DOJ Settles Flurry of False Claims Act Cases Following Government Reopening -- But Where Are the Whistleblowers?
By the 91pornWhistleblower Team
The Department of Justice (DOJ) wasted no time in getting back to business in fraud enforcement following the end of the longest Government Shutdown in history.听 In the two weeks following the Grand Reopening on November 12, DOJ settled close to 20 False Claims Act cases involving a wide array of defendants.
What Has DOJ’s Recent Burst of False Claims Act Settlements Involved?
Here is a high-level overview of the who, what, where, when, and how much of these recent settlements.
- Sky Lease ($1M). On November 25, Miami-based air cargo delivery company Sky Lease I Inc. agreed to pay roughly $1 million to settle allegations it violated the False Claims Act by providing false information under its delivery contract with the U.S. Postal Service (USPS).[1] 听Specifically, Sky Lease was required to submit to USPS electronic scans of the mail it delivered that reported the time of delivery but allegedly submitted scans that falsely reported the delivery time.
- Sola ($2M). On November 25, Virginia-based operator of adult residential group homes Sola, Inc. agreed to pay $2 million to settle allegations it violated the False Claims Act by overbilling Medicaid for skilled and other nursing services for its residents.[2]听 According to the government, Sola billed Medicaid for nursing services that were impossible to perform because the amount of time billed exceeded the number of hours the nurses reported on their time sheets.
- Austin Emergency Center ($429K). On November 25, the Austin-based operator of emergency medical centers agreed to pay roughly $429,000 to settle allegations it violated the False Claims Act by overbilling the Federal Employees Health Benefit Program (FEHBP).[3]听 Specifically, the government claimed the company improperly charged the FEHBP more than it charged cash-paying patients for certain COVID-19 tests.听 The government further alleged the company up-coded evaluation and management services for drive-through COVID-19 screening.
- Patients Choice ($9.6M). On November 24, Indiana-based diagnostic laboratory Patients Choice Laboratories agreed to pay $9,620,000 to settle allegations it violated the False Claims Act and Anti-Kickback Statute by billing Medicare for respiratory pathogen panels (RPPs) that were either medically unnecessary or obtained through kickbacks.[4] 听Specifically, the government claimed Patients Choice entered into a sham Marketing Services Agreement through which it paid a supposed infection prevention company for referrals from long-term care facilities.听 Patients Choice also allegedly paid that company to swab residents at these facilities for medically unnecessary RPP testing.
- San Rafael Hospital ($650K). On November 24, Colorado-based Mt. San Rafael Hospital and Rural Health Clinic and three of its physicians agreed to pay a combined $650,000 to settle allegations they violated the False Claims Act and Controlled Substances Act by unlawfully dispensing and billing Medicare for invalid opioid prescriptions.[5]听 According to the government, the prescriptions were not issued for a legitimate medical purpose or were outside the usual course of professional practice.听 The government further claimed the physician-defendants ignored numerous 鈥渞ed flags鈥� indicating the prescriptions were improper or unsafe.听 These flags included high daily opioid doses, dangerous drug combinations, signs of substance abuse, prolonged opioid use, cash payments, long-distance travel to obtain prescriptions, and repeated early refill requests.
- Deer Valley ($535K). On November 24, St. Louis-based home health care company Deer Valley Home Health Services agreed to pay roughly $535,000 to settle allegations it violated the False Claims Act by falsely billing Medicare and Medicaid for services not provided or provided by uncredentialed personnel.[6]听 Specifically, the government claimed Deer Valley billed for services by an employee claiming to have worked more than 24 hours per day and who provided applied behavior analysis services he was not qualified to provide.
- Vohra Wound ($45M). On November 21, Dr. Ameet Vohra and his wound care company Vohra Wound Physicians Management agreed to pay $45 million to settle allegations they violated the False Claims Act by billing Medicare for medically unnecessary surgical procedures, for procedures not performed, and for evaluation and management services Medicare does not cover.[7]听 According to the government, Vohra 鈥減ressured, trained, and provided financial incentives for Vohra physicians to perform debridement procedures during as many patient visits as possible regardless of the patients鈥� needs.鈥� 听The government further claimed the company programmed its electronic health record and billing software to ensure it automatically billed Medicare for the higher-reimbursed surgical procedure, creating false medical records to support the billings.
- GTI ($1.6M). On November 20, Arizona-based diagnostic laboratory Genetic Technological Innovations (GTI) agreed to pay $1.635 million to settle allegations it violated the False Claims Act and Anti-Kickback Statute by billing Medicare for respiratory pathogen panels that were either medically unnecessary or obtained through kickbacks.[8]听 The charges mirror those DOJ brought against Patients Choice which resulted in the $9.6 million settlement on November 24 (described above).
- Aesculap ($38.5M). On November 17, DOJ announced that Pennsylvania-based medical device company Aesculap Implant Systems agreed to pay $38.5 million to settle allegations it violated the False Claims Act by selling knee replacement devices it knew would fail prematurely at a higher than acceptable rate.[9]听 This resulted in false claims to Medicare/Medicaid because the failures rendered the implants medically unreasonable and unnecessary.听 The Government also claimed the company paid kickbacks to an orthopedic surgeon to induce him to use the knee implants. 听The allegations originated in a whistleblower lawsuit filed by John Marien and Michael McGee, third-party distributors for Aesculap. 听They will receive a whistleblower award of $4,475,000 from the proceeds of the government鈥檚 recovery.
