AMARILLO, TX – “Truth always bubbles to the surface.” This is a time-honored phrase that is 100% accurate. If a DME supplier is doing something it should not be doing, then someone knows about it. That “someone” is often an employee or ex-employee. Virtually all employees of DME suppliers are aware of the existence of “qui tam”….or “whistleblower”….lawsuits.
What this means is that if an employee is aware that his employer is engaging in fraudulent acts, then the employee can become a “whistleblower” or “relator.” The relator will file a lawsuit against the DME supplier in federal court. For example, the lawsuit might be entitled “John Smith, Individually, and in the Name of the United States of America vs. ABC Medical Equipment, Inc.”
The whistleblower lawsuit will initially be “under seal,” meaning that ABC will not know about it. A civil Assistant U.S. Attorney (“AUSA”) with the local U.S. Attorney’s Office will examine the lawsuit and conduct his own investigation. A “civil” AUSA does not attempt to put people in prison; rather, he tries to impose hefty civil monetary penalties (“CMPs”) against ABC.
If the civil AUSA concludes that the whistleblower lawsuit has merit, then the Department of Justice (“DOJ”) will intervene and take the lawsuit over. This is when the lawsuit is “unsealed.” This also means that the relator and his attorney can sit on the sidelines and watch the DOJ pursue ABC.
Most whistleblower lawsuits are settled. When this happens, then the DME supplier normally pays a lot of money to the DOJ and signs a Corporate Integrity Agreement with the Office of Inspector General (“OIG”). The relator will receive about 20% of the settlement proceeds.
Most criminal cases arise out of whistleblower lawsuits. That is, when determining whether to intervene and take the whistleblower lawsuit over, the civil AUSA may decide that the evidence shows that criminal acts occurred. If he makes this determination, then the civil AUSA will hand the file to a criminal AUSA and ask him to determine if a criminal case should be filed. Often, the target (e.g., ABC) will be required to settle both the criminal and civil cases.
A “real life” whistleblower case is occurring in San Jose, CA. On May 12, 2015, the DOJ issued the following press release:
“The United States has joined a whistleblower action pending in the Northern District of California against the owners and operators of Bay Sleep Clinic and their related businesses, Qualium Corporation and Amerimed Corporation, announced United States Attorney Melinda Haag and U.S. Department of Health and Human Services Special Agent in Charge, Ivan Negroni.”
“The action alleges that Saratoga, Calif., residents Anooshiravan Mostowfipour, 57, and Tara Nader, 56, fraudulently billed the Medicare program for diagnostic sleep tests. Defendants Mostowfipour and Nader own Qualium Corporation, which operates sixteen sleep clinics doing business as Bay Sleep Clinic. The defendants also own Amerimed Corporation, which distributes durable medical equipment under the name Amerimed Sleep Diagnostics.
The defendants are alleged to have billed Medicare for tests that were conducted at unapproved locations and performed by technicians lacking the licenses or certifications required by Medicare payment rules and regulations. The government also alleges that the defendants fraudulently billed Medicare for medical devices in violation of Medicare rules and regulations that prohibit providers of diagnostic sleep tests from supplying medical devices and from sharing a sleep laboratory location with a durable medical equipment supplier.”
“The whistleblower action…..was filed under the qui tam provisions of the False Claims Act. The False Claims Act allows for private persons, such as Elma F. Dresser in this case, to file actions to provide the government information about wrongdoing. Under the statute, if it is established that a person has submitted or caused others to submit false or fraudulent claims to the United States, the government can recover treble damages and $5,500 to $11,000 for each false or fraudulent claim filed. If the government is successful in resolving or litigating its claims, the whistleblower who initiated the action can recover a share of between 15 percent to 25 percent of the amount recovered.”
The takeaway for DME suppliers is that they “live in a glass house.” As I stated at the beginning of this article, if the supplier is doing something it should not be doing, then somebody knows about it. That “somebody” might very well be a qui tam relator.
Jeff Baird will be presenting the following webinar:
AAHomecare’s Educational Webinar
After the Purchase is Complete: Transfer of Patient Files, Calling the Seller’s Patients, and Other Hot Button Issues
Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato, P.C.
Thursday, June 11, 2015
2:30-4:00 p.m. EASTERN TIME
Buying and selling a DME supplier is not simple. In addition to the standard transactional issues (e.g., specific provisions in the Asset Purchase Agreement or Stock Purchase Agreement), there are a number of federal and state regulatory issues that must be addressed. For example, can a Medicare Part B supplier number be transferred? What about a Medicaid provider number? Must the purchaser obtain new physician orders? New AOBs? How do the WOPD and face-to-face rules fit in? What type of notice must given to the seller’s patients? Can the purchaser simply pick up the phone and call the patients who are transferred to the purchaser? The answers to these questions are impacted by whether the sale is a “stock” sale or an “asset” sale. This program will discuss the multiple regulatory issues that must be addressed when a DME supplier is sold.
Contact Ika Sukh at email@example.com to register for “After the Purchase is Complete: Transfer of Patient Files, Calling the Seller’s Patients, and Other Hot Button Issues” on Thursday, June 11, 2015, 2:30-4:00 pm ET, with Jeffrey S. Baird, of Brown & Fortunato, PC.
Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato PC, a law firm based in Amarillo, Tex. He represents pharmacies, infusion companies, HME companies, and other health care providers throughout the United States. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization and can be reached at (806) 345-6320 or firstname.lastname@example.org.