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Case Results

Pain Cream Telemarketers Settle Tricare Fraud Action for $4 Million

On March 16, 2021, the DOJ Announced its settlement against the former owners of a telemarketing firm.  The telemarketers  contacted veterans and asked if they had any pain.  When they responded yes, the fraud proceeded full steam ahead.  The Defendants engaged with doctors and pharmacists to get prescriptions written and filled and sent to the unwitting patients.  The Defendants charged Tricare as much as $4,000 for a tube of cream. The cream was illegally prescribed and completely unnecessary.  Our brave whistleblowers contributed to this result, and aided the named whistleblower and the government through out the matter.

Here’s an excerpt from the DOJ’s press release.

Two Florida men have agreed collectively to pay at least $4 million to resolve allegations that they violated the False Claims Act by engaging in schemes to generate prescriptions for compounded drugs and refer those prescriptions to pharmacies in exchange for illegal kickbacks. Many of those prescriptions were billed to TRICARE, the federal health care program providing insurance for active duty military personnel, military retirees, and military dependents.

Jack Lee Stapleton, of Gulf Stream, and Jack Hunter Stapleton, of Fort Lauderdale, formerly owned a marketing business in Fort Lauderdale which operated under various names, including CV McDowell LLC, and J&J Tel Marketing LLC (the Stapleton Entities). The United States alleged that the Stapleton Entities, under the Stapletons’ direction, used telemarketing to solicit prospective patients to accept compounded drugs regardless of patient need, procured prescriptions for those patients, and then sent those prescriptions to compounding pharmacies that agreed to pay the Stapleton Entities half of the amount TRICARE reimbursed for each prescription. The Stapletons and Stapleton Entities worked with pharmacies to identify compounded drug formulas that maximized the level of reimbursement for the drugs, regardless of the medical need for the chosen formula. They then sought to procure large volumes of prescriptions for those formulas. In many cases, the Stapleton Entities procured prescriptions by paying telemedicine providers who prescribed expensive compounded drugs without ever seeing the patients or conducting any meaningful medical examination.

“Kickback arrangements undermine confidence in our health care system,” said Acting Assistant Attorney General Brian M. Boynton of the Department of Justice’s Civil Division. “This case demonstrates how kickback schemes often result in the provision of medically unnecessary services at the taxpayer’s expense. The department is committed to holding accountable those who engage in such unlawful conduct.”

“This is another in a long line of this office’s civil and criminal prosecutions of pharmacies, marketers, and prescribers – both individual and corporate – who exploited the TRICARE program for their personal gain and at substantial expense to taxpayers,” said Acting U.S. Attorney Karin Hoppmann for the Middle District of Florida. “We will continue to use all available resources to pursue those who defraud this and other federal healthcare programs and to return monies to those programs.”

“The Defense Criminal Investigative Service (DCIS) protects the integrity of Department of Defense programs, such as TRICARE, by rooting out those who choose to divert into their own pockets American taxpayer dollars intended to support our men and women in uniform,” said Special Agent in Charge Cyndy Bruce of the DCIS Southeast Field Office. “Individuals who unjustly enrich themselves will be held accountable.”

“We are grateful to those who came forward to expose these fraudulent practices and vow to continue our efforts to protect taxpayers from fraudsters siphoning money from the nation’s health care system,” said Special Agent in Charge Michael McPherson of the FBI’s Tampa Division.

***

The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Dwayne Thornton against the Stapletons. Under the qui tam provisions of the False Claims Act, a private party can file an action on behalf of the United States and receive a portion of the settlement if the government takes over the case and reaches a monetary agreement with the defendant. Thornton is a former employee of one of the pharmacies to which the Stapleton Entities referred prescriptions. The share to be awarded from this settlement has not yet been determined. The qui tam case is captioned United States ex rel. Thornton v. National Compounding Co. et al., Case No. 8:15-cv-2647 (M.D. Fla.).

Pain Medicine Doctor And Medical Testing Lab Found Guilty Of Health Care Fraud For Kickback And Self-Referral Violations

Konstantin Bas, age 41, of Brooklyn, New York, owner of Accu Reference, and Mubtagha Shah Syed, age 49, of Jersey City, New Jersey, conspired in a scheme in which a Maryland pain management practice referred urine specimens to Bas’s testing lab in return for $1.37 million in kickbacks.

The following details are excerpts from the press release provided by the U.S. Department of Justice (DOJ):

According to their plea agreements and other court documents, Bas was the owner and CEO of Accu Reference, a medical testing laboratory with corporate offices in New Jersey. In late 2010 or early 2011, Bas began using co-conspirator Syed to market Accu Reference’s services. In February 2011, Syed had a meeting with Muhammad Ahmad Khan, the chief administrative officer (CAO) of a group of Maryland-based pain management medical clinics that were incorporated as Advanced Pain Management Services but that operated under the name of American Spine Center (APMS/ASC). The clinics were owned and operated by Drs. Atif Malik and Sandeep Sherlekar. APMS/ASC required patients who were prescribed pain relief medications to submit urine samples for testing in order to monitor the levels of pain medication or other narcotics in their bodies.

