False Claims Act

The federal government has intervened in three False Claims Act whistleblower lawsuits and filed a consolidated complaint against HCR ManorCare, alleging that ManorCare knowingly submitted or caused the submission of false claims to federal health care programs Medicare and TRICARE for rehabilitation therapy services that were not medically reasonable and necessary, the U.S. Department of Justice announced last week.

The government’s complaint alleges that ManorCare, which is owned by The Carlyle Group, exerted pressure on SNF administrators and rehabilitation therapists to meet unrealistic financial goals that resulted in the provision of medically unreasonable and unnecessary services to Medicare and Tricare patients.  ManorCare allegedly set prospective billing goals designed to significantly increase revenues without regard to patients’ actual clinical needs and threatened to terminate SNF managers and therapists if they did not administer the additional treatments necessary to qualify for the highest Medicare payments.  ManorCare also allegedly increased its Medicare payments by keeping patients in its facilities even though they were medically ready to be discharged.

The three consolidated lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery.  The False Claims Act permits the government to intervene in such lawsuits, as it has done in these cases.  A defendant that violates the False Claims Act is liable for three times the government’s losses plus civil penalties.

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.

Family Dermatology P.C., which owns and operates a dermatopathology lab and a number of dermatology practices, has agreed to pay $3.2 million plus interest to settle allegations that the company violated the False Claims Act by engaging in improper financial relationships with a number of its employed physicians, the U.S. Department of Justice announced earlier this week.

The settlement resolved allegations that financial relationships that Family Dermatology and its affiliates had with a number of their employed physicians violated the Stark Statute and the False Claims Act.  The Stark Statute restricts the financial relationships that health care providers may have with doctors who refer patients to them.  Family Dermatology employs a number of dermatologists as independent contractors and it has routinely required them to use Family Dermatology’s in-house pathology lab, which operated under the name Nelson Dermatopathology, for their pathology services.  The government alleged that Family Dermatology’s financial relationships with a number of these physicians did not comply with the requirements of the Stark Statute, and that Family Dermatology improperly billed Medicare for dermatopathology analyses performed by Nelson Dermatopathology on specimens that were sent to the laboratory by these employed physicians.

The allegations settled today arose from three separate lawsuits filed by three whistleblowers, Scott M. Ross MD, Mark F. Baucom and Harold Milstein MD under the qui tam provisions of the False Claims Act.  Under the act, private citizens can bring suit on behalf of the government for false claims and share in any recovery.  The whistleblowers will collectively receive more than $584,000 from the recovery announced today.

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.

Fireman’s Fund Insurance Company has agreed to pay $44 million to settle allegations under the False Claims Act that it knowingly issued insurance policies that were ineligible under the U.S. Department of Agriculture’s (USDA) federal crop insurance program and falsified documents, the Justice Department announced earlier this week.  Fireman’s Fund, an Allianz SE subsidiary headquartered in Novato, California, provides personal and commercial property insurance throughout the United States.

Between 1999 and 2002, Fireman’s Fund operated a crop insurance business and participated in the federal crop insurance program.  Under the program, Fireman’s Fund sold and serviced crop insurance policies that were reinsured by the USDA for a portion of the risks.

The United States alleged that Fireman’s Fund knowingly issued federally reinsured crop insurance policies that were ineligible for federal reinsurance.  Specifically, Fireman’s Fund allegedly backdated policies, forged farmers’ signatures, accepted late and altered documents, whited-out dates and signatures, and signed documents after relevant deadlines. 

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.

Recovery Home Care and National Home Care Holdings LLC have agreed to pay $1.1 million to resolve allegations that the Recovery Home Care entities knowingly submitted or caused the submission of false claims to Medicare, the U.S. Department of Justice announced today.  The Recovery Home Care entities provide home health care services to Medicare beneficiaries and were purchased by National Home Care Holdings LLC in 2012, after the conduct addressed by the settlement occurred.

Recovery Home Care allegedly paid dozens of physicians thousands of dollars per month to perform patient chart reviews.  According to the government’s lawsuit, the physicians were over-compensated for any actual work they performed and, in reality, payments to the physicians were used to induce them to refer their patients to Recovery Home Care, in violation of the Anti-Kickback Statute and the Stark Law.

The Anti-Kickback Statute and the Stark Law are intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives.  The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by federal health care programs, including Medicare.  The Stark Law forbids a home health care provider from billing Medicare for certain services referred by physicians who have a financial relationship with the entity.

The settlement partially resolves allegations made in a lawsuit filed in federal court in Tampa, Florida, by Gregory Simony, a former employee of Recovery Home Care.  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.  The act also allows the government to intervene and take over the action, as it did in part in this case.  Simony will receive $198,000 of the recovered funds. 

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.

Import companies C.R. Lawrence Co. Inc., Southeastern Aluminum Products Inc., and Waterfall Group LLC have agreed to pay, collectively, $3.05 million to resolve allegations that the companies knowingly submitted or caused the submission of false claims to the federal government in connection with false customs declarations on imports of aluminum extrusions from the People’s Republic of China (PRC), the U.S. Department of Justice announced last week.  The companies sell shower doors and shower enclosures made with the PRC-manufactured aluminum extrusions.

The government’s complaint alleged that C.R. Laurence, Southeastern and Waterfall made false declarations to the U.S. Department of Homeland Security’s Customs and Border Protection (CBP) to avoid paying antidumping and countervailing duties on aluminum extrusions imported from manufacturer Tai Shan Golden Gain Aluminum Products Ltd. in the PRC.  The Department of Commerce assesses, and CBP collects, antidumping and countervailing duties to protect U.S. businesses and level the playing field for domestic products.  Antidumping duties protect against foreign companies “dumping” products on U.S. markets at prices below cost, while countervailing duties offset foreign government subsidies.  C.R. Laurence, Southeastern, and Waterfall allegedly misrepresented that the “country of origin” of the aluminum extrusions was Malaysia, when the goods were manufactured in the PRC and merely shipped through Malaysia – a practice called “transshipping.”  Imports of PRC-manufactured aluminum extrusions have been subject to antidumping and countervailing duties since 2010.  No such duties are due on imports of such items from Malaysia.

The government’s complaint also alleged that C.R. Laurence, Southeastern and Waterfall purchased PRC-made aluminum extrusions imported by other domestic companies and caused or conspired with those importers to make false declarations to CBP to evade duties. 

qui tam provisions of the False Claims Act.  The act permits private parties to sue on behalf of the government those who falsely claim federal funds or, as in this case, avoid paying funds owed to the government.  The United States may intervene in and take over the lawsuit, as it did in this case.  The act allows the whistleblower to receive a share of any funds recovered through the lawsuit.  Valenti will receive $555,100 as his share of these settlements.

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.