Model-House-on-Money-200x300Last week, M&T Bank (“M&T”), headquartered in Buffalo, New York, agreed to pay $64 million dollars to settle allegations that the company violated the False Claims Act. Whistleblower Keisha Kelschenbach initiated the suit by alleging M&T knowingly originated and underwrote mortgage loans insured by the U.S. Department of Housing and Urban Development (HUD) that did not meet applicable requirements.

During the time period covered by the settlement, M&T Bank participated as a “direct endorsement lender” in the HUD insurance program. Under the program, M&T had the authority to originate, underwrite, and endorse mortgages for insurance.  If M&T approved a mortgage loan for insurance and the loan later defaulted, the holder of the loan could submit an insurance claim to HUD for the losses resulting from the defaulted loan.

Under the program, HUD did not review M&T’s loans for compliance before it is endorsed them for insurance. M&T, as a government fiduciary, was therefore required to (1) follow program regulations intended to ensure the company is properly underwriting and certifying mortgages for insurance; (2) maintaining a quality control program that can prevent and correct deficiencies in underwriting practices, and (3) self-report any deficient loans identified by the bank’s quality control compliance program.

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The False Claims Act, originally enacted in 1863 during the civil war to combat rampant fraud in government contracting, was amended by Congress in 1986 to enhance the federal government’s ability to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.

A teenager who died after receiving mental healthcare services from unlicensed and underqualified professionals is the impetus behind a False Claims Act lawsuit handled by Greene, LLP on behalf of the late Yarushka Rivera. The case is now before the U.S. Supreme Court. The United States Office of the Solicitor General and the Department of Justice argued before the Supreme Court on April 19, 2016 with assistance from Greene, LLP.

Yarushka Rivera was a teenage enrollee of MassHealth benefits (Massachusetts’s state equivalent of Medicare) and began seeing Arbour counselor Maria Pereyra in 2007 after experiencing various behavioral problems at school. Pereyra, an Arbour staff member, lacked a professional license to provide mental-health therapy. Rivera’s parents met with Pereyra’s supervisor, clinical director Edward Keohan, after Yarushka complained that she was not benefiting from counseling. During the meeting, they became worried that Keohan was not properly supervising Pereyra and was unfamiliar with Yarushka’s treatment.

Yarushka was eventually transferred to another staff member, Diana Casado, who was also supervised by Keohan. Casado too, was unlicensed. Yarushka’s parents quickly became dissatisfied with her treatment and believed that Casado too, was not properly supervised.

md_tmgOn October 19, 2015, Greene LLP announced the resolution of False Claims Act claims against Millennium Health, LLC in a settlement reached with the United States. The settlement, likely to exceed $231 million once interest is calculated, brought to an end the whistleblower suit initiated by Greene LLP and client Mark McGuire in January 2012 under the qui tam provisions of the False Claims Act.

The settlement resolved allegations that Millennium encouraged physicians to order drug testing performed by the company without an individualized assessment of patient need. The Greene LLP suit and the United States’s complaint in intervention alleged that Millennium caused physicians to order such tests by promoting the use of standing orders termed “custom profiles,” which included a default panel of tests for Millennium to run on each specimen physicians sent to its San Diego, California facility for testing. Also resolved by the settlement were the complaints’ claims that Millennium billed the federal and state governments for testing it was referred in exchange for providing physicians with free point-of-care testing supplies, cups containing test strips that also served as specimen containers. Continue reading ›

Yellow-and-Red-Pills-300x224PharMerica Corporation has settled False Claims Act (FCA) allegations agreeing to pay the United States $9.25 million. The allegations had accused PharMerica of taking kickbacks from Abbott Laboratories Inc. in order to increase the use of the seizure prevention drug Depakote with the patients in their nursing homes. The presence of kickbacks is a violation of the Stark law and in this instance could place the elderly at risk. Kickbacks can create bias in the judgment of the nursing home staff, and nursing home staff must be uniquely objective in their decisions as nursing home patients may suffer from dementia. This settlement stems from a 2012 resolution between Abbott and the United States for FCA violations, resolving PharMerica’s role in that settlement. Continue reading ›

Supreme-Court-Pillars-300x199 2Earlier this month, the U.S District Court for the Southern District of New York decided for Schindler Elevator Corporation after more than a decade of prolonged litigation. The ten years of back and forth litigation included both a trip to the Second Circuit and one to the Supreme Court in 2011 for a decision on the meaning of the False Claims Act (FCA) public disclosure bar.  The summary judgment decision is the final defeat for the whistleblower, a U.S Army veteran, in his attempt to prove that Schindler Elevator Corp. had committed fraud against the government by obtaining federal contracts through false representations. Continue reading ›

Pill-Capsule-150x150Adventist Health System has agreed to pay the government $115 million in order to settle allegations that it violated the False Claims Act and the Stark Law. The suit alleged that fraud was committed against the government when Adventist paid its doctors excessive sums in compensation for patient referrals. It was also alleged that fraud was committed through the miscoding of Medicaid and Medicare claims, which resulted in higher reimbursement rates than were deserved. This settlement is the highest amount ever paid in a case of fraudulent patient referrals and it nearly doubles the previous record. That past record was set just last week when North Broward Hospital District agreed to pay $69.5 million to settle allegations of kickback payments for patient referrals.   Continue reading ›

Housing-Fr4aud-150x150 3Walter Investment Management Corporation has agreed to settle a False Claims Act (FCA) allegation for $29.63 million. It was alleged that Walter Investment had been submitting false claims to the United States Department of Housing and Urban Development for years. These submissions were made by three subsidiaries of Walter Investment and included Reverse Mortgage Solution Inc., Reo Management Solutions LLC, and RMS Asset Management Solutions LLC. It was alleged that the false submissions contained improper dates, causing the government to over reimburse the lenders, and that these dates were intentionally misstated in order to fraud the government. The lawsuit, United States ex rel. McDonald v. Walter Investment Management Corp., et al., was settled without a determination of liability on behalf of Walter Investment. Continue reading ›

100-dollar-bill-and-drugs 2Retail Giant Kmart Corporation has agreed to settle, at a cost of $1.4 million, allegations that it violated the False Claims Act (FCA) by knowingly and illegally inducing Medicare beneficiaries to fill their prescriptions at pharmacies within their retail stores. Kmart, a unit of Sears Holdings Corp, is a major player in both the US department store and pharmacy market, operating some 780 retail stores that contain pharmacies. The Department of Justice announced the settlement on Tuesday. The settlement of the case U.S. ex rel. Leight v. Sears Holdings Corp et al. made no determination of liability on the part of Kmart. Continue reading ›

The Fifth CiNew Orleans (Post-Katrina)rcuit reversed the decision of the district court, which had ruled that further discovery was prohibited by Rule 9(b) of the False Claims Act (FCA). The holding will allow whistleblower’s Cori and Kerrri Rigsby to continue searching for fraud committed by State Farm Fire & Casualty Co. against the government. In the initial claim, a jury had found State Farm Fire guilty of violating the FCA when it defrauded the National Flood Insurance Program (NFIP) after the destruction created by Hurricane Katrina. The Court emphasized that future discovery decisions should be decided by examining the unique facts of each case along with an attempt to strike a balance between the whistleblower’s interest in finding additional fraud claims and the defendant’s interest in limiting the costs of the discovery process. Continue reading ›

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