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Recent Cases

HCA Pays 840,000,000 to DOJ

2000 Health Care Fraud Recoveries

General American Life Insurance Company officials indicted

Richmond Indiana Dentist Pays For Fraud

Glendale Adventist Settles Billing Fraud Case

Hospital Chain Settles Billing Fraud Case

Orange County Case

Fraud on Postal Service Nets Settlement

 

 



September 1, 2001

HCA AGREES TO PAY $840 MILLION IN GOVERNMENT'S LARGEST FRAUD SETTLEMENT EVER

Settlement Resolves Seven of the 27 Qui Tam Suits Filed Across the Country In December 2000, DOJ reported that the nation's largest for-profit hospital chain, HCA-The Health Company (formerly known as Columbia/HCA) agreed to pay $840 million in criminal and civil fines and penalties to resolve allegedly unlawful billing of federally and state funded health care programs. $745 million, of which $731.4 million will go to the Federal Government and $13.6 million to the States, resolves only a portion of HCA's civil liability. The civil settlement resolves allegations of billing for services provided to ineligible patients, falsifying DRG codes, improperly billing for certain lab tests, and billing for home health services that were medically unnecessary or never provided. The agreement does not resolve allegations that HCA unlawfully included the costs of running its hospitals on cost reports submitted to the Government, or that it paid kickbacks to physicians to get Medicare and Medicaid patients referred to its facilities. The criminal portion of the $840 million consists of a $95 million fine to be paid by HCA subsidiaries. The subsidiaries that have pled guilty will be ineligible to participate in government health care programs.

 

The civil settlement includes the following: over $95 million to resolve allegations of fraudulent laboratory billing practices; more than $403 million to resolve allegations of upcoding; $50 million to resolve allegations that the company claimed nonreimbursable marketing and advertising costs disguised as community education; $90 million to resolve allegations of improper charges to Medicare in the purchase of home health agencies; and, $106 million to resolve allegations of billing for home health visits for nonqualified patients.

 

The settlement is the largest government fraud settlement ever reached by the Justice Department and resolves seven of the 27 qui tam lawsuits filed in various jurisdictions across the country, but consolidated in Washington, D.C. As part of the settlement, HCA agreed to an eight-year corporate integrity agreement, which according to HHS Inspector General June Gibbs Brown is unprecedented in its scope and level of detail.

 

Senator Charles Grassley (R-IA), co-sponsor of the 1986 amendments to the False Claims Act, believes that this settlement vindicates those who fought efforts to gut the Act two years ago. Grassley stated: "Two years ago, hospitals complained that prosecutors were after them for innocent billing mistakes. In response, some legislators tried to gut the False Claims Act. Today's announcement proves two things. One, outright fraud can masquerade as innocent billing mistakes. Two, prosecutors know the difference, and they need a robust False Claims Act to make their case." Former Attorney General Janet Reno described the investigation into HCA's billing practices as "the largest multiagency investigation of a healthcare provider ever undertaken by the U.S."

 

Significantly, the allegations not resolved by the civil settlement may ultimately lead to HCA's greatest liability. The unresolved allegations, that HCA unlawfully charged for the cost of running its hospitals on cost reports submitted to the Government and paid kickbacks to physicians for referrals, are likely to cost the company close to an additional $1 billion. Many of the unresolved allegations are part of qui tam lawsuits filed by John Schilling, a former reimbursement manager, and Jim Alderson, a former hospital CFO. Both cases allege that HCA and its predecessor companies followed a policy of including in their cost reports claims for reimbursement related to medical care that they knew were inflated, unsupportable, or nonreimbursable. A major allegation is that HCA then created "reserve" cost reports that itemized improperly filed claims so that the money could be repaid to the government if the fraud was ever discovered during an audit. In addition, HCA's hospitals allegedly shifted purchase costs for home health agencies into management fees in order to qualify for Medicare reimbursement.
 


