Government Enforcement Actions

November 19, 2014

Washington Gas Energy Systems agreed to pay more than $2.5M for conspiring to commit fraud by illegally obtaining contracts that were meant for small, disadvantaged businesses. It is a wholly owned subsidiary of WGL Holdings Inc., the parent company for all of the corporations within the Washington Gas family. According to the government, WGESystems conspired with a company that was eligible to receive federal government contracts set aside for small, disadvantaged businesses with the understanding that the business would illegally subcontract all of the work on the projects to WGESystems. In this way, WGESystems was able to capture a total of eight contracts worth almost $18M that should have gone to an eligible company. DOJ

November 18, 2014

Christopher Gabel, former chief operating officer of a Miami-area hospital Hollywood Pavilion LLC, pleaded guilty for his role in a mental health care fraud scheme that resulted in the submission of more than $67M in fraudulent claims to Medicare. According to Gabel’s admissions, between April 2003 and September 2012, the hospital submitted fraudulent claims to Medicare for mental health treatment that was not medically necessary or not provided. DOJ

November 17, 2014

New York environmental remediation firm Sevenson Environmental Services Inc. agreed to pay more than $2.7M to resolve allegations it violated the False Claims Act and the Anti-Kickback Act by accepting kickbacks, rigging bids and passing inflated charges to the US Environmental Protection Agency (EPA) in connection with work performed at the Federal Creosote Superfund Site in Manville, New Jersey. According to the government, Sevenson solicited and accepted more than $1.6M in kickbacks from six companies in exchange for the award of subcontracts for work at the Federal Creosote Site. DOJ

November 14, 2014

Detroit-area physician Dr. Rajesh Doshi pleaded guilty for orchestrating — through his medical practice Home Physicians Services— the submission of fraudulent claims for physician home visits as part of a $19M home health care fraud scheme. According to his plea agreement, Dr. Doshi admitted that between October 2005 and September 2012, he conspired with others to commit health care fraud by referring Medicare beneficiaries for home health care that was not medically necessary, and then submitting false and fraudulent claims for the purported care to Medicare for reimbursement. Dr. Doshi also admitted he solicited and received kickbacks from home health agency owners in exchange for the referral of beneficiaries to those agencies, regardless of whether the beneficiaries qualified for or needed home health care. DOJ

November 13, 2014

A California federal court entered a permanent injunction against Scilabs Nutraceuticals Inc., and its board chairman and CEO Paul P. Edalat, to prevent the distribution of adulterated dietary supplements. SciLabs Nutraceuticals Inc. is a manufacturer of dietary supplements distributed under the brand name All Pro Science. DOJ

November 13, 2014

Five South Florida residents, Dennis Hernandez, Juan Valdes, Jose Alvarez, Joel San Pedro and Alina Hernandez, pleaded guilty to a long-running $6.2M Medicare fraud scheme involving Miami home health care agency Professional Medical Home Health LLC that purported to provide home health and therapy services. According to admissions in their plea agreements, the defendants through Professional Home Health billed Medicare for expensive physical therapy and home health services that were not medically necessary or were not provided. They also acted as patient recruiters for Professional Home Health soliciting and receiving kickbacks and bribes from other co-conspirators at Professional Home Health in exchange for recruiting beneficiaries who neither needed, nor in some cases received services. DOJ

November 13, 2014

Japanese auto parts maker Seiki Co. Ltd. agreed to plead guilty and pay a $35.8M million criminal fine for its role in a conspiracy to allocate customers of variable valve timing (VVT) devices sold to automobile manufacturers including General Motors Company, Nissan Motor Company Ltd., Volvo Car Corporation and BMW AG in the US and elsewhere.DOJ

November 13, 2014

Ramon Regueira, owner of Miami home health care company Nation’s Best Care Home Health Corp., pleaded guilty for his role in a $30M home health Medicare fraud scheme. Regueira admitted that he and his co-conspirators operated Nation’s Best for the purpose of billing the Medicare program for expensive physical therapy and home health care services not medically necessary or provided. Specifically, Regueira admitted he and his co-conspirators paid kickbacks and bribes to patient recruiters who provided patients to Nation’s Best, as well as prescriptions, plans of care (POCs) and certifications for medically unnecessary therapy and home health services. From January 2007 through November 2012, Nation’s Best submitted approximately $35M in false claims and Medicare paid approximately $21M for these fraudulent claims. DOJ

November 12, 2014

Home healthcare agency CareAll Management LLC agreed to pay $25M to settle charges it violated the False Claims Act by submitting false and upcoded home healthcare billings to Medicare and Medicaid. According to the government, between 2006 and 2013, CareAll overstated the severity of patients’ conditions to increase billings and billed for services that were not medically necessary and rendered to patients who were not homebound. The current allegations first arose in a whistleblower lawsuit filed by Toney Gonzales under the qui tam provisions of the False Claims Act.  Gonzales will receive a whistleblower award in an undisclosed amount.  Whistleblower Insider

November 7, 2014

Flakeboard America Limited (and its parent companies Celulosa Arauco y Constitución S.A. and Inversiones Angelini y Compañía Limitada) and SierraPine agreed to pay a combined $3.8M in civil penalties and disgorge an additional $1.15M in illegally obtained profits for violating the Hart–Scott–Rodino (HSR) Act by engaging in illegal premerger coordination while Flakeboard’s proposed acquisition of three SierraPine mills was under DOJ antitrust review. Flakeboard and SierraPine abandoned the proposed acquisition after the DOJ expressed concerns about the transaction’s likely anticompetitive effects in the production of medium-density fiberboard, a wood product widely used in furniture, kitchen cabinets, and decorative mouldings. According to the government, SierraPine operated particleboard mills that competed directly with one of Flakeboard’s particleboard mills and before the expiration of the HSR Act’s mandatory premerger waiting period, Flakeboard, Arauco, and SierraPine illegally coordinated to close one of SierraPine’s mills and move the customers to Flakeboard. DOJ