PHILADELPHIA, PA – United States Attorney William M. McSwain today announced calendar year 2018 affirmative civil enforcement (ACE) achievements by the U.S. Attorney’s Office Civil Division. As the 2018 achievements demonstrate, the Eastern District of Pennsylvania (EDPA) continues to have one of the busiest and most prolific Civil Divisions in the country.
For calendar year 2018, the EDPA Civil Division recovered over $115.5 million in settlements and judgments from civil cases involving fraud against the government. These matters originated largely from qui tam, or whistleblower filings and agency referrals. Of that amount, over $108 million resulted from False Claims Act (FCA) cases, largely from those alleging healthcare fraud violations. Whistleblowers recovered over $18 million from these resolutions. During the same calendar year, EDPA opened a record-setting number of ACE investigations into alleged fraud on the government, Controlled Substances Act violations, and civil rights violations.
“We sincerely thank the whistleblowers and their counsel who have brought these matters to the attention of the United States. Without the willingness of relators to shed light on allegations of fraud, preserving government program funds would be far more challenging. Their efforts played a vital role in the resolution of these cases,” said U.S. Attorney McSwain.
“We also thank our federal law enforcement partners, including the U.S. Department of Health and Human Services Office of the Inspector General, the Defense Criminal Investigative Service, the Drug Enforcement Administration, the U.S. Office of Personnel Management Office of the Inspector General, the U.S. Postal Inspection Service, and the Railroad Retirement Board Office of the Inspector General. The agency support and dedication in these matters is critical to the success of our civil enforcement.”
“We plan to build on these achievements in 2019,” continued U.S. Attorney McSwain. “I anticipate that the newly created ACE Strike Force will help us realize even greater success this year.” In August 2018, the U.S. Attorney formed the ACE Strike Force. It consists of five Assistant U.S. Attorneys within the Civil Division who focus their efforts on ACE work. Its mission is to pursue complex fraud investigations, including FCA whistleblower cases, combat the opioid crisis through civil enforcement, and enforce federal civil rights statutes.
“The Civil Division will continue to build its robust pipeline of ACE cases, and we have every reason to expect to see a large number of complex whistleblower filings under the False Claims Act and agency referrals,” said U.S. Attorney McSwain. “I expect ongoing ACE success, reflecting the identification and targeting of specific ACE areas including government fraud, Controlled Substances Act enforcement, and civil rights enforcement.”
The following are significant calendar year 2018 achievements:[1]
FCA Healthcare Fraud Settlements
HMA. In this qui tam against Health Management Associates (HMA), its hospitals Lancaster Regional and Heart of Lancaster, and the physicians group Physicians Alliance Ltd. (PAL), EDPA and DOJ negotiated a large, multi-district $260 million settlement involving medically unnecessary hospital admissions and kickbacks to doctors. The kickback methods included: physicians participating in whole-hospital joint ventures of HMA facilities, physicians receiving excessive compensation, physicians receiving bogus co-management fees, and physicians receiving bogus medical directorship fees. The settlement amount is $55 million for the joint venture piece of the litigation arising out of EDPA, with a global settlement of $260 million for eight qui tams filed in five districts. https://www.justice.gov/usao-edpa/pr/national-hospital-chain-will-pay-over-260-million-resolve
Abbott. Abbott Laboratories and AbbVie Inc. (“Abbott”) agreed to pay $25 million to resolve allegations that it employed kickbacks and unlawful methods of off-label marketing and promotion to induce physicians to prescribe the drug TriCor,® a blockbuster cholesterol reducing drug that was promoted for use in conjunction with other cholesterol lowering medications. https://www.justice.gov/usao-edpa/pr/abbott-laboratories-and-abbvie-inc-pay-25-million-resolve-false-claims-act-allegations
