Archive

KBR – Defense Contracting Fraud ($108.75 million)

Constantine Cannon represented whistleblowers Geoffrey Howard and Zella Hemphill Anderson in a False Claims Act case against defense contractor KBR Inc. that resulted in the largest settlement to date involving Iraq War fraud. KBR agreed to pay the government $108.75 million, with the whistleblowers sharing an award of $31.5 million, representing a whistleblower share of 29% of the total recovered. The whistleblowers alleged that KBR overcharged the U.S. government in connection with procuring supplies and materials to support U.S. troops stationed in Iraq and Afghanistan during the Iraq War. The relevant contract, pursuant to which the government reimbursed KBR for its costs plus profit, required KBR to make efficient use of taxpayer funds by “cross-leveling” before procuring new material, including by checking to see if KBR already had excess of the needed item available in-theater before buying more. In their complaint, the relators, both of whom worked for KBR during the Iraq War, alleged that KBR’s failures to “cross-level” resulted in hundreds of millions of dollars in excess materials and overcharges to the government. Press Release; Whistleblower Insider

Tagged in: Contract Non-Compliance, Defense Contract Fraud, FCA Federal, Government Procurement Fraud, Whistleblower Rewards,

Sutter Health – Medicare Advantage Fraud ($90 million)

Constantine Cannon represented whistleblower Kathy Ormsby in a False Claims Act litigation against Sutter Health and its affiliates that resulted in a $90 million settlement – the largest Medicare Advantage FCA settlement to date against a hospital system, and the second largest reported Medicare Advantage fraud settlement to date. Ms. Ormsby, a former Risk Adjustment Factor Project Manager at Sutter Health affiliate Palo Alto Medical Foundation, alleged the Sutter Health defendants inflated the number and severity of Medicare Advantage patient diagnoses, manipulated patient records, ignored audit “red flags,” and engaged in other misconduct to increase patient risk scores and obtain Medicare Advantage payments to which they were not entitled. In Spring 2019, the Government intervened in Ms. Ormsby’s case as to PAMF, and Ms. Ormsby continued to pursue her claims against the other Sutter Health affiliates on a non-intervened basis. This settlement resolves all claims and follows Sutter’s unsuccessful effort to dismiss both the complaints. Read more: Press Release; Whistleblower Insider.

Tagged in: FCA Federal, Healthcare Fraud, Hospital Fraud, Managed Care, Provider Fraud, Risk Adjustment Fraud, Upcoding,

Kaiser Permanente – Medicare Advantage Risk Adjustment Fraud (Case Intervention)

Constantine Cannon represents Dr. James Taylor, a highly placed physician and healthcare coding expert, in False Claims Act litigation against Kaiser Permanente. He is among a group of ten whistleblowers who accuse the large Medicare Advantage organization of knowingly submitting false claims for risk-adjusted payments to the Centers for Medicare & Medicaid Services (CMS). The suit alleges that Kaiser routinely obtained fraudulently inflated risk-adjusted payments by knowingly submitting diagnosis codes for patients that were unsupported by the patients’ medical records, and the government’s intervention focuses on unsupported diagnosis codes that Kaiser allegedly improperly added through addenda to patients’ medical records. The qui tam whistleblower suit was unsealed on July 29, 2021. See: Taylor Amended Complaint; DOJ Press Release

Tagged in: FCA Federal, Healthcare Fraud, Managed Care, Risk Adjustment Fraud, Whistleblower Case,

Group Health Cooperative (now a subsidiary of Kaiser Permanente) – Medicare Advantage Fraud ($6.375 million)

Constantine Cannon represents whistleblower Teresa Ross against Group Health Cooperative, an insurance company that participates in the Medicare Advantage program. GHC has agreed to pay $6.375 million to resolve allegations that the insurance plan improperly collected money from the Medicare Advantage program by overstating how sick its beneficiaries were. Ms. Ross is a former employee of GHC, where she worked for 14 years; her most recent position was the director of risk adjustment services. In her complaint, Ms. Ross alleged that GHC had improperly relied on coders’ interpretations of diagnostic tests, prescriptions, and entries in problem lists to come up with diagnoses and that it had also submitted other codes that were false because they were diagnosed by inappropriate providers, fell outside service year, or the patient had no evidence of a current condition. See Press Release and Whistleblower Insider for more.

