On Tuesday, August 30, 2016, the Department of Justice along with Connecticut Attorney General George Jepson and the U.S. Department of Health and Human Services announced that Jesus Villegas, DDS, and his two pediatric dental clinics in Milford and West Haven, Connecticut have entered to a civil settlement to pay $1,367,466 to resolve allegations that they violated the federal and Connecticut False Claims Acts.
The allegations revolve around the taking of pediatric dental x-rays at the two dental clinics. Under Connecticut law, a licensed dentist may delegate the taking of dental x-rays to dental assistants if the dental assistant has completed the dental radiography portion of an examination prescribed by the Dental Assisting National Board (DANB). The federal and state cases alleged that the majority of x-rays taken at Dr. Villegas dental clinics were taken by dental assistants who were not DANB certified. This practice was alleged to have violated the federal and state False Claims Act because X-rays taken by uncertified dental assistants are not payable by the Medicaid program yet the defendants billed Medicaid for these X-rays. The conduct covered under the settlement occurred from June 1, 2010 through March 17, 2014.
As part of the settlement, Villegas and the two clinics have entered into a three-year billing Integrity Agreement with the U.S. Department of Health and Human Services. The agreement is designed to ensure future compliance with federal healthcare programs.
The case was investigated by the Office of Inspector General for the Department of Health and Human Services and is being prosecuted by Assistant U.S. Attorney Richard M. Molot and Auditor Kevin Saunders, and by Assistants Attorney General Karen S. Haabestad and Natasha Freismuth of the Connecticut Office of the Attorney General.
Under the qui tam provisions of the False Claims Act, whistleblowers with information about similar fraud against the government may bring a civil case on behalf of the United States. If successful, the government can recover three times the amount the defendants fraudulently billed the government. The whistleblower, who originally filed the qui tam case, is entitled to 15-30% of the government’s recovery as well as their attorney’s fees.
To report fraud, contact Frohsin, Barger & Walthall.
Yesterday, August 30, 2016, Niurka Fernandez, 54, and her son Roberto Alvarez, 29, both of Miami, each pleaded guilty to one count of conspiracy to commit health care fraud before U.S. District Judge Federico A. Moreno of the Southern District of Florida. They are scheduled to be sentenced November 8, 2016.
In her guilty plea, Fernandez admitted that as owner of two Miami area pharmacies, she was the organizer and leader of a Medicare fraud scheme that paid Medicare beneficiaries and patient recruiters for prescriptions that were medically unnecessary. She also admitted that she and her co-conspirators billed Medicare for many prescriptions that they never even dispensed to the beneficiaries.
In his guilty plea, Alvarez admitted that he was involved in the Medicare fraud scheme at one of the pharmacies owned by his mother. Alvarez purported to work there as a pharmacy technician but his actual function was to facilitate kickback payments to Medicare beneficiaries. Alvarez also admitted to writing checks to money launderers in order to obtain cash to pay kickbacks to Medicare beneficiaries.
Medicare paid over $16 million to the two pharmacies as a result of the health care fraud scheme.
The cases were brought as a part of the Medicare Fraud Strike Force. Since its inception in March 2007, the Medicare Fraud Strike Force is now operating in nine cities across the country and has charged nearly 2,900 defendants who have collectively billed the Medicare program for more than $10 billion.
The cases against Fernandez and Alvarez are criminal cases. However, under the qui tam provisions of the False Claims Act, whistleblowers with information about similar fraud against the government may bring a civil case on behalf of the United States. If successful, the government can recover three times the amount the defendants fraudulently billed the government. The whistleblower, who originally filed the qui tam case, is entitled to 15-30% of the government’s recovery as well as their attorney’s fees.
To report fraud, please contact Frohsin Barger & Walthall.
On August 30, 2016, Khaled Elbeblawy was sentenced to 20 years in federal prison and ordered to pay nearly $36.5 million in restitution for his role in a Medicare home health fraud scheme. The sentence follows a two-week trial which culminated on January 21, 2016 when a South Florida jury found Elbeblawy guilty of one count of conspiracy to commit health care fraud and wire fraud and one count of conspiracy to defraud the United States and pay health care kickbacks.
