Articles Posted in Whistleblowers and Qui Tam Lawsuits

Medicare fraud and brazenness seem to be pairing up with troubling frequency these days, as individuals determined to illegally enrich themselves at the taxpayers’ expense are coming up with increasingly blatant schemes. We learn about these fraudulent endeavors when the fraudsters are caught stealing, but unfortunately, as we have discussed in our blogs, many of the schemes have gone unpunished. But San Francisco qui tam lawsuit attorney Gregory J. Brod would point to one scheme in particular in Detroit that was recently uncovered and prosecuted for being one of the more brazen cases of Medicare fraud.

According to the FBI’s Detroit Division, a case was unsealed in U.S. District Court in the Eastern District of Michigan on October 8 to which Usman Butt pleaded guilty for his role in a $22 million conspiracy to defraud Medicare. The plea of Butt, a former owner and manager of two metro Detroit home health care agencies, followed that of his former business partner and co-conspirator, Muhammad Aamir, who had already pleaded guilty on August 20.

In the plea documents, Butt admitted to conspiring with others to bill Medicare for home health services that were not actually provided, nor were medically necessary and that were procured through the payment of illegal kickbacks. Through the scheme, which ran from 2008 through January 2013, false claims were submitted to Medicare that resulted in the program paying out approximately $12,607,262. Butt specifically admitted that the nursing care services provided by his companies, Prestige Home Health Services in Troy, Mich., and Royal Home Health Care Inc, of Clawson and Troy, Mich., were neither medically necessary nor even needed.

What made the Butt scheme particularly brazen was the fact that he also admitted to having helped a co-conspirator to file a false corporate tax return for Prestige in which the illegal kickbacks were deducted as “business expenses.” That ploy saved Prestige at least $321,485 in taxes that were due for 2009.

Sentencing for Butt has been scheduled for Jan. 13, 2015. His case, investigated by the FBI, Health and Human Services Office of the Inspector General and IRS, represents another success story for the federal government’s Medicare Strike Force, which, since its inception in 2007, has charged nearly 2,000 defendants with more than $6 billion in collective fraud against Medicare.

While the case against Butt and other successful cases that the Medicare Fraud Strike Force has pursued have been encouraging developments in the fight against Medicare fraud, conservative estimates of the value of schemes that may slip by the government’s watch every year have been pegged at $100 billion per year, and more generous estimates place the total much higher at upward of $300 billion every year.
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Best Price Fraud, like many other types of health care fraud, is at once complex and quite simple. At heart, Best Price Fraud is about drug manufacturers lying to the government in order to increase profits. Likewise, the claims filed against the perpetrators are about the truth. Whistleblowers come to our Northern California health care fraud law firm because they believe in uncovering the truth. In doing so, they can help return money to programs that desperately need every dollar.

The Medicaid Drug Reimbursement Process & The “Best Price”

Understanding best price fraud on a more detailed level requires understanding a bit about how Medicaid deals with pharmaceuticals. If a pharmaceutical company wants to supply drugs to Medicaid patients, they are required to pay a rebate to the states. Manufacturers submit a Quarterly Report that includes data on each individual drug including the Average Manufacturer Price (“AMP”) and the “Best Price.” The Best Price is the lowest price at which the manufacturer sells the drug to any outpatient purchaser nationwide. It takes into account volume discounts, cash discounts, rebates, and any free goods offered with that drug. Best Price excludes a few explicitly laid forth prices such as the amount charged to the Veterans Administration and the Indian Health Service. Using the AMP and Best Price information, the Centers for Medicaid and Medicare Service will tell the manufacturer what rebate the state is owed.

Americans spend nearly $1,000 per person on pharmaceuticals each year. According to PBS, this is nearly 40% more than is spent per person in Canada, the next highest spender. To explain the discrepancy, PBS notes that Americans take more drugs than any other county and the high costs of medications, especially new drugs that often debut in the U.S. Notably, many other nations essentially regulate medication costs. We would add another factor contributing to high pharmaceutical costs in the U.S.– health care fraud. In this post, our California pharmaceutical fraud law firm looks at two forms of alleged Medicare/Medicaid fraud. Along with other cases of drugstore health care fraud, these schemes create costs and endanger the health of the American consumer.

