical devices.

Derrick L. Jackson, Special Agent in Charge, U.S. Department of Health and Human Services, Office of Inspector General for the region including North Carolina joins U.S. Attorney Rose in making today’s announcement.

According to allegations contained in filed court documents, CSI executed a kickback scheme to induce the use of its medical devices by doctors.  The government alleges that CSI violated the False Claims Act by providing marketing and other practice development services to physicians utilizing CSI’s devices to perform atherectomies.  Atherectomy is a procedure that clears blockages restricting blood circulation in arteries.  The government alleges that CSI developed and distributed marketing materials to promote physicians utilizing CSI’s devices to referring physicians; coordinated meetings between utilizing physicians and referring physicians; and developed and implemented business expansion plans for utilizing physicians.  The government alleges that CSI engaged in these activities to induce doctors to begin to use or continue to use CSI’s devices.

“Doctors are expected to provide medical advice and treatment options that benefit patients, not their own practice,” said U.S. Attorney Rose.  “A Company cannot reward physicians for using its medical devices over those of competitors.  The type of kickback scheme alleged in this case compromises good medical care and can lead to inefficient use of limited healthcare resources.  My office is committed to preventing medical device manufacturers from improperly influencing physicians’ medical judgment.  We will thoroughly investigate any such allegations,” Rose added.

Today’s settlement resolves a civil complaint filed in July 2013 by whistleblower Travis Thams, a former employee of CSI.  Mr Thams filed the allegations against CSI under the qui tam provisions of the False Claims Act, which permit private parties to file suit on behalf of the government and obtain a portion of the government’s recovery.

In addition to its settlement with the Justice Department, CSI has also entered into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services – Office of Inspector General, requiring the company to engage in significant compliance efforts over the next five years, including engaging an independent review organization.

“Medical device companies engaging in kickbacks to boost profits undermine physicians’ medical judgment and drive up health care costs for everyone,” said Special Agent in Charge Jackson.  “Our agency will continue to work with our law enforcement partners to investigate and recover Medicare money that was improperly paid.”

This settlement was the result of a coordinated effort by the U.S. Attorney=s Office Western District of North Carolina and HHS-OIG.

The lawsuit is captioned United States, ex rel. Thams v. Cardiovascular Systems, Inc. Case No. 3:13-cv-404.  The claims resolved by this settlement are allegations only, and there has been no determination of liability.

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

North Texas Companies and Individuals Pay $1.125 Million to Settle Medicaid Allegations

U.S. Attorney John M. Bales recently announced that Ten North Texas companies and individuals have agreed to pay the United States a total of $1.125 million to resolve alleged False Claims Act violations for causing false claims to be submitted to the U.S. Department of Health and Human Services (HHS) and its component agency the Centers for Medicare and Medicaid Services (CMS).  The companies and individuals paying the United States under the settlement are:

  • Irving Holdings, Inc. (together with its predecessor companies Big Tex Taxi Corporation, Terminal Taxi Corporation, Choice Cab, Inc., Yellow Checker Cab of Dallas, Inc., and Yellow Checker Cab of Fort Worth, Inc.)
  • JetTaxi, Inc.
  • Dallas Taxi, LLC
  • US Cab, LLC
  • Terminal Taxi Corporation of Irving
  • Classic Shuttle Acquisition Corporation, Inc. d/b/a Go Yellow Checker Shuttle
  • Dallas Car Leasing, LLC
  • Jackie Bewley
  • Jeffrey Finkel
  • Elizabeth George

The settlement resolves a portion of a lawsuit filed under the qui tam provisions of the False Claims Act by Robert Spence, Mike Jones, and Cheryl Jones.  The Act permits private citizens (called “relators”) with knowledge of fraud against the Government to bring a lawsuit on behalf of the United States and to share in any recovery.  Under the civil settlement announced today, the relators will receive $202,500 out of the United States’ recovery.  The lawsuit remains pending in the Eastern District of Texas and is captioned United States of America ex rel. Robert Spence, Mike Jones, and Cheryl Jones v. Irving Holdings, Inc., et al., Case Number 4:12-CV-487.  The following companies and individuals are also named in the action but are not parties to the settlement announced today:

  • North Texas Opportunity Fund, L.P.
  • NTOF Capital Partners, LP
  • North Texas Opportunity Fund Capital Partners, LP
  • North Texas Investment Advisors, LLC
  • Lone Star Investment Advisors, LLC
  • William Tauscher
  • Arthur Hollingsworth
  • Greg Campbell
  • Luke Sweetser

The relators were employees of Irving Holdings, Inc. d/b/a Yellow Cab (“Irving Holdings”), one of the largest taxicab companies in the United States.  The relators claim in their lawsuit that Irving Holdings and many related or affiliated entities, stockholders, and employees failed to comply with rules and regulations governing Medicaid transportation services provided by Irving Holdings to Texas Medicaid recipients, resulting in false claims being submitted to Texas Medicaid and CMS.

