Headlines that Matter for Companies and Executives in Regulated Industries

DC Federal Judge Dramatically Amplifies False Claims Act Damages Award

On January 16, Judge Rudolph Contreras of the US District Court for the District of Columbia issued an opinion agreeing in part with the federal government’s request to increase the amount of FCA damages imposed on Gen Digital Inc. Judge Contreras had previously rendered a damages award of $1.6 million but increased the sum to $53 million following additional briefing on the issue.

Gen Digital, an Arizona-based software company formerly known as Symantec Corporation and NortonLifeLock, Inc., was found liable under the FCA in early 2022 for allegedly obscuring certain discounts that it normally gave to other customers but improperly withheld from the federal government and the state of California.

The $53 million award consists of $16.1 million in “rebate damages” and nearly $37 million in additional civil penalties provided under the FCA. The state of California had submitted a similar request for increased damages, but Judge Contreras rejected its four-page brief as “spare” and insufficient to persuade him that its damages should be modified.

According to a public statement issued on January 17, Gen Digital is considering an appeal.

A link to the court’s opinion can be found here.

Prosecutors Request Prison Sentence for Former NBA Player in Fraud Scheme

On Friday, January 12, federal prosecutors filed a sentencing memorandum in their case against Sebastian Telfair, a former National Basketball Association (NBA) player who was convicted for his role in defrauding the NBA’s Players Health and Welfare Benefit Plan. As part of his plea deal, Telfair admitted to participating in a scheme that ultimately netted more than $358,000 from the Plan, pleading guilty to conspiracy to commit wire and health care fraud.

Prosecutors argued that Telfair’s offense was “indisputably serious” because defrauding the Plan placed other plan participants at the risk of harm. Specifically, Telfair confessed to submitting fake invoices to the Plan and seeking reimbursement for alleged services provided by a chiropractor and a dentist, both of whom were also indicted as co-conspirators in the scheme.

Despite the fact that Telfair has a lengthy criminal history, prosecutors have recommended a sentence of between 15 and 21 months for Telfair, which is beneath the sentencing guideline range. The five-year-long scheme involved more than a dozen players in total, and former Boston Celtics player Terrence Williams — the alleged mastermind — was previously sentenced to 10 years in prison.

Telfair’s sentencing hearing is set to occur on January 26. A copy of the government’s submission can be found here.

Long-Term Care Hospital and Investors Agree to Pay $30.6 Million to Resolve False Claims Act Allegations

A New Jersey-based health care facility known as Silver Lake Hospital, located in Newark, reached a settlement with the federal government this week to resolve allegations that it violated the False Claims Act (FCA) by defrauding the Medicare program. The hospital agreed to pay $18.6 million, along with interest, based upon accusations that it submitted claims for excessive amounts of supplemental reimbursements known as “cost outlier” payments.

Cost outlier payments are available to hospitals in regions with a high cost of care, in order to encourage the facilities in those locations to treat patients with expensive care. The government alleged that Silver Lake Hospital increased its charges well above its actual costs with the goal of receiving inflated reimbursements from Medicare.

A group of investors in Silver Lake Hospital simultaneously agreed to pay $12 million to resolve allegations they violated the Federal Debt Collection Procedures Act (FDCPA), when they transferred the fraudulent funds from the hospital to other accounts.

A link to the US Department of Justice’s (DOJ) press release can be found here.

Two Idaho-Based AmeriHealth Clinics Settle False Claims Act Allegations

AmeriHealth and the owners of two of its Idaho clinics recently settled for $2 million with the federal government after admitting to violating the FCA. Specifically, the company and the clinic owners, Ryan and Alban Hatch, entered into a consent judgment to resolve allegations that they assigned inexperienced, vulnerable, or otherwise unqualified staff members to provide substandard or unnecessary care to patients. For example, the complaint alleged that the owners ordered an impaired staff member with a hangover to treat unknowing and unsuspecting patients.

While the consent judgment required the defendants to admit their FCA violations, it also resolved further allegations that they violated the Paycheck Protection Program, the Controlled Substances Act, and the Anti-Kickback Statute, without requiring them to admit to those offenses.

A link to the DOJ’s press release can be found here.

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