 

False Claims Act Recoveries Reach Record Level in 2000

In November 2000, DOJ reported that the United States collected a record $1.5 billion in civil fraud recoveries during the 2000 fiscal year—an increase of almost 50% above the largest previous annual recovery in 1997.

Approximately $1.2 billion of the settlements and judgments were the result of qui tam lawsuits. Payments to whistleblowers for the 2000 fiscal year totaled more than $173 million.

Health care fraud cases once again topped the list of annual recoveries, totaling more than $840 million. This amount included what was the largest civil fraud recovery ever (until record-breaking Columbia/HCA settlement in December 2000)—a $385 million settlement with Fresenius Medical Care to resolve four separate qui tam lawsuits alleging various wrongdoing by its kidney dialysis subsidiary. The largest of the four suits, which resulted in $253.3 million of the $385 million total settlement, involved allegations of fraudulent claims related to intradialytic parenteral nutrition (IDPN), a therapy for patients undergoing dialysis. The suit alleged that a Fresenius holding, NMC Homecare, Inc. submitted claims for this nutritional treatment that were based on fraudulent medical data, billed for equipment that was not used, and paid kickbacks to facilities to induce referral of business for IDPN therapy. The relators were former NMC employee Dana R. Austin, and a competitor of NMC, Ven-A-Care of Key West Florida.

The Department also recovered $170 million from Beverly Enterprises, Inc., the largest nursing home operator in the United States, for alleged false billings to Medicare involving over 400 nursing homes around the country. That suit, filed in 1995 by Domenic Todarello, who formerly headed a number of Beverly nursing homes in California and Arizona, alleged that Beverly billed Medicare for labor costs incurred in treating non-Medicare beneficiaries and used phony documents to support its claims for payment.

A health care fraud settlement with Quorum Health Group, Inc., the nation's largest hospital management chain, resolved 2 qui tam lawsuits. The largest of the suits was filed in January 1993 by James Alderson, a former CFO for a Quorum-managed hospital, and alleged that Quorum included non-reimbursable costs in its annual cost reports and kept a secret set of cost report reserves identifying the improper claims in case the scheme was uncovered.

Also in FY 2000, GAMBRO Healthcare, Inc. and two subsidiaries agreed to pay a total of $53.1 million to settle a qui tam lawsuit alleging that the laboratories submitted false claims for services provided to end stage renal disease patients. The suit was filed by relators Jay Buford, William Schoff and Dianne Castano.

After health care, the largest category of fraud recoveries involved the production of oil and other minerals from public lands. The Department recovered more than $243 million from companies alleged to have underpaid royalties on such production, including $95 million from Chevron, $56 million from Shell, $43 million from Texaco, $32 million from BP Amoco, $26 million from Conoco and $11.9 million from Devon Energy. These settlements were all the result of a qui tam lawsuit against 14 oil companies filed in 1996 by J. Benjamin Johnson and John Martinek, former employees of Atlantic Richfield Co.

The Department's recoveries also included over $140 million in settlements with twenty-five brokerage firms. These companies allegedly sold open market securities with artificially low yields to municipalities refunding tax-exempt bonds, thereby reducing the municipalities' purchase of special low-interest Treasury bonds. The most significant "yield burning" settlement came from Solomon Smith Barney, which agreed to pay $38.8 million to resolve these allegations.

Defense procurement fraud accounted for another $100 million in recoveries, including $54 million from the Boeing Corporation to resolve allegations that it placed defective transmission gears in army Chinook helicopters. There is significant evidence that the defective gears caused numerous accidents including a 1988 crash of a Chinook in Honduras in which five American soldiers were killed. The settlement resolved two related qui tam actions filed by Brett Roby, a former Quality Assurance Engineer for Boeing subcontractor SPECO Corp.