The United States’ contended that certain Defendants misrepresented Irving Holdings’ compliance with the transportation broker requirements contained in 42 C.F.R. § 440.170.  Specifically, the United States alleged that Irving Holdings and Jeffrey Finkel submitted a false affidavit to the State of Texas knowing the affidavit would then be provided to CMS.  The United States claimed that the false affidavit caused CMS to pay inflated amounts to Texas Medicaid.  The settling Defendants have expressly denied the United States’ contentions.

This settlement demonstrates the United States’ continued commitment to pursuing health care providers who misrepresent their compliance with Medicare and Medicaid regulations.  Moreover, the settlement illustrates that the Department of Justice will pursue companies as well as individuals whose actions cause the submission of false claims—even if someone else receives the money.

“The public is besieged by fraud, guile, and recklessness every single day,” said U.S. Attorney Bales.  “Our office will not tolerate the mistreatment of taxpayer money, whether by corporations or individuals.”

This case was investigated by the U.S. Attorney’s Office for the Eastern District of Texas, the Texas Attorney General’s Office, and the Office of Inspector General of the Department of Health and Human Services (HHS-OIG).  The settlement was negotiated by Assistant U.S. Attorneys Joshua Russ and James Gillingham.  The claims resolved by the settlement and the claims alleged by the relators are allegations only; there has been no determination of liability.

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

Pharmaceutical Companies to Pay $67 Million To Resolve False Claims Act Allegations Relating to Tarceva

The Department of Justice announced yesterday that pharmaceutical companies Genentech Inc. and OSI Pharmaceuticals LLC will pay $67 million to resolve False Claims Act allegations that they made misleading statements about the effectiveness of the drug Tarceva to treat non-small cell lung cancer.  Genentech, located in South San Francisco, California, and OSI Pharmaceuticals, located in Farmingdale, New York, co-promote Tarceva, which is approved to treat certain patients with non-small cell lung cancer or pancreatic cancer.  OSI Pharmaceuticals LLC is the successor to OSI Pharmaceuticals Inc., which was acquired by Astellas Holding US Inc. in 2010 and converted to a limited liability company in 2011.

“Pharmaceutical companies have a responsibility to provide accurate information to patients and health care providers about their prescription drugs,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “The Department of Justice will hold those companies accountable that mislead the public about the efficacy of their products.”

The settlement resolves allegations that, between January 2006 and December 2011,  Genentech and OSI Pharmaceuticals made misleading representations to physicians and other health care providers about the effectiveness of Tarceva to treat certain patients with non-small cell lung cancer, when there was little evidence to show that Tarceva was effective to treat those patients unless they also had never smoked or had a mutation in their epidermal growth factor receptor, which is a protein involved in the growth and spread of cancer cells.

As a result of today’s $67 million settlement, the federal government will receive $62.6 million and state Medicaid programs will receive $4.4 million.  The Medicaid program is funded jointly by the state and federal governments.

“This settlement demonstrates the government’s unwavering commitment to pursue violations of the False Claims Act and recover taxpayer dollars spent as a result of misleading marketing campaigns,” said U.S. Attorney Brian Stretch for the Northern District of California.

“Pharmaceutical companies that make misleading or unsubstantiated statements about their products can put patients at risk,” said Deputy Commissioner Howard R. Sklamberg for FDA’s global regulatory operations and policy. “The FDA will continue to work to protect the public’s health by ensuring that companies do not mislead healthcare providers about their products.”

“Drug manufacturers that make misleading claims about their product’s effectiveness can jeopardize the health of patients – in this case, cancer patients,” said Special Agent in Charge Steven J. Ryan for the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).  “Our agency will continue to protect both patients and taxpayers by holding those who engage in such practices accountable for their actions.”

The settlement resolves allegations filed in a lawsuit by former Genentech employee Brian Shields, in federal court in San Francisco.  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.  Shields will receive approximately $10 million.

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 the Attorney General and the Secretary of Health and Human Services.  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 $29.8 billion through False Claims Act cases, with more than $18.2 billion of that amount recovered in cases involving fraud against federal health care programs.

