Money-2

Department of Justice Highlights Some of The Major Tax Prosecutions

Hiring a criminal tax attorney is an important decision. Department of Justice Tax Division has made it very clear that willful violations of federal tax laws will lead to prosecution and possible imprisonment. The Department  has also continued to prosecute foreign bank account (FBAR) cases against taxpayers hiding and/or concealing millions of dollars in offshore accounts. Below is a snapshot of some of those cases and others highlighted by the Department of Justice Tax Division found at this link:

 

  • A Missouri roofing contractor, pleaded guilty to filing false 2007 and 2008 income tax returns. Contractor operated his roofing business under the name Eagle Roofing Co. He late filed false 2007 and 2008 returns that underreported his business’s gross receipts by approximately $959,500 and $794,680.
  • A Philadelphia, Pennsylvania tech business owner,pleaded guilty to tax evasion. Taxpayer owned New Wave Logistics Inc. He evaded more than $800,000 in taxes by cashing a significant amount of his business’s gross receipts at a check cashing facility, lying to his accountant about the total amount of income he earned and filing false tax returns.
  • a Las Vegas, Nevada liquor storeowner, was sentenced to serve 41 months in prison for tax evasion and conspiring to defraud the United States. He and his conspirators skimmed cash receipts and provided their accountant with a phony set of books that omitted nearly $4 million in cash receipts.
  • Washington businessman,pleaded guilty to filing a false individual income tax return. He owned and operated a produce sales business. He underreported his income by approximately $564,292.
  • Former owners of a bar, Sully’s Pub in West Des Moines, Iowa, pleaded guilty to aiding and assisting in filing a false tax return. The owners filed a false 2013 tax return that did not report cash that they earned through their business.
  • Two Louisiana attorneys,pleaded guilty to failing to file individual income tax returns. when they regularly received cash payments, had a partnership interest in a tax return preparation business, and did not file 2007 through 2009 income tax returns.
  • Mississippi businessman, and owner of demolition and construction companies was sentenced to serve 12 months in prison for failing to file an individual income tax return.
  • Insurance salesman who failed to file timely return for several years was convicted at trial Ohio resident, was convicted at trial for failing to pay more than $1 million in income taxes, interest and penalties.
  • A Texas artist, was sentenced to serve 12 months in prison for failing to file an individual income tax return. He did not file tax returns for 2006 through 2009, despite earning more than $1.3 million in income during this time.
  • Florida owner of Demandblox, a marketing and information technology business,pleaded guilty to conspiracy to commit tax and bank fraud. He conspired to move more than $2.5 million to offshore accounts in Belize and disguised them as business expenses in the corporate records and used the funds to pay for personal expenses and purchase significant personal assets.
  • A Los Angeles, California businessman, was sentenced to serve 24 months in prison for hiding more than $23.5 million in offshore bank accounts which he maintained several undeclared bank accounts at Israeli banks, both in his name and in the names of entities that he created. He diverted more than $21 million in untaxed gross business income to those undeclared accounts and earned more than $2.5 million in interest income and reported none of this income on his individual and corporate tax returns.
  • Orange County, California residents pleaded guilty to hiding millions of dollars in secret foreign bank accounts; they willfully failed to file legally required reports, commonly known as FBARs, disclosing their bank accounts in Switzerland and Israel.
  • Married couple plead guily to defrauding the IRS. The wife earned income through her ownership interest in two companies that owned Southern California mobile home parks. The married couple also established a number of purported trusts. They owned bank accounts in the names of these trusts using fabricated taxpayer identification numbers and paid personal expenses from the accounts, causing a tax loss of $376,350.
  • California man was sentenced to serve 33 months in prison based on failure to file returns and pay taxes despite earning significant income as a partner with an engineering company. He attempted to frustrate IRS collection and audit efforts by filing lawsuits against the IRS and, to conceal his income, used prepaid debit cards and money orders to pay personal expenses.
  • A St. Petersburg, Florida man, was sentenced to serve 21 months in prison. He evaded a substantial portion of his individual income taxes for 2007 through 2011 and interfered with an IRS audit. Notably he also fabricated a letter from the IRS to a bank directing the bank to send subpoenaed records to a bogus address.
  • A Greensboro, North Carolina resident and former IRS revenue officer, pleaded guilty. He filed tax returns each year but has not paid since at least 1998, created nominee bank accounts to hide hundreds of thousands of dollars from the IRS, submitted false information to the investigating IRS officer regarding these accounts and transferred funds from nominee accounts to avoid impending IRS levies.
  • A North Carolina man, was sentenced to serve 21 months in prison. He failed to file tax returns for 2003 through 2006, and the IRS assessed income tax against him for those years and attempted to evade payment of his tax debt by filing false disclosures with the IRS, omitting businesses that he owned as well as bank accounts and rental income.