The evidence at trial showed Elbeblawy managed Willsand Home Health Agency Inc. and owned JEM Home Health Care LLC and Healthy Choice Home Services Inc., all in the Miami area. Trial evidence also showed that from approximately 2006 to 2013 Elbeblawy and his co-conspirators billed Medicare for home health services that were not medically necessary and often never even provided. To further this scheme, Elbeblawy and his co-conspirators paid kickbacks to doctors, patient recruiters and staffing groups in exchange for Medicare beneficiary referrals to the home health agencies. Over this time period, the three home health agencies submitted approximately $57 million in false and fraudulent claims to Medicare and received payments totaling approximately $40 million for those claims.
One of Elbeblawy’s co-conspirators, Eulises Escalona, was sentenced to 10 years in prison after pleading guilty to one count of conspiracy to commit health care fraud. Another co-conspirator, Cynthia Vilches, has pled guilty to one count of conspiracy to commit health care fraud and is scheduled to be sentenced on October 13, 2016.
The case was brought as a part of the Medicare Fraud Strike Force. Since its inception in March 2007, the Medicare Fraud Strike Force is now operating in nine cities across the country and has charged nearly 2,900 defendants who have collectively billed the Medicare program for more than $10 billion.
The cases against Elbeblawy and his co-conspirators are criminal cases. However, under the qui tam provisions of the False Claims Act, whistleblowers with information about similar fraud against the government may bring a civil case on behalf of the United States. If successful, the government can recover three times the amount the defendants fraudulently billed the government. The whistleblower, who originally filed the qui tam case, is entitled to 15-30% of the government’s recovery as well as their attorney’s fees.
To report Medicare fraud, contact Frohsin, Barger & Walthall.
Disgraced cyclist Lance Armstrong has filed a motion for summary judgment arguing that the hotly contested False Claims Act case pending against him should be dismissed. The case, which was originally brought by Armstrong’s former teammate Floyd Landis under the qui tam provisions of the False Claims Act and later joined by the federal government, alleges that the U.S. Postal Service would not have paid $32.3 million in sponsorship money if it had known Armstrong had taken illegal performance enhancing drugs.
The federal government also recently filed its own motion asking the court to affirm that Tailwind Sports, the cycling team’s owner, submitted 41 claims for payment to the USPS from 2000 to 2004, totaling the $32.3 million sought as single damages. However, under the treble damages provisions of the False Claims Act, Armstrong is facing over $100 million in damages if found liable.
Armstrong’s defense largely focuses two issues. First, Armstrong claims that he, himself, did not submit any false claims to the USPS but that the sponsorship contracts were between USPS and Tailwind Sports and Tailwind then paid Armstrong a salary. Second, Armstrong argues that reports commissioned by the USPS show that the USPS did not suffer any damages. Armstrong claims these reports instead show the USPS received at least $165 million in domestic and international media exposure as a result of the cycling team sponsorship between 2001 and 2004.
The government views the issues differently arguing, “No sponsor who knew the truth about how Armstrong achieved his Tour de France victories would have paid any amount of money to sponsor him or his team.”
District Judge Christopher R. Cooper is presiding over the case in the United States District Court for the District of Columbia and is expected to rule on the respective motions in the coming weeks. If the court denies Armstrong’s motion, the case will proceed to trial and Armstrong could potentially be held liable for over $100 million in damages.
Whether Armstrong’s motion for summary judgment is granted or denied, the highly anticipated ruling will shape the history of the False Claims Act and this atypical case which has propelled the FCA into the mainstream media.
To report fraud, contact Frohsin, Barger & Walthall.
In a joint press release issued August 25, United States Attorney for the Southern District of New York Preet Bharara and New York Attorney General Eric T. Schneiderman announced a $2.95 million False Claims Act settlement with New York’s Mount Sanai Health System to resolve allegations that the hospital system knowingly retained over $800,000 in Medicaid overpayments for over two years. The hospital system was required by law to return the overpayments within 60 days. This is the first settlement involving this law, which was included in the Affordable Care Act and created False Claims Act liability for health care providers that identify overpayments and do not return the money within 60 days.
HHS-OIG Special Agent in Charge Scott J. Lambert commented: “Any threat to the financial health of Medicaid is a threat to the vulnerable citizens who depend upon it for critical services. Today’s settlement should send a message to providers that this behavior will not be tolerated, and we will pursue justice in these cases.”
The case was originally brought under the qui tam provisions of the False Claims Act by relator Robert Kane, a former technical director at Continuum Health Partners, one of the Mount Sinai entities named as defendants in the case. Kane alleged that he alerted Continuum to a software glitch that caused erroneous billing of 444 claims to Medicaid. After Mr. Kane compiled a list these erroneously billed claims and sought to convince Continuum to return the money to Medicare, he was fired.
