Why Whistleblowers Can't Win for Losing

December 5, 2013,

Corporate Growth Chart.jpgI am a False Claims Act lawyer, and I am doing a series of articles addressing criticism of the Act. A recent article in the Public Contract Law Journal, published by the American Bar Association, gave grim statistics about the success rate for relators (whistleblowers) in False Claims Act ("FCA") cases where the Government chooses not to intervene in the case. According to author David Krok, by using data he received as a result of the Freedom of Information Act he was able to determine that relators have a 95% chance of winning if the Government chooses to intervene in the case; conversely, they have only a 9% chance of winning if the Government chooses not to intervene. Citing statistics such as those Krok cites in his article, Does Private Enforcement Attract Excessive Litigation? Evidence from the False Claims Act, critics have suggested that these statistics are evidence that relators should not be allowed to prosecute non-intervened cases.

For more about "intervention", see my earlier blog post, Why Whistleblower Cases Seldom Succeed After the Government Declines the Case.

Critics argue that the relators must not be bringing meritorious suits since the relators generally do not succeed when the Government chooses not to intervene, but they are missing a critical point: the impact on the case that occurs simply because the Government refused to intervene.

Three important things happen when the Government does decide to intervene. First, because the Government chose to intervene in the case, courts tend to assume that the case must have merit. Second, the courts tend to give the Government the benefit of the doubt about whether the case is pled sufficiently. And third, the Government usually has sufficient information to plead the case appropriately.

When the Government does not intervene, the opposite occurs. The defendant usually files a motion to dismiss in which the defendant argues that the case must not be any good, because -- after all -- the Government refused to intervene in the case. In my experience, the argument is almost always false; the intervention decision most often is related to dollars and cents, and not to facts. Nonetheless, defendants make the argument precisely because they realize that it likely will resonate with the judge. Since the Government does not put anything in writing about why it chose not to intervene, the relator has little to work with in convincing the court that the Government did not believe the case was unfounded.

Because the court already is skeptical about whether the case is meritorious, the court then looks with a jaundiced eye on the claims, and is much more likely to grant a motion to dismiss as a result.

Third, the relator, who is usually an individual, generally has only a limited amount of information. The defendant typically argues that the fact that the relator's information is limited means that the case should be dismissed because the relator cannot prove every detail of the claim in advance, without any discovery. For example, even when the relator has ironclad proof of the fraud that went on, the defendant typically will claim that the relator is missing some other piece of information, such as copies of the bills that were submitted to the government agency. The argument typically is absurd. Does anyone seriously doubt that a hospital is submitting its claims to Medicare? No hospital could stay in business if it failed to submit the claims. Nonetheless, even where a hospital employee can prove that the hospital was billing for procedures that were never performed, the hospital will argue that the case ought to be dismissed because the employee does not have copies of the bills that went to Medicare.

Or course, the irony of the argument is that jobs are typically segmented enough that the relator who knows about the fraud does not know have access to the billing, and vice versa. Some courts have raised the bar unnecessarily high in this situation. The upshot is that courts dismiss clearly meritorious cases, and the Government never recovers the money stolen from it by fraud.

Georgia Drivers: Be Careful this Christmas Holiday!

December 4, 2013,

Christmas bear at table.jpgI'm an Atlanta car wreck lawyer, and I'm on a one-woman quest to see whether we can get Georgia drivers to slow down and drive more carefully over this Christmas holiday. Over the 2009 Christmas holiday (the latest data available), ten people were killed on Georgia highways over the holiday. The year 2008 was far worse: 25 people were killed in 25 car wrecks across Georgia.

As an auto accident lawyer, I have met with many families who lost a loved one in a wreck, and with people who suffered debilitating personal injuries in a car crash. But of all the things I do in my job, nothing is sadder than meeting with families who lost somebody over a holiday, and - for me - particularly families who lost someone they loved very much during the Christmas holiday.

What if we could change the numbers? What if - by driving defensively and slowing down - we could cut the number of fatal collisions in half - or lower? What an amazing accomplishment!

So as we march up to the holiday, I am going to do several blog entries about how many people die on Georgia roads each Christmas holiday, and about where the accidents happen. My hope is that the information will make Georgians more aware of the fact that driving over Christmas can be very dangerous -- and that it will prompt folks to drive more carefully this season.

I'm going to be using data from the National Highway Traffic Safety Administration (NHTSA), which maintains a database called FARS. The FARS database (the full name is Fatality Accident Reporting System, but since that is a mouthful, for obvious reasons everybody calls it FARS) is a searchable set of facts about accidents in which someone died in one of the fifty U.S. states or in one of the U.S. territories. FARS does not contain data about serious injury accidents unless someone died in the accident. Thus, FARS misses some very serious personal injury car crashes, even ones resulting in paraplegia, quadriplegia, traumatic brain injuries, amputations, broken bones, etc. Still, the database is a one-of-a-kind way to look at the statistics and the trends in serious accidents around the United States.

NHTSA has released FARS data for 2008 and 2009, and I'm going to be talking about the car crash deaths that occurred over the Christmas holidays in those two years. The year 2009 saw ten deaths from Georgia car wrecks, which was bad enough, but in the year 2008, an astonishing 25 people were killed in car accidents in Georgia over the Christmas holidays.

