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Catch of the Week: Private Equity Firm and Former Executives of a Mental Health Center Reach $25 Million Medicaid Settlement

Posted  10/15/21
dollar bill with Medicaid text ripped through
In recent years there has been a proliferation of private equity firms taking oversight of healthcare entities. These private equity firms have increased their exposure to False Claims Act liability by playing active roles in the operation of healthcare entities, and multiple settlements have been reached over the last two years (on kickbacks and promotion of unapproved use of drug-device systems on pediatric...

October 14, 2021

Owners and executives of Massachusetts mental health provider South Bay Mental Health Center, Inc. have agreed to pay $25 million to resolve claims that they caused the submission of false claims to the state’s Medicaid program, MassHealth, by billing for services provided by unlicensed, unqualified, and improperly supervised staff members in violation of MassHealth regulations. Defendants  H.I.G. Growth Partners, LLC and H.I.G. Capital, LLC will pay $19.95 million and defendants Peter J. Scanlon and Kevin P. Sheehan, who held executive and board positions at relevant entities, will pay $5.05 million.  The case was initiated by the filing of a whistleblower complaint under the Massachusetts False Claims Act.  SBMHC previously agreed to pay $4 million to resolve related charges.  Mass

August 16, 2021

Education publishing company Pearson plc agreed to pay $1 million to resolve an SEC investigation into its disclosures regarding a 2018 data breach that resulted in the exposure of millions of student and school administrator records, including birthdates, e-mail addresses, user names, and hashed passwords.  The SEC found that Pearson understated the nature and scope of the incident, overstated the company’s data protections, and had inadequate controls and procedures regarding the assessment and reporting of cybersecurity incidents.  Pearson, which is publicly traded in the UK, is a foreign private issuer with ADRs trading on the NYSE. SEC

August 5, 2021

Tennessee’s Department of Human Services has agreed to pay nearly $7 million to resolve allegations of submitting false information to the USDA’s Supplemental Nutrition Assistance Program, known until 2008 as the Food Stamp Program.  Under the direction of the Julie Osnes Consulting firm, numerous state agencies—including Alaska, Florida, Louisiana, Mississippi, Texas, Virginia, and Wisconsin—allegedly submitted false quality control data to the USDA, receiving performance bonuses as a result.  This is the ninth settlement in the matter; more than $67 million has been recovered thus far.  USAO EDWA

July 21, 2021

Alliance Family of Companies LLC, a national electroencephalography testing company, and Ancor Holdings LP, a private insurance company, have agreed to pay a combined $15.3 million to resolve alleged violations of the False Claims Act and Anti-Kickback Statute.  According to a number of whistleblowers, Alliance provided free electroencephalography (EEG) interpretation reports to induce physician orders, caused physicians to submit false claims to the government, used inaccurate billing codes to generate higher reimbursements, and billed for a specialized digital analysis that it didn’t actually perform.  The whistleblowers also alleged that while performing due diligence prior to investing in Alliance, Ancor learned of the kickbacks but allowed them to continue after the change in management.  Two of the whistlebl­owers involved will share a reward of nearly $3 million.  DOJ

Catch of the Week: Florida Department of Children and Families Pays $17.5 Million to Resolve Alleged SNAP Fraud

Posted  07/16/21
united states currency rolls
The Florida Department of Children and Families (FDCF) has agreed to pay $17,500,000 to resolve allegations that it violated the False Claims Act in its administration of the Supplemental Nutrition Assistance Program (SNAP).

The Program

The SNAP program provides eligible low-income individuals and families with financial assistance to buy nutritious food. Since 2010, SNAP has served on average more than 45 million...

July 12, 2021

The Florida Department of Children and Families (FDCF) has agreed to pay $17.5 million and forgo payment of $14.7 million in unpaid bonuses to resolve allegations that it submitted false information to the USDA’s Supplemental Nutrition Assistance Program (SNAP), which was known as the Food Stamp Program until 2008.  Although the USDA reimburses states for administering SNAP, it relies on the states to determine applicant eligibility, administer benefits, and perform quality control.  FDCF allegedly failed to have proper quality control procedures in place, resulting in false information submitted to the USDA, for which they received unentitled performance bonuses from 2011 through 2014.  USAO EDWA

Therakos Settlement Keeps Private Equity in DOJ’s Crosshairs for FCA Liability

Posted  12/4/20
durable medical equipment fraud whistleblower
On November 19th the United States Department of Justice (“DOJ”) announced an $11.5 million settlement involving the alleged promotion of two drug-device systems for unapproved uses by Therakos, Inc.  The action was initiated by a whistleblower under the qui tam provisions of the False Claims Act. The settling defendants included Johnson & Johnson subsidiary Medical Device Business Services, Inc. and The Gores...

February 6, 2020

February 6, 2020 -- The successor to the Community Redevelopment Agency of the City of Los Angeles, CRA/LA, has agreed to pay $3.1 million to resolve allegations under the False Claims Act that the agency failed to comply with federal accessibility laws while distributing federal funds to help develop affordable housing.  Federal accessibility laws require that 5% of all units in certain federally-funded housing be accessible to people with mobility issues, and an additional 2% of all units be accessible for people with visual or auditory impairments.  However, according to whistleblower and wheelchair user Mei Ling, at least nine agency-affiliated properties lacked accessible parking spaces, appropriate ramp and height access for wheelchair users, or appropriate visual and tactile signs for people with visual or auditory impairments.  DOJ; USAO CDCA

December 23, 2019

The Texas Health and Human Services Commission will pay $15.3 million to the U.S. to resolve allegations that it submitted false quality control data to the USDA’s Supplemental Nutrition Assistance Program (SNAP), thereby falsely receiving performance bonuses for fiscal years 2010, 2013, and 2014 to which it was not entitled.  THHSC had contracted with Julie Osnes Consulting LLC to provide advice and recommendations to lower its SNAP quality control error rate.  Advice provided by Osnes has previously led to settlements with three other states, as well as with Osnes, with total recoveries to the U.S. exceeding $32 million.  DOJ
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