The settlement is the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the Northern District of California, with assistance from the HHS-OIG, the HHS Office of Counsel to the Inspector General, the HHS Office of the General Counsel-CMS Division, the FDA’s Office Chief Counsel, the FDA’s Office of Criminal Investigations, the Office of the Inspector General for the Office of Personnel Management, the FBI, the Department of Defense Office of the Inspector General, the Office of the General Counsel for the Defense Health Agency and the National Association of Medicaid Fraud Control Units.

The case is captioned United States ex rel. Shields v. Genentech, Inc., et al., Case No.  CV 11 0822 MEJ (N.D. Ca.).  The claims resolved by the settlement are allegations only, and there has been no determination of liability.

If you know of or suspect improper pharmaceutical marketing, contact us now.

Former CEO-Physician and Drug Testing Laboratory Pay $9.35 Million to Settle False Claims Act Allegations

The Department of Justice announced yesterday that Dr. Jonathan Oppenheimer, former owner and CEO of Nashville drug testing laboratory Prost-Data, Inc., d/b/a OURLab (“OURLab”), OPKO Health, Inc. (“OPKO”), and OPKO Lab, LLC, have agreed to pay $9.35 million to resolve False Claims Act (“FCA”) allegations.  Pursuant to the civil settlement, Oppenheimer, and OPKO will be jointly and severally liable for the settlement amount. OPKO is a successor to OPKO Lab, LLC, which purchased OURLab from Oppenheimer in December 2012, after OURLab and Oppenheimer instituted the alleged conduct. OPKO Lab, LLC ceased commercial operations in early 2016 and is no longer billing federal payors. Oppenheimer has agreed to an exclusion from participation in all federal health care programs for 5 years as part of the agreement.

“Enforcement of the False Claims Act is a priority of the Department of Justice and this Office,” said United States Attorney David Rivera. “The U.S. Attorney’s Office and our law enforcement partners are committed to protecting the public fisc and protecting the integrity of federal healthcare programs by vigorously investigating alleged violations of the Anti-Kickback Statute and Stark Law.”

The settlement resolves allegations by the United States that Dr. Oppenheimer and OURLab, and OPKO as a successor company, submitted false claims for payment to the Medicare Part B program as a result of violations of the Federal Anti-Kickback Statute (“AKS”) and the Stark Law (“Stark”) from about June 2007 through January 2015. These violations relate to donations that OURLab and Oppenheimer made toward electronic health records (“EHR”) systems purchased by their client physician practices from EHR vendors.  OURLab and Oppenheimer ostensibly made these contributions pursuant to the AKS safe harbor and Stark exception that allowed laboratories to contribute to a practice’s purchase of an EHR system from 2006 until drug testing laboratories were removed from the scope of these provisions in 2013.  Although these provisions allowed certain entities to contribute up to 85% of the purchase price of an EHR system to a vendor on behalf of a physician’s practice, they placed certain restrictions on such activities. The United States alleged that the conduct of OURLab and Oppenheimer fell outside of the restrictions set forth in the AKS EHR safe harbor and the Stark EHR exception, and constituted violations of those statutes.

Specifically, OURLab and Oppenheimer made monetary contributions toward EHR systems obtained by their client physician practices, and, in making these contributions, they violated the AKS EHR safe harbor and the Stark EHR exception by, among other things, (1) directly considering the volume and/or value of referrals and business, including return on investment, between OURLab and the physicians’ practice when determining whether to make an EHR donation and the amount of the donation; (2) improperly considering the volume of Medicare business supplied by the physician practice when considering an EHR donation; and (3) occasionally withholding previously agreed-upon EHR donation payments until they received a certain number of referrals from the physicians’ practice. These actions placed OURLab and Oppenheimer outside of the scope of the EHR safe harbor provisions for the AKS and Stark, and constituted illegal kickbacks and physician remuneration.

“This laboratory traded physicians free computer software for patient referrals,” said Derrick L. Jackson, Special Agent in Charge at the U.S. Department of Health and Human Services, Office of Inspector General in Atlanta. “Such quid pro quo arrangements are kickbacks that stifle competition and steer business to the company offering the inducements.”

The settlement agreement also resolves allegations that OURLab, and subsequently OPKO Lab, LLC, billed the Medicare and TRICARE programs for fluorescence in situ hybridization (“FISH”) tests despite a June 2012 adverse coverage determination for the particular type of FISH test being used.  A FISH test maps the genetic material in human cells.  Because FISH tests can detect abnormalities associated with cancer, it may be useful for diagnosing certain types of the disease.

