DOJ Fraud Settlements

The Department of Justice is the principal federal agency authorized to enforce the laws and defend the interests of the United States. As such, it oversees the enforcement of the False Claims Act, the foundation of the American whistleblower system, and by far the most widely used statute by whistleblowers to report corporate fraud and misconduct.

The agency traces its origins to the Judiciary Act of 1789 which created the Office of the Attorney General, and the 1870 Act to Establish the Department of Justice, which established the agency as "an executive department of the government of the United States" with the Attorney General as its head.

The agency is comprised of numerous divisions with the Civil Division and in some instances, the Criminal Division, overseeing investigations and prosecutions under the False Claims Act. The U.S. Attorneys Office of the federal district where the False Claims Act case is filed also plays a key role in False Claims Act enforcement.

Below are summaries of the most recent DOJ settlements or successful resolutions under the False Claims Act as well as other successful prosecutions for fraud and misconduct. If you believe you have information about fraud against the government, including against the Medicare or Medicaid systems, please contact us to speak with one of our experienced whistleblower attorneys.

August 2, 2017 - 

Atlanta-based pain management clinic Atlanta Medical Clinic and its owner Dr. Timothy Dembowski agreed to pay $250,000 to resolve charges they violated the False Claims Act by billing for services performed by a physician suspended from the Medicare program and administering foreign, non-FDA approved drugs, which are not eligible for reimbursement under the Medicare program.  DOJ (NDGA)

July 24, 2017 - 

New Jersey-based pharmaceutical manufacturer Celgene Corp. agreed to pay $280 million to settle charges of violating the False Claims Act by promoting two cancer treatment drugs — Thalomid and Revlimid — for uses not approved by the FDA.  The allegations included the use of false and misleading statements about the drugs, and paying kickbacks to physicians to induce them to prescribe the drugs.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by former Celgene sales manager Beverly Brown.  She will receive a yet-to-be-determined whistleblower award from the proceeds of the government’s recovery.  DOJ (CDCA)

July 24, 2017 - 

Dr. James Norman, the owner and operator of Norman Parathyroid Center, agreed to pay $4 million to resolve allegations he violated the False Claims Act by billing Medicare for pre-operative examination services for which he had already received payment from the government.  These extra fees ranged from $150 to $750 for Florida residents, to $1,750 or more for patients who lived out-of-state, adding up to hundreds of thousands of dollars in illicit billing.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by a former patient of Dr. Norman, Myra Gross, and her husband, Dr. David Gross.  They will receive a whistleblower award of roughly $600,000 from the proceeds of the government’s recovery.  DOJ (MDFL)

July 24, 2017 - 

Tennessee-based Pain Management Group P.C. agreed to pay $312,000 to settle charges it violated the False Claims Act by billing for medically unnecessary urine drug tests and non-FDA approved pharmaceuticals Botox, Supartz, and Eufflexa, which the company purchased from foreign-based suppliers.  DOJ (MDTN)

July 21, 2017 - 

Baton Rouge-based home healthcare company Charter Home Health agreed to pay $1.7 million to settle charges of violating the False Claims Act and Anti-Kickback Statute by paying for patient referrals.  DOJ (MDLA)

July 19, 2017 - 

Sreedhar Potarazu, an ophthalmic surgeon and founder of VitalSpring Technologies Inc., was sentenced to 10 years in prison for defrauding his former company’s shareholders and for failing to pay employment taxes.  He was also ordered to pay roughly $50 million in restitution to the shareholders and $7.7 million to the IRS, and forfeiture of several homes, vehicles, and bank accounts.  From at least 2008, Potarazu provided materially false and misleading information to VitalSpring’s shareholders to induce more than $49 million in capital investments in the company.  DOJ

July 17, 2017 - 

Ohio-based nursing home operators Foundations Health Solutions Inc., Olympia Therapy Inc. and Tridia Hospice Care Inc., and their executives Brian Colleran and Daniel Parker, agreed to pay roughly $19.5 million to resolve allegations they violated the False Claims Act by submitting to Medicare claims for medically unnecessary rehabilitation therapy services and for hospice services to patients not eligible for the Medicare benefit, and by soliciting and receiving kickbacks to refer patients from their skilled nursing facilities to home health care provider Amber Home Care LLC.  The allegations originated in two whistleblower lawsuits filed under the qui tam provisions of the False Claims Act by former Olympia employee Vladimir Trakhter and former Tridia employees Paula Bourne and La’Tasha Goodwin.  Mr. Trahkter will receive a whistleblower award of roughly $2.9 million and Ms. Bourne and Ms. Goodwin collectively will receive an award of roughly $740,000, all from the proceeds of the government’s recovery.  Whistleblower Insider