Mr. Kane filed his case on behalf of the government and the government then exercised its right under the False Claims Act and intervened in the case. The primary claim in the case, which is alleged when an entity unlawfully retains money that is owed to the government, is known as a “reverse false claim.” Judge Edgardo Ramos’ denial of the Defendant’s motion to dismiss was the first such decision under this Affordable Care Act “60 day repayment” provision and has been interpreted by legal experts as “the most significant case interpretation” of the “reverse false claims provision” of the federal False Claims Act. Brian Feldman, Health Care Overpayments and Reverse False Claims, New York Law Journal, September 8, 2015.
Of the $2.95 million settlement, $1.7 million will go to the State of New York and the federal government will receive $1.2 million. Mr. Kane, the whistleblower, will receive a relator’s share of $354,000 out of the government’s recovery.
If you have questions about the False Claims Act or would like to report fraud, please contact Frohsin, Barger & Walthall.
The interim rule governing the Enforce and Protect Act of 2015 (EAPA) was released by Customs and Border Protection (CBP) on August 22, 2016. The EAPA is specifically designed to increase the transparency and effectiveness of CBP’s antidumping and countervailing duty (AD/CVD) evasion enforcement by establishing a formal procedure which allows interested parties to file allegations of AD/CVD evasion with CBP.
The EAPA, which is expected to result in significantly more AD/CVD evasion enforcement actions, comes as a welcome addition to the current AD/CVD enforcement mechanisms such as the False Claims Act. The primary direct beneficiaries of this increased evasion enforcement are expected to be U.S. industry groups who have struggled to gain trade protection by implementing AD/CVD orders only to have the duties continually evaded and law abiding importers who are disadvantaged by competitors who cheat AD/CVD orders.
What are Antidumping and Countervailing Duties?
Antidumping and countervailing duties are vital tools used by the United States to counteract unfair trade practices by foreign corporations and foreign nations. When a foreign entity is aggressively importing their products into the United States at prices that are below the cost of production simply to grab market share, an AD/CVD order can be issued. After the AD/CVD order is issued, the unfairly imported products are taxed at a duty level that counter-balances the subsidies the foreign companies receive and account for the cost of production. The AD/CV duties can be as much as 300% of the value of the imports and this high duty rate creates a strong incentive for fraudulent evasion of the duties. Schemes to evade AD/CV duties can take many forms but generally have involved misrepresenting the merchandise’s true country of origin, false shipping and entry documentation, or misreporting the merchandise’s physical characteristics.
AD/CVD Order Enforcement and Evasion Prosecution Has Become a Major CBP Initiative
Due to the hyper-aggressive trade practices of foreign corporations and even some foreign governments AD/CVD orders have been on the rise in recent years, which also has led to a rise in AD/CVD evasion. Because the economic implications of AD/CV duties are so substantial and evasion so pervasive, CBP has made AD/CVD enforcement a major agency priority. This has led to an increase in AD/CVD evasion False Claims Act cases, such as the recent $3 million settlement by Frohsin & Barger, U.S. ex rel. G.E.S. v. Ameri-source. Prior to the enactment of the EAPA the administrative mechanism used to detect AD/CVD duty evasion, known as an E-Allegation, did not afford parties an opportunity to participate in the investigation nor did CBP have a duty to notify the party that submitted the allegations of the outcome.
How Does the EAPA Work?
Under the current “interim” EAPA rule, an interested party who believes that another entity is engaging in AD/CVD evasion may submit an allegation to CBP that reasonably suggests that merchandise covered by an AD/CVD order entered the United States without paying the requisite duties. After receipt of the allegation, CBP must decide whether to initiate an investigation within 15 business days and if initiated must determine within 300 days whether there is “substantial evidence” that merchandise covered by AD/CVD order evaded the AD/CV duties.
CBP may investigate allegations by methods CBP considers appropriate. One method specifically mentioned by the EAPA is the use of questionnaires to discover information relevant to AD/CVD evasion. CBP may make an “adverse inference” (essentially viewing the information or lack of information unfavorably) if a party did not act to the best of its ability to provide requested information. If through this investigative process, “substantial evidence” of evasion is found, CBP has several methods available to recover the evaded duties and may refer the matter for possible civil or criminal investigation.
The EAPA also provides for an even faster temporary remedy, known as the “interim measures mechanism.” Under this provision, CBP will determine within 90 calendar days of initiation of an EAPA investigation whether “reasonable suspicion” exists that AD/CV duties were evaded. If CBP determines that such “reasonable suspicion” exists, there are multiple measures CBP may take to collect the appropriate duties, including reassessing duties or requiring a bond or cash deposit to import the goods.