During their February 2011 meeting, Syed and Khan discussed the possibility of APMS/ASC referring its patients’ urine toxicology specimens to Accu Reference for testing in return for the payment of kickbacks. Khan discussed the plan with Malik and Sherlekar who assigned Vic Wadhwa, APMS/ASC’s Chief Financial Officer (CFO), to conduct additional discussions concerning the arrangement. Syed arranged for a meeting between Bas and Wadhwa during which they agreed that Accu Reference’s profits from the urine toxicology tests would be equally divided between Accu Reference and APMS/ASC personnel. In addition, Bas agreed to pay Syed a 5% share of the proceeds for his role in putting the transaction together. Unknown to Bas, Wadhwa told Malik and Sherlekar that he and Bas had agreed on a figure of $35 per specimen cup for the kickbacks, which was significantly lower than the amount of the kickbacks Bas would actually be paying under his agreement with Wadhwa. This allowed Wadhwa and Khan to skim off approximately 60% of the kickback payments for themselves. Starting in the spring of 2011, APMS/ASC also referred patients for back braces to another company that Bas operated, in exchange for kickbacks to APMS/ASC.

Each month from April 2011 through July 2012, APMS/ASC referred between 700 and 1,300 patient urine specimens to Accu Reference in return for kickbacks. Accu Reference received approximately $4.4 million in payments from claims submitted to Medicare and private insurers for testing the specimens submitted by APMS/ASC. Bas caused his companies to pay kickbacks totaling approximately $1.37 million to Wadhwa and his co-conspirators.

According to federal and state False Claims Acts, claims tainted with kickbacks or self-referrals are typically rendered false. This demonstrates a classic case of such fraudulent conduct.

The link to the full press release can be found here: https://www.justice.gov/usao-md/pr/ceo-lab-testing-company-and-marketing-representative-sentenced-federal-prison-pain

Home Health Agency Settles Kickback And LUPA Claims For $5.8 Million

November 2020

I proudly served as local counsel on behalf of our clients who took on the role of whistleblowers. This case included allegations that certain employees of Doctor’s Choice Home Care, Inc. had unethically pressured its personnel to increase the number of home visits for Medicare patients. This effort was supposedly intended to prevent the application of the Medicare Low Utilization Payment Adjustment. Ostensibly, such a payment adjustment would have decreased reimbursements from Medicare to Doctor’s Choice without the delivery of these unnecessary services.

Our portion of the claim resolved these allegations in our clients’ favor. It was my pleasure to serve alongside Veronica Nannis, Jay Holland and Sarah Chu to represent these whistleblowers, our very brave clients.

The DOJ press release can be found here.

Lead Counsel Veronica Nannis’ press release can be found here.

Practice area(s): Fraud

Florida Compounding Pharmacy and Its Owners to Pay at Least $775,000 to Resolve False Claims Act Allegations

February 2019

This was not our case, though we have reviewed very similar fact patterns.  In this case, the owners set up a scheme by which they would pay kickbacks to telemarketers who obtained patients for them for compound drug prescriptions, regardless of medical need.  When Tricare or Medicare reimbursed the defendant pharmacy, the pharmacy would share those proceeds with the marketing group – hence the kickback.  Based on our review of the area and the number of False Claims Act settlements in this arena, the compound pharmacy world is replete with these types of schemes.  For the Department of Justice press release about the case discussed herein, click here.

Practice area(s): Fraud

Prepared business acquisition documents

March 2019

Our client was acquiring a third therapy business.  We were able to draft the documents necessary to make the acquisition go smoothly and insure that our client had the necessary legal protections in place.  We handled the matter efficiently and to our client’s full satisfaction.

Practice area(s): Commercial

Resolved Contract Dispute

October 2018

We had the pleasure of working with a therapist who provided work through a home health care agency.  The agency was dragging its feet in paying him for the work he had performed and he was making no progress collecting the money he was owed.  He contacted Schechter Legal Group.  We were able to resolve the issue for him in about one month’s time.  He has referred several clients to me facing similar situations.  We are able to quickly facilitate resolution to these matters and are happy to do so.

Practice area(s): Business

Resolved Breach of Commercial Lease Dispute

I had the pleasure of resolving a commercial lease issue for my client.  She had entered into a lease, and had an out clause if she was not satisfied with the shared air conditioner unit.  She timely notified the landlord, but the landlord refused to return her security deposit and first month’s rent.  We became involved, and were able to resolve the issue fairly quickly so our client could lease another space for her shop.

Practice area(s): Landlord / Tenant

United States ex rel John Doe v. Freed, Kleinberg, Nussbaum, Festa and Kronberg M.D. LLP, et al.