Walgreens 2008: Switching Between Pill Types For Profit

In 2008, Walgreen Co. paid $35 million to settle allegations of prescription drug fraud claims. As detailed in a Department of Justice (“DOJ”) press release, the settlement addressed reimbursement requests for three specific prescription drugs that Walgreens filed with the Medicaid systems in 42 states and Puerto Rico. It was similar to previous settlements with CVS Caremark and Omnicare. The Walgreens case was initiated by a pharmacist who was slated to receive nearly $5 million via the federal and state whistleblower statutes. In settling the claims, Walgreens did not admit any liability.

When the owner of a Miami home healthcare agency was arrested this week in connection with an $8 million Medicare fraud scheme, attention was refocused on how home healthcare services have proven to be a fertile field for fraudulent schemes. And San Francisco qui tam lawsuit lawyer Gregory J. Brod would also point out that the news serves as a reminder that South Florida is a major hotbed for healthcare fraud.

According to the FBI Miami Division, an indictment that was returned on September 25 and unsealed on Tuesday charged Orelvis Olivera of Miami with conspiracy to commit healthcare and wire fraud, conspiracy to pay and receive kickbacks and paying and receiving kickbacks in connection with a federal healthcare benefit program.

The indictment accuses Olivera’s Acclaim Home Health, a Miami-based home healthcare agency, of purportedly providing home healthcare and physical therapy services to Medicare enrollees. Olivera allegedly paid kickbacks to patient recruiters in return for the recruiters’ referral of Medicare beneficiaries to his home healthcare agency. Olivera also allegedly solicited and received kickbacks in return for referring Medicare beneficiaries to other Miami-area home healthcare agencies.

As a result of the aforementioned alleged actions, from May 2008 to June 2014, Acclaim Home Health billed Medicare approximately $8 million for bogus claims and, in turn, Medicare paid Acclaim Home Health approximately $7.3 million for those claims.

As a measure of how serious a problem Medicare fraud is in the United States, the Medicare Fraud Strike Force, which was established in March 2007, has charged nearly 2,000 defendants who have collectively billed Medicare for more than $6 billion, but no one is certain how much fraud goes undetected. Conservative estimates have placed the hit to the taxpayers at $100 billion per year while more generous estimates peg the loss at closer to $300 billion every year.

Whatever the total amount of losses due to fraud really is, there is no doubt that South Florida could be dubbed “fraud central” in the United States without any exaggeration. Indeed, according to the Miami New Times, FSF prosecutors charged 1,480 defendants with $4.8 billion in fraud from 2007 through the spring of 2013 and more than half of those indictments originated from the unit in Miami. The depth and creativity of the schemes is so impressive that Special Agent in Charge Christopher Dennis calls Miami “the crown jewel of Medicare fraud,” and that “a lot of the schemes are typically started here (Miami) – and farmed out to other parts of the country.”

Home healthcare fraud schemes have been a particular problem in the Miami area, so much so that the state of Florida now requires health workers who conduct home visits to call in from the patient’s telephone during every appointment, thus allowing voice recognition technology to match the healthcare worker’s voice pattern against the one stored electronically, a procedure that has made a dent on billing for schemes in which no visit actually takes place.
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As San Francisco qui tam lawsuit attorney Gregory J. Brod has pointed out in our blog posts, the problem of Medicare fraud is as pervasive as it is costly to taxpayers and honest enrollees in the Medicare system. Unfortunately, the financial downside to the Medicare fraud crisis has been coupled with an imperiling of the health and/or lives of some Medicare patients who have been prescribed unnecessary medications or treatments by unscrupulous healthcare providers.

The most recent example of Medicare fraud literally killing a patient came to light Thursday when a doctor in western Kentucky was charged with having pursued a Medicare fraud scheme that ultimately resulted in the death of one of his patients. According to the Louisville Courier-Journal, Dr. George Kudamani, who had previously been charged with distribution of controlled substances, healthcare fraud and money laundering, was indicted again for having unlawfully distributed oxycodone and hydrocodone from 2009 to 2012 to 11 patients. Those prescriptions resulted in the death of one of Kudamani’s patients, according to the indictment. Kudamani was also charged with having fraudulently submitted claims for medically unnecessary services or services such as ultrasounds that were never performed as well as the unnecessary prescriptions, all of which would generate fraudulent Medicare bills.

The charges against Kudamani do not represent the first time a physician has been accused of engaging in practices that not only defrauded Medicare but also put the lives of patients in jeopardy. Indeed, as recently as September 16, a notorious case was revisited at U.S. District Court in Detroit. That is where, according to Deadline Detroit, Dr. Farid Fata pleaded guilty to fleecing Medicare for tens of millions of dollars and also for having misdiagnosed patients, telling them they had cancer when they did not and giving them unnecessary chemotherapy or giving chemotherapy to patients who were at a stage of cancer when they could not possibly have benefited from the treatment. The scheme was paid for, of course, by the taxpayers. Fata’s acts become so infamous that the local media in Detroit started calling him “Dr. Evil.”