The EAPA, in divergence from the lack of disclosure that hampered the effectiveness of the E-Allegation procedure, requires CBP to communicate its determination to the party who made the allegation within five days.
Under the current interim version of EAPA, the interested party who makes the allegation is not rewarded with any type of monetary benefit, including no reward of attorney’s fees for reporting this information to CBP. The absence of a reward is puzzling. An EAPA allegation is essentially a whistleblower complaint as it alerts the government to the fraudulent evasion of AD/CVD duties, a destructive practice which can also carry severe civil and criminal penalties. Comparatively, other Federal agencies such as the SEC and IRS include whistleblower rewards in the framework of their fraud reporting regulations. Further, the same type of allegations that would form an EAPA allegation have constituted successful qui tam False Claims Act complaints, which mandate that the whistleblower would receive 15-30% of the amount recovered by the government as well as attorney’s fees.
However, the law states EAPA investigations are not meant to be the exclusive means or only statutory authority by which CBP can investigate allegations of evasion of AD/CVD orders but instead to provide a transparent investigative procedure to address allegations. Therefore, the existing AD/CVD enforcement mechanisms such as filing a civil case under False Claims Act, prosecuting a criminal case through U.S. criminal smuggling laws and the administrative E-Allegation procedure, are still available.
The interim rule became effective on August 22, 2016 and CBP is accepting comments by interested parties until October 21, 2016.
How Does the EAPA protect American Industry and Law-Abiding Importers?
The passage and implementation of the EAPA demonstrates the strength of the United States’ commitment to not only protecting the American economy from unfair trade practices but also adequately enforcing the trade remedies that have been implemented. The EAPA also signals that AD/CVD evasion is now a primary focus of CBP and with the increased focus there will be an increase in the detection of AD/CVD evasion schemes. Overall, the additional resources, streamlined procedure and greater accessibility provided by the EAPA are a step in the right direction to curtail AD/CVD evasion and allow the AD/CVD orders achieve the goal for which they were implemented: to protect the U.S. economy from unfair trade.
If you have questions about the Enforce and Protect Act of 2015, or AD/CVD evasion, please contact Frohsin, Barger & Walthall.
The U.S. Attorney for the Southern District of Florida announced on August 15, 2016 that Ramon Collado Gonzalez has pled guilty to one count of conspiracy to defraud the United States and one count of making a false statement in connection with a federal health care benefit program.
In his guilty plea, Collado Gonzalez admitted that he was recruited by Mildrey Gonzalez and Milka Alfaro, the owners of Golden Home Health Care Inc. (Golden), a home health care agency in Miami, to fraudulently represent himself as the owner of Golden. In return for concealing his alleged co-conspirators’ ownership interests, Collado Gonzalez received a monthly payment and periodic bonuses, although he did not do any actual work for Golden. His function was simply to sign off on a Medicare application and other documents for the purpose of facilitating submission of false claims to Medicare and concealing Mildrey Gonzalez’s and Alfaro’s ownership interests.
During the time Collado Gonzalez misrepresented himself as the owner, Golden received approximately $4.2 million from Medicare as a result of false and fraudulent claims.
Since its inception in March 2007, the Medicare Fraud Strike Force has charged nearly 2,900 defendants who have collectively billed the Medicare program for more than $10 billion.
The charges to which Collado Gonzalez pled guilty were criminal charges. However, under the qui tam provisions of the False Claims Act, whistleblowers with information about similar fraud against government programs may bring a civil case on behalf of the United States. If such a case is successful, the government can recover up to three times the amount the defendants fraudulently billed the government. The whistleblower is then entitled to receive 15-30% of the government’s recovery and also entitled to receive reasonable attorney’s fees.
Read the full Department of Justice Press Release
To report fraud, please contact Frohsin & Barger.
Bering Straits Technical Services LLC (BSTS) and its parent company, Bering Straits Native Corporation (BSNC), have paid $2 million in damages to resolve numerous alleged violations of the False Claims Act. Generally, it was alleged that BSTS and BSNC caused false claims to be submitted to the Department of Defense (DOD) and/or the Defense Logistics Agency (DLA) for maintenance facility services provided at the Red River Army Depot located near Texarkana.
