Investigations Newsletter: COVID-19 Task Force Established to Enhance Enforcement Efforts against Fraud

Arent Fox

Headlines that Matter for Companies and Executives in Regulated Industries

COVID-19 Task Force Established to Enhance Enforcement Efforts against Fraud

On May 17, 2021, the Department of Justice and U.S. Attorney General announced the establishment of the COVID-19 Fraud Enforcement Task Force, designed to coordinate DOJ resources across government agencies to combat COVID-19 related fraud.

The Attorney General identified three goals of the Task Force in the announcement: “(1) to identify cross-governmental resources, investigative techniques, and information for uncovering fraud schemes and the actors who perpetrate them; (2) to harness what [DOJ has] learned about COVID-19 related and other types of fraud from past efforts; and (3) to deter, detect, and disrupt future fraud wherever it occurs.”

The Task Force will be led and organized by the Deputy Attorney General, will continue to incorporate existing coordination mechanisms within the DOJ, and will involve several entities within the DOJ, including the Criminal and Civil Divisions, the Executive Office for United States Attorneys, and the Federal Bureau of Investigation. Key interagency partners have also been invited to serve on the Task Force, including the Department of Labor, the Department of the Treasury, the Department of Homeland Security, the Small Business Administration, the Special Inspector General for Pandemic Relief, and Pandemic Response Accountability Committee, among others.  

The Attorney General’s announcement can be found here, and the COVID-19 Fraud Enforcement Task Force Fact Sheet can be found here, including a full list of Task Force members and case examples.

Former OB-GYN Convicted of $21M Fraud for Unnecessary Surgeries, Sentenced to 59 Years

On May 17, 2021, former obstetrician-gynecologist Javaid Perwaiz was sentenced to 59 years in prison after a jury convicted him on 52 counts of health care fraud and false statements related to performing unnecessary surgeries on patients and receiving nearly $21 million from insurers.

According to court records, Perwaiz acted fraudulently by convincing patients that they needed surgeries, including hysterectomies and sterilizations, either to treat or avoid cancer. Evidence also showed that Perwaiz falsified medical records to induce early labor to be reimbursed by health insurance and back-dated medical forms in violation of Medicaid’s required waiting period for elective sterilizations. Prosecutors also alleged that he charged insurance companies for hundreds of thousands of dollars for surgeries that he did not actually perform.

The case is USA v. Perwaiz, case number 2:19-cr-00189, in the U.S. District Court for the Eastern District of Virginia.

Charging for COVID-19 Vaccine Could Violate False Claims Act

On May 17, 2021, the U.S. Attorney’s Office for the Eastern District of California and the U.S. Department of Health and Human Services Office of Inspector General, together with the California Department of Justice, advised the public that they should not be asked to pay to receive the COVID-19 vaccine and warned vaccine providers not to seek payment from individual COVID-19 vaccine recipients, cautioning a potential violation of the False Claims Act.

All COVID-19 vaccination providers are required to sign an agreement to receive and administer vaccines under the U.S. Centers for Disease Control and Prevention COVID-19 Vaccination Program, part of which includes an agreement to administer the vaccine regardless of the patient’s ability to pay. Vaccine providers are permitted to seek reimbursement from a plan that covers vaccine fees, but they are prohibited from seeking any payment from the vaccine recipient individually.

Failure to comply with the terms of the vaccination provider agreement, including by charging individual vaccine recipients for the COVID-19 vaccine or denying administration of a vaccine for inability to pay, can result in the vaccine provider’s suspension or termination from the CDC COVID-19 Vaccination Program. Phillip A. Talbert, Acting U.S. Attorney for the Eastern District of California, also warned that such non-compliance could lead to potential criminal and civil penalties, including a potential violation of the civil False Claims Act and other civil and criminal statutes. He added that the U.S. Attorney’s Office has sent multiple cease and desist letters to vaccine providers to stop this practice.

The DOJ press release can be found here

Wedding Planner Pleads Guilty to $3M PPP-Related Fraud, Faces 20 Years

Fahad Shah, the owner of a wedding planning company based in Texas, pleaded guilty on May 19, 2021, to seeking more than $3 million in Paycheck Protection Program (PPP) loans through fraudulent loan applications. Shah pleaded guilty to one count of wire fraud and faces a maximum sentence of 20 years in prison.

Shah admitted that he submitted one application for $1.7 million and a second application for $1.5 million in PPP loans for his company WBF Weddings by Farah Inc. (“WBF”), from two different Small business Administration-approved lenders. Shah fraudulently claimed that WBF employed 126 employees with an average monthly payroll of over $600,000, but according to court documents, WBF had only two employees.

Shah admitted to receiving over $1.5 million in PPP loan proceeds. Shah used over $1 million of the proceeds to buy, among other things, two Teslas, two Freightliner trucks, and a Mercedes Benz van, all within days of receiving the PPP funds.

The DOJ press release can be found here

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