March 2018

WHISTLEBLOWER CASE BROUGHT BY FISCHER LEGAL GROUP CLIENT AGAINST LONG ISLAND PEDIATRICIANS SETTLES FOR $750,000

New York, March 7, 2018: The United States Attorney for the Eastern District of New York and the Attorney General for the State of New York settled a Federal and New York State False Claims Act qui tam action, brought by Andrea Fischer and handled by Andrea Fischer and Audrey Schechter of Fischer Legal Group, on behalf of its client whistleblower, against Freed, Kleinberg, Nussbaum, Festa & Kronberg M.D. LLP; Arnold W. Scherz, M.D.; Mitchell Kleinberg, M.D.; Michael Nussbaum, M.D.; Robert Festa, M.D.; and Jason Kronberg, D.O. The suit, 14-CV-3943, was filed in 2014 by Andrea Fischer in the United States District Court for the Eastern District of New York and was ably and successfully pursued by the United States Attorney’s Office for the Eastern District of New York and the New York State Attorney General’s office. The suit alleged that Defendants, in contravention of Medicaid regulations, did not enroll many of their employee-providers who treated Medicaid patients, in the Medicaid program. Defendants then billed Medicaid for services provided by these unenrolled employee-providers, under their own provider numbers. The settlement was obtained under the False Claims Act and the New York State False Claims Act. Ms. Fischer of Fischer Legal Group stated, “Thanks to my client’s efforts to right a wrong, Defendants have been held accountable for their wrongs. We at Fischer Legal Group are proud to have assisted the Relator and the Government in reaching this victory. It is an excellent example of the private-public partnership at work.” About Fischer Legal Group Fischer Legal Group is a boutique law firm focusing on the prosecution of qui tam (whistleblowing) litigation, as well as complex litigation, throughout the United States. Ms. Fischer and Ms. Schechter are both licensed in New York and Florida.

See AG’s Press Release here: https://ag.ny.gov/press-release/ag-schneiderman-announces-750000-joint-settlement-long-island-pediatrics-practice

Practice area(s): Fraud

United States v. WMC

Westchester Medical Center settled a federal lawsuit brought by the U.S. Attorney’s Office in New York. The U.S. Department of Justice reported on the outcome of the case: The medical center agreed in 2015 to pay $18.8 million and admitted to misconduct. The lawsuit had accused the operating entity of this hospital in a suburb of New York City of committing fraud against Medicare between 2000 and 2007 while violating the False Claims Act, a federal law that bans kickbacks. U.S. attorney Preet Bharara explained that the organization had improperly paid kickbacks to a local cardiology practice, which, in turn, referred hundreds of patients to the hospital. It had also obtained Medicare reimbursements for costs not incurred, according to Bharara. According to a special agent for the U.S. Department of Health and Human Services, Scott Lampert, “Westchester Medical Center’s aggressive, intricate kickbacks and other fraud schemes…threatened the impartiality of medical referrals, the financial integrity of Medicare, and…trust in the health care system,” (https://www.yahoo.com/entertainment/s/westchester-ny-hospital-pays-18-8-million-settle-205518087–sector.html). A former Westchester Medical compliance officer, Dan Briks, first brought the claim as a whistleblower and his widow, Chris Carrs, continued with the case on his behalf after his death three years later. Attorney Audrey Hildes Schechter assisted the Fischer Legal Group’s prior firm in successfully handling this case.

State of New York, ex rel. Doe Corp. v. Express Hospitality Group, et al.

October 2017

NEW YORK—Attorney General Eric T. Schneiderman today announced the conviction of Yankee Clipper Food Services I Corporation on felony charges stemming from an extensive scheme to avoid paying New York taxes between 2011 and 2015. Following an investigation conducted by the Attorney General’s Office, the company, along with several individuals and affiliated airport food service companies doing business under the trade name “Express Hospitality Group,” agreed to pay $13 million to settle separately filed civil claims initially raised by a whistleblower under New York State’s False Claims Act. The plea and civil settlement are the first resolution in the Attorney General’s ongoing investigation into the contracting and procurement process at JFK Airport—an investigation dubbed “Operation Greased Runway.”

“For years, Express Hospitality Group disregarded state law and New York taxpayers,” said Attorney General Schneiderman. “Today’s felony conviction and settlement should send a clear message to those attempting to avoid paying their fair share: tax evasion is illegal, disgraceful — and it will not be tolerated.”

Our Relator received a 22% share of the $13M settlement.

https://ag.ny.gov/press-release/ag-schneiderman-announces-felony-conviction-and-13-million-settlement-tax-fraud

Practice area(s): Fraud

Kehoe v. DTS Recovery, Inc.

August 2017

Client’s car damaged during questionable tow.

Judgment $14,251.44

Weiss v. A-1 Recovery, et al.

October 2016

Defendants wrongfully towed Plaintiff from Handicapped parking space. Allegations brought based on State and local law and ordinances.

Settled.

Fitzherbert v. Inland Property Management

Ms. Schechter successfully briefed the appeal in this case, leading the Second District Court of Appeals to reverse the lower court’s summary judgment in this slip and fall case.

Allstate Services of Central Florida, Inc. v. Fairway Investments, LLC

Ms. Schechter successfully defended the lower court’s decision in favor of her client in this commercial landlord tenant dispute. The Fifth District Court of Appeals affirmed the lower court’s ruling.