Part of the reason for the difference is the way that NHTSA counts the holiday. NHTSA tracks deaths that occur around the holiday, to account for the fact that people hit the roads in the days before and after the holiday itself, in order to be able to spend Christmas Day itself with their families. In 2009, Christmas fell on a Friday, so NHTSA calculated the "holiday" as covering the 24th, 25th, 26th and 27th. By contrast, in 2008, Christmas fell on a Thursday, so NHTSA kicked off the holiday on the 24th, and ran it through the 28th.

But no matter which year you take, 2008 or 2009, both years saw a tragic number of deaths. So this Christmas season, Georgians -- drive carefully, don't drive under the influence, and drive defensively. Let's see if we can make this Christmas a lot happier for Georgia families!

(Thanks to Wong Mei Teng for the beautiful photo on this post. Mei Teng is a really talented photographer who generously posts free images on stock.xchng.)

Why Whistleblower Cases Seldom Succeed After the Government Declines the Case

December 2, 2013,

Pie Chart.jpgAn article in the American Bar Association's Public Contract Law Journal (p. 241), "Evidence from the False Claims Act: Does Private Enforcement Attract Excessive Litigation", is being cited by critics of the False Claims Act. The gist of the article was no surprise to whistleblower attorneys like me: cases taken over by the Government (called "intervened" cases) almost never lose, and "non-intervened" cases almost never win. What did surprise me, though, was the reaction of critics of the False Claims Act system, who claimed the statistics are evidence that the qui tam system - which allows a relator to file a case in the name of the Government - encourages frivolous cases. These critics fundamentally misunderstand the practical obstacles facing relators who try to prosecute a case on their own.

The Intervention System:
Under the False Claims Act, the whistleblower (called the "relator") brings the lawsuit on behalf of the United States. The United States then is allowed time to investigate the case. When the United States concludes its investigation, or when the time for investigation runs outs, whichever comes first, the United States has a choice to make. It can intervene in the case, which essentially means that the United States takes over the case. The relator remains in the case, but takes a back seat to the United States, which becomes the chief prosecutor of the case. On the other hand, the United States can refuse to intervene in the case. In that case, the relator has the option to continue the case on his or her own, without the help of the United States. The relator also can choose to dismiss the case.

The Statistics: According to the article, when the U.S. intervenes in a case, the United States wins the case 95% of the time. On the other hand, when the United States declines the case and leaves the relator to prosecute it on his or her own, the relator dismisses the case 25% of the time. Fifty percent of the time, a court dismisses the case. Only 22% of the cases go on to trial, and the defendants win somewhat more than half of those cases. In the end, only 9% of the cases where the Government refused to intervene end up resulting in a settlement or judgment for the United States. While the United States intervened in 953 cases, it refused to intervene in 2314 cases, which means that the overall "success rate" was less than 50%.

An Overview of Why the Critics are Wrong:
While the statistics for non-intervened cases are grim for relators, the fact that non-intervened cases tend to be dismissed or lost is emphatically not evidence of an abundance of frivolous claims. Put simply, there are a number of reasons why relators do worse when the Government does not intervene - and those reasons have nothing to do with whether the case was good in the first place. In my next whistleblower blog entry, I will talk about why the critics are wrong to conflate the effectiveness of the False Claims Act with the success of non-intervened cases.

Georgians - Please Drive Carefully this Thanksgiving Holiday Weekend!

November 26, 2013,

Thanksgiving turkey.jpgThis Thanksgiving weekend Georgians will head out to be with families and friends. We'll eat and visit and be grateful for all we have been given in this nation. Some of us, of course, also will shop!

But the sad truth is that some of us here in Georgia may die or be seriously injured in car accidents this very weekend. So I hope, that in the midst of the fun and joy, people here in Georgia will take just a minute to think about the fact that we need to be exceptionally cautious this weekend.

Being an auto accident lawyer, when I had questions about how dangerous Thanksgiving weekend could be in terms of car accidents, I turned to the Fatality Analysis Reporting System maintained by the National Highway and Traffic Safety Administration, or NHTSA. According to what I learned from that database, 13 people died across Georgia in 12 different accidents over the 2009 Thanksgiving holiday weekend.

People were killed in fatal car wrecks all over the State of Georgia, and not simply (or even mostly) in the Atlanta metro area. Two people were killed in deadly car crashes in Macon, and another person died in a Buford auto crash. One person was killed in a Valdosta car accident, and another in a Savannah auto collision. A person was killed in a car crash near Carrollton, and another in a Covington car accident. These fatal car accidents happened not just on the mega interstates, like I-75, I-95, I-475, and I-85, but also on smaller or more local roads, like Glade Farm Rd. in Hall County, Boring Pond Rd. in Lowndes County, Brewton Lovett Rd. in Laurens County, S. Bogan Rd. in the city of Buford in Gwinnett County, and Muse Bridge Rd. in Carroll County.

The large number of deaths from Thanksgiving car accidents was no fluke. In fact, even more people died over the Thanksgiving holiday in 2008. That year, 18 people were killed in car accidents in Georgia. The most dangerous holiday of 2008 was Christmas, when 25 people were killed in 25 different auto crashes. Twenty-one people were killed in Independence Day car collisions over the Fourth of July weekend. Thanksgiving was tied with Labor Day for third deadliest holiday weekend of the year, with each holiday seeing 18 people killed around Georgia.

Over the 2009 Thanksgiving weekend, someone was killed in a car accident here in Georgia every day of that four-day holiday. Surprisingly to me, relatively fewer people were killed on Black Friday, November 27, 2009. In a single, horrific accident, two people died that Friday.