Coordinated Health and Emil DiIorio, M.D. Coordinated Health Holding Company, LLC (“Coordinated Health”) and its founder, principal owner, and Chief Executive Officer, Emil DiIorio, M.D., agreed to settle allegations that they abused billing modifiers to unbundle surgery codes resulting in false claims submitted to federal health care programs. Coordinated Health agreed to pay $11.25 million and DiIorio agreed personally to pay $1.25 million, for total settlement of $12.5 million. Coordinated Health has also entered into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services that will require regular monitoring of its billing practices for five years. https://www.justice.gov/usao-edpa/pr/coordinated-health-and-ceo-pay-125-million-resolve-false-claims-act-liability
SouthernCare. SouthernCare, Inc., a hospice care provider, agreed to pay $5,863,426 to the federal government to resolve allegations that the company submitted false claims to Medicare for hospice care that was medically unnecessary or lacked documentation. In their qui tam complaints, the whistleblowers alleged that SouthernCare provided hospice care to patients who were not eligible under the Medicare program. https://www.justice.gov/usao-edpa/pr/hospice-care-provider-pays-nearly-6-million-resolve-false-claims-act-allegations
I&L Express Pharmacy. I&L Express Pharmacy and its owners agreed to pay $3.2 million to the federal government to resolve allegations that they submitted false claims to Medicare for prescription medications that were not actually dispensed during a six-year period. Significantly, they also agreed to enter into an integrity agreement that requires them to undertake substantial compliance obligations and to contract with an Independent Review Organization that will conduct quarterly audits of their Medicare and Medicaid claims and drug inventory. https://www.justice.gov/usao-edpa/pr/pharmacy-owners-agree-pay-32-million-resolve-false-claims-case
Community Health Clinics / Dr. Melchor Martinez. In this case, EDPA filed a complaint in intervention of a qui tam alleging that Martinez had been excluded from participating in all federally funded healthcare programs, but had nonetheless continued to own and operate community mental health clinics that billed Medicaid and Medicare. The complaint also alleged widespread fraud in billing for mental health services, billing for services provided by unqualified individuals, and falsifying credentials. https://www.justice.gov/usao-edpa/pr/civil-complaint-alleges-fraud-operators-community-mental-health-clinics The district court entered a $3 million consent judgment on October 18, 2018, which required the defendants to shut down their remaining Medicare business and for significant periods of exclusion from participation in federally funded healthcare programs for the defendants. https://www.justice.gov/usao-edpa/pr/united-states-obtains-3-million-consent-judgment-and-federal-healthcare-exclusions-0
Bromedicon. Marshfield Medical, Inc., formerly known as Bromedicon, Inc., agreed to pay $550,000 to resolve a qui tam lawsuit’s allegations that Bromedicon submitted false claims to Medicare and other federal healthcare programs for failing to provide a qualified interpreting physician to monitor each surgery for which it purportedly provided remote Intraoperative Neurophysiological Monitoring. https://www.justice.gov/usao-edpa/pr/intra-operative-monitoring-company-agrees-pay-550000-settle-false-claims-act-claims
Dr. Banka. Vidya Banka, MD agreed to pay a civil penalty of $126,617 and to a five-year term of exclusion from all federal healthcare programs to settle allegations that he improperly submitted Medicare claims for unnecessary cardiac stent procedures. The University of Pennsylvania Health System (“UPHS”), which owns Pennsylvania Hospital, brought the matter to the United States’ attention through a voluntary self-disclosure. The United States then continued to investigate Dr. Banka. https://www.justice.gov/usao-edpa/pr/united-states-resolves-claims-philadelphia-cardiologist-billed-medicare-unnecessary
Rosenbaum. A personal injury law firm, Rosenbaum & Associates, and its principal, Jeffrey Rosenbaum, Esq., agreed to pay $28,000 to resolve allegations that they failed to reimburse the United States for certain Medicare payments the government had previously made to medical providers on behalf of firm clients who sought medical care. The government’s investigation arose under the Medicare Secondary Payer provisions of the Social Security Act. Rosenbaum also agreed to (1) designate a person at the firm responsible for paying Medicare secondary payer debts; (2) train the designated employee to ensure that the firm pays these debts on a timely basis; and (3) review any outstanding debts with the designated employee at least every six months to ensure compliance. https://www.justice.gov/usao-edpa/pr/philadelphia-personal-injury-law-firm-agrees-start-compliance-program-and-reimburse