Also in fiscal year 2000, Government contractor Jacobs Engineering Group, Inc. agreed to pay $35 million to settle allegations that the company inflated lease payments under its contracts with various government agencies. The settlement resolves a qui tam action filed in 1997 by former Jacobs employee Edwin Bond. Bond was subsequently dismissed from the action, but he has appealed.

Civil recoveries for fiscal year 2001 began on a strong note with the largest FCA recovery ever, a $745 million settlement with HCA-The Health Company (formerly Columbia/HCA); a $30.6 million settlement with LifeScan, Inc., and a $27 million settlement with National Health Care Corp. The LifeScan settlement resolved a qui tam suit filed in 1997 by two former employees, alleging that the company failed to file medical device reports with the FDA advising it of the illnesses and injuries resulting from defective blood glucose monitoring devices. According to DOJ, the reports the company did file contained false, incomplete or misleading information. The relators were Robert Konrad and John Pumphrey.

National Health Care paid $27 million to settle allegations that it submitted inflate costs reports to Medicare. The allegations came to light as a result of a qui tam lawsuit filed by a former nursing home administrator for National Health Care's Orlando facility, Philip Charles Braeuning.


Richmond Dentist Pays $2,500,000 to Government for Medicaid Fraud

April 17, 2001

Timothy M. Morrison, United States Attorney for the Southern District of Indiana, announced that JAMES D. HERNLY, 56, Richmond, Indiana, was sentenced to 33 months imprisonment today by U.S. District Judge S. Hugh Dillin following his guilty pleas to six counts of mail fraud. This case was the result of a 4-year investigation by the Indiana Attorney General's Medicaid Fraud Control Unit in conjunction with the Federal Bureau of Investigation, agencies participating in the Health Care Fraud Task Force for the Southern District of Indiana.

HERNLY, a Richmond, Indiana dentist, was indicted in March, 1999 by a federal grand jury in Indianapolis with six counts of mail fraud. HERNLY was paid nearly $2.5 million over a five-year period by submitting false claims to the Indiana Medicaid program. The claims were for procedures that were never performed or for procedures more complex than actually performed.

According to Assistant United States Attorneys Sharon M. Jackson and Jill E. Zengler, who prosecuted the case for the government, Judge Dillin also imposed three years supervised release following HERNLY's release from imprisonment. HERNLY was ordered to make restitution in the amount of $963,148.32 and was fined in the amount of $25,000.00, ordered to pay $600.00 in special assessments and also ordered to repay the state and federal government $121,794.17 that was spent in investigating the case.

In addition to the criminal penalties, HERNLY also paid the United States more than $1.8 million to settle civil causes of action resulting from his conduct, including any liability that he may have under the civil False Claims Act. Included in the $1.8 million is the restitution owed to the government in the criminal case. Thus, the total sum paid by HERNLY to the United States on this date, was just under $2 million for restitution, civil settlement and criminal fines and costs.

According to United States Attorney Morrison, the civil False Claims Act was enacted to deter fraud, waste and abuse of public monies and in federally funded programs, like the Medicaid program. Under the False Claims Act, a party who submits a false claim for payment is liable for three times the amount of its loss, as well as a penalty of $5,500 to $11,000 for each false claim that is submitted. As part of the civil settlement agreement, HERNLY also agreed to be permanently excluded from participation in Medicare, Medicaid and all other Federal health care programs.

In 1997, following execution of a search warrant on his office but prior to HERNLY's indictment, the United States obtained a civil injunction to maintain the majority of his assets under Court supervision during the United States' investigation and to prevent Hernly from transferring any property. As result of the injunction, the United States prevented the dissipation of Hernly's assets and ensured that funds remained available to repay the Medicaid program for the more than $960,000 loss that it suffered as a result of his conduct.

Morrison stated, "This office is committed to the deterrence of fraud, waste and abuse in government programs, like the Medicaid program, through full application of both the civil and criminal remedies provided by Congress. In this case, the government judiciously used its resources to ensure that vital medical insurance programs, such as Medicaid, regain funds that were unlawfully taken." Morrison commended the work of the investigators and agents on the Task Force, noting that this case was extremely complex as the investigators and agents had to determine whether dental services were actually rendered and/or medically necessary.