I had thought that the heavy mall and shopping traffic that day would make that one of the most dangerous days of the weekend. However, each of the other days saw even more people killed. Three people were killed in car accidents on Thanksgiving Day, four more were killed on Saturday, November 28, 2009, and another five people lost their lives in fatal traffic crashes on Sunday, November 29, 2009.

Significantly, these figures from NHTSA do not include any of the people who were seriously injured over the Thanksgiving weekend. Even if someone suffered serious personal injuries in a car wreck - a head injury, multiple broken bones, or quadriplegia or paraplegia - the database is limited to car accidents in which someone was killed. Unless someone died in those serious wrecks, then, they were not even in the FARS database.

So when you go visiting and shopping this weekend, remember that you are one of the things for which your relatives and friends are the most thankful - and watch out while you are driving!

DOJ Says Company Faked Background Checks for Government Employees

November 22, 2013,

Rubber Stamp.jpgWell, this certainly makes me feel safer . . . NOT.

DOJ is intervening in a False Claims Act lawsuit against a company accused of failing to do background investigations on people who were applying to work for government agencies. The company, DSIS, was hired to vet thousands of people who had applied for federal jobs or to be government contractors - except that the Department of Justice says sometimes it did not actually bother to do the screening. Two of the employees the company "vetted"? Aaron Alexis, who shot 12 people at the Washington Navy Yard, and Edward Snowden, who is accused of leaking secret government information.

Blake Percival, a former employee of USIS, filed the FCA lawsuit that DOJ has decided to join. As a defense contractor whistleblower, Percival will be entitled to between 15-25% of what the U.S. recovers from USIS as a result of the accusations.

How USIS Cheated, According to DOJ

The Office of Personnel Management and other U.S. agencies outsource background checks to three contractors. USIS is the biggest of the three, and single-handedly completes 2/3 of the security clearance investigations.

I use the term "completes" quite loosely, since according to DOJ and Percival, USIS was achieving its quick results - and raking in wads of cash - by approving employees before it finished checking their backgrounds. OPM paid USIS $1900 for every report it completed before the next-to-last day of the month. If OPM missed that deadline, it only got $1425 for each investigative report.

DOJ says that USIS came up with a computer program that would automatically release the reports even if the company still had work to do to finish the investigation.

Percival worked for USIS as a director of fieldwork services. He says that the company fired him when he refused to tell his employees to dump reports on prospective employees and contractors that they had not finished vetting.

USIS Vetted Snowden and Alexis

Federal officials have said that USIS did not do a sufficient investigation into Snowden's background. The company also cleared contractor Aaron Alexis, who shot 12 people at the Washington Navy Yard this past September. While officials initially said that USIS apparently did do a thorough job when it investigated Alexis, ABC News reports that the company did not even attempt to get a police report from Seattle. The police report described an incident in which Alexis shot out his neighbor's tires in what he himself described as a blackout fueled by anger. The police report concluded that Alexis had anger management problems.

Fraud That Puts Us All at Risk

Percival filed his suit in the Middle District of Alabama, with the office of U.S. Attorney George L. Beck, Jr. USIS has its headquarters in Falls Church, Virginia. Beck put into words why this type of fraud sends a cold shiver down my spine: "The increase in foreign and domestic terrorism places an increased responsibility on our government to ensure that unsuitable individuals are prohibited from government employment."

We are left with this chilling question: who else is out there that USIS failed to investigate? Is there someone sitting in a position of trust on a military installation? Is there someone who landed a job inside an airport? Did someone get cleared to work in customs, "checking" the big containers that are shipped in? The issues may have seemed all financial to USIS, but the fact that these background checks were never done could lead to unfathomable consequences for Americans. The taxpayers were cheated out of money, but with this sort of fraud, the money we lost may be the least of our worries.

Under the False Claims Act, a company is liable for making false claims for payment. The DOJ and Percival allege that USIS made false claims when it demanded payment for doing background checks that it in fact never finished.

This is Only a Good Idea if You Like Paying More for Healthcare

November 19, 2013,

Take the buck money.jpgSecretary of Health and Human Services Kathleen Sebelius announced that the Obama administration will not consider the federal insurance exchange or the subsidies the Government pays to insurance companies to be "federal health care programs."

For most people, the ruling will be a head-scratcher. It's hard to figure how you could argue that the federal insurance exchange is not a "federal health care program."

But whistleblower lawyers like me are disturbed about the decision, because it has an extremely important consequence: it means that the insurance companies on the exchanges don't have to abide by the federal anti-kickback laws.

The anti-kickback statute, found at 42 U.S.C. § 1320a-7b(b), makes it illegal to pay somebody or give them valuable freebies in order to get referrals from them or in order to generate Federal health care program business.

Medicare and Medicaid fraud lawyers like me immediately saw a host of potential problems. Drug companies will argue that now they can give coupons to people who are buying insurance on the federal exchange. The coupons - which of course will only be for the newer, more expensive drugs - will lower the cost of the drugs to patients, but will cost taxpayers more as they will have to buy the more expensive drug.

According to a New York Times article, Strategic Move Exempts Health Law From Broader U.S. Statute, the president of the Pharmaceutical Care Management Association warned that: "The coupons steer consumers away from lower-cost alternatives to more expensive drugs, increasing costs to insurers and to the government."

It is hard to reconcile the new ruling with what HHS has said about the anti-kickback laws in the past. According to Health and Human Services, the purpose of the anti-kickback laws "is to protect the Medicare and Medicaid programs from increased costs and abusive practices resulting from provider decisions that are based on self-interest rather that cost, quality of care or necessity of services."