The indictment of Kudamani came on the heels of another case of Medicare fraud, a major scheme that was based in New Orleans, the details of which the Justice Department revealed Thursday. According to the Daily Caller, 13 people, including five doctors, were indicted for having operated a collusive network of the doctors and healthcare and medical supply companies that billed Medicare for home health services and medical equipment that was found to be either unnecessary or nonexistent during the seven-year period from 2007 to 2014. The web of deceit was so elaborate in this multifaceted scheme that patient recruiters allegedly received kickbacks in return for securing Medicare beneficiary numbers, with the kickbacks laundered through another firm one of the conspirators controlled. In addition, one of those indicted was accused of falsifying tax and employee records in order to conceal the fraud, while another, a registered nurse, was accused of certifying home health services she never provided.

Of the defendants, three have already pleaded guilty to conspiracy to commit healthcare fraud. Out of a total $56 million in billing falsely charged to Medicare, the defendants managed to rake in $50.7 million.
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Readers of this blog know that health care fraud steals billions from federal and state governments each year. The financial impact ultimately reaches all taxpaying Americans and anyone who uses our health care system, whether or not they use government programs. Our San Francisco health care fraud attorney knows that health care fraud, including medical device fraud, also has a very real impact on the wellbeing and personal medical care of some individual patients. As one of the most common ailments, back-related care is one area threatened by the perpetrators of these wrongs.

Back Pain: Suffering and Spending

Earlier this year, Time Magazine reported that lower back pain is the top cause of job disability around the globe. Additionally, Americans spend more than $50 billion annually on low back pain, despite the fact that it remains difficult to treat. While the news magazine suggests one in ten people suffer low back pain, other sources say eight in ten Americans will experience back pain at some point (see Medline Plus).

In an ideal world, we would honor our elders, learning from their wisdom while taking care of them as age leads to physical and/or mental ailments. Sadly, our world is far from perfect. Many seniors find themselves on the receiving end of rude, disrespectful behavior. Worse still, elder abuse is far too common as people take advantage of those who are unable to protect themselves and incapable of reporting the mistreatment. Our team is committed to fighting all nursing home abuse cases in Northern California, especially when the circumstances also allow us to offer service as a San Francisco nursing home fraud law firm. When a care center improperly treats a patient and then seeks reimbursement from Medicare for these “services,” the same conduct amounts to nursing home fraud on the government and is a particularly lethal form of elder abuse. These cases victimize the target as an individual and as the member of the class of people who are hurt when money is taken from the government health care coffers.

Arba Litigation: The Defendants

McKnight’s Long-Term Care News and McKnight’s Assisted Living News provide news updates to individuals in the senior care arenas. Recently, McKnight’s, along with Courthouse News Service, reported on two California nursing homes that are facing federal health care fraud charges tied to acts that endangered the lives and well-being of residents. The defendant in the Complaint, which was filed in late August, is Arba Group (“Arba”), a management company that oversees both Country Villa Watsonville East Nursing Center (now Watsonville Nursing Center) and Country Villa West Nursing & Rehabilitation Center (Watsonville Post-Acute Care Center). The locations are, respectively, an 87-bed and a 95-bed facility.

Why health care fraud? We’re asked this a lot. Much of our practice involves representing the wrongfully injured causing some to peg us as a victims’ law firm. That is a label that we are proud to say fits much of our practice. The truth is there are MANY victims of health care fraud. All taxpayers are victims of the economic fraud, with the neediest suffering the most as scammers target government health programs. There are also more immediate victims, people are endangered by health care fraud from those who lose out on necessary medical care because their plans have been wrongfully depleted to those who receive inappropriate/unneeded care. Today’s post looks at some of these victims of health care fraud, people who are helped when a whistleblower comes forward and partners with our Northern California health care fraud law firm to help the victims.

Homeless Recruited in Health Care Scam

The perpetrators often take advantage of the neediest members of our society in order to carry out their schemes, preying on the disadvantaged and profiting from endangering the people that public health programs are intended to help. An example, discussed in a 2008 New York Times article, came to light due to a tip from a rescue mission worker. In 2004, Scott Johnson called state authorities to report suspicious cars and vans packed full (including the trunks!) wit homeless people. He suspected they might be ambulances wrongfully discarding poorer patients.