Controlled Substances Act Enforcement
Passavant/PDC. Arising from a voluntary self-disclosure, Passavant Memorial Homes, and its subsidiaries Passavant Development Corporation, PDC Pharmacy Philadelphia, PDC Pharmacy Pittsburgh, and PDC Pharmacy Colorado, paid the United States $1,850,000 to resolve allegations that it dispensed controlled substances to patients without a valid prescription in violation of the Controlled Substances Act and FCA. This matter also involved two additional disclosures in coordination with the District of Colorado and the Western District of Pennsylvania. The U.S. Attorney’s Offices worked in close collaboration with each other, HHS, DEA, and Medicaid Fraud Control Units from all three districts to obtain the resolution in this case. https://www.justice.gov/usao-edpa/pr/passavant-memorial-homes-pay-185-million-resolve-allegations-improperly-dispensing
Dr. Stephen Latman. This civil complaint resulted in a first-of-its-kind consent decree against a physician who had been allegedly overprescribing opioids for years. According to the complaint, Dr. Latman issued 343 opioid prescriptions to three of his patients that lacked a legitimate medical purpose and were issued outside of the usual course of his professional practice. Dr. Latman entered into a Stipulated Order and Consent Judgment, requiring him to pay $400,000 to the United States, prohibiting him from ever seeking a future DEA controlled substance license, requiring him to voluntarily relinquish his license to practice medicine, and requiring him to execute an agreement with the U.S. Department of Health and Human Services to be excluded from Medicare, Medicaid, and all other federal health care programs. https://www.justice.gov/usao-edpa/pr/united-states-files-suit-against-reading-area-physician-opioid-prescribing
Stephen Humbert, D.O. and Raymond Ferraro, P.A. These medical providers agreed to pay $112,500 to resolve allegations for improperly prescribing opioids to one of their former patients. Additional conditions of compliance with the DEA required regular reporting of their prescriptions for controlled substances and new policies for their opioid patients. https://www.justice.gov/usao-edpa/pr/two-healthcare-providers-agree-pay-over-100000-settle-civil-claims-improper-opioid
FCA Procurement/Grant Fraud Settlements
Shubhada Industries. EDPA filed a civil fraud lawsuit against Babu Metgud and Shubhada Kalyani, and four companies, Shubhada Industries, d/b/a Shubhada, Inc., Metcon Aerospace & Defense, d/b/a Metcon Industries, NRI Capital Corporation, and The Innovation Technology & Enterprise Development Center, Inc., for a scheme to overcharge the military for spare vehicle parts. The United States, as the plaintiff, moved for summary judgment against Metgud and Kalyani. In granting the United States’ motion, the district court entered judgment against the individual defendants, awarding damages and imposing the maximum penalty allowable under the FCA. The couple has been ordered to pay $232,891.37 to the United States. https://www.justice.gov/usao-edpa/pr/lawsuit-filed-against-defense-contractors-over-alleged-false-claim. The press release for the judgment is here: https://www.justice.gov/usao-edpa/pr/court-enters-judgment-against-new-jersey-couple-overcharging-military-spare-vehicle
Scholars in Print. EDPA filed a civil complaint alleging that Scholars in Print and its owners, John Paul Ryan and Mary Motz Ryan, violated the FCA by shipping unordered textbooks to the Federal Bureau of Prisons and demanding payment, in conjunction with a motion asking the court to enter a stipulated order and consent judgment to resolve the matter. The defendants will pay a civil penalty of $75,689 for submitting false claims. They will also refrain from marketing products to any federal agency through unsolicited communications or telemarketing. https://www.justice.gov/usao-edpa/pr/bucks-county-couple-and-telemarketing-firm-agree-pay-penalty-resolve-false-claims-act
FCA Benefits Fraud Settlements
Richard Cundari. A former Railroad Retirement Board employee resolved civil fraud claims under the FCA for $307,500 concerning allegations that he applied for and received occupational disability annuities that he was ineligible to receive due to income earnings in excess of the applicable limits. https://www.justice.gov/usao-edpa/pr/doylestown-man-pay-307500-resolve-civil-false-claims-allegations-he-illegally-received
[1]The civil claims resolved by settlement are allegations only, and there has been no determination of liability.