The New York Times noted that HHS's decision may not be the final word if a federal court rejects HHS's interpretation in a lawsuit filed by a whistleblower under the False Claims Act.

Until a whistleblower steps forward with information about how a company has been defrauding the government through the exchange, we'd better get used to paying more of our tax money toward drugs and medical care.

The federal anti-kickback statutes are similar to, but distinct from, the Stark Law, found at 42 U.S.C. § 1395nn. The Stark Law is aimed at stopping what had become an fairly widespread industry practice, in which physicians referred patients for health services they themselves owned, or in which hospitals paid physicians for patient referrals. The concern, of course, was that an objective doctor might not believe the patient needed the services at all, or might conclude that a different service provider could better meet the needs of the patient. The law prohibits the physician from referring the patient, and also makes it illegal for the health service to bill Medicare for treating a patient who is referred in violation of the law. The hospital and the doctor have to return the overpayments even if they did not intend to violate the law. If the violation was intentional, they may face penalties and even being excluded from the Medicare program.

You Can Have the Medicare Cheats - But Can We Get Our Money Back?

November 15, 2013,

Map North South America.jpgAs a lawyer representing Medicare fraud whistleblowers, I am used to seeing stories about Medicare scams in South Florida. After all, South Florida is the epicenter of Medicare fraud in the U.S. But Jay Weaver of the Miami Herald is reporting that many of these fraudsters are escaping justice. They are fleeing to other countries - with a particularly large number heading to Cuba - taking our taxpayer money with them.
Weaver published an article in the November 2nd Miami Herald, FBI tracking down Medicare fraud fugitives from South Florida. His article explained what everyone in the field of False Claims Act lawsuits knows all too well: South Florida has more Medicare fraud than anywhere else in the country. A staggering 1600 people have been charged with Medicare fraud in federal courts there -- one third of all healthcare cases in the entire United States.

But Weaver also explained that many of the worst perpetrators are escaping justice by hightailing it to other countries -- in particular, to Cuba - before the FBI can nab them. He gives numerous examples.

Brothers Luis and Carlos Benitez, were born in Cuba. They came to the U.S., where they stole a whopping $ 84 million from Medicare through HIV therapy fraud. The brothers took their money and scampered back to Cuba, where they are currently hiding out from U.S. federal authorities.

Juan Carrelero, also born in Cuba, stole $ 9 million by submitting fraudulent charges for HIV therapy supposedly being given to patients. He, too, is a fugitive living in Cuba.

Ramon Fonseco, who also hailed from Cuba, stole $ 30 million from Medicare through HIV therapy fraud. He fled to Venezuela.

Maricel Beatriz Hernandez grabbed $ 5.1 million from Medicare through fraudulent claims that patients were receiving therapy for HIV. A Cuban native, she fled back to her native homeland to escape prosecution.

Another Cuban native, Joan Noalles gathered a cool $ 10.6 million in a scheme involving durable medical equipment (DME) and pharmacy fraud. He is currently a fugitive from the law, although U.S. official do not know where he is hiding.

Emilio Seijo ran a traditional medical equipment fraud scheme. He netted 14.5 million, and fled back to his native Cuba, where he currently lives.

Orlin Tamayo-Quinones used an scheme involving HIV treatments to purloin $ 30 million from Medicare. Originally born in Ecuador, he, too, is hiding out in Cuba.

The FBI has had some successes. It caught Enrique Gonzalez, who had stolen $ 9.9 million through HIV therapy Medicare fraud. Gonzalez was living in Bolivia. When he tried to flee Bolivia for Cuba, federal authorities apprehended him in Peru before he could get to Cuba.

Carmen Kaeren Gonzalez stole $ 8.2 million, also for faked HIV therapy charges. She was originally born in Cuba, and fled back to the country after she was indicted here. Fortunately, authorities were able to arrest her when she came to the Fort Myers area.

Weaver's article covers the genesis of Medicare fraud in South Florida. The earliest fraudulent schemes were relatively simple: criminals stole Social Security numbers from elderly and disabled people who were eligible for Medicare and Medicaid, and stole Medicare license numbers from physicians. The crooks then fabricated claims out of whole cloth, billing for durable medical equipment (like wheelchairs) that weren't needed and were never supplied.

Over time, and thanks in large part to whistleblowers who were willing to report the fraud to the Government, Medicare began to wise up. Of course, as Weaver notes in another article, "Stealing Medicare blind, at a cost of billions," the criminals developed increasingly sophisticated schemes to steal taxpayer funds from Medicare and Medicaid.

U.S. taxpayers cannot afford to continue hemorrhaging dollars to Medicare fraud in Florida or anywhere else. Let's hope whistleblowers will come forward to stop abuse of the program.

But Mom, All the Kids Are Doing It!

November 12, 2013,

Jumping Off Cliff.jpgA hospital system has been caught with its hand in the cookie jar - and it was holding a pretty big cookie. A California health system has agreed to pay California's Department of Insurance a whopping $ 46 million to resolve allegations that it overbilled for anesthesia services.

The claims stem from a 2009 False Claims Act lawsuit filed by a whistleblower against Sutter Health, a company based in Sacramento that has hospitals and facilities all over the North Bay area in California. The whistleblower (also known as a relator) was a billing auditor, Rockville Recovery Associates. Rockville filed suit under California's False Claims Act statute, alleging that the hospital system was triple billing for anesthesia services at its hospitals and facilities. Sutter operates 24 acute-care facilities throughout the northern part of California.