The suit specifically alleged that beginning in September 2010, BSTS and BSNC submitted false preventative maintenance reports for maintenance work that was not performed. The complaint also claimed that BSTS and BSNC employees were directed to repair equipment that no longer existed or was no longer in service and compelled to claim maintenance hours and supply costs for work that was not performed. BSTS ceased providing services at the Red River Army Depot Aug. 31, 2014.
The settlement is the result of a False Claims Act qui tam suit that was filed in United States District Court for the Southern District of Texas in 2012. The qui tam provision allows individuals, with knowledge of fraud against the government, to file suit on behalf of the United States. The individual, known as a relator, is then typically entitled to receive a portion of the government’s recovery.
Read the full Department of Justice Press Release here.
To report fraud, contact Frohsin & Barger.
California-based Z Gallerie LLC has agreed to pay $15 million to settle allegations that the company violated the False Claims Act by engaging in a scheme to evade antidumping duties on imports of wooden bedroom furniture from the People’s Republic of China (PRC). Specifically, the suit alleged that from 2007 to 2014, Z Gallerie evaded antidumping duties by misclassifying, or conspiring with others to misclassify, the imported bedroom furniture as non-bedroom pieces. For instance, Z Gallerie allegedly sold certain Basset Mirror Company products, including a six-drawer and three-drawer chest as part of a bedroom collection. However, this furniture was mislabeled as “grand chests” and “hall chests” on the import documents submitted to Customs and Border Protection (CBP), in order to evade the antidumping duties. Under the antidumping order on wooden bedroom furniture from the PRC, which has been in effect since 2005, antidumping duties can be as much as 216.01% of the value of the subject merchandise.
The case was handled by the U.S. Attorney’s Office for the Southern District of Georgia. “Savannah is home to one of the fastest growing ports in the country, handling almost 10 percent of all the containerized cargo volume in the United States,” said U.S. Attorney Edward J. Tarver for the Southern District of Georgia. “This U.S. Attorney’s Office will work hard to make sure those using the Port of Savannah play by the rules, and to hold those who try to cheat their way out of paying customs duties accountable.”
The allegations resolved by the settlement were originally brought by whistleblower Kelly Wells, an e-commerce furniture retailer from Huntsville, Alabama, under the qui tam provision of the False Claims Act. The qui tam provision allows private parties, who have knowledge of fraud against the government, to sue on behalf of the United States those who falsely claim federal funds or, in the case of antidumping fraud those who avoid paying funds owed to the government. Under the False Claims Act, a whistleblower is entitled to receive a share of any funds recovered. Ms. Wells will receive $2.4 Million as her share of the $15 million settlement.
“Under the new Trade Facilitation and Trade Enforcement Act, CBP will likely see an increase in these types of settlements as the streamlined processes take effect concerning allegations of duty evasion,” said CBP Commissioner R. Gil Kerlikowske. “The Act reinforces CBP’s existing authorities and tools to collect and investigate public allegations of duty evasion improving the overall effectiveness and enforcement of CBP law enforcement actions concerning illicit trade activity, specifically in the area of antidumping and countervailing duty evasion schemes.”
The use of the False Claims Act to enforce customs fraud, particularly schemes to avoid antidumping and countervailing duties, is a viable unfair trade remedy available to both individuals and businesses injured by unfair trade. Another example of False Claims Act enforcement of antidumping duties fraud is the recent case settled by Frohsin & Barger client Graphite Electrode Sales, Inc.
Read the full Department of Justice Press Release here.
To report fraud, please contact Frohsin & Barger.
Carlos Rodriguez Nerey, a patient recruiter for several Miami-based home health companies, has been convicted for his role in a fraud and kickback scheme that resulted in fraudulently submitting millions of dollars in false claims to Medicare.
Mr. Nerey was found guilty of one count of conspiracy to defraud the United States and pay and receive health care kickbacks and one count of receiving health care kickbacks. He claimed to work for a staffing company but in reality served as a patient recruiter for D&D&D Home Health Inc. (D&D&D) and Mercy Home Care, Inc. (Mercy), two fraudulent home health care companies. Mr. Nerey created a shell company through which he received kickbacks from Mercy and D&D&D, as well as $250,000 for his role in the conspiracy. Medicare paid over $2 million to D&D&D and Mercy for false claims.
The case was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Southern District of Florida. Since its inception in 2007, the Medicare Fraud Strike Force has charged nearly 2,000 defendants who have collectively billed the Medicare program over $6 billion.
Read the full Department of Justice press release.
To report fraud, contact Frohsin & Barger.