The United States’ investigation corroborated conduct originally alleged in a qui tam complaint filed by a former employee of OURLab pursuant to the FCA. The qui tam provisions of the False Claims Act allows for whistleblowers, or relators, to file suit for violations of the act on behalf of the government.  The relator is entitled to a percentage of the amount recovered by the government as a result of the information provided that resulted in the subsequent investigation and resolution. The relator in this case will receive $1.683 million.

This matter was investigated by the Department of Health and Human Services Office of Inspector General and the United States Attorney’s Office for the Middle District of Tennessee. The United States was represented by Assistant U.S. Attorney Christopher C. Sabis.

The case is docketed as United States ex rel. Newman v. OPKO Health Inc., et al., No. 3:13-cv-0700 (M.D. Tenn.). The claims settled by this agreement are allegations only, and there has been no determination of liability.

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

SEC Awards More Than $5 Million to Whistleblower

The Securities and Exchange Commission announced yesterday that it will award between $5 million and $6 million to a former company insider whose detailed tip led the agency to uncover securities violations that would have been nearly impossible for it to detect but for the whistleblower’s information.
“Employees are often best positioned to witness wrongdoing,” said Andrew Ceresney, Director of the SEC’s Division of Enforcement.  “When they report specific and credible tips to us, we will leverage that inside knowledge to advance our enforcement of the securities laws and better protect investors and the marketplace.”
This award is the SEC’s third highest to a whistleblower.  In September 2014, the agency announced a more than $30 million whistleblower award, exceeding the prior highest award ofmore than $14 million announced in October 2013.  Since the inception of the whistleblower program in 2011, the SEC has awarded more than $67 million to 29 whistleblowers, including one for more than $3.5 million announced last week.
“The whistleblower program has seen tremendous growth since its inception and we anticipate the continued issuance of significant whistleblower awards in the months and years to come,” said Sean X. McKessy, Chief of the SEC’s Office of the Whistleblower.
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 unique and useful 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 through monetary sanctions paid to the SEC by securities law violators.  No money has been taken or withheld from harmed investors to pay whistleblower awards.
Contact us now if you suspect securities fraud.

Freedom Mortgage Corporation Agrees to Pay $113 Million to Resolve Alleged False Claims Act Liability Arising from FHA-Insured Mortgage Lending

The Department of Justice announced today that Freedom Mortgage Corporation has agreed to pay the United States $113 million to resolve allegations that it violated the False Claims Act by knowingly originating and underwriting single family mortgage loans insured by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) that did not meet applicable requirements for the FHA insurance program.  Freedom Mortgage Corporation is headquartered in Mt. Laurel, New Jersey.

“It is imperative that mortgage lenders that participate in the FHA insurance program follow the rules and requirements set forth by HUD,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “We will continue to work with our partners at HUD, its Office of Inspector General, and U.S. Attorneys around the country to protect homeowners and taxpayers from those who knowingly seek to abuse the FHA program for their own gain.”

“Freedom Mortgage did not properly comply with FHA rules for the mortgages it was generating and did not adequately monitor early payment defaults,” said U.S. Attorney Paul J. Fishman for the District of New Jersey.  “It also failed to report to HUD the defaults it did discover, as required by its participation in the program.  Today’s settlement recognizes those failures and imposes an appropriate sanction.”

During the time period covered by the settlement, Freedom Mortgage Corporation participated as a direct endorsement lender (DEL) in the FHA insurance program.  A DEL has the authority to originate, underwrite and endorse mortgages for FHA insurance.  If a DEL approves a mortgage loan for FHA insurance and the loan later defaults, the holder of the loan may submit an insurance claim to HUD, FHA’s parent agency, for the losses resulting from the defaulted loan.  Under the DEL program, the FHA does not review a loan for compliance with FHA requirements before it is endorsed for FHA insurance.  DELs are therefore required to follow program rules designed to ensure that they are properly underwriting and endorsing mortgages for FHA insurance, to maintain a quality control program that can prevent and correct deficiencies in their underwriting practices and to self-report any deficient loans identified by their quality control program.