Tagged in: FCA Federal, Healthcare Fraud, Managed Care, Medical Billing Fraud, Medicare, Risk Adjustment Fraud, Whistleblower Case, Whistleblower Rewards,

Mid Dakota Clinic – Medicare Fraud/ASC Kickbacks ($5.45M)

The Constantine Cannon team represented Jeffery Neuberger, the former CEO of a medical group in North Dakota, in a 2017 False Claims Act case alleging a scheme in violation of the Anti-Kickback Statute (AKS) between the medical group and its wholly owned ambulatory surgery center (ASC). The AKS is intended to prevent abuses (such as unnecessary treatments) that can occur when a doctor makes money from referring patients for goods or services. The ASC safe-harbor to the AKS is limited; it essentially permits ASC ownership only by surgeons who perform procedures or surgeries in the ASC as a functional extension of his or her office. The lawsuit alleges that all of the multi-practice physician owners profited from referrals, not only the surgeons, and that they refused to give up this lucrative income stream despite knowing that it violated the AKS. In November 2019, Mid Dakota Clinic, its affiliated building partnership, and insurer agreed to pay the United States $4.15 million to resolve the case. The clinic additionally paid $1.3 million for the whistleblower’s attorneys’ fees and costs, for a total payment of $5.45 million. The United States awarded Mr. Neuberger a 25% relator’s share of its recovery.

Tagged in: Anti-Kickback and Stark, FCA Federal, Healthcare Fraud, Medicare, Provider Fraud, Whistleblower Rewards,

Centric Parts – Customs Fraud ($8 million)

In a customs fraud victory, the Constantine Cannon team represented whistleblower Steve Hughes in his successful False Claims Act action against his former employer, auto parts distributor CWD, LLC. Hughes alleged that CWD, which does business as Centric Parts, misclassified brake pads imported from Asia as “unmounted” brake pads when they were, in fact, brake pads mounted to a metal backing plate, and therefor subject to a 2.5% tariff. When Hughes learned of the misclassification, he immediately advised the CEO and CFO to disclose the issue to U.S. Customs and Border Protection. Instead, the company concealed the misclassification and retaliated against Hughes. As a result of Centric’s alleged omissions and false statements regarding its imported products, the company knowingly evaded millions of dollars of customs duties it owed to the United States. The $8 million settlement resolved the Hughes lawsuit and one other qui tam action filed by a different whistleblower. The whistleblowers shared a $1.48 million whistleblower award, representing 18.5% of the government’s recovery. Whistleblower Insider; Press release

Tagged in: Customs Fraud, FCA Federal, Government Programs Fraud, Multiple Whistleblowers and First-to-File, Whistleblower Case, Whistleblower Rewards,

Visiting Nurse Service of New York – Medicare/Medicaid Home Health Care Fraud ($57 million)

Constantine Cannon represented whistleblower Edward Lacey against Visiting Nurse Service of New York – the largest not-for-profit home health care agency in the United States. VNSNY agreed to pay $57 million to resolve allegations it failed to provide home health care visits and services to tens of thousands of New Yorkers and fraudulently billed Medicare and Medicaid. Mr. Lacey was an executive at VNSNY for 16 years. In his complaint, Mr. Lacey alleged that VNSNY failed to provide its patients all the critical nursing and therapy visits and services their doctors prescribed under the patient Plans of Care. He contended that by failing to provide this care, VNSNY endangered the welfare of tens of thousands of its patients while maximizing the company's Medicare and Medicaid reimbursement. Mr. Lacey's claims concerning alleged Plan of Care failures impact the entire home health care industry. This is the first reported False Claims Act settlement involving allegations of a home health agency failing to follow patient Plans of Care. It also is the largest non-kickback False Claims Act settlement ever against a home health care company and the second largest settlement of any home health care fraud case. Read more: Press Release; Whistleblower Insider.

