DOJ unveils 'largest takedown ever' against Medicare fraud

The U.S. Justice Department said Wednesday that federal law enforcement officials have hit a milestone in 2016 by completing the "largest takedown ever" against defendants allegedly trying to defraud Medicare and other federal insurance programs.

The 2016 takedown involves 301 defendants and a loss amount of $900 million, the department said. That exceeds a record last year, when 243 defendants faced charges in a combined $712 million in losses.

Among the defendants charged in the takedown include two owners of a group of outpatient clinics and a patient recruiter who stand accused of filing $36 million in fraudulent claims for physical therapy and other services that were not medically necessary.

To find patients, the Justice Department alleges the clinic operators and the recruiter targeted poor drug addicts and offered them narcotics so they could bill them for services that were never provided.

Another case that was highlighted on Wednesday involved home health fraud. In that case, a doctor was indicted for billing $38 million for home health services that were not needed or ever provided.

The Justice Department said that about 50 percent of the cases in the 2016 take down involve some form of home health fraud, and about 25 percent involve pharmacy fraud. 

New Whistleblower Protection Law in France not yet Fit for Purpose

Michel Sapin, the French Minister of Finance, promised to deliver a comprehensive anti-corruption law that included protection for those courageous enough to speak out against corruption and malpractice. The minister set the bar high when he said that the law should “cover all possible situations… and here, I obviously think of situations like the one of Antoine Deltour,” a French citizen who disclosed secret tax rulings and is currently under prosecution in Luxembourg.

The draft law – called “Loi Sapin II” after the Minister himself – is in its final stages of approval. But, as it currently stands, it falls far short: The definition of whistleblower is too narrow. It only covers violations of the law and serious risks and harms in three areas: the environment, health or public security. This means that people who disclose such information in other areas would not be protected – neither would Antoine Deltour who had revealed secret tax arrangements between the Luxembourg authorities and multinational companies. If he had been in France and the new law was in effect, Deltour would still have found himself in the dock. read more »

Supreme Court Upholds “Implied Certification” Theory of Liability Under the False Claims Act

The Supreme Court issued its long-awaited decision in Universal Health Services, Inc. v. United States ex rel. Escobar, the most significant False Claims Act (“FCA”) decision of the year.  At issue was a theory of liability known as “implied certification,” and whether this theory was valid under the FCA.

The relators (the technical term used to describe private whistleblower plaintiffs in FCA qui tam cases) were Julio Escobar and Carmen Correa, the parents of Yarushka Rivera.  Yarushka died after several years of receiving counseling and medication prescriptions from Arbour Counseling Services (“Arbour”), a mental health facility owned and operated by Universal Health Services.  The relators alleged that Arbour billed Medicaid for treatment by unlicensed or improperly supervised counselor and nurses, and that by doing so Arbour violated various regulatory requirements of the Medicaid program.  The trial court dismissed the relators’ complaint, holding that none of the regulations they relied upon were “conditions of payment.”  The United States Court of Appeal for the First Circuit reversed, holding that merely by submitting claims for payment, Arbour had “implicitly” represented that it was in compliance with Medicaid program requirements.  The Supreme Court agreed to hear the case because various Courts of Appeal around the country had reached differening conclusions about the viability or scope of this “implied certification” theory of liability under the FCA read more »

SEC Readies Case Against Merrill Lynch Over Notes That Lost 95%

The Securities and Exchange Commission is preparing a civil enforcement case against Merrill Lynch over an investment that fell as much as 95% in value and was marketed in a way that one of the firm’s financial advisers called “borderline crooked,” people close to the probe said.

The expected case against the brokerage arm of Bank of America Corp. underscores some of the risks of so-called structured notes, securities custom-built by banks out of options and other derivatives and often sold to retail investors.

It also brings to light a dispute between Merrill and two of its brokers who sold structured notes to their clients. With clients complaining after the value of the notes plunged, the brokers secretly taped calls with executives at Merrill, left the firm for rival UBS Group AG and then filed a whistleblower complaint over the notes with the SEC.

The probe involves a product called Strategic Return Notes that Merrill sold over a number of months in 2010, raising about $150 million. Linked to a Merrill Lynch index tracking the volatility of the S&P 500 stock index, the five-year notes lost value rapidly after they were issued, as market volatility fell and the cost of buying the options upon which the notes were based rose sharply.

Those so-called roll costs averaged about 12% of the principal per quarter in the first half of 2011, before falling to an average of less than 4% per quarter in the second half of the year, according to Merrill. In the calls, the brokers allege they were never told the costs could grow so large. read more »

DOJ touts $900M Medicare fraud takedown, the largest ever

The government says 300 people have been charged this year in health care fraud sweeps across the country. That includes physicians, clinic owners and other health care professionals accused of bilking Medicare.

In all, the fraudulent billings allegedly totaled $900 million, the Justice Department said. Authorities called it the largest-ever national Medicare fraud dragnet. More than 55 million people receive Medicare.

An estimated 50 percent of the cases in the 2016 takedown involve some form of home health fraud, and about 25 percent involve pharmacy fraud. read more »