 


GLENDALE ADVENTIST HOSPITAL'S PERINATAL MEDICAL GROUP  SETTLES WHISTLEBLOWER LAWSUIT ALLEGING MEDI-CAL FRAUD

 A medical group associated with the Glendale Adventist Medical Center and a doctor have agreed to pay $250,000 to resolve a “whistleblower” lawsuit alleging fraudulent Medi-Cal billings for services provided to patients by residents at the hospital, United States Attorney Alejandro N. Mayorkas announced today.
 A settlement involving the Perinatal Medical Group and Dr. Hugo Riffel was announced today when the United States Attorney's Office learned that a federal judge had unsealed a lawsuit. The $250,000 settlement was paid last week.
 The federal whistleblower lawsuit – technically a complaint filed pursuant to the qui tam provisions of the False Claims Act – was filed by Dr. Caroline Pieszak, who worked as a resident in the OB/GYN residency program at Glendale Adventist Medical Center in 1995 and 1996. Dr. Pieszak alleged that Perinatal Medical Group, Riffel and Glendale Adventist Medical Center routinely billed Medi-Cal for simple vaginal deliveries conducted by residents enrolled in the hospital's OB/GYN program but falsely represented that the services were provided by licensed attending physicians.
 Riffel was the director of the OB/GYN Teaching program at Glendale Adventist Medical Center. The settlement resolves the allegations against Perinatal Medical Group and Riffel, who did not admit any wrongdoing. The portion of the lawsuit concerning Glendale Adventist Medical Center is still pending, although the United States has elected not to intervene in the suit against the hospital, but Dr. Pieszak has elected to pursue that portion of the lawsuit.
 In exchange for the $250,000 payment, the United States has released Perinatal Medical Group and Riffel from potential fraud claims and other claims that could have been made under federal False Claims Act and other laws. In addition to the payment, Perinatal Medical Group and Riffel have promised to comply with a five-year Corporate Integrity Agreement with the Department of Health and Human Services, Office of the Inspector General.
 The investigation into Perinatal Medical Group and Dr. Riffel was conducted by the Civil Fraud Section of the United States Attorney's Office in Los Angeles, which received substantial assistance from the California Attorney General’s Office and the Department of Health and Human Services, Office of the Inspector General.
 The settlement agreement relates to United States and State of California ex rel. Caroline Pieszak v. Glendale Adventist Medical Center, et al., CV98-6501-ABC. United States District Judge Audrey B. Collins unsealed the case in an order filed on February 8.

 Release No. 00-031
 


 