What is it about anesthesia services that makes them such a hotbed for Medicare fraud? I am losing count of how many whistleblower blog entries I have written on anesthesia fraud.

But despite the big payout, the hospital system does not seem particularly remorseful. Neither does the California Hospital Association.

In a press release, Settlement Agreement Reached in Case Involving Anesthesia Billing Methodology, Sutter claimed it "followed the law and hospital industry practice." So why is Sutter paying so much to the State of California? They paid $ 46 million because it was in "the best interests of our charitable assets" to avoid "the significant human and financial resources associated with a lengthy trial."

And far from being outraged Sutter's overbilling, the president and CEO of the California Hospital Association (CHA) expressed his dismay that Sutter was settling. "More than 90 percent of California hospitals", including state hospitals, "bill for anesthesia services in this same manner," he moaned.

Sounds like what every parent in the world has heard: "But Mom, ALL the kids are doing it." And you already know the traditional counter by heart: "What if everyone was jumping off a cliff? Would you do it, too?"

If what Sutter did was wrong, then it doesn't matter whether everyone else was doing it, too. Everybody needs to cut it out, Sutter included. And does anyone seriously believe that Sutter would pay $46 million to settle a case if it really believed that it had been billing the way it was supposed to?

And if CHA really does know that some of its other members are violating the law, too, I would say the CHA has a duty to come forward with that information.

Until then, we will have to hope that other whistleblowers will come forward with information that shows particular hospitals are doing the same thing. If your daughter told you "everybody's doing it," you'd hardly march down to the school and turn your daughter's best friend in - on the assumption she must be the "everybody" who had been reported to you. You'd look pretty crazed if you called the friend's parents to complaint about the friend's behavior, when you did not have one bit of information to make you connect the behavior to that particular friend.

The state and federal governments are in the same position. They cannot march down to the courthouse and start filing suit against every hospital, assuming that the CHA meant that particular hospital was the "everybody" in "everybody's doing it."
In the suit against Sutter, California got its information from Rockville Recovery Associates, which had audited Sutter. According to an article by ABC affiliate News10, Sutter Health anesthesia suit settlement should benefit consumers, Rockville uncovered the triple billing during its audit. The whistleblower it found that the hospital was billing for an outside anesthesiologist, and it also was billing a second - and overlapping charge "for the operating room and a charge under a Code 37x. Anesthesia." The 37x code implied that Sutter had an employee in the room and could charge by the hour, when in fact the services were being performed by the outside anesthesiologist, and already were being billed separately. The audit found that in some cases the hospital system also was billing separately for anesthesia medications (gasses) that were included in the other charges being sent to Medicaid.

GE Subsidiary Pays $6.58 Million After Whistleblower Says It Sold Bad Fuel Tanks

October 21, 2013,

Navy Hornet.jpgThe Department of Justice is reporting that a General Electric Co. will pay $6.58 million to settle a False Claims Act lawsuit stemming from extremely serious allegations by a whistleblower. The whistleblower says that a GE subsidiary made fuel tanks for Navy Hornets that did not meet the Government's specs. In fact, in quality control testing, at least one tank failed.

As a whistleblower lawyer, I don't think allegations get any more serious than that. With an aircraft, of course, just about every part is critical, but it would be hard to think of a part that is more critical than the fuel tank.

According to the DOJ press release, General Electric Aviation Systems (GEAS), a GE subsidiary, had a contract to manufacture fuel tanks for the Department of Defense. The fuel tanks were intended for military aircraft, specifically for the Navy F/A-18 Hornet.
Jeffrey Adler, a former GEAS employee, filed a whistleblower lawsuit under the FCA, informing the Government that the Hornet fuel tanks did not meet contract specifications and were not being subjected to adequate quality control. (In the FCA lingo, Adler is known as a 'relator.')

Continue reading "GE Subsidiary Pays $6.58 Million After Whistleblower Says It Sold Bad Fuel Tanks" »

Doctor Bills for 78 Hours of Procedures in One Day, Indicted for Fraud

October 17, 2013,

Alarm clock.jpgMaybe he was just one heck of a hard worker?

According to an indictment filed against Texas doctor Dennis B. Barson, Jr., M.D., the doctor and his medical clinic administrator, Dario Juarez, fraudulently collected $2.1 million in payments from Medicare - in under two months! Barson actually claimed to have seen 156 patients in one, single day - July 13, 2009. On another 13 days during the two-month period, he claimed he saw more than 100 patients per day.

As a False Claims Act lawyer who represents whistleblowers, I just shake my head. I know that for every doctor the federal government catches, dozens, probably hundreds, get off scot free because the federal government never finds out about the fraud.

With Dr. Barsen, the federal government caught on because the numbers just didn't add up. Dr. Barsen literally could not have seen as many patients as he claimed he had treated.

In theory, Dr. Barsen could have seen 156 patients on July 13th, if he had worked a solid, non-stop, 12 hours. Sure, he would have had to skip lunch, and eschew all breaks, even for the bathroom. And yes, he would have had only 4.6 minutes to spend with each of his patients. Probably his patients would have had some caustic things to say about his rushed bedside manner. Still, it would have been physically possible for Dr. Barsen to "lavish" 4.6 minutes on 156 patients in one day.

