Investigations Newsletter: DOJ Announces Charges Against 345 Defendants in Historic Nationwide Health Care Fraud and Opioid Takedown

Arent Fox

DOJ Announces Charges Against 345 Defendants in Historic Nationwide Health Care Fraud and Opioid Takedown

The DOJ announced a nationwide enforcement action charging 345 defendants across 51 federal districts with submitting more than $6 billion worth of fraudulent claims to federal health care programs and private insurers, making this the largest health care fraud and opioid enforcement action in the history of the DOJ.

Although the cases charged span a variety of alleged health care fraud schemes, the largest amount of fraud charged–$4.5 billion in allegedly false and fraudulent claims–concerns telemedicine, which is the use of telecommunications technology, such as the telephone or e-mail, to provide healthcare services remotely.  Telemedicine executives are alleged to have paid doctors and nurse practitioners to order unnecessary services, testing, medications, and equipment for patients they never interacted with, or only spoke to briefly by phone.  In exchange for illegal kickbacks and bribes, pharmacies, genetic testing laboratories, and durable medical equipment companies purchased these orders and then submitted false and fraudulent claims to government insurers, such as Medicare.

Another large amount of the fraud charged–almost $850 million dollars’ worth of fraud–related to “sober home” cases.  Those involved, including physicians, owners and operators of substance abuse treatment facilities, and patient recruiters, are alleged to have participated in the payment of illegal kickbacks and bribes in exchange for referrals of patients to substance abuse treatment facilities.  Some of the defendants charged are alleged to have subjected patients at substance abuse treatment facilities to medically unnecessary drug testing and to have prescribed medically unnecessary controlled substances to entice patients to stay at the facility.  In exchange for additional kickbacks, some patients were discharged and admitted to other treatment facilities or referred to other laboratories and clinics.

DOJ’s announcement also included cases involving the submission of false and fraudulent claims for treatments that were medically unnecessary and often never provided, as well as the illegal prescription and distribution of opioids.  Patient recruiters, beneficiaries, and co-conspirators are alleged to have received cash kickbacks in exchange for supplying beneficiary information to providers, thereby enabling providers to submit false and fraudulent bills to Medicare.

Read the Assistant Attorney General’s remarks here and DOJ’s press release here.

International Engineering Company to Pay $22 Million to Resolve False Claims Act Allegations

A multinational industrial engineering company, Linde GmbH, and its U.S. subsidiary, Linde Engineering North America LLC (collectively, Linde), agreed to pay over $22 million to resolve allegations that they violated the False Claims Act by knowingly making false statements on customs declarations to avoid paying duties on imported materials.

Linde GmbH, headquartered in Germany, imports materials into the United States for use in the construction of chemical and natural gas manufacturing plants. For goods to enter the United States, the importer must declare the country of origin of the items, the value of the items, and whether the item is covered by anti-dumping or countervailing duties.  This information is relied on by U.S. Customs and Border Protection to determine the correct amount of any duties owed.

This settlement resolves allegations made in a 2017 lawsuit by whistleblower, Crystal Johnson, who worked at Linde’s Oklahoma location for 10 years. According to the lawsuit, from 2011 – 2017, Linde avoided paying duties by knowingly making false statements on its customs declarations regarding the nature, classification, and value of imported goods, and the applicability of free trade agreements. The settlement agreement resolves these allegations without making a determination of liability.

The $22.8 million dollar settlement includes $15 million previously paid by Linde after it self-disclosed some of its importing practices to the government. Ms. Johnson will receive approximately $3.7 million of the $22.8 million as a result of the whistleblower provision of the False Claims Act that allows a private citizens to share in a portion of any recovery.

Read DOJ’s press release here.

Nonprofit Agrees to Pay $1.9 Million to Resolve False Claim and Kickback Allegations

Industries for the Blind and Visually Impaired Inc. (IBI), a nonprofit corporation headquartered in Wisconsin, agreed to pay $1,938,684.09 to resolve allegations that it violated the False Claims Act and the Anti-Kickback Act.

IBI is one of the four hundred companies that participate in the government’s AbilityOne program, which is one of the largest sources of employment for individuals who are blind, visually impaired, or have significant disabilities.  Under the AbilityOne program, IBI received set-aside contracts in exchange for providing jobs to blind and visually-impaired individuals.

The settlement resolves allegations that IBI misrepresented that it would maintain a 3:1 blind-to-sighted ratio of employees in order to obtain contracts under the AbilityOne Program for furniture design and installation services.  The settlement also revolves allegations that furniture designers and sales representations took impermissible payments and accepted gifts from manufacturers, and that IBI improperly subcontracted a set-aside contract for screen-printed clothing to an entity that did not generally use blind labor.

The lawsuit was filed by Paul Inzeo, a former marketing manager at IBI.  His share in the recovery has not yet been determined.

Read the DOJ’s press release here.

New York Man Charged With Wire Fraud and Identify Theft In Connection with Fraudulent SBA Loan Application

Michael Kornaker, a resident of Tonawanda, New York, was recently charged with wire fraud in relation to a national emergency and aggravated identity theft in a criminal complaint filed in the Western District of New York.  According to the complaint, the defendant applied for and was granted a $60,500 Economic Injury Disaster Loan  through the Small Business Administration by using the name and personal information of another individual without that individual’s permission.  Economic Injury Disaster Loans are available to small businesses and private, non-profit organizations that suffer substantial injury as a result of a declared disaster, such as the COVID-19 pandemic.

Read DOJ’s press release here.

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Arent Fox

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