Novel Use of False Claims Act Makes News as Traditional Uses of Law Are Rife

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A most unusual application of the federal False Claims Act came to light recently, when it was reported that for-profit schools have bilked the government out of millions of dollars by falsifying records of students so that they could enroll them and draw the federal financial aid that was available for the schools’ technical programs, even as the students were ineligible for a variety of reasons. As San Francisco qui tam lawsuit attorney Gregory J. Brod would point out, the revelations of alleged wrongdoing are an example of the creative lengths to which accused fraudsters will go.

According to The New York Times, the lawsuit, which was unsealed and made available to the public last fall, accuses Harris and its Philadelphia-based parent Premier Education Group of keeping ineligible students – including those who lacked mental stability, academic skills or English proficiency – on the books so that they could collect $112 million in federal Pell grants and federal student loans during the 2011-12 timeframe. The lawsuit, charging that Harris and Premier defrauded the federal government, was filed under the federal False Claims Act. And if Harris and Premier are found to have violated the False Claims Act they, like any other defendant found liable under the act, they would be subject to triple the actual damages. The whistleblowers in the case would stand to reap up to 30 percent of any verdict award.

While the news about the Harris-Premier case made headlines, there were plenty of other examples in February of more traditional applications of the False Claims Act in the realm of Medicare and Medicaid fraud from coast to coast, including the following examples:

  • An Atlanta doctor was sentenced to more than four years in prison and fined $3.5 million Feb. 20 for allegedly bilking Medicare and the Internal Revenue Service of about $16 million during a period of five years, according to the Atlanta Journal-Constitution. Prosecutors said that the convicted doctor schemed to induce Medicare patients from all over the country to be treated at his clinic by awarding them free travel to the clinic through a bogus charity fund. After receiving millions of dollars from Medicare, prosecutors say that the doctor evaded $1 million federal income taxes by deducting as charitable donations payments he made to the fake fund.
  • A Palisades Park, N.J., doctor pleaded guilty on Feb. 21 to charges that he recruited patients by offering free lunches, recreational classes and spa services and then falsely billed Medicare for more than $13 million for physical therapy and other services that were neither necessary or nor provided, according to eNews.
  • Federal indictments were announced Feb. 20 in connection with the arrest of more than 20 people in a case federal law enforcement officials are calling the largest uncovered healthcare fraud scheme in the history of the District of Columbia, according to the Washington Post. In the case, those charged were accused of billing the government for in-home healthcare services that were never provided. Through various schemes, 10,000 beneficiaries were allegedly billing the government for $280 million through 2013.
  • A Glendale, Calif., trio of clinic workers were convicted Feb. 20 of healthcare fraud conspiracy, aggravated identity theft, conspiracy to misbrand pharmaceutical drugs, making false statements to the federal government, and conspiracy to use other persons’ identification documents to advance their scheme, according to the Los Angeles Daily News. Federal prosecutors said the schemes netted fraudulent billings worth $20 million.


The common thread through all of these cases is an alleged scheme to defraud the federal government under the False Claims Act. And in most cases, it takes a brave whistleblower to step forward with the evidence of wrongdoing to uncover such schemes. If you have information regarding a scheme to defraud federal programs such as Medicare and Medicaid, please contact the experienced attorneys at the Brod Law Firm for a free consultation.
-James Ambroff-Tahan contributed to this article.

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The Potential for Health Care Fraud Involving Electronic Health Records