So Dr. Barson might have gotten away with his claims had he been billing for routine office procedures. But in this case, Dr. Barsen was billing Medicare for performing rectal sensation tests and electromyogram studies of the anal or urethral sphincter. According to medical-dictionary, each electromyogram procedure takes between 30 and 60 minutes. So Dr. Barson would have had to work 78 straight hours to cram in the 156 rectal sensation and electromyogram studies he claimed he performed in just 24 hours.

The government was not clear as to what tipped it off to the fraud, saying only that "the criminal charges are the result of a joint investigation" by the FBI, Department of Health and Human Services, and the Texas Medicaid Fraud Control Unit.

Dr. Barson has a medical practice in Houston, Texas. The indictment says that he billed for procedures performed on 429 patients, but he in fact did not perform the "rectal sensation tests and electromyogram (EMG) studies of the anal or urethral sphincter" which he claimed he was performing.

Unlike Dr. Barson, according to the indictment Juarez actually was seeing patients. The problem was that Juarez was the office administrator, and only pretended to be a doctor or a physician's assistant. He had no medical training, yet actually saw and treated patients. Juarez is currently in jail for practicing medicine without a license.

In addition to being just plain wrong, left unchecked, this kind of fraud will absolutely break the Medicare system. Yet another reason why we need whistleblowers and the False Claims Act - to root out this sort of behavior before it crushes the U.S. taxpayers. The False Claims Act specifically addresses fraud in which someone "knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval" or uses "a false record or statement material to a false or fraudulent claim." If doctors represent that they have performed procedures they did not perform, and create medical records to support those claims, clearly they are defrauding the government. Whistleblowers who report the fraud help protect the entire Medicare system. In order to incentivize the whistleblowers, federal law allows a whistleblower to collect between 15% and 30% of the amount recovered by the United States after it learns of the fraud. The whistleblower must file an appropriate lawsuit, following the requirements set out in 31 U.S.C. § 3729, et seq.

Alabama Company Pays Amid Allegations It Faked a Minority-Owned Company

October 14, 2013,

Dreamcatcher.jpgA growing number of False Claims Act cases are holding companies accountable when they get contracts by fraudulently pretending to be minority-owned or woman-owned. In one recent case, an Alabama company wound up paying the Government $1,150,000 after a whistleblower reported that the company was only pretending to hire a Native American-owned company.

The whistleblower's lawyers filed suit alleging that Caddell Construction, an Alabama corporation, had a contract with the Army Corps during the period between 2003 and 2005. Under the contract, Caddell was to build barracks at two army bases in Fort Bragg, N.C. and Fort Campbell, Ky.

As part of the contract, Caddell agreed to hire and mentor a Native American-owned company. The contractual provision was set up under programs run by the Department of Defense, the Mentor-Protégé and Indian Incentive Programs. Caddell claimed it was entitled to payment because it had hired and mentored a Native American-owned company called Mountain Chief. A whistleblower, however, reported that Mountain Chief was not a real company; it had been set up solely to allow Caddell to claim it was using a Native American-owned company. In fact, the whistleblower's lawyers explained, Mountain Chief was not actually doing any work. It had no employees at all who were working on the project.

In the press release from the Department of Justice, the Government stated that: "Mountain Chief allegedly was merely a pass-through entity used by Caddell to claim payments under the two programs, and didn't perform the work or receive the mentoring services for which Caddell received payment."

In addition to pursuing the False Claims Act civil case, the Government also indicted two former employees of Caddell for making the false claims. Mark Hill, the company's director of business development, and Daniel Chattin, company president, were both indicted in federal court in the Middle District of Alabama. The company avoided prosecution itself by agreeing to pay $2,000,000 and cooperate in the criminal prosecutions.

A Principal Deputy Assistant Attorney General for the Civil Division of the Department of Justice explained that when a company falsely claims that it hired a minority-owned business, it "subvert[s] important government programs." Indeed, if the Government will not enforce these cases, the government programs might as well be shut down, as businesses will be free to ignore provisions such as the one promoting involvement of Native American businesses.

The Department of Defense began its Mentor-Protégé Program in 1991 in order to assist small, disadvantaged businesses (SDB). The program is designed to encourage larger companies to partner with and mentor smaller companies. The smaller company must qualify as a Small Disadvantaged Business under § 8(d)(3)(C) of the Small Business Act, found at 15 U.S.C. § 637(D)(3)(C), or meet similar criteria for businesses owned by Indian tribes, Native Hawaiians, the severely disabled, women, service-disabled veterans, or HUBZone-qualified businesses. For its part, the mentor company receives direct reimbursement for its efforts and/or multiplied credit toward the SDB subcontracting goal set out in the company's contract with the U.S.

The Indian Incentive Plan is a program begun by Congress. Under the program, a contractor receives a 5% rebate for work subcontracted to, or items bought from, an Indian-Owned Economic Enterprise or Indian Organization.

The Surprising Truth About Deadly Car Accidents over the Columbus Day Holiday

October 10, 2013,

Thumbnail image for Columbus, Christopher.jpgThink Columbus Day presents a big problem in terms of car accidents? Unfortunately, Columbus Day is not just deadly in terms of car accidents - in the year 2009 it was the deadliest holiday weekend of all. Believe it or not, that year more people died on Georgia roads over the Columbus Day holiday than died over the New Year's Eve holiday. Here in Georgia, we have got to take this holiday weekend seriously.

As a car crash attorney, I talk to grieving families and seriously injured people all the time. Several months back, I started researching Georgia car accidents in order to see whether I could spot any patterns about when, how and where car accidents happen. My hope is that if we can figure out the trouble spots, then maybe we can make Georgia roads safer.