Tagged in: FCA Federal, Healthcare Fraud, Home Health and Hospice, Lack of Medical Necessity, Whistleblower Case, Whistleblower Rewards,

Sharp HealthCare — Medicare Fraud/Kickbacks (undisclosed settlement amount)

Three of our whistleblower attorneys represented a whistleblower in a qui tam action under the False Claims Act against Sharp HealthCare, a regional hospital system in San Diego. Our client alleged that the Sharp Healthcare Center for Research, Sharp’s clinical-trial research arm, fraudulently billed government payers in violation of “secondary payer” rules that prohibit billing the government when other payers will pay for a patient’s care. Our whistleblower client also alleged that Sharp cultivated an illegal kickback scheme to entice prospective trial sponsors to host clinical trials at Sharp by regularly undervaluing Sharp’s costs involved in managing clinical trials. By offering below-market value incentives and billing government and commercial insurers for injuries, the lawsuit alleged that Sharp sought to increase its attractiveness to trial sponsors. Sharp’s alleged purpose was to burnish the organization’s reputation and offer a lucrative stream of income for Sharp-affiliated physicians involved in clinical trials. Sharp settled the whistleblower’s case for an undisclosed amount. Read more here.

Tagged in: Anti-Kickback and Stark, FCA Federal, FCA State, Healthcare Fraud, Hospital Fraud, Medicaid, Medical Billing Fraud, Medical Devices and DME, Medicare, Other Government Health Programs, Pharma Fraud, Private Insurance Whistleblower Reward Programs, Provider Fraud, Whistleblower Rewards,

Unitrans International Inc., Anham FZCO, et al. — Government Contract Fraud ($45 million)

Our attorneys represented Rory Maxwell, John Bush, and Supreme Foodservice GmbH in a qui tam action under the False Claims Act against Unitrans International Inc., a privately held Virginia defense contracting company, and Anham FZCO, an associated Dubai Free Zone company, for making false certifications of compliance with the U.S. sanctions regime against Iran to induce the U.S. Defense Logistics Agency and the U.S. Army to award Anham wartime contracts to provide food and transportation to U.S. troops. Our whistleblower clients also alleged Anham knowingly and falsely represented construction progress on its Bagram warehouse in related bid proposals to the government. In December 2019, Unitrans agreed to pay $45 million to resolve criminal and civil allegations related to this alleged misconduct, which includes $27 million to resolve our whistleblower clients’ False Claims Act allegations. Read more about the case at the Department of Justice website here and in The Washington Post here.

Tagged in: Certifications, Contract Non-Compliance, Criminal Proceedings, Defense Contract Fraud, FCA Federal, Government Procurement Fraud, Trade Agreements, Whistleblower Rewards,

Cisco Systems, Inc. – Government Contract Fraud/Non-Conforming Product ($8.6 million)

Constantine Cannon represented whistleblower James Glenn against Cisco in the first cybersecurity whistleblower case ever successfully resolved under the False Claims Act. Cisco Systems, Inc. agreed to an $8.6 million settlement to resolve allegations it knowingly sold vulnerable video surveillance software to federal, state and local government agencies, exposing government systems to the risk of unauthorized access and the manipulation of vital information. The whistleblower, who worked in Europe for a Cisco partner, had reported critical security vulnerabilities in the software to Cisco, but Cisco had continued to sell the technology to government entities, including the District of Columbia and 15 states, despite the fact that the software failed to comply with FAR procurement standards that require basic cybersecurity controls, including those set forth by the National Institute of Standards and Technology. Read more: Press Release; Whistleblower Insider

Tagged in: Contract Non-Compliance, Cybersecurity and Data Breaches, FCA Federal, FCA State, Government Procurement Fraud, International Whistleblowers, Whistleblower Rewards,

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