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.

November 11, 2016 - 

Marie Neba, co-owner of Houston-based home-health agency Fiango Home Healthcare Inc., was convicted for her role in a $13 million Medicare fraud and money laundering scheme.  According to the evidence presented at trial and admissions made in the guilty plea of her husband and co-owner Ebong Tilong, Neba and Tilong paid illegal kickbacks to physicians in exchange for authorizing medically unnecessary home-health services for Medicare beneficiaries.  They also paid illegal kickbacks to patient recruiters for referring Medicare beneficiaries for home-health services and to Medicare beneficiaries for allowing them to bill Medicare using their Medicare information for home-health services that were not medically necessary or not provided.  Neba and Tilong also falsified medical records to make it appear as though the Medicare beneficiaries qualified for and received home-health services.  DOJ

November 8, 2016 - 

Japanese auto maker Usui Kokusai Sangyo Kaisha Ltd. agreed to plead guilty and pay a $7.2 million criminal fine for its role in a criminal conspiracy to fix prices, allocate customers and rig bids for automotive steel tubes sold to automobile manufacturers in the United States and elsewhere.  DOJ

November 8, 2016 - 

Niurka Fernandez and her son Roberto Alvarez were sentenced to 120 months and 30 months in prison, respectively, for their roles in spearheading a $9.5 million health care fraud conspiracy that targeted Medicare Part D.  In addition, Fernandez and Alvarez were ordered to pay respectively $9.5 million and $1.5 million in restitution and to forfeit the same amounts.  As part of her guilty plea, Fernandez admitted she co-owned and operated several pharmacies in the Miami area, including Calan Pharmacy & Discount Service LLC and Bertyann Corp. (doing business as Best Pharmacy), for the purpose of submitting false and fraudulent claims through Medicare Part D by paying kickbacks to Medicare beneficiaries and patient recruiters for prescriptions that were medically unnecessary.  DOJ

November 7, 2016 - 

Badar Ahmadani, co-owner of Detroit home health care company Hands on Healing Home Care Inc., was sentenced to 96 months in prison and to pay roughly $38 million in restitution for his role in a Medicare fraud scheme that caused approximately $33 million in losses.  According to evidence presented at trial, Ahmadani and his co-conspirators obtained patients by paying cash kickbacks to recruiters, who in turn paid cash to patients to induce them to sign up for home health care with companies owned by co-defendant Zafar Mehmood: Access Care Home Care Inc., Patient Care Home Care Inc., Hands On Healing Home Care Inc. and All State Home Care Inc.  The evidence also showed that Mehmood and Ahmadani paid kickbacks to physicians to refer patients to the companies for home health care services that were medically unnecessary and/or not provided.  Mehmood was previously sentenced to 360 months in prison and to pay roughly $40.5 million in restitution.  DOJ

November 7, 2016 - 

Pennsylvania-based medical device manufacturer Biocompatibles Inc., a subsidiary of British-based BTG plc, pleaded guilty and agreed to pay more than $36 million for violating the False Claims Act and Food, Drug and Cosmetic Act by misbranding its embolic device LC Bead, which is used to treat liver cancer, among other diseases, and by marketing and selling the product for uses not approved by the FDA.  The matter originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by Ryan Bliss who oversaw Bicompatibles’ North American marketing.  He will receive a whistleblower award of approximately $5.1 million from the proceeds of the government’s False Claims Act recovery.  Whistleblower Insider

November 4, 2016 - 

California-based aerospace parts company Air Industries Corporation agreed to pay $2.7 million to resolve allegations it violated the False Claims Act by falsely certifying it had performed required inspections on aerospace parts used in military aircraft, spacecraft and missiles used by the Department of Defense.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by an AIC employee.  The employee will receive a whistleblower award of $621,000 from the proceeds of the government’s recovery.  DOJ (CDCA)

November 1, 2016 - 

The City of Fairfield, California and the Fairfield Housing Authority paid $680,000 to settle False Claims Act allegations that they received grants to fund two coordinator positions for a federal housing program but did not use the funds for that purpose.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by a former FHA employee.  The whistleblower will receive a whistleblower award of roughly $129,000 from the proceeds of the government’s recovery.  DOJ (EDCA)

November 1, 2016 - 

Anthony Wendel Frederick Sr., a former business manager of Local 657 of the Laborers International Union of North America, pleaded guilty to stealing $1.7 million from the union.  In pleading guilty, Frederick admitted he directed more than $1.7 million in Local 657 funds to Maryland-based STS Contracting which in turn made a number of financial payments to Frederick with the stolen funds.  DOJ

October 31, 2016 - 

Tariq Mahmood, former owner and operator of several rural hospitals across Texas, was ordered to pay roughly $1.2 million for violating the False Claims Act following his conviction for committing health care fraud and for aggravated identity theft.  DOJ (EDTX)

