Published on:

Kentucky Ambulance Company Sued for Alleged False Claims Act Violations

Hedge-Fund-Manager-Holding-MoneyOn Monday, June 6, 2016, a False Claims Act (FCA) lawsuit brought against a Kentucky ambulance company was unsealed. The whistleblower, Darrell McIntosh, is the owner of McIntosh Ambulance Services. During the course of conducting business in Breathitt County, Kentucky, McIntosh became aware of a competitor ambulance company, Arrow-Med, and their allegedly fraudulent Medicare billing practices.

The False Claims Act, originally enacted in 1863 during the civil war to combat rampant fraud in government contracting, was amended by Congress in 1986 to enhance the federal government’s ability to recover losses from fraud against the United States. Violations of the False Claims Act are subject to civil penalties plus three times the amount of the loss that the government incurred as a result of the defendant’s actions.

McIntosh’s qui tam complaint alleges that Arrow-Med violated three provisions of the False Claims Act: (1) billing Medicare for “medically unnecessary” non-emergency ambulance transport, (2) billing for “non-reimbursable” transport, and (3) providing kickbacks to referral sources.

Medicare pays only for services that are “reasonable and necessary for the diagnosis or treatment of illness or injury.” The program covers ambulance services only when the transport is medically necessary. Non-emergency transportation by ambulance is reimbursable only if the Medicare patient is bed-confined.

McIntosh alleges that Arrow-Med regularly provided transportation for Medicare patients who were not bed-confined, were able to walk, and did not meet conditions to be eligible for reimbursement. McIntosh provided the government with information on eight Arrow-Med users that were regularly transported by ambulance between nursing homes and dialysis centers. Despite Arrow-Med billing Medicare for these services, the patients were able to transport themselves to appointments or use traditional nursing-home van transportation. McIntosh garnered this information through personal observation of the patients and in speaking to area dialysis clinic staff who alerted him of Arrow-Med’s alleged scheme.

McIntosh also alleges many of the trips for which Arrow-Med billed Medicare were “non-reimbursable,” as Arrow-Med staff did not meet the statutory Medicare reimbursement requirements. Medicare regulations require ambulance service providers to adequately staff emergency transport vehicles in order to be eligible for reimbursement. Under these regulations, an ambulance must be staffed by an individual who is “certified as an emergency medical technician by the state or local authority.” McIntosh witnessed Arrow-Med use the services of an individual in the capacity of an EMT even though that individual lacked the proper credentials to act as an EMT. He alleges that the company uses an employee whose EMT license was suspended by the State of Kentucky. McIntosh says Arrow-Med was continuously searching for EMTs and did not have an adequately credentialed staff to operate ambulances for runs and obtain Medicare reimbursements.

McIntosh’s last FCA claim rests on his knowledge of Arrow-Med’s alleged referral-swapping scheme with nursing homes. He claims that soon after Arrow-Med started operating, the company entered into a swapping scheme with the Nim Henson Geriatric Center (“NHGC.”) The center would receive deeply discounted patient transports in exchange for referrals for Medicare patients. In exchange for the deeply discounted rates, NHGC allegedly exclusively refers its patients to Arrow-Med for patient transport. McIntosh alleges that Arrow-Med’s deeply discounted patient transport operates as a “kickback” to NHGC for the right to transport all of NHGC’s Medicare patients. McIntosh says he was told by NHGC that his company’s previous contracts for transportation with the center were terminated because Arrow-Med provided the nursing center a “better-rate.”

The whistleblower alleges that this mixture of fraudulent billing and Arrow-Med’s use of unqualified staff caused the submission of false claims actionable under the FCA.

There are rarely better-poised individuals to undercover fraud against the government than business competitors. As businesses operate in similar spheres, competitors know what is required to adequately fulfill a government contract. If a competitor business is skirting regulations to cut down on costs or is engaging in kickbacks like those alleged in McIntosh’s complaint, with the help of an experienced False Claims Act attorney, one’s business may not only level the playing-field in their market, but may also recover a substantial financial reward for providing the government with information that assists in the recovery of ill-gotten funds.

Posted in:
Published on:
Updated:

Comments are closed.