When I did my research in the Fatality Analysis Reporting System ("FARS") database maintained by the federal government, I was stunned to learn that Columbus Day was so dangerous. Over that weekend in 2009, 22 people died in 19 different fatal auto collisions here in Georgia. That number is not only large, it actually is the largest for any holiday weekend of the whole year. The combined total of people who were killed in car crashes over the New Year's Eve and Day and surrounding period was 17. Eighteen people died in car accidents over the Fourth of July. Seventeen more people were killed in car crashes on Georgia roads on Memorial Day. But the single, deadliest holiday of the entire year was Columbus Day.

The number of deaths in 2008 was much smaller. Over the Columbus Day weekend, ten people died in 9 car accidents that occurred here in Georgia. That year more people were killed over Christmas (when 25 people lost their lives in 25 fatal car collisions), Thanksgiving (when 18 people were killed in 17 different auto wrecks around the state of Georgia), and on Independence Day (when 21 people died in 16 separate fatal car accidents).

Still, the number of people who died in Columbus Day traffic is sobering. And these deadly car accidents did not happen just in the metro Atlanta area. Over the 2009 Columbus Day holiday, people were killed all over the State: in Macon County, Peach County, Houston County, and Madison County, to give just some examples. People were killed in Fort Valley, Georgia, Macon, Georgia, and Centerville, Georgia, and other cities around our state.

For years I have avoided driving on New Year's Eve and New Year's Day. I have been cautious every time I got in the car over the Fourth of July. I thought about Memorial Day and Labor Day, and knew those could be dangerous times for driving.

But never, in all my years of driving, had I even considered the thought that Columbus Day might be particularly dangerous for drivers, passengers and pedestrians. My guess is that I'm not alone.

But the truth is that the car wrecks and Columbus Day do go together. So be extra, extra, extra careful this weekend. Remember that it is a holiday weekend, that people are traveling, and that some people may be DUI because they are drinking and driving.

Medicare's Ability to Fight Fraud Goes Under the Knife

October 7, 2013,

Thumbnail image for Scalpel.jpgThe Center for Public Integrity is delivering more bad news about the budget cuts to the fraud-fighting arm of Medicare and Medicaid. In my whistleblower law blog entry, Now Here's A Bad Idea: Government Decreases Funding to Fight Medicare Fraud, I blogged about how severe these budget cuts will be, and why it would be penny-wise and pound-foolish to cut the funding for the office that draws money back into Medicare. Why would you cut funding to an organization that is making money for you, like the Department of Health and Human Services' Office of the Inspector General?

The Center for Public Integrity has published new details about what OIG has decided to cut. OIG is dropping a program that would investigate hospitals accused of providing poor care to patients, and axing another investigation into whether nursing homes are overusing antipsychotic drugs, at enormous cost to Medicare and untold cost to the patients.

One of the cuts that simply staggers me is the plan to axe a review of the drugs that Medicare has paid for and yet that were never approved by the FDA. Apparently Medicare suspects that it may have paid as much as $3 billion for drugs under Medicare Part D, even though those drugs had not even been through the FDA review process. Medicare intended to investigate to try to find out whether this was true and what drugs were involved, but now cannot afford to do so.

I hope whistleblowers will come forward with the information, because it is outrageous that the Government has been charged $3 billion for pharmaceuticals that had never been approved. If the Government does recover money, the whistleblower who came forward with original information and who properly filed suit under the False Claims Act will be entitled to between 15% and 30% of what the Government has collected.

The agency also is cutting a study of durable medical equipment providers, which is simply terrible news. The fraud by suppliers of durable medical equipment (DME) has been appalling and open. This area has been an easy target for fraud because the DME companies are virtually unregulated and the state and federal governments have erected very few barriers to entry. Doctors and hospitals have far more reason to avoid fraud; they know that they can lose their licenses, or nearly as bad, their qualification for treating Medicare and Medicaid patients. The DME business, however, is so unregulated that I have seen situations where a company that is shut down just reopens under a new name, and keeps right on defrauding Medicare and Medicaid in the exact same way it was doing before.

Harvard Professor Malcolm Sparrow predicts we will regret these cuts three years from now. I agree. Given that government spending on medical care is ramping up, there is absolutely no excuse for cutting the existing mechanisms to stop fraud. If anything, HHS should be increasing the funding so that it can recapture the money being stolen from it and direct the funds back into its healthcare programs.

The OIG budget cuts make it critical that healthcare whistleblowers step forward. The Government's resources have always been overwhelmed by the sheer volume of fraud, and now the mismatch will be even more pronounced. If medical insiders turn a blind eye to the fraud, the healthcare system will not be able to absorb the heavy cost of the fraud. We need honest people from all over the field -- doctors, nurses, physicians' assistants, anesethesiologists and anesthetists, billers, and coders -- to step forward to let the Government know when it is being defrauded. Medicare and Medicaid will not be able to handle the job of funding healthcare and also the lining the pockets of hospitals, doctors, and medical practices that are willing to cheat the government in order to get more money.

Hawaii Hospital Pays $451,000 to Settle Allegations of Medicare and Medicaid Fraud

October 3, 2013,

Hawaii.jpgThe story is all too familiar. In fact, I told it in my very last blog post, when I discussed False Claims Act allegations against Vanderbilt University Medical Center. Like Vanderbilt, Wahiawa General Hospital of Honolulu is accused of charging for physicians to supervise student doctors -- when in fact the doctors were not supervising as much as the hospital claimed they were. Vanderbilt is denying the claims, but the Hawaii hospital has agreed to pay $451,428 to settle the allegations that it defrauded Medicare and Medicaid.

