Monthly Archives: January 2014

United States Sues Kellogg, Brown & Root Services Inc. for Kickbacks and False Claims Relating to Iraq Support Services Contract

Written January 24, 2014 by Robert Lu

On January 23, 2014, the United States announced that it has filed suit under the False Claims Act (and the Anti-Kickback Act) against Kellogg, Brown & Root Services In.c (KBR), and two foreign subcontractors, Kuwaiti companies La Nouvelle General Trading & Contracting Co. (La Nouvelle) and First Kuwaiti Trading Co. (First Kuwaiti), for kickbacks and false claims related to government contracts with the Department of Defense (Army) for logistical support in Irag. KBR is an engineering, construction and services firm headquartered in Houston, Texas. Kuwait-based La Nouvelle and First Kuwaiti provided transportation, maintenance and other services in support of KBR’s contract with the Army.

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Therapy Provider and Nursing Home to Pay $30 Million to Settle Kickback Allegations Under the False Claims Act

Written January 21, 2014 by Janine Arno

A physical therapy provider and a nursing home operator have agreed to pay $30 million to settle False Claims Act allegations in a whistleblower lawsuit, according to the Department of Justice.

The whistleblower lawsuit, filed in 2007, accused RehabCare Group Inc. and Rehab Care Group East Inc., and nursing home operator Health Systems Inc. and its affiliate, Rehab Systems of Missouri, of a kickback scheme concerning nursing home referral business.
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St. Mary Medical Center Agrees to Pay $2.4 Million to Settle False Claims Act Allegations

Written January 14, 2014 by Robert Lu

The U.S. Attorney’s Office for the Eastern District of Pennsylvania announced on January 6, 2014, that it had settled claims under the False Claims Act with St. Mary Medical Center (SMMC) for improperly administering certain physician income guarantee agreements.  SMMC agreed to pay $2,339,224 to resolve the matter.

According to the government’s investigation, between January 2005 and August 2010, SMMC used 15 physician income guarantee agreements for recruited physicians but failed to properly administer the terms of their agreements, which resulted in net overpayments to certain recruited physicians.  Because those physicians and their practices referred patients to SMMC for medical treatment that was billed to federally funded programs, the United States alleged that false claims were submitted to the government.

This matter was handled by Department Health and Human Services Office of the Inspector General, and the U.S. Attorney’s Office for the Eastern District of Pennsylvania.

6 Lessons For Lawyers From Feds’ 2013 FCA Haul

January 6, 2014

Health Care Is Still the Epicenter

The lion’s share of FCA recoveries has long come from health care and life sciences, with the defense industry placing a distant second. There’s been speculation in recent years that better compliance among providers and drugmakers, along with wider application of the FCA, could change things. In 2012, for example, just 60 percent of recoveries were related to health care, an unusually low portion.

But there was no evidence of a shift in 2013, as more than 68 percent of FCA proceeds were derived from the health and life sciences industries.

Robert K. Lu, a former health fraud lawyer at the DOJ who is now at Robbins Geller Rudman & Dowd LLP, said the disparity will almost certainly persist, given that Medicare and Medicaid are expanding and the federal government is taking on an even greater role in health care.

“I just don’t see that share of the pie in terms of FCA recovery ever dropping below two-thirds,” Lu said.

It’s possible that the proportion will remain stable instead of becoming even more skewed toward health care, Lu said, depending on the government’s success using other statutory tools to go after businesses in other fields. Several looming cases, for example, are testing the potency of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 for punishing fraud.

“The only reason I could see where the numbers don’t trend upward as highly as we expect them to is just a different emphasis on priorities,” Lu said.

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