November 13, 2001

ORANGE COUNTY HEALTH CARE FIRM AGREES TO PAY $3.2 MILLION TO SETTLE ‘WHISTLEBLOWER’ LAWSUIT

 Covenant Care, Inc. has agreed to pay the United States $3.2 million to settle a lawsuit that accused the Aliso Viejo health care company of overcharging Medicare for its nursing services at more than 35 nursing facilities it operates in California and other states.
 United States Attorney John S. Gordon announced the settlement today after learning late Friday that it had been approved by United States District Judge Audrey B. Collins. Covenant Care paid the government half of the settlement on October 29. Pursuant to the agreement, Covenant Care must pay the remaining $1.6 million, with interest, within one year.
 Generally, Covenant Care nursing facilities provide residents with only custodial care, which is not covered by Medicare. However, as is common in the industry, the Covenant Care facilities set aside some beds that are certified through Medicare to provide a higher level of medical care referred to as “skilled nursing.”  These skilled nursing beds are made available to Medicare patients who typically have been discharged from hospitals and are transferred to the nursing facilities to recover before returning home.
 To ensure proper Medicare reimbursement for the skilled nursing, federal regulations during the period 1995 through 1998, the time period covered by the lawsuit, required that nursing facilities bill Medicare only for the “actual” number of hours of nursing services that they provided Medicare patients and that those hours be recorded and verifiable.
 A federal investigation found that Covenant Care overcharged Medicare and billed for nursing services that were really provided to non-Medicare residents. The government found that Covenant Care knowingly reported to Medicare nursing service hours that were not accurate. Those hours were not accurate for several reasons, including: they were not recorded at the time the services were performed; they were not recorded by, or obtained from, the nurses who performed the services; they were based only on estimates or company targets as to the amount of nursing that patients supposedly needed; and they could not be verified by audits of reliable records.
 The settlement in this case resolves a lawsuit filed in 1998 by Michael C. McNall, the former controller of Covenant Care, under the qui tam, or “whistleblower,” provisions of the False Claims Act. The United States Attorney’s Office in Los Angeles investigated the charges and reached a settlement with Covenant Care before intervening in the lawsuit.
 In settling the lawsuit, Covenant Care denied any wrongdoing.
 As part of the settlement, Covenant also entered into a Corporate Integrity Agreement with the Office of Inspector General for the U.S. Department of Health and Human Services. The CIA requires Covenant Care to implement a detailed program to ensure that the company and its employees comply with federal health care program requirements.
 Under the False Claims Act, Mr. McNall will receive an award of between 15 percent and 25 percent of the proceeds from the fraud settlement.
 The government investigation team in the case included agents from the San Francisco Regional Office of Inspector General for the U.S. Department of Health and Human Services. Also, assistance with financial analyses and cost audits was provided by the United States Attorney’s Office for the Northern District of California (San Francisco) and Medicare intermediary Mutual of Omaha.

 Release No. 01-167


 

May 23, 2001

HOSPITAL CHAIN AGREES TO SETTLE GOVERNMENT’S CLAIM FOR PHYSICIAN SELF-REFERRAL VIOLATIONS

 Paracelsus Healthcare Corporation, a publicly traded hospital company, has agreed to allow the United States’ claim for approximately $5.1 million as part of Paracelsus’s bankruptcy plan of reorganization, pursuant to a negotiated settlement of the United States’ Medicare fraud claims, United States Attorney John S. Gordon announced today.
 The government estimates that once Paracelsus’s reorganization plan is final, the Medicare trust fund will recover between $2 and $3 million as the pro rata share of its bankruptcy claim.
 The government's fraud claims arose out of an investigation of allegations made on behalf of the United States by a whistleblower in a civil suit filed under seal in June 1998 in the United States District Court in Los Angeles pursuant to the qui tam provisions of the False Claims Act.
 The suit involved Paracelsus’ relationship with Alliance Healthcare Corporation, a Los Angeles-based psychiatric services management company with ties to board and care homes. The whistleblower alleged that Paracelcus gave Alliance free office space and inflated management and director fees to induce Alliance to funnel patients for psychiatric treatment to Hollywood Community Hospital, a  Paracelsus hospital in Van Nuys.
 The government additionally claimed that Paracelsus knowingly made false claims to the Medicare program for non-reimbursable items such as patient transportation and Alliance’s office space.
 Paracelsus has denied any wrongdoing.
 Paracelsus currently owns and operates, through its subsidiaries, 10 hospitals in seven states with a total of 1,287 beds. It filed for protection under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas on September 15, 2000.
 The settlement announced today was approved by the Bankruptcy Court on Tuesday, May 22.
 As part of the settlement, Paracelsus also has agreed to incorporate in its reorganization plan a five-year Corporate Integrity Agreement with the Office of Inspector General of the Department of Health and Human Services. The Corporate Integrity Agreement requires Paracelsus to hire an independent auditing firm to review, monitor and report on Paracelsus’s billings to federal health care programs, and to continue training programs designed to ensure future compliance with all  federal health care program rules. Although Paracelsus’s bankruptcy filing was limited to the parent company, the agreement also binds all of the company’s subsidiary hospitals.
 As part of the settlement, Paracelsus also has agreed to allow a $250,000 claim by the whistleblower’s attorney, Mark Allen Kleiman, for attorneys’ fees. The United States, the State of California and the whistleblower in turn have agreed to grant Paracelsus certain releases and to dismiss claims against Paracelsus in the litigation pending in Los Angeles.
 United States Attorney Gordon said: "Payments to induce patient referrals corrupt the professional judgment of health care providers and unnecessarily deplete federal health care program funds. They are improper and illegal. Even where the provider files for bankruptcy protection, we will seek to recover losses to the Medicare program resulting from illegal physician self-referrals and kickbacks for patient referrals. Along with possible criminal sanctions and exclusion from federal health care programs, the False Claims Act is an important tool in our ongoing effort to ensure that the health care services given to Medicare beneficiaries are not corrupted by referral fees or other financial incentives to physicians.”
 The investigation of this matter was conducted by the United States Attorney’s Office for the Central District of California, the Civil Division of the United States Department of Justice, HHS-OIG Office of Investigations and Office of Counsel, Blue Cross of California, and Transamerica Life Insurance Company.