A criminal tax attorney can assist a taxpayer in navigating complex IRS procedures and protocols. A tax attorney can also ensure that a taxpayer invokes and vigorously asserts her rights at each stage during the course of an investigation.

Share this post
Medicine-1

Personal Care Services Fraud Discussion in DC May Signal Increase in Health Care Fraud and False Claims Act Prosecutions

 

Fraud related to personal care services (PCS) are a hot topic this week in Washington, DC. On Tuesday, Christi Grimm, Chief of Staff for the Office of Inspector General HHS, provided testimony before Congress on the rising levels of fraud related to personal care services (PCS) and how fraud and abuse are rampant and are undermining confidence in the Medicaid program.

That same day, GAO also released a report Medicaid Personal Care Services: More Harmonized Program Requirements and Better Data are Needed, which reiterates many of the same concerns as Mrs. Grimm did during her testimony.

PCS enable Medicaid beneficiaries who are elderly, have disabilities (including children) or have chronic or temporary conditions to receive care directly in their homes rather than in institutions or facilities (e.g. skilled nursing homes or assisted living facilities). As such, there are some obvious benefits for patients receiving direct care in this context.

Mrs. Grimm testified that CMS has no reliable method of collecting or monitoring the data related to personal care services because there are no uniform federal qualifications or screening standards for PCS attendants and no requirement that States enroll or register PCS attendants and assign them a unique number. Further, Mrs. Grimm stressed that one way to prevent improper payments is to simply require that PCS claim identify the dates of services and the PCS attendant that provided those services.

OK, so let’s get this straight: the federal government has no reliable method of monitoring how individuals are providing care to some of the most vulnerable and high risk patients and has not implemented a system to weed out the bad actors or to even identify them or narrow them down by name as they continue to provide care?

Alaska has though. Alaska implemented some of these requirements and now enrolls all PCS attendants with the Medicaid agency. As a result, in the last 2 years, Alaska knocked out 108 criminal convictions and recovered $5.6 Million in restitution and the State reduced its costs significantly.

What Lies Ahead for PCS

It is reasonable to believe that many states may take these words and recommendations to heart. If so expect that Medicaid Fraud Control Units in coordination with their federal partners will devote significant resources to investigating and prosecuting these cases and CMS will revisit the significance of implementing additional regulations to combat fraud within PCS. The government has already clamped down on assisted living facilities and skilled nursing facilities citing similar deficiencies and fraud involving patient harm is, (and always has been) a top priority of the Department of Justice. These changes and an uptick in these prosecutions would therefore appear to be a natural extension of current government enforcement priorities.

It is therefore anticipated that there will be an increase in prosecutions, both civil and criminal, related to PCS services, ALFs, and SNFs. Prosecution theories might range from simple billing fraud (e.g. services not provided) to PCS provided by attendants with criminal histories. The Government may also continue to investigate and  prosecute providers of PCS, skilled nursing facilities, or assisted living facilities if they view the care as “worthless.” Under this novel theory known as the “worthless services” or patient care fraud theory, care is so deficient that it has no fair market value. Worthless services is a prosecution theory that has garnered mixed results in both health care fraud and False Claims Act cases for the Government but is a theory which may prove to be a powerful prosecution tool in PCS fraud cases if some of Mrs. Grimm’s recommendations become reality and all the buzz surrounding PCS this week materializes.

