September 4, 2015

Constantine Cannon And Department of Justice Continue Joint Pursuit Against California Sleep-Clinic Chain

By Jessica T. Moore

Constantine Cannon LLP has filed an amended complaint on behalf of a whistleblower alleging multi-faceted fraud on the part of Bay Sleep Clinic and its owners and operators, and billing company Access Medical Consultants.  The filing in United States ex rel. Dresser v. Qualium Corp., et al, Civil Action No. 12-1745 in the Northern District of California, comes on the same day the United States reported that it filed its own complaint in the case, having previously intervened in the action.  The whistleblower’s complaint alleges that Bay Sleep Clinic, which operates diagnostic sleep clinics in California, and its affiliated medical device business fraudulently billed Medicare by, among other things: 1) hiring non-qualified and non-credentialed practitioners to conduct sleep studies, 2) conducting sleep testing and dispensing sleep-disorder products at non-approved locations, 3) engaging in prohibited self-dealing, 4) using non-licensed personnel to dispense medical devices, and 5) providing kickbacks to doctors.

The whistleblower, Elma F. Dresser, a sleep technician who formerly worked for the defendants, also alleges that defendants’ Medicare billing agent, Access Medical Consultants, knew about the alleged fraud and assisted in submitting false claims to Medicare for payment.  Specifically, the company allegedly misrepresented the location of services for Medicare patients on claims for payment, including falsely stating that services occurred in a Medicare-approved facility when in fact the testing or device-dispensing occurred in an unapproved facility.

Defendant Bay Sleep Clinic is a dba of Qualium Corporation.  Qualium operates its associated medical device business through its dbas CPAP Specialist and Amerimed.  The complaint also names as defendants Qualium’s owners: California residents Anoosh Mostowfipour and Tara Nader.  Access Medical Consultants is located in Los Gatos, California.

As required under the qui tam provisions of the False Claims Act, the action was initially filed in April 2012 under seal to permit the United States time to investigate the allegations.  The government joined the action in May 2015, filing its complaint in intervention in September 2015 and joining in most of the claims against Qualium (and its dbas) and the individual owners Mr. Mostowfipour and Ms. Nader.  The whistleblower, Ms. Dresser, will continue to assist the government in its prosecution of this matter and pursue the additional claims the government has not joined, including the claims against biller Access Medical Consultants.  The False Claims Act allows private individuals such as Ms. Dresser to bring an action alerting the government of false or fraudulent practices that draw upon the public fisc and taxpayer dollars.  The Act provides for treble damages and a penalty of $5,500 to $11,000 for each false claim presented to the government for payment.  Successful cases that the government has joined can result in the whistleblower receiving a share of the recovery — between 15 and 25 percent.

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