(As a whistleblower lawyer, I was quite curious as to how the parties arrived at such an unusual number, but I was not able to find an answer.)

In both the Vanderbilt and the Wahiawa General cases, the Government learned about the Medicare fraud thanks to a whistleblower.

Both Vanderbilt and Wahiawa also have been accused of billing as if doctors were supervising patient treatments, when in fact non-doctors were actually performing the medical work. The type of medicine changed, but not much else. In the case against Vanderbilt, the Vandy Medical Center is accused of billing as if doctors had performed anesthesia on surgical patients, when in fact student doctors and nurse anesthetists were doing the work and the doctors who were supposed to be supervising them were not actually present. Wahiawa General is charged with using a similar scheme in its Family Practice Residency Program, associated with the John A. Burns School of Medicine.

According to lawyers for the Government and for the physician whistleblower who brought the lawsuit, Wahiawa was using codes that a hospital only should use when a doctor performs a procedure. (Medicare reimburses doctors and hospitals according to "codes" set for each procedure. Medicare reimburses more for some codes than for other codes. Obviously Medicare depends on hospitals and doctors to properly code the procedures.) The higher billing codes were only justified if the Wahiawa General doctors were providing a certain amount of supervision for the resident doctors who performed the procedures.

When the whistleblower filed an FCA suit and claimed that the doctors were not supervising the procedures as much as the hospital was claiming they were, the Government asked the hospital to provide documentation that would support its billing. Apparently the hospital was not able to support its claims, and the patient records in fact did not show that physicians were offering enough supervision to merit the codes the hospital was billing to Medicare and Medicaid. Additionally, sometimes the hospital bill used a code for services that did not match the services that the doctor described in the patient's chart.

The federal government and the State of Hawaii will share in the recovery. Because the states pay part of the cost of Medicaid, both federal and Hawaii taxpayers were overcharged as a result of the hospital's upcoding and overbilling. Congratulations to Hawaii, which was wise enough to enact a Hawaii False Claims Act so that it could aid in the recovery of these amounts.

The whistleblower in this case was a doctor who had worked at an out-patient clinic sponsored by Wahiawa General, the Physicians Center at Mililani. Under the False Claims Act, a whistleblower who brings a successful suit is entitled to receive a percentage of what the Government gets. Here, the Government will be paying $84,642.75 to the whistleblower, and in addition Wahiawa General will pony up for $75,000 in attorney fees.

Say It's Not So! Vanderbilt University Medical Center Accused of Medicare Fraud

September 30, 2013,

Vitals Monitor.jpgI was really disappointed to hear about some very serious allegations against the hospital associated with my undergraduate alma mater, Vanderbilt University. I am a lawyer who represents whistleblowers, and I hate to think that such a fine place as Vanderbilt would be engaged in Medicare fraud. However, according to three whistleblowers who filed a qui tam lawsuit against Vanderbilt University Medical Center, the hospital has been systematically overcharging Medicare for ten years.

According to an article in the Nashville Post, Whistleblower Docs Allege Vast VUMC Medicare Billing Deception, the False Claims Act lawsuit was filed by three anesthesiologists who once worked at Vanderbilt. They say that the hospital billed Medicare and Medicaid for "teaching physician services", when in fact the teaching physician was not present during the key parts of the procedure. Under Medicare rules about surgical charges, a hospital is only allowed to charge for a "teaching physician" who is present during "all critical portions" of the surgery, and who is available "during the entire procedure."

According to the whistleblowers, Vanderbilt set policies that "force[d] surgeons to routinely overbook their schedules and rely on residents to perform the critical portions." The situation was so bad that "surgeons were booked for multiple procedures simultaneously" in different parts of the hospital.

Yikes! I know I wouldn't want my surgeon to go AWOL while I was lying on the operating table. According to the three relators (the legal term for whistleblowers who bring a suit under the False Claims Act), however, that is exactly what happened and it led to some pretty frightening situations.

One of the anesthesiologists says he was called into a surgery that supposedly was being supervised by a physician. When he got there, he found a student nurse anesthetist was trying to single-handedly perform the anesthesia for a patient who was in the middle of brain surgery. The patient was struggling to breathe, having become bradycardic and cyanotic (blue). The whistleblower discovered that the allegedly "supervising" physician was in his office, which was in an entirely different building.

Vanderbilt claims the allegations are false, and that it would have taken a coordinated effort by "thousands of individuals" to maintain this much fraud. But the doctors say Vanderbilt managed it via a computer system. After a 2008 audit, they claim Vanderbilt took its overbilling "underground" by writing its very own computer program that automatically generated all the documentation it would need to support the false claims it was making to Medicare.

Since a qui tam suit alleges that the Government has been ripped off, the Government has the right to intervene (take over) in a lawsuit. Here, the Government got five extensions of the time it had to decide whether to intervene, but apparently had not completed its investigation when the judge denied the Government a sixth extension and unsealed the case. In pleadings filed in the case, the Government said that it was not prepared to intervene in the case, but emphasized that it was still investigating the allegations. The Government made it clear that the fact that it was not intervening immediately did not mean that it had decided it was not going to intervene (known as "declining" to intervene). As a whistleblower lawyer, I read those statements as saying that the Government is taking the allegations very seriously and believes there is some evidence of fraud.