Share this post
Medicine-3

$18 Million False Claims Act Settlement Has Important Lessons for Whistleblowers and Hospitals

False Claims Act settlement in United States ex rel Robinson v. Indiana University Health, Inc. et al., Case No. 13-cv-2009-TWP (S.D. Ind. 2013) against an Indiana University hospital provides some important lessons about the Government’s enforcement trends where patient harm is an integral part of the false or fraudulent conduct alleged by the whistle blower. Further, while the DOJ press release champions the Government’s continuous victories against health care providers who undermine confidence in the federal health care system, the whistle blower’s lawsuit in this case was not without its deficiencies. In fact, prior to the settlement reached in this case, the district court knocked out one defendant and several counts in the complaint illustrating, again, why pleading with particularity in False Claims Act cases is critical. Whistle blowers cannot lump defendants together into a single complaint without meeting the heightened pleading standards in False Claims Act cases.

Background

Indiana University Health (IU Health) is a conglomeration of hospitals and other allied health care services.  Indiana University Health Medical Hospital was the key hospital at issue in the qui tam complaint.

Health Net Inc. is a large federally qualified health center in Indiana which provides health care services, including pediatrics, obstetrics, and gynecological services on a sliding scale and the majority of its patients are Medicaid beneficiaries.

MDWise is the largest managed care provider in Indiana and is jointly owned by IU Health and another corporation. MDWise was awarded a contract to provide care to beneficiaries on Hoosier health care plans.

All of the defendants are related entities. Health Net supplied the professionals to the IU health hospitals and patients treated by Health Net doctors at IU facilities were covered by MDWise plans.

The relator, a former doctor working at Health Net and a board certified Ob/Gyn claimed that Health Net and IU Health engaged in a complex compensation arrangement designed to steer Medicaid patients to MDWise and described it best as follows:

Defendants collectively operated a complex scheme to funnel obstetric patients into MDWise as the managed care entity responsible for distributing Medicaid reimbursement, and to maximize Medicaid reimbursements by using certified nurse midwives and nurse practitioners (non physicians) to treat all obstetric patients, regardless of risk factors that mandate physician involvement. …MDWise knowingly failed to identify and reject the false claims submitted under physician names but actually conduct by non-physicians.

(ECF-138 at 19-20)

What is perhaps, most concerning, about the allegations above and the large False Claims Act settlement in this case is the apparent institutionalization at IU facilities of certified nurse mid-wives to perform deliveries of babies and during Caesarian sections to drive revenue. According to the False Claims Act complaint, claims were submitted over and over again with physician names giving the impression that a physician had properly supervised the obstetric care. Many of the patients receiving care from mid-wives were also high risk patients and at least some patients, under their care, died. There was a director whose chief responsibility was to vigorously promote the CNM program. In fact, the False Claims Act complaint alleged that white papers were distributed to physicians at Health Net justifying the practice of using CNMs as much as possible in these settings despite the patient population that was at risk.

In addition to the above, the False Claims Act complaint alleged that IU Health provided a “rent free” triage center inside of the hospital to Health Net physicians which was predominantly staffed by CNMs to assess whether Health Net patients were in active labor and also doubled as an after-hours clinic where pre-natal patients could be seen for pregnancy related issues. The complaint alleged that the “free” rent was a kickback to induce Health Net to refer its heavy flow of Medicaid patients to IU Health and its hospitals without an alternative choice of care (i.e.  another hospital).

Finally, MDWise was dismissed from the False Claims Act complaint. The inclusion of the provider was significant because the relator alleged that the managed care entity was reckless in disregarding claims the managed care provider should have known were false and had a financial incentive to disregard. Those claims, however, according to the district court were highly speculative, not based on personal knowledge of the relator, and an attempt to pool together and treat all defendants equally and then sort it out during discovery.