July 17, 2017 - 

New York-based home health care company Visiting Nurse Service of New York and its subsidiaries VNS Choice and VNS Choice Community Care agreed to pay roughly $4.4 million to settle charges of violating the False Claims Act by improperly collecting monthly Medicaid payments for 365 Medicaid beneficiaries whom VNS Choice failed to timely disenroll from the VNS Choice Managed Long-Term Care Plan.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by an undisclosed whistleblower.  The whistleblower will receive an undisclosed whistleblower award from the proceeds of the government’s recovery.  DOJ (SDNY)

July 14, 2017 - 

Rodney Hesson and Gertrude Parker, owners of Nursing Home Psychological Services and Psychological Care Services, were respectively sentenced to 180 months and 84 months in prison and to respectively pay $13.8 million and $7.3 million in restitution for their involvement in a $25.2 million Medicare fraud scheme involving billing Medicare for psychological testing services that nursing home residents did not need or in some instances did not receive.  DOJ

July 14, 2017 - 

Narco Freedom, Inc., a former operator of outpatient chemical dependency clinics, Joining Hands Management Inc., an operator of short-term residences known as “three-quarter houses,” and Joining Hands co-owner Devorah Haigler, settled claims of violating the False Claims Act.  The government will receive a $50.5 million allowed claim in the Narco Freedom bankruptcy proceeding, and Joining Hands and Haigler will pay $300,000.  The government alleged the defendants engaged in a kickback scheme whereby Narco made monthly cash payments to Joining Hands in exchange for Haigler and others referring residents of Joining Hands three-quarter houses to NARCO outpatient programs.  The allegations originated in a whistleblower lawsuit under the qui tam provisions of the False Claims Act.  An unidentified whistleblower will receive an undisclosed whistleblower award from the proceeds of the government’s recovery.  DOJ (SDNY)

July 13, 2017 - 

The DOJ and HHS announced the largest ever health care fraud enforcement action by the Medicare Fraud Strike Force, involving 412 charged defendants across 41 federal districts, including 115 doctors, nurses and other licensed medical professionals, for their alleged participation in health care fraud schemes involving approximately $1.3 billion in false billings.  DOJ

July 13, 2017 - 

New York podiatrist Perrin D. Edwards pled guilty to health care fraud for illegally charging Medicare and private insurance companies for podiatry services he never provided and agreed to pay $410,000 to resolve charges of violating the False Claims Act.  DOJ (NDNY)

July 11, 2017 - 

Mallinckrodt LLC, a pharmaceutical manufacturer and one of the largest manufacturers of generic oxycodone, agreed to pay $35 million to settle allegations it violated certain provisions of the Controlled Substances Act.  According to DOJ, it is the first settlement of its magnitude with a manufacturer of pharmaceuticals resolving nationwide claims the company did not meet its obligations to detect and notify DEA of suspicious orders of controlled substances such as oxycodone.  DOJ

July 7, 2017 - 

Wal-Mart Stores Inc. agreed to pay $1.65 million to resolve allegations it violated the False Claims Act by submitting pharmacy claims to California’s Medi‑Cal program not supported by applicable diagnosis and documentation requirements.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by a Wal-Mart pharmacist.  The whistleblower will receive a whistleblower award of roughly $264,000 from the proceeds of the government’s recovery.  DOJ (EDCA)

July 6, 2017 - 

New Jersey-based Compassionate Care Hospice Group, Inc. agreed to pay $2.4 million to resolve charges that the company and its subsidiary Compassionate Care Hospice of Atlanta violated the False Claims Act and Stark Law by engaging in improper financial relationships with contracted physicians to induce them to refer patients.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by former CCH Atlanta employees Cathy Morris and Josie King.  They will receive a yet-to-be-determined whistleblower award from the proceeds of the government’s recovery.  DOJ (NDGA)

