/>iHealth Care Network Settles False Claims Act Allegations for $345 Million
Community Health Network Inc. (CHN) has agreed to pay $345,000,000 to settle allegations that it violated the False Claims Act (FCA) for knowingly submitting or causing the submission of false claims to the Medicare program from 2008 to 2017.
On January 6, 2020, the government filed a complaint alleging that CHN engaged in a scheme to recruit and employ hundreds of physicians to secure their downstream revenue and referrals. In exchange for capturing the revenue and referrals, CHN allegedly offered and paid salaries to physicians that were significantly higher than what they received in private practice and well above fair market value. The US Department of Justice (DOJ) alleged that CHN disregarded repeated warnings that their proposed compensation for physicians was too high from valuation firms it had engaged, and that it provided false compensation figures to a valuation firm in order to receive a favorable opinion.
The settlement arises from a whistleblower complaint filed in 2014 by Thomas Fischer, CHN’s former CFO and COO. According to the settlement agreement, CHN has agreed to pay $345 million and enter into a five-year corporate integrity agreement with the US Department of Health and Human Services Office of Inspector General (OIG-HHS).
The DOJ press release can be found here and the settlement agreement can be found here.
Nikola Executive Sentenced to Four Years in Prison for Securities and Wire Fraud
On December 18, 2023, the DOJ announced that US District Judge Edgardo Ramos of the Southern District of New York sentenced Trevor Milton, the former executive chairman and CEO of Nikola Corporation, an electric- and hydrogen- powered vehicle manufacturer and energy company, to four years in prison for allegedly engaging in securities and wire fraud.
According to the indictment, which the government filed on July 28, 2021, from at least November 2019 through September 2020, Milton allegedly engaged in a scheme to defraud investors by inducing them to purchase shares of Nikola by making false and misleading statements to the public through social media, television, podcasts, and print. In particular, the DOJ alleged that Milton made false and misleading statements that: (1) Nikola had early success in creating a “fully functioning” semi-truck protype which he knew to be inoperable; (2) Nikola was producing hydrogen at a reduced cost, when Milton knew that no hydrogen was being produced at any cost; (3) reservations made for the future delivery of the semi-trucks were binding orders representing billions in revenue, when the vast majority could be cancelled at any time, and (4) Nikola had built and engineered a pickup truck from the “ground up” using Nikola’s technology and parts, which Milton knew to be untrue.
The DOJ further alleged that Milton “took advantage” of the fact that Nikola went public by merging with a special purpose acquisition company (SPAC), rather than going public through an IPO. According to the indictment, merging with a SPAC allowed Milton the opportunity to make false and misleading statements to the public during a period of time where he would not have been allowed had the company gone public through a traditional IPO, which has restricted quiet periods.
On October 14, 2022, after a month-long trial, the jury found Milton guilty of one count of securities fraud and two counts of wire fraud. In addition to a prison sentence, Milton was ordered to forfeit property and pay a fine of $1 million.
The case is United States v. Milton, Case No. 20 CR 00478. The DOJ press release can be found here.
Two Individuals Sentenced for Hospital Billing Scheme
On December 15, 2023, the DOJ announced that Jorge Perez and Ricardo Perez of Miami, Florida were sentenced to eight years and four months and six years and three months in prison, respectively, for engaging in a scheme to defraud insurance companies by using rural hospitals to bill for urine drug testing that was not reimbursable and medically necessary.
According to the DOJ, Jorge Perez, the owner and manager of several hospitals and owner of a billing company, and Ricardo Perez, the manager of a billing company, conspired with each other and others to bill for laboratory testing services that were medically unnecessarily and fraudulently billed these services through rural hospitals rather than the independent laboratories where most of the testing took place. The government alleged that, along with co-conspirators, Jorge Perez researched financially distressed rural hospitals in order to obtain ownership and control over them for the purpose of billing false and fraudulent claims. According to the indictment, Jorge also allegedly paid kickbacks to recruiters and a co-conspirator to induce the solicitation and referral of the testing services and paid these individuals a portion of the insurance reimbursements the rural hospitals obtained.
On June 27, 2022, a jury in the Middle District of Florida found Jorge Perez and Ricardo Perez guilty of conspiracy to commit health care fraud and wire fraud, conspiracy to commit money laundering, and five counts of health care fraud.
The case is United States v. Perez, Case No. 20 CR 00086. The DOJ press release can be found here.