Lessons from Indiana

  1. DOJ Likely to Intervene When Patient Safety is a Theme. The Department of Justice has said repeatedly on and off record that fraud that compromises patient safety is one of their highest enforcement priorities. This case epitomizes these concerns with high risk patients, a program targeted at driving revenue based on the use of non-physician CNMs and the occurrence of actual patient deaths.
  2. Free Rent is a Recognized Form of Remuneration under the AKS. The Anti-Kickback Statute punishes any person receiving or paying any remuneration in return for services which are reimbursable by a federal health care program. This case reminds us that “free rent” is an obvious inducement when the entity receiving the rent free of cost is a primary referral source.
  3. Managed Care Plans are Relator Targets. While MDWise in this case was not an ideal target and was dismissed from the complaint for that very reason, this case demonstrates that relators (and the Government) have a renewed focus on managed care plans and Part C. It also reinforces that over-zealous relators cannot simply lump together potentially very solvent defendant into a qui tam action without personal knowledge of the fraud and without having the ability to state the who, what, where, when of the fraud. ECF-153. Absent those allegations, a qui tam complaint is speculative and, in a case like this one, did not survive a motion to dismiss since there were no facts that put MDWise on notice of how it deliberately disregarded false claims as the managed care entity.
  4. Retaliation Demands Stricter Proof. The Court also dismissed several of the whistleblowers’ retaliation claims based on reporting of the CNM practices finding that the relator’s complaints related to “patient care and medical practices” and not fraud on the Government. ECF-153 at 29. Accordingly, whistleblowers will have to do better when it comes to alleging retaliation.

Share this post






Medicine-5

Tricare Fraud in Compounding Pharmacies Attorney Andrew S Feldman Quoted

Tricare fraud related to compounding pharmacies is on the rise. Attorney Andrew S. Feldman was recently quoted in Florida Record discussing the uptick in Tricare fraud and compounding pharmacies:

ORLANDO — A Florida compound pharmacy owner is the latest proprietor in an ongoing probe to agree to reimburse the federal government millions of dollars in fines over alleged billing violations of the Department of Defense’s TRICARE program.

QMedRx co-owner Mark Gilmore’s sworn arrangement to pay back $4.25 million in fines over abuses to the military health care program makes him at least the fourth partial owner of the Maitland-based operation to agree to a multimillion-dollar settlement and brings to $20 million the overall amount that government officials have negotiated to collect from company owners.

In all, the U.S. District Court for the Middle District of Florida has recovered nearly $70 million in fines and penalties from owners across the region accused of such overbilling practices during the past 18 months.

Compounded medicines are typically used for patients requiring liquid formulations because of difficulty in swallowing pills.

Nationally, TRICARE paid $1.75 billion for these medicines during fiscal year 2015, an increase reported to be at least 18 times the amount paid in 2012. Overall, the cost for the medicines accounted for nearly 20 percent of Tricare’s estimated $9.14 billion prescription drug budget in 2015.

In the case of QMedRx, company officials are alleged to have systematically charged federal health care programs fees that are not covered under any plan for a yearlong period commencing in January 2013.

Other QmedRx owners who have also reached settlement agreements with the government include Andy Miller and Tracy Miller who, along with the Hallmark Investment Trust, have arranged to pay back $7.75 million.

“The government has been investigating TRICARE fraud for some time and how they were being reimbursed at astronomical rates for nonsterile compounds,” Andrew S. Feldman, managing member of the Feldman Firm that represents individuals and criminals in white collar crimes, told the Florida Record.

Doing business under the name Home Care Solution, QMedRx operates as a compounding pharmacy that serves doctors and patients alike. The company specializes in the kind of therapy that offers relief for pain, scar and wound care through the primary use of transdermal creams and gels that range in price from $600 to $1,500 per unit.