October 28, 2016 - 

Zafar Mehmood, owner of several Detroit home health care companies was sentenced to 360 months in prison and to pay roughly $40.5 million for his role in a Medicare fraud scheme that caused approximately $33 million in losses.  According to evidence presented at trial, Mehmood participated in a scheme in which he obtained patients by paying cash kickbacks to recruiters, who in turn paid cash to patients to induce them to sign up for home health care with Mehmood’s companies: Access Care Home Care Inc., Patient Care Home Care Inc., Hands On Healing Home Care Inc. and All State Home Care Inc.  The evidence also showed that he paid kickbacks to physicians to refer patients to the companies for unnecessary home health care services.  DOJ

 

October 28, 2016 - 

Albert Einstein Healthcare Network and the Einstein Practice Plan agreed to pay roughly $970,000 to resolve charges they violated the False Claims Act by improperly billing Medicare for services submitted on behalf of a cardiologist that were not medically necessary or lacked sufficient documentation.  After it discovered the problem, the Einstein defendants took corrective action to resolve the improper payments and disclosed the matter to the government.  DOJ (EDPA)

October 27, 2016 - 

Theodore E. Suhl, owner of two Arkansas mental health companies that provide inpatient and outpatient mental health services to juveniles, was sentenced to 84 months in prison and to pay a $200,000 fine for engaging in a scheme to bribe a former deputy director of the Arkansas Department of Human Services in exchange for business resulting in more than $1.5 million in profits for Suhl’s juvenile mental health counseling business.  DOJ

October 25, 2016 - 

Kansas City-based Best Choice Home Health Care Agency Inc. and its owner Reginald King agreed to pay $1.8 million to resolve allegations they violated the False Claims Act by paying kickbacks for the referral of Medicaid-covered patients for home and community-based healthcare services.  According to the government, King paid kickbacks to patient transporter Christopher Thomas for referrals to Best Choice.  The allegations originated in a whistleblower lawsuit filed by Thomas under the qui tam provisions of the False Claims Act.  Thomas will receive a whistleblower reward of $43,178, which represents 10 percent of the federal share of the settlement minus the amount he received in kickbacks.  DOJ

October 24, 2016 - 

Los Angeles licensed occupational therapist Keith Canlapan pleaded guilty for his role in a $2.6 million Medicare fraud scheme that involved billing for occupational therapy services not provided.  As part of his guilty plea, Canlapan admitted that through his employer, occupational clinic JH Physical Therapy, he billed Medicare for occupational therapy services never provided.  The patients instead received massage and acupuncture services which are not reimbursable under Medicare.  DOJ

October 24, 2016 - 

Life Care Centers of America Inc., the Tennessee-based operator of more than 220 skilled nursing facilities, and its owner Forrest L. Preston, agreed to pay $145 million to resolve charges that Life Care violated the False Claims Act by submitting claims to Medicare and TRICARE for rehabilitation therapy services that were not reasonable, necessary or skilled.  It is the largest settlement with a skilled nursing facility chain in DOJ’s history.  The allegations originated in a whistleblower lawsuit filed by former Life Care employees Tammie Taylor and Glenda Martin under the qui tam provisions of the False Claims Act.  They will receive a whistleblower award of $29 million from the proceeds of the government’s recovery.  Whistleblower Insider

October 24, 2016 - 

Brazilian aircraft manufacturer Embraer S.A. agreed to pay a penalty of more than $107 million in connection with schemes involving the bribery of government officials in the Dominican Republic, Saudi Arabia and Mozambique, and to pay millions more in falsely recorded payments in India via a sham agency agreement.  According to the company’s admissions, Embraer executives and employees paid bribes to government officials and falsified books and records in connection with aircraft sales to foreign governments and state-owned entities in multiple countries.  In 2008, Embraer paid $3.52 million to an influential government official in the Dominican Republic via a false agency agreement to secure a contract to sell the Dominican Air Force eight military aircraft for approximately $92 million.  In 2010, Embraer paid $1.65 million to an official at a Saudi Arabian state-owned and -controlled company via a false agency agreement to secure that instrumentality’s agreement to purchase three aircraft from Embraer for approximately $93 million.  In 2008, Embraer paid $800,000 via a false agency agreement with an intermediary designated by a high-level official at Mozambique’s state-owned commercial airline, Linhas Aéreas de Moçambique S.A. (LAM), to secure LAM’s agreement to purchase two aircraft from Embraer for approximately $65 million.  In 2009, Embraer paid an agent $5.76 million pursuant to a false agency agreement with a shell company in connection with a contract it secured to sell the Indian Air Force three aircraft for approximately $208 million.  In total, Embraer earned profits of nearly $84 million on the foregoing aircraft sales.  DOJ

October 24, 2016 - 

Daybreak Partners, LLC, a holding company for a number of subsidiaries that operate and manage skilled nursing facilities throughout Texas, agreed to pay $5.3 million to resolve allegations that they billed Medicare and Medicaid for materially substandard nursing services.  Specifically, the government alleged that skilled nursing services provided at four nursing facilities Daybreak owned and managed (Deerings Nursing and Rehabilitation, L.P., Mansfield Nursing and Rehabilitation, L.P., Marine Creek Nursing and Rehabilitation, L.P. and Mineral Wells Nursing and Rehabilitation, L.P.) were materially substandard and/or worthless because Daybreak: (i) failed to follow appropriate fall protocols; (ii) failed to follow appropriate pressure ulcer and infection control protocols; (iii) failed to properly administer medications; (iv) failed to follow doctors’ orders; (v) failed to provide appropriate mental health treatment; (vi) failed to answer several residents’ call lights promptly; (vii) failed to institute appropriate infection control measures; (viii) failed to provide a habitable living environment, adequate equipment, and needed capital expenditures; and (ix) failed to investigate and report serious incidents to appropriate authorities on several occasions.  DOJ (NDTX)

