Investigations Newsletter: Russian National Sentenced to Prison for $100 Million Cyber Fraud Conspiracy

Arent Fox

Russian National Sentenced to Prison for $100 Million Cyber Fraud Conspiracy

On October 30, 2020, a Russian national was sentenced to eight years in prison for his role in a scheme to illicitly obtain and use sensitive personal and financial information online over the course of twelve years, resulting in more than $100 million in estimated losses. In February, the defendant pled guilty to conspiracy to commit bank and wire fraud.

The government alleged that, from 2007 through 2019, the defendant and other cybercriminals used “botnets,” or networks of infected computers, to engage in a large-scale scheme to steal and traffic sensitive information, such as personally identifiable information and online banking credentials.

According to court documents, the defendant wrote software scripts and manually searched online data to mine for easily monetized information. Over the course of the scheme, the defendant allegedly possessed and monetized over 200,000 unauthorized access devices containing either personally-identifying information or financial account information.

Read the press release here.

Memphis Physicians and Family Medicine Practices to Pay More Than $340,000 for Alleged False Claims Act Violations

Two doctors, and family medicine practices Memphis Primary Care Specialists, Lunceford Family Health Center, and Getwell Family Medicine agreed to pay $341,690 to resolve alleged False Claims Act violations by knowingly overbilling Medicare. The government alleged that the defendants improperly billed Medicare at rates for physician services when the services were actually performed by nurse practitioners.

The Medicare program generally pays higher reimbursement rates for services performed by a physician than for non-physician services. While Medicare will pay the physician rate for services rendered by a non-physician if they are “incident to” physician services, those non-physician services must be provided under the direct supervision of a physician. The government alleged that, from 2015 to 2018, the defendants violated the False Claims Act by billing Medicare for physician services when nurse practitioners performed the services rendered and were not directly supervised by a physician, contrary to Medicare’s “incident to” billing rules. On some occasions, the defendants billed at physician services rates for non-physician services when the physicians were not in the office and traveling abroad. 

The settlement resolves allegations initiated by a whistleblower lawsuit brought under the qui tam provisions of the False Claims Act. The relator will receive $58,087 from the government’s recovery. The claims resolved by this settlement are allegations only; there has been no determination of liability.

Read the press release here.

Whistleblower Seeks Supreme Court Review of Heightened False Claims Act Pleading Standard

Relator Integra Med Analytics LLC (Integra) has petitioned the US Supreme Court for review of a Fifth Circuit decision affirming the dismissal of Integra’s $61.8 million False Claims Act suit against Baylor Scott & White Health (Baylor Scott), alleging that the Fifth Circuit panel improperly heightened the pleading standard for False Claims Act lawsuits.

Integra’s lawsuit, in which the federal government declined to intervene, alleged that Baylor Scott improperly increased the use of a specific Medicare diagnosis code to increase its revenue. In addition to intentionally inflating its claims that were billed to Medicare, Integra alleged that Baylor Scott’s management encouraged these billing practices and offered training on how to obtain increased revenue from Medicare. Integra claimed to have applied “unique algorithms and statistical processes” to data from the Centers for Medicare and Medicaid Services to uncover the alleged fraud. 

In May, a panel of the Fifth Circuit affirmed the district court’s dismissal with prejudice of Integra’s qui tam suit, concluding that the complaint suggests that Baylor Scott’s conduct was not unlawful. While a medical claim could increase in value by as much as $25,000 by using the Medicare diagnosis codes at issue, and Baylor Scott’s use of these codes may have been greater than other hospitals, the court reasoned that other hospitals were increasingly reaching Baylor Scott’s usage rates.

Integra’s petition for certiorari asserts that the Fifth Circuit’s ruling would require whistleblowers relying on statistical analyses to think of every possible “alternative explanation” behind the statistical data sets that a court finds “obvious” on the pleadings, which Integra alleges is “an impossible pleading standard for FCA relators.” Integra also alleges that the appellate court “either completely discounted or simply ignored factual allegations and other statistical indications that refuted the court’s theory.”

The case is United States ex rel. Integra Med Analytics LLC v. Baylor Scott & White Health et al., case number 20-581, in the U.S. Supreme Court.

Read the Law360 article here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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