- Zephyr Aviation ($3.9M). On November 14, Virginia-based Zephyr Aviation and its owners agreed to pay roughly $3.9 million to settle allegations they violated the False Claims Act by submitting inflated invoices for aviation services to the Department of Homeland Security (DHS).[10]听 DHS contracted with Zephyr for chartered flights to transport persons in the custody of Customs and Border Protection.听 According to the government, Zephyr subcontracted with various aircraft operators to fly the required flights and billed DHS for flight hours that exceeded the actual flight times of the aircraft operators.
- VRA Enterprises ($17M). On November 14, Tampa-based pharmacy VRA Enterprises agreed to pay roughly $17 million to settle allegations it violated the False Claims Act by billing Medicare for Covid-19 tests never provided or provided months after the company billed them to Medicare.[11]听 According to the government, VRA repeatedly acknowledged internally that it had billed Medicare for tests it failed to ship and should issue refunds to Medicare.
- Denali Group ($3.5M). On November 13, the Alaska-based transportation company agreed to pay $3.5 million to settle allegations it violated the False Claims Act by submitting false customer satisfaction surveys to secure Department of Defense and Coast Guard contracts for moving and storage services for government personnel.[12]听 According to the government, Denali submitted false customer satisfaction surveys with perfect scores and had employees call customer survey lines using call spoofing applications to mask their phone numbers and impersonate government personnel.听 The government claimed these fake surveys resulted in the government awarding Denali more contracts than it otherwise would have secured.
In addition to these settlements, DOJ entered into several additional False Claims Act settlements during this two-week period relating to fraud on the CARES Act Paycheck Protection Program (PPP).听 These include settlements with five Pennsylvania-based car companies (November 24),[13] Koide Tennessee (November 19),[14] two New York transportation companies (November 17),[15] Southside Communities Fire Protection (November 13),[16] and Chroma Systems Solutions (November 14).[17]
Health Care Fraud Remains a Top Enforcement Priority
Unsurprisingly, other than the PPP cases, the bulk of these recent settlements involved health care fraud, which in recent years has accounted for the vast majority of False Claims Act cases.听 What is surprising is the breadth of defendants these settlements covered in such a narrow window of time, including an adult residential group home, emergency medical center, diagnostic laboratory, hospital, home health agency, wound care company, medical device company, pharmacy, individual owners, and physicians.
It is a clear indication that health care fraud remains a top priority for the Trump Administration no matter the type of entity or individual involved.听 It is also a strong sign that despite the government鈥檚 more restrained enforcement approach in certain areas, it does not seem to be scaling back its efforts to police fraud.
What Does the String of False Claims Act Settlements Say About Trump’s Fraud Enforcement Priorities?
91pornwhistleblower partner Gordon Schnell is heartened by the False Claims Act blitz that immediately followed the government reopening.听 According to Schnell, 鈥渢he onslaught of settlements just reinforces the Trump Administration鈥檚 continued use of the False Claims Act to go after fraud.鈥�
Schnell pointed to a seeming downturn in enforcement activity by other regulators, such as the Securities and Exchange Commission and the Commodity Futures Trading Commission.听 But 鈥渨ith DOJ and the False Claims Act,鈥� he remarked, 鈥渢he government seems to be full steam ahead.鈥�
What Role Did Whistleblowers Play In These Recent False Claims Act Settlements?
One not-so-favorable development from all this recent False Claims Act activity is the relative absence of any DOJ promotion of the whistleblowers who prompted these government enforcement actions and settlements.听 Most of the DOJ press releases announcing the settlements make no mention of any whistleblower participation, and those few that do provide scant information on the whistleblowers and the award they received for bringing the matter forward.
This is surprising given whistleblowers originate the majority of False Claims Act actions, taking advantage of the qui tam provisions of the statute which allow private parties to bring lawsuits on behalf of the government against those that commit fraud against the government.听 In return, they can receive up to 30% of any government recovery from the action.听 Historically, DOJ has prominently promoted any whistleblower involvement in these matters, typically identifying who they are, their relationship to the defendant, and the share of the settlement amount they will receive for initiating the action.
Schnell does not believe the relative lack of whistleblower promotion with these recent settlements is indicative of any change in DOJ attitude towards whistleblowers.听 Rather, he attributes it to the rush of getting these settlements done and announced as soon as possible after the government resumed operations.听 He points to the overall brevity of many of these press releases as further support for this view.
According to Schnell, 鈥渢he Trump Administration and Bondi-led DOJ have given every indication they are fully behind whistleblowers and recognize the critical role they play in helping the government use the False Claims Act to go after fraud.鈥澨� But he cautions, how DOJ credits whistleblowers in its False Claims Act press releases going forward is something to keep a close eye on.
91pornHas Substantial Experience Representing False Claims Act Whistleblowers
91pornhas substantial experience representing whistleblowers under the False Claims Act, with a string of groundbreaking successes for the government and the firm鈥檚 whistleblower clients.听 If you would like to learn more about the firm and its whistleblower practice, or have questions about the False Claims Act or what it means to be a whistleblower more broadly, please do not hesitate to contact us.听 We will connect you with an experienced member of the 91pornwhistleblower team for a free and confidential consultation.
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Tagged in: False Claims Act, qui tam,