 

October 21, 2016 - 

New York-based hematology and oncology practice Hudson Valley Associates agreed to pay $5.31 million to settle charges of violating the False Claims Act by improperly waiving patient copayments and submitting claims for services it did not provide and/or were not permitted under the Medicare and Medicaid program rules.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act.  The whistleblower will receive a yet-to-be-determined whistleblower award from the proceeds of the government’s recovery.  DOJ (SDNY)

October 21, 2016 - 

Mark Gilmore, owner of Florida compound pharmacy QMedRx, agreed to pay $4.25 million to settle charges that he violated the False Claims Act by billing the government for services that were not reimbursable.  Specifically, the government contends that QMedRx submitted to federal healthcare programs compounded prescriptions that were tainted within the meaning of the Anti-Kickback Statute. The government is still pursuing penalties and fines from other participants within QMedRx.  DOJ (MDFL)

October 21, 2016 - 

Gallia Graeca Shipping Ltd. and Angelakos (Hellas) S.A., the companies that own and operate a Greek shipping vessel, were sentenced to a $1.3 million fine for the dumping of oily waste at sea.  In June, they were found guilty of violating the Act to Prevent Pollution from Ships, falsifying records in a federal investigation and engaging in a scheme to defraud the United States.  According to the evidence at trial, the defendants’ cargo ship named the M/V Gallia Graeca travelled from China to Seattle with an inoperable pollution-control device and  discharged overboard approximately 5,000 gallons of oily bilge water.  The defendants then concealed it from the Coast Guard by making false statements to inspectors and making false statements and omissions in the ship’s oil record book.  DOJ

October 19, 2016 - 

Karen L. Finley, former CEO of a traffic light enforcement camera vendor, was sentenced to 14 months in prison for her role in a multi-year bribery and fraud scheme under which her company made campaign contributions to elected public officials in Columbus and Cincinnati Ohio with the understanding that the officials would assist the company in obtaining or retaining municipal contracts.  DOJ

October 19, 2016 - 

Elaine Davis and Pramela Ganji, the owner and medical director of New Orleans medical service company Christian Home Health Inc., were respectively sentenced to 96 months and 72 months in prison for their involvement in a $34 million Medicare fraud scheme.  According to evidence introduced at trial, Davis directed a massive fraud scheme through her company, using elderly and disabled Medicare recipients in New Orleans and adjacent communities to fraudulently bill Medicare for home health care services these patients did not require.  DOJ

October 17, 2016 - 

Ohio-based nursing home pharmacy Omnicare, Inc. agreed to pay roughly $28 million to resolve charges of violating the False Claims Act by soliciting and receiving kickbacks from pharmaceutical manufacturer Abbott Laboratories in exchange for promoting the prescription drug, Depakote, for nursing home patients.  The settlement follows the May 2012 settlement under which Abbott agreed to pay $1.5 billion to resolve Abbott’s liability under the False Claims Act for, among other things, alleged kickbacks to nursing home pharmacies, including Omnicare and PharMerica Corp.  In October 2015, PharMerica agreed to pay $9.25 million to settle its role in the alleged scheme.  The allegations underlying this settlement as well as the prior Abbott and PharMerica settlements originated in two whistleblower lawsuits filed by former Abbott employees Richard Spetter and Meredith McCoyd under the qui tam provisions of the False Claims Act.  Ms. McCoyd will receive a whistleblower award of $3 million from the proceeds of this settlement.  Whistleblower Insider

October 14, 2016 - 

John Bertrand Beliveau II, a former Naval Criminal Investigative Service supervisory special agent, was sentenced to 144 months in prison and ordered to pay $20 million in restitution to the Navy for disclosing sensitive law enforcement reports to a defense contractor who was the target of a criminal fraud investigation in exchange for cash, luxury travel and the services of prostitutes.  According to admissions made as part of his plea agreement, Beliveau helped former Glenn Defense Marine Asia CEO Leonard Francis perpetrate a massive fraud scheme on the U.S. Navy by providing information that allowed Francis to avoid, stall and thwart criminal investigations into misconduct by GDMA.  DOJ

October 12, 2016 - 

Fred Witmer and Gary Jury, the owners of Indiana biofuel producers Triton Energy LLC and Gen2 Renewable Diesel LLC, pleaded guilty to conspiracy, fraud and false statements for participating in a scheme that generated over $60 million in fraudulent tax credits and EPA renewable fuels credits at Triton.  Although the credits required that the fuel be used domestically for transportation, Witmer admitted selling it for uses that included the production of fire starter logs and asphalt and also for power generation.  As part of their pleas, Witmer and Jury agreed to serve a sentence of 57 months and 30 months, respectively.  DOJ