Engineering Company Agrees to Pay $4.4 Million to Settle FCA

Headlines that Matter for Companies and Executives in Regulated Industries

Engineering Company Agrees to Pay $4.4 Million to Settle FCA

On Friday, September 15, 2023, the US Department of Justice (DOJ) announced a settlement agreement with Navmar Applied Sciences Corporation, a Pennsylvania-based engineering company. As detailed in the settlement, Navmar knowingly double-billed and shifted certain labor and material costs under a series of contracts with the US Department of the Navy in violation of the FCA.

As background, Navmar had entered into contracts with the US government to manufacture, design, and test emerging intelligence, surveillance, and reconnaissance technologies. As detailed by the DOJ, Navmar knowingly billed certain labor and material costs on one Navy contract, and then subsequently billed the same costs on another contract. As a result, Navmar was paid twice for the same costs. Navmar also admitted that it knowingly and improperly shifted material costs incurred under certain contracts to other contracts. This practice violated the Federal Acquisition Regulations, which require that costs incurred under a contract be allocable to that same contract. As a result, Navmar recovered costs it otherwise would not have received.

Navmar has agreed to pay $4.4 million to resolve the case.

A link to the DOJ’s press release can be found here.

United States Intervenes in FCA Case, Filing Complaint Against Hospital and Behavioral Health Organization

On Monday, September 18, 2023, the US Attorney’s Office for the District of Massachusetts filed an FCA complaint against Brookline-based Bournewood Health Systems and First Psychiatric Planners (FPP). As alleged in the government’s complaint, Bournewood and FPP paid kickbacks in the form of free sober housing to induce patients to choose Bournewood and FPP over other treatment facilities. The Massachusetts Attorney General’s Office also joined the complaint under the Massachusetts False Claims Act and related state laws.

The case originally began with allegations filed by a whistleblower under the qui tam provisions of the FCA, and the government subsequently intervened. According to prosecutors, Bournewood and FPP paid the kickbacks to grow their daily patient volume and increase the amount of reimbursement received from, among others, federal health care programs. Prosecutors also allege that Bournewood and FPP sent patients to certain sober homes to support their revenues, knowing that some of the sober homes were unsafe and threatened patients’ sobriety. Of particular concern, patients experienced sexual solicitation and harassment, drug overdoses, prescription medication theft, bed bugs and overcrowding.

If convicted, the defendants may be required to pay significant damages under both the federal FCA and Massachusetts False Claims Act.

A link to the DOJ’s press release can be found here.

Owner of Sleep Clinics Pleads Guilty to Submitting Over $1 Million in Fraudulent Claims

On Monday, September 18, 2023, the owner of a sleep clinic in Fresno and Tulare Counties pleaded guilty to health care fraud and aggravated identity theft charges today for submitting over $1 million in fraudulent claims for sleep studies to Medicare.

As detailed in court records, Travis Gober, the owner of the sleep clinic, submitted thousands of claims to Medicare for sleep studies that were not actually performed on patients. In these same claims, Gober also falsely stated that the patients had been referred for the sleep studies by physicians with whom Gober had previously worked. The purpose of the scheme was to obtain reimbursement form Medicare, which would not otherwise reimburse claims submitted for sleep study patients unless the patient were referred by a physician. Gober engaged in the scheme to pay debts that his brother had incurred on behalf of his sleep center without his knowledge or consent.

Gober potentially faces 10 years in prison for the health care fraud conviction, and an additional, two years in prison for a separate identity theft conviction.

A link to the DOJ press release can be found here.


Continue Reading