Investigations Newsletter - Medical Device Exec Sentenced to 42 Months in Prison for $4.6 Million Kickback Scheme, Co-Conspirator Awaits Sentencing

Arent Fox

DOJ News

Medical Device Exec Sentenced to 42 Months in Prison for $4.6 Million Kickback Scheme, Co-Conspirator Awaits Sentencing

On August 29, the Department of Justice announced that a Tennessee health care executive, Brenda Montgomery, was sentenced to 42 months in prison and ordered to forfeit $595,676.80 after she pled guilty to eight counts – one count of conspiracy to violate the anti-kickback statute and seven counts of violating the anti-kickback statue – on January 7, 2019.

Montgomery, the former CEO of CCC Medical, Inc., a medical device company, admitted to paying more than $770,000 in illegal kickbacks to John Davis, the former CEO of Comprehensive Pain Specialist, a pain management company. In exchange for the kickbacks, Davis referred Medicare patients in need of durable medical equipment to Montgomery, who then used those referrals to submit more than $4.6 million in Medicare claims and received $2.9 million in fraudulent reimbursements.

Davis was also charged in connection with the scheme, and in April 2019 he was found guilty by a jury in the Middle District of Tennessee on one count of conspiracy to violate the anti-kickback statute and seven counts of violating the anti-kickback statute. Davis has not yet been sentenced.

The DOJ Press Release is here.

Health Care Contractor Settles TRICARE Fraud Allegations for $940,000

International SOS Assistance, Inc., International SOS Government Services, Inc., International SOS, LP, Air Rescue Americas, Inc., Arnaud Vaissié; and Pascal Rey-Herme agreed to pay $940,000 to resolve alleged violations of the False Claims Act brought by the United States Attorney’s Office for the Eastern District of Pennsylvania while admitting no liability.

The settlement resolves allegations that, between 2013 and 2017, International SOS, an overseas provider of health care services, overcharged TRICARE, a health insurance program for military servicemen and women, as well as their families, by hiding discounts it received for medical evacuations from third-party air ambulance providers. Instead of passing the discounted rates on to TRICARE, International SOS is alleged to have billed TRICARE a higher, non-discounted rate. The whistleblower, a former International SOS flight desk manager, will receive $165,000, approximately 17.6%, of the $940,000 settlement.

The USAO Press Release is available here.

Former Pharmacy Owner Charged in Bribery and Healthcare Fraud Scheme

The former owner of Empire Specialty Pharmacy Corp., Eduard “Eddy” Shtindler, was charged by the United States Attorney’s Office for the District of New Jersey with one count of conspiracy to pay illegal kickbacks and one count of conspiracy to commit health care fraud. The complaint alleges that from 2012 through early 2017, Shtindler paid cash bribes – sometimes delivered in pill bottles – to a psychiatrist in New Jersey, who in return sent patients to Empire Pharmacy.

Shtindler is also accused of overseeing the falsification of prior authorizations for expensive specialty medication to convince doctors that Empire Pharmacy was more successful in receiving prior authorization approvals than rival pharmacies. As a result, Empire Pharmacy allegedly received illegal reimbursement payments from Medicare, Medicaid, and other insurance carriers totaling approximately $2 million. Shtindler faces up to 10 years in prison and a fine of $250,000 or twice the gross gain or loss from the offense.

The USAO Press Release is available here.

Insurer Pays Over $1 Million to Resolve False Claims Act Allegations Involving Section 8(a) Business

North American Specialty Insurance Company agreed to pay $1.040 million to resolve allegations made by the United States Attorney’s Office for the Western District of North Carolina that it violated the False Claims Act without admitting any liability.
The Small Business Administration oversees the Section 8(a) Business Development Program, which seeks to provide opportunities for small businesses owned by socially and economically disadvantaged individuals. One of these opportunities is to compete for set-aside contracts administered by various government agencies. Businesses may remain in the 8(a) Program for up to nine years as long as they provide information to the SBA confirming their continued eligibility.
According to the government’s press release, Claro Company, Inc., a South Carolina general contractor, allegedly submitted false claims for services performed in connection with contracts from the Department of Defense and Department of Agriculture that had been set-aside for 8(a) small businesses, and also made material false, fictitious, and fraudulent statements and representations and/or material omissions to become Section 8(a) certified and to remain in the 8(a) Program. The government alleged that NASIC either knew or should have known that Claro was not controlled by a socially and economically individual as required to be Section 8(a) certified and that Claro made material false representations regarding its financial status to remain in the 8(a) Program. By bonding Claro, NASIC allowed Claro to continue to fraudulently bid for contracts and allegedly violated the False Claims Act.

The USAO Press Release is available here.

Written by:

Arent Fox

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