In mid-to-late April and into May, the U.S. Department of Justice (DOJ) recovered $14.1 million from three False Claims Act settlements. Each of the cases was brought by whistleblowers under the False Claims Act’s qui tam provisions, which allows citizens to file lawsuits about fraud or waste on behalf of the government. Qui tam whistleblowers are eligible for monetary rewards that can range between 15 and 30% of the sum that the government recovers. This article takes a look back at some recent False Claims Act settlements that came from qui tam whistleblower lawsuits.
Comprehensive Pain Specialists
On April 21, the DOJ announced that Anesthesia Services Associates, PLLC d/b/a Comprehensive Pain Specialists (CPS), along with “its four majority owners, Dr. Peter B. Kroll, Dr. Steven R. Dickerson, Dr. Gilberto A. Carrero, and Dr. Richard Muench,” and former CPS executive Russell S. Smith, D.C., agreed to pay $4,121,663.94 to settle allegations of wrongdoing. Tennessee-based CPS shut down in 2018, having previously “operated over 40 pain clinics and had operations in 12 states.” In April 2019, CPS’ former CEO John Davis was convicted of health care fraud along with Drs. Kroll, Dickerson, Carrero, and Dr. Smith, “a former manager of certain CPS clinics in East Tennessee.” The complainant in that case alleged that the aforementioned individuals engaged in fraudulent behavior like submitting “false claims for medically unnecessary and/or non-reimbursable testing and acupuncture.” According to the press release, Dr. Muench “agreed to settle with the United States and Tennessee” before that complaint was filed.
The April 2021 settlement resolves the U.S. and Tennessee’s claims that CPS violated both the False Claims Act and the Tennessee Medicaid False Claims Act. Allegedly, from May 2011 to CPS’ closure in 2018, the company submitted “false claims to federal health care programs and TennCare specifically for medically unnecessary and/or non-reimbursable urine drug, specimen validity, genetic and psychological testing, as well as claims for electro-auricular acupuncture.” This settlement “also resolves claims relating to CPS’s submission of false claims under Dr. Kroll’s provider number for services he did not render and testing he did not order.” Additionally, “the agreements resolve common law claims for fraud, payment by mistake, and unjust enrichment against CPS, the Owners and Dr. Smith.”
CPS has “agreed to release $2,196,663.94 million in funds held by Medicare in a suspension account and will contribute an additional $750,000 in cash” as part of the settlement. Drs. Kroll, Dickerson, Carrero, and Muench “will pay a total of $1.05 million to resolve claims against them.” Dr. Smith will pay $125,000 “to resolve potential liability for common law claims that could be brought against him” by the U.S. and the state of Tennessee. Now, the U.S. and Tennessee will dismiss the Civil Action, excluding claims against Davis.
The whistleblowers in this case, who remain anonymous in the DOJ’s press release, are responsible for bringing the allegations that this settlement resolved. The individuals filed a qui tam lawsuit and will receive $610,684.62 for their disclosure.
“This type of purposeful, illegal conduct takes money from TennCare that otherwise would be used to pay legitimate claims of others,” said Tennessee Attorney General Herbert H. Slatery. “This settlement should send a message. If you do this, State and federal authorities are coming after you.” TennCare is Tennessee’s Medicaid agency.
Tungsten Heavy Powder, Inc.
On April 29, the DOJ published a press release announcing that San Diego-based company Tungsten Heavy Powder, Inc. (THP) agreed to pay $5,641,114 to resolve allegations that it violated the False Claims Act. THP, a company that “manufactures and supplies tungsten products,” allegedly engaged in “falsely certifying that it sourced product materials in the United States for items it manufactured under a contract with the government of Israel that was funded by the U.S. Defense Security Cooperation Agreement Agency (DSCA).”
The U.S. alleged that THP “knowingly submitted false certifications” to the U.S. about “the origin and manufacture of defense articles procured by the government of Israel.” According to the press release, these articles “were financed with United States’ grant funds paid by the Foreign Military Financing (FMF) program through the DSCA,” and allegedly, THP “submitted false certifications pertaining to seven government of Israel purchase orders.” The U.S. alleged that THP falsely claimed that tungsten was from China when it had actually been sourced in the U.S. The U.S. also alleged that THP falsely certified “that manufacturing occurred in the United States, when in fact THP contracted with a Mexican maquiladora.” This violated the conventions that “grant funds for foreign procurements are only available when the materials are sourced and manufactured in the United States by domestic companies,” according to the press release.