The settlement announced today resolves allegations that Freedom Mortgage Corporation failed to comply with certain FHA origination, underwriting and quality control requirements.  As part of the settlement, Freedom Mortgage Corporation admitted to the following facts: Between Jan. 1, 2006 and Dec. 31, 2011, it certified mortgage loans for FHA insurance that did not meet HUD underwriting requirements and were therefore not eligible for FHA mortgage insurance.  Additionally, Freedom Mortgage Corporation did not adhere to FHA’s quality control (QC) requirements.  Between 2006 and 2008, Freedom Mortgage Corporation did not share its early payment default (EPD) QC reviews with production and underwriting management, nor did it require responses to its EPD QC findings from its production or underwriting staff.  Due to staffing limitations between 2008 and 2010, Freedom Mortgage Corporation did not always perform timely QC reviews or perform audits of all EPD loans, as required by HUD.  An EPD is a loan that becomes 60 days past due within the first six months of the loan.  The EPD QC reviews that Freedom Mortgage Corporation did perform revealed high defect rates, exceeding 30 percent between 2008 and 2010.  Yet, between 2006 and 2011, Freedom Mortgage Corporation did not report a single improperly originated loan to HUD, despite its obligation to do so.  Additionally, in 2012, after identifying hundreds of loans that “possibly should have been self-reported to HUD,” it reported only one.  As a result of Freedom Mortgage Corporation’s conduct, HUD insured hundreds of loans that were not eligible for FHA mortgage insurance under the DEL program, and that HUD would not otherwise have insured and subsequently incurred substantial losses when it paid insurance claims on the ineligible loans approved by Freedom Mortgage Corporation.

“This recovery on behalf of the Federal Housing Administration should serve as a reminder of the potential consequences of not following HUD program rules and demonstrates HUD OIG’s continued efforts to combat fraud in the origination of single family mortgages insured by the FHA,” said HUD Inspector General David A. Montoya.

“FHA-approved lenders have a responsibility to comply with underwriting standards,” said HUD’s General Counsel Helen Kanovsky.  “We are gratified that Freedom Mortgage Corporation has accepted responsibility for its actions.”

The settlement was the result of a joint investigation conducted by HUD, HUD OIG, the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the District of New Jersey.

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

Dermatology Physicians and Practice to Pay $1.9 Million to Settle False Claims Act Investigation into Overbilling Medicare for Evaluation and Management Services

The U.S. Attorney’s Office for the Northern District of Georgia announced today that it has reached a settlement with dermatologists Margaret Kopchick, M.D., and Russell Burken, M.D., and their practice group, Toccoa Clinic Medical Associates, who agreed collectively to pay $1.9 million to settle claims that they violated the False Claims Act by billing Medicare for evaluation and management (E&M) services that were not permitted by Medicare rules.

“Physicians and practice groups are expected to bill Medicare for the costs of the services they provide.  However, when they improperly bill for those services, it affects those who depend on Medicare by taking available dollars away from the program,” said U.S. Attorney John Horn.  “Those who inflate their Medicare billings can expect recovery of any overpayments, as well as significant penalties under the False Claims Act.”

“The improper billing of evaluation and management services cost the taxpayers millions of dollars each year and drain the Medicare Trust Fund,” said Derrick L. Jackson, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG) for the Atlanta region.  “The OIG and the U.S. Attorney’s Office will continue to hold health care providers like these responsible for improper claims.”

The civil settlement resolves the United States’ investigation into Drs. Burken and Kopchick’s billing for E&M services on the same day as a procedure. Providers are not permitted to bill both E&M services and a procedure on the same day under the Medicare program’s regulations unless a significant, separately identifiable service has been performed. In addition, where a significant, separately identifiable service has been performed, providers must bill the appropriate level of E&M service. More complex E&M services are reimbursed at higher rates. Here, the United States alleged that Drs. Burken and Kopchick billed for E&M services along with procedures where no significant and separately identifiable service was performed, and upcoded E&M services to higher levels than were appropriate, leading to overpayments by Medicare.

HHS-OIG has identified the inappropriate billing of E&M services as a national issue costing taxpayers billions of dollars.

This resolution is part of the government’s emphasis on combating health care fraud under the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by the Secretary of the Department of Health and Human Services in May 2009. 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 that effort is the False Claims Act. Since January 2009, the Justice Department recovered more than $27.4 billion through False Claims Act cases, with more than $17.4 billion of that amount recovered in cases involving fraud against federal health care programs.

This case was investigated by the U.S. Attorney’s Office for the Northern District of Georgia and the U.S. Department of Health and Human Services, Office of Inspector General.

Assistant United States Attorney Emily Shingler reached the civil settlement.

The claims settled by the settlement agreement are allegations only; there has been no determination of liability.

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

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