July 6, 2017 - 

Matthew Kolodesh, Alex Pugman, Svetlana Ganetsky, and Malvina Yakobashvili agreed to pay millions of dollars to settle False Claims Act allegations that they and their now-defunct company Home Care Hospice, Inc. falsely billed for hospice services that were either unnecessary or never provided.  The allegations originated in a whistleblower lawsuit under the qui tam provisions of the False Claims Act by former HCH employees Maureen Fox and Cathy Gonzales.  They will receive a yet-to-be-determined whistleblower award from the proceeds of the government’s recovery.  DOJ (EDPA)

July 6, 2017 - 

Pennsylvania hospice company Compassionate Care of Gwynedd Inc., and a subsidiary of New Jersey-based Compassionate Care Hospice Group Inc., agreed to pay $2 million to resolve allegations it violated the False Claims Act by providing unnecessary hospice services.  The government alleged the company admitted patients by using a diagnosis of “debility” that was not medically justified.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act.  The whistleblowers will receive an award of more than $350,000 from the proceeds of the government’s recovery.  DOJ (DNJ)

July 5, 2017 - 

Reliant Care Group, Reliant Care Management Company, Reliant Care Rehabilitative Services, and a number of Reliant affiliated skilled nursing facilities agreed to pay roughly $8.4 million to settle charges they violated the False Claims Act by billing Medicare for unnecessary physical, speech, and occupational therapy to nursing home residents.  DOJ (EDMO)

July 3, 2017 - 

Prospect Mortgage Company agreed to pay roughly $4 million to settle charges of violating the False Claims Act stemming from Prospect’s participation in the Direct Endorsement Lender Program administered by the Federal Housing Administration and Department of Housing and Urban Development.  The government alleged Prospect falsely certified compliance with critical underwriting and quality control requirements when originating loans insured by the FHA and HUD resulting in substantial losses to the government when the loans defaulted and ripened into claims by Prospect for insurance payments from the government.  DOJ (NDGA)

June 30, 2017 - 

Dawn Bentley, a Detroit-area medical biller, was sentenced to 50 months in prison and to pay roughly $3.3 million for her role in a $7.3 million Medicare and Medicaid fraud scheme involving medical services that were billed to Medicare and Medicaid but not rendered as billed.  DOJ

June 30, 2017 - 

Charlotte-Mecklenburg Hospital Authority (dba Carolinas Healthcare System) agreed pay $6.5 million to resolve charges it violated the False Claims Act by “up-coding” claims for urine drug tests in order to receive higher payment than allowed for the tests.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by Mark McGuire, a former laboratory director for CHS.  He will receive a whistleblower award of roughly $1.4 million from the proceeds of the government’s recovery.  DOJ (WDNC)

June 29, 2017 - 

Innovative Therapies, Inc. and its parent company Cardinal Health, Inc. agreed to pay roughly $2.7 million to settle charges they violated the False Claims Act by submitting false claims to Medicare through their marketing of certain negative pressure wound treatment devices as durable medical equipment when they knew these devices did not have the expected life of a durable device.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by a former ITI employee.  The whistleblower will receive an award of $488,700 from the proceeds of the government’s recovery.  DOJ (MDTN)

June 29, 2017 - 

XIK, LLC, Honeywell International, Inc., and Domtar, Inc. agreed to pay $8.2 million to resolve a claim for natural resource damages at the St. Louis River/Interlake/Duluth Tar Superfund Site brought under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), also known as the Superfund Law.  The polluted site consists of 255 acres of land and river embayments located primarily in Duluth, Minnesota, and extends into the St. Louis River, including Stryker Bay.  DOJ

June 28, 2017 - 

PAMC Ltd. and Pacific Alliance Medical Center Inc., which together own and operate Pacific Alliance Medical Center, an acute care hospital located in Los Angeles, agreed to pay $42 million to settle charges they violated the False Claims Act and the Stark Law by engaging in improper financial relationships with referring physicians.  These relationships took the form of (1) arrangements under which the defendants allegedly paid above-market rates to rent office space in physicians’ offices, and (2) marketing arrangements that allegedly provided undue benefit to physicians’ practices.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by Paul Chan, who was employed as a manager by one of the defendants.  He will receive a whistleblower award of more than $9.2 million from the proceeds of the government’s recovery.  DOJ

June 28, 2017 - 

Charles G. Landry, D.O. agreed to pay $133,464 to resolve allegations he violated the False Claims Act by knowingly submitting claims for certain evaluation and management services not eligible for Medicare payment.  DOJ (DME)