In this case, a qui tam whistleblower lawsuit brought the original False Claims Act violation allegations. The whistleblowers were Gregory Caputo, who was a former THP employee, and Global Tungsten & Powders Corporation. Caputo and Global Tungsten & Powders Corporation “will receive seventeen percent of the settlement proceeds.”
Of the case, Acting U.S. Attorney for the Southern District of California said: “As always, we are committed to preserving the integrity of the government contracting process and to ensuring that funds fraudulently obtained are returned to the public fisc.”
Dr. Asfora, Medical Designs LLC, and Sicage LLC
On May 3, the DOJ announced that neurosurgeon Wilson Asfora, M.D. and the two medical device distributorships he owns, Medical Designs LLC and Sicage LLC, will pay $4.4 million to resolve allegations that they violated the False Claims Act. The U.S. alleged that “over the course of nearly a decade, Asfora, Medical Designs, and Sicage knowingly and willfully engaged in three kickback schemes to allow Asfora to profit from his use of over a dozen devices in his medical procedures.” Allegedly, “Medical Designs and Sicage paid Asfora profit distributions in exchange for Asfora using Medical Designs’ and Sicage’s devices in his spine surgeries.” The U.S. alleged that Medical Designs would resell “other manufacturers’ spinal devices” and then split the profits with Asfora “when he used those devices in surgeries.”
Additionally, the U.S. alleged Asfora “solicited and received kickbacks from medical device manufacturer Medtronic USA Inc.” for using MedTronic’s SynchroMed II infusion pumps. MedTronic allegedly paid Asfora the kickbacks “through a restaurant he owned with his wife, called Carnaval Brazilian Grill, in the form of lavish meals and alcohol for Asfora and his friends, colleagues, and business partners.” The press release states that this method of paying the kickbacks was “[a]t Asfora’s request.”
Asfora also allegedly “knowingly submitted false claims to federal healthcare programs for medically unnecessary procedures using the devices in which he had a financial interest.” According to the press release, Asfora profited off of medically unnecessary procedures in which he used devices “sold by Medical Designs, Sicage, and Medtronic.”
The civil settlement with Asfora, Medical Designs, and Sicage resolves allegations that were brought under the False Claims Act’s qui tam provisions. The whistleblowers in this case were Drs. Carl Dustin Bechtold Bryan Wellman. They “will receive $880,000 of the settlement proceeds” for blowing the whistle on this case.
“Kickback dollars can corrupt the high quality medical care patients deserve and taxpayers fund,” said Special Agent in Charge Curt L. Muller of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “We have excluded Dr. Asfora and his two medical distributorships from receiving Medicare, Medicaid, and other federal health program dollars,” Special Agent in Charge Muller said.
The press release states that the U.S. “has recovered a total of more than $33 million relating to conduct involving Asfora, including a False Claims Act settlement with Sanford Health entities for $20.25 million in October 2019 and a False Claims Act and Open Payments settlement with Medtronic for $9.21 million in October 2020.” These massive recoveries demonstrate whistleblowers’ importance in maintaining integrity in the healthcare field and discovering misconduct like Asfora’s, behavior that may not have been in his patients’ best interest.
These False Claims Act settlements, all announced in the past few weeks, show the sheer power whistleblowers have in uncovering cases of fraud that are harmful to the American public. The cases also demonstrate the power of the False Claims Act and that qui tam whistleblowers will be rewarded for their disclosures.
The DOJ announced that in 2020, over two-thirds of money recovered through the False Claims Act came from qui tam whistleblower cases. “Whistleblowers filed 672 qui tam suits in fiscal year 2020, and this past year the department recovered over $1.6 billion in these and earlier-filed suits,” the press release states. 2021 should expect to bring in similar numbers, since along with these three cases, another whistleblower received $3.59 million in a May 4 False Claims Act settlement.