Whistleblower

Medicare reimburses health care institutions for certain costs in addition to paying for individual procedures and treatment. Virtually every hospital and many other providers submit cost reports to Medicare, which are used to calculate how much the government will reimburse the provider for expenses related to patient care. This includes the costs of capital improvements like new medical equipment and bigger wards. Over the years, cost reports can represent billions of dollars in payments for some providers.

Providers who knowingly inflate the costs they incurred, mischaracterize the nature of those costs or give the wrong percentage of their services dedicated to Medicare patients are liable under the False Claims Act.

Examples

Two sisters, both supervisory employees of a residential care facility, stole money by creating phantom employees and phantom contractors whose salaries and expenses were included in the cost reports submitted to a Medicaid program. Settlement: They were excluded from Medicaid for 25 years.

The owner/operator of physical therapy clinics and a nursing home defrauded Medicare by billing for the owner's personal expenses such as jewelry, cars, vacations and costs associated with show dogs. Many of the billings were disguised as salaries for employees. Settlement: The Company had to pay more than $1 million to settle criminal and civil fraud charges. The owner, his wife, the nursing home and clinics he operated in eight states had to pay more than $900,000 to settle civil charges and $100,000 in criminal fines. An additional $182,000 in legitimate Medicare reimbursement was also withheld. The owner will not be allowed to participate in the Medicare and Medicaid programs for two years and thereafter may submit only audited cost reports.

A former nursing home owner and operator filed over 7,000 fraudulent Medicare claims. A government audit and investigation revealed that he had billed Medicare for nonexistent medical supplies for his nursing home and filed cost reports with false expenses. He attempted to conceal the scheme by submitting false cost reports to Medicare supported by falsified medical records and fabricated invoices. Verdict: He was sentenced to 11 years and three months imprisonment and ordered to pay fines, restitution and special assessments totaling more than $3.5 million. Two of his employees and two former Medicare carrier employees who testified against him pled guilty and also received sentences.