 Release No. 01-090


 

April 30, 2001

JUDGE UNSEALS FEDERAL 'WHISTLEBLOWER' SUIT ALLEGING PACIFIC PRECISION METALS, INC. PROVIDED DEFECTIVE AND NONCONFORMING PRODUCTS TO THE POSTAL SERVICE

 A federal judge in Los Angeles has unsealed a “whistleblower” lawsuit that accuses the Azusa-based Pacific Precision Metals, Inc. (PPM) of providing the United States Postal Service with thousands of defective and nonconforming products used to process mail.
 United States Attorney John S. Gordon today announced that the Government has intervened in and taken over prosecution of the False Claims Act lawsuit filed by a former quality assurance inspector of PPM’s Medcab Division in La Verne, California.
 The lawsuit, originally filed by George Ocampo in December 1997, accuses  Medcab of providing the Postal Service with defective and nonconforming mail drop units, and mail sorting cases and tables from approximately January 1997 through approximately November 1999.
 According to the lawsuit, Medcab charged the Postal Service millions of dollars its products and falsely certified that it complied with Postal Service contract requirements. However, the company allegedly knew that it violated it four contracts with the Postal Service in four ways: 1) by failing to manufacture its products in accordance with Postal Service specifications and drawings; 2) by failing to perform required inspections of its products prior to shipment; 3) by failing to calibrate its measuring devices used to conduct inspections of its products; and 4) by failing to correct the defective and nonconforming products prior to shipment.
 The lawsuit further alleges that Postal Service quality assurance inspectors notified Medcab management in September 1997 that they would be visiting the La Verne facility to review Medcab’s manufacturing and quality procedures for its Postal Service contracts. In preparation for the Postal Service inspectors’ visit, Medcab management directed George Ocampo and other Medcab employees to fabricate inspection records to make it appear to Postal Service inspectors that Medcab had been conducting the required product inspections and measuring device calibrations. As a result of this deception, Medcab was able to continue furnishing defective and nonconforming products to the Postal Service.
 The lawsuit, which was filed under seal pursuant to the qui tam provisions of the False Claims Act, was unsealed on April 6 by United States District Judge Lourdes G. Baird. The United States Attorney’s Office today filed an amended complaint in the case. The case, United States of America, ex rel. George Ocampo v. Pacific Precision Metals, Inc., CV98-4710-LGB, seeks damages and civil penalties.
 The Government decided to intervene in this lawsuit following an investigation by the United States Postal Service, Office of Inspector General.

