Another Busy Week For DOJ False Claims Act Enforcement
While the lazy days of summer may be upon us, there seems to be no slowing down in the efforts of the Department of Justice (DOJ) to combat fraud with the agency settling several False Claims Act matters covering a wide range of fraud and misconduct. This follows a similar post we wrote only three weeks ago highlighting an equally prolific week of DOJ fraud enforcement activity with multiple civil and criminal False Claims Act resolutions.
The False Claims Act is the government’s primary fraud-fighting tool through which the government annually recovers billions of dollars of ill-gotten gains. It was enacted during the Civil War to go after war profiteers trying to defraud the Union Army with lame mules, empty munitions, and the like. Last week’s proceedings shows the wide scope of misconduct that falls within the statute’s broad sweep. Notably, they largely involved low-dollar settlements showing the government is willing to go after all types of fraud no matter how small the monetary harm involved.
Here is a breakdown of last week’s settlements:
Northstar Auto and Salvage: On June 14, DOJ announced the New York scrap metal recycler agreed to pay $45,000 to settle charges it violated the False Claims Act by receiving government property from unauthorized individuals. More specifically, two soldiers and a civilian sold Northstar roughly 29,000 pounds of brass shell cartridges from the Fort Drum Army base for the company to process and sell on the open scrap metal recycling market. But Northstar did not have a contract to purchase the Fort Drum brass and the three individuals were not authorized to sell it.
Evergreen Treatment Services: On June 13, DOJ announced the Seattle-based drug treatment center agreed to pay roughly $1.5 million to settle charges it violated the False Claims Act by double billing Medicare for certain drug treatment services during a six-month window in 2020. DOJ apparently identified the improper billing through its own data analysis work, a method of fraud detection becoming increasingly more common.
Supportive Care Holdings: On June 13, DOJ announced the Connecticut-based network of companies providing psychological services to nursing home residents, along with its CEO Joseph Dov Newmark, agreed to pay roughly $4.6 million to settle charges they violated the False Claims Act with respect to telehealth services they provided nursing home residents. As the government highlighted in announcing the settlement, “telehealth plays an increasingly important role in our health care system,” and “it is critical that health care providers follow the relevant rules and bill for such services accurately and honestly.”
All Star Property Management: On June 13, DOJ announced the Spokane-based property management company, along with one of its property owners, agreed to pay roughly $330,000 to settle charges they violated the False Claims Act by improperly claiming rent assistance intended to benefit struggling renters during the COVID-19 pandemic. The government appeared especially umbraged by the misconduct, noting the defendants “lined their pockets with money that should have been used to keep people in a safe, secure, affordable home during a deadly pandemic.” The allegations originated in a whistleblower lawsuit filed by Northwest Justice Project, Washington’s largest legal aid organization, on behalf of tenant.
Multiple Non-Profits: On June 11, DOJ announced that multiple non-profit organizations, including two private country clubs and two homeowners associations, agreed to pay roughly $5.8 million to settle charges they violated the False Claims Act by securing Paycheck Protection Program (PPP) loans for which they were not eligible. The government stressed the importance of enforcing the PPP program, noting it “was born from the urgent need to support small businesses weathering the storm of a generational pandemic.” The allegations originated in a whistleblower lawsuit.
Progressive Pain Management: On June 11, DOJ announced the Missouri-based pain management center and its owner Dr. Nehal Modh agreed to pay $1.2 million to settle charges they violated the False Claims Act by billing Medicare and Medicaid for ultrasounds not provided, joint injections that did not meet billing substantiation requirements, and upcoding to inflate reimbursement. The allegations originated in a whistleblower lawsuit filed by a former employee of the company.
All this was in addition to the whistleblower-originated False Claims Act suit DOJ filed on June 13 against LabQ Clinical Diagnostics and its CEO and related companies for improperly billing the government for COVID-19 testing under a program reserved for uninsured individuals. In bringing the action, the government stressed it “will hold accountable those who divert federal funds designed to provide critical medical care to the uninsured population . . . in order to line their own pockets.”
Another very strong week’s worth of DOJ enforcement activity. And as usual, several of these matters originated with allegations by a whistleblower. The False Claims Act authorizes whistleblowers to bring lawsuits on behalf of the government for those committing fraud against the government. In return, whistleblowers are entitled to up to 30% of the government’s recovery. Whistleblowers have been responsible for originating the majority of False Claims Act cases and have received billions of dollars in whistleblower rewards over the past thirty years.
If you think you might have information relating to potential fraud against the government, please do not hesitate to contact us and we will connect you with an experienced member of the Constantine Cannon whistleblower team for a free and confidential consult.