DOJ Secures Conviction in $197 Million Health Care Fraud Scheme Targeting Seniors and Veterans

DOJ Secures Conviction in $197 Million Health Care Fraud Scheme Targeting Seniors and Veterans

A federal jury in the Middle District of Florida recently convicted the owner of a marketing company for his role in a multiyear scheme to defraud Medicare and the Civilian Health and Medical Program of the Department of Veterans Affairs of nearly $200 million. 

According to the US Department of Justice (DOJ), the defendant, Joel Rufus French, a former NFL player, worked with overseas call centers that pressured elderly Americans into providing their personal and health insurance information and agreeing to accept medically unnecessary orthotic braces. Many of the individuals targeted suffered from Alzheimer’s disease and dementia. In some instances, call center operators altered recordings to make it appear as though Medicare beneficiaries had consented to receive braces.

French paid sham telemedicine companies to obtain signed orders from medical providers who never examined — and often never even spoke to — the patients. He then sold these fraudulent orders to marketers and medical supply companies, which submitted false claims to Medicare. The defendant also owned and managed eight durable medical equipment supply companies, using false documents to conceal his connection to them from Medicare. Evidence at trial showed that the defendant and his co-conspirators submitted claims for braces for amputees for limbs they did not have and for beneficiaries who were deceased.

The jury convicted the defendant of conspiracy to commit health care fraud and wire fraud, conspiracy to commit money laundering, and conspiracy to offer, pay, solicit, and receive kickbacks. He faces a maximum penalty of 20 years in prison for the health care and wire fraud conspiracy, 10 years for the money laundering conspiracy, and five years for the kickback conspiracy. A sentencing date has not yet been set.

Read the DOJ’s press release here.

Defense Subcontractor Pays $1.4 Million to Settle False Claims Act Allegations Over Falsified Testing

Insect Shield LLC, a North Carolina company, and the estate of its late co-founder Richard Lane have agreed to pay $1.4 million to settle allegations that they violated the False Claims Act (FCA) by submitting fraudulent claims to the US Department of Defense.

Insect Shield served as a subcontractor to multiple defense contractors who manufacture Army Combat Uniforms. The government alleged that between 2015 and 2021, Insect Shield falsified test results regarding the application of insect repellent, permethrin. Specifically, the company allegedly manipulated test results for insect repellant application by combining results from different testing rounds, relabeling samples to conceal their origins, conducting unauthorized re-tests beyond contractual limits, and hiding failed test results.

The case originated as a whistleblower lawsuit filed under the qui tam provisions of the FCA, which allows private individuals to sue on the government’s behalf when they have knowledge of fraud. The whistleblower, Ms. Downs, will receive $315,000 from the settlement.

The claims resolved by the settlement are allegations only and there has been no determination of liability.

Read the DOJ’s press release here.

Companies Pay $3.29 Million to Settle FCA Allegations Over PPP Loans

On February 5, the US Attorney’s Office for the District of Massachusetts announced that QP Holdings, LLC, an Arkansas-based company, along with three affiliated entities — River Bend, Industries, LLC, Master Molded Products, LLC, and 3D Plastics, LLC — agreed to pay approximately $3.29 million to resolve allegations that they violated the FCA in connection with Paycheck Protection Program (PPP) loans.

Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, small businesses were able to obtain forgivable loans to help with job retention and certain approved expenses through the PPP. Loans were provided in two draws, and businesses were required to certify in their applications that they met the applicable size standards.

The government alleged that the QP Holdings affiliates obtained second-draw PPP loans for which they were ineligible because, when considered together with their affiliated entities, they exceeded the applicable business size standards established for second-draw borrowers. The affiliates subsequently sought and received full forgiveness of these loans from the Small Business Administration.

As part of the settlement agreement, the QP Holdings entities acknowledged their ineligibility for the PPP loans. The DOJ noted that the settlement amount reflects credit given to the companies for their cooperation under the DOJ’s Guidelines for Taking Voluntary Disclosure, Cooperation, and Remediation into Account in False Claims Act Matters.

The matter originated as a qui tam action filed by Verity Investigations, LLC, under the FCA’s whistleblower provisions. Pursuant to the settlement agreement, the relator will receive 10% of the recovery. 

The case is United States ex rel. Verity Investigations, LLC v. QP Holdings, LLC, et al., No. 1:24-cv-12001 (D. Mass.).

Read the DOJ’s press release here.