 Release No. 01-077


General American Life Insurance Company

September 12, 2002
For Immediate Release

TWO FORMER GENERAL AMERICAN LIFE INSURANCE COMPANY, INC. EMPLOYEES ARE INDICTED FOR FALSIFYING AND CONCEALING GENERAL AMERICAN'S ERROR RATES FROM MEDICARE

St. Louis, Missouri: United States Attorney Ray Gruender announced today that two former employees of General American Life Insurance Company were indicted today by a federal grand jury for conspiring to falsify and conceal from federal auditors information about payment errors and other errors General American made as a Medicare contractor.

CARL MESSINA, 59, former Medicare Director at General American, was indicted on one felony count of conspiring to falsify and conceal information from federal auditors and two felony counts of making a false statement to a federal agency.

MARY WIMBLEY, 56 , former Medicare Manager at General American who reported to Messina, was indicted on one felony count of conspiring to falsify and conceal information from federal auditors and one felony count of making a false statement to a federal agency.

If convicted, Messina faces a maximum penalty of 15 years in prison and a fine of $750,000 per count and Wimbley faces a maximum penalty of 10 years in prison and a fine of $500,000 per count.

The indictment alleges that Carl Messina and Mary Wimbley knowingly provided false information to the Centers for Medicare & Medicaid Services (formerly known as the Health Care Financing Administration), the agency responsible for administering the Medicare program. The allegations were originally brought in a "whistleblower" case under the qui tam provisions of the False Claims Act by two former employees of General American, Harry and Nancy Riggs. As part of the settlement of the civil "whistleblower" suit in June 2002, the relators received 19 percent (or $14,440,000) of the $76 million settlement announced by this office on June 25, 2002.

As a Medicare Part B carrier, General American acted under contract with the Centers for Medicare & Medicaid Services to process claims submitted by Medicare beneficiaries and their doctors or other health care providers in accordance with Medicare coverage and payment rules. Under its contract with the Centers for Medicare & Medicaid Services, General American was responsible not only for making individual determinations regarding eligibility and coverage, but also for processing approved claims for payment from the Medicare trust fund. The Centers for Medicare & Medicaid Services evaluated the adequacy of General American's claims processing and related services through periodic performance audits.

The indictment alleges that Carl Messina, the former Medicare Director at General American, and Mary Wimbley, a former General American Medicare manager, failed to report errors which they had identified in the quality assurance process and further caused to be concealed General American's true error rate by deleting claims selected for review by the Centers for Medicare and Medicaid Service's Kansas City Regional Office. These former employees also allegedly caused to be deleted those quality assurance claims which they believed would adversely affect their error rate and replaced the deleted claim files with claim files which they believed to be satisfactory, i.e. ones which would not significantly affect their error rate and ultimately their standing within the carrier rankings in terms of performance. Additionally, they are alleged to have hidden documents, altered other documents and falsified numerous reports mandated by the Centers for Medicare & Medicaid Services.

As disclosed in the government's prior settlement with General American, the government contended that General American manipulated its quality assurance data in order to maintain a high carrier ranking. In 1984, prior to the implementation of the scheme, General American was the 38th ranked Medicare carrier. Subsequent to implementation of the scheme, General American rose, in 1986, to a ranking of number two. This favorable ranking assisted General American in retaining its Medicare contract and competing for additional contracts throughout the country.

General American acted under contract with the Centers for Medicare & Medicaid Services from 1966 through December 31, 1998. General American withdrew from the Medicare program on December 31, 1998, prior to the filing of the whistleblower lawsuit.

"Today's indictment of two former General American executives clearly shows that the government will hold criminally responsible those individuals who engage in corporate fraud - - even if the corporation pays $76 million in restitution and penalties," said Ray Gruender, United States Attorney for the Eastern District of Missouri.

Gruender commended the excellent work of the Federal Bureau of Investigation and the Department of Health and Human Services Office of Inspector General and Assistant United States Attorney Dorothy McMurtry who is handling the case.

The charges set forth in an indictment are merely accusations, and each defendant is presumed innocent until and unless proven guilty.

 

 

 


 

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