The announced settlement was brokered by the Health Care Fraud Prevention and Enforcement Action Team (HEAT), which was launched by the government in 2009 to root out such corruption. Since then the U.S. Justice Department has recovered nearly $31 billion through False Claims Act cases, well more than half that amount stemming from fraud against federal health care programs.

“The government targets industries where it sees large change in terms of where the money is going,” added Feldman alluding to all the increased scrutiny in the compounds’ industry. “All of a sudden there was a large change in reimbursements for TRICARE.”

With prescription drug costs at an all-time high, the government estimates federal agencies have recently paid out as much as $2 billion for tainted and unnecessary compound prescriptions.

Thus far, U.S. Air Force reserve member Randy John Papanek is the only person in the QMedRx case charged in a criminal indictment, which seeks a judgement against him of $87,500.

Papanek, who has already pleaded guilty to charges of conspiring to accept and pay bribes, is scheduled to go before U.S. District Judge Roy B. Dalton Jr. for sentencing Dec. 12 in Orlando.

In exchange for various forms of kickbacks over a two-year period starting in 2013, Papanek is said to have recruited people covered by TRICARE and steered them into seeking prescriptions only from QMedRx doctors.

As a Tricare beneficiary, he is also accused of receiving payments for receiving his own prescriptions from those same doctors.

“It’s going to continue,” Feldman predicted of the TRICARE government crackdown. “Those who are serious about being in the non-sterile compounds industry will find a way to make the necessary changes to be compliant.”

The Government has continued to aggressively investigate TriCare fraud. Tricare is one of the government programs which reimburses compounding pharmacies for dispensing compounded medications. From 2013- 2015, TriCare reimbursements for expensive medications made by compounding pharmacies, typically pain and scar creams, rose drastically. Certain medications made by compounding pharmacies were reimbursed  by Tricare at a rate of $25,000.00 per medication or prescription.

Beginning in May of 2015, Tricare, through their pharmacy benefit manager, Express Scrips, attempted to clamp down on unscrupulous providers seeking to obtain reimbursements for medications from compounding pharmacies and implemented a more rigorous process for submitting claims to TriCare for compounded medications. Similarly, since 2015, the Department of Justice has launched investigations relating to Tricare fraud and abuse and violations of the Anti Kickback Statute in the compounding pharmacy industry. Many of these investigations and prosecutions relate to the dispensing of compounded medications without a valid patient-doctor relationship, manipulation of the average wholesale price, claims for medically unnecessary active ingredients in compounded medications, and/or compensation arrangements involving the marketing of compounded medications.

It is anticipated the Department of Justice in coordination with the OIG-HHS, Department of Defense, and the FBI, will continue to crackdown on compounding pharmacies if the Government discovers evidence of fraud and abuse or violations of the Anti Kickback statute.

Share this post
Medicine-4

Attorney Andrew Feldman Presents on Health Care Fraud on Annual ABA Webinar

Health care fraud attorney Andrew S. Feldman presented with Assistant U.S. Attorney Jessica Sievert (Eastern District of Tennessee) on health care fraud on a webinar sponsored by the ABA Health Law Section.

The program was the second health care fraud and abuse webinar presented by Mr. Feldman, a health care fraud attorney in Miami, Florida, and focused on  enforcement initiatives of the Department of Justice in 2016 and the impact of some of those initiatives, including the emphasis on individuals (Yates Memo) and prosecutions of physicians in “medical necessity” cases. The program further highlighted

  • The enhanced use of parallel civil and criminal proceedings in False Claims Act and Health Care Fraud prosecutions;
  • Major victories for the government and the defense in high profile trials and the practical takeaways from those cases;
  • The uptick in prosecutions and investigations related to compounding pharmacies and pharmacists including the increase in Department of Defense and Tricare investigations; and
  • Recent trends and developments in enforcement and prosecution of corporate entities for violations of the Anti-Kickback Statute and False Claims Act relating to sales and marketing entities.
Share this post