How a Civil War law forced a local medical group to pay $5.3M

In 1863, at the height of the Civil War, Congress passed legislation to ensure suppliers to the Union Army were not cheating the government.

More than 150 years later, that legislation — the False Claims Act — and its amended derivatives enabled a local worker to challenge the billing practices of her former employer, Hudson Valley Hematology Oncology Associates, resulting in a $5.3 million settlement announced Friday by Preet Bharara, U.S. Attorney for New York’s Southern District.

The medical practice, which treats cancer and blood disorders and has offices in Poughkeepsie and Fishkill, admitted it illegally waived Medicare co-pays for patients and then added those amounts to its bills to the taxpayer-funded health insurance program.

It also admitted it entered billing codes indicating doctors had overseen or administered a procedure, when only a nurse had done so, thereby inflating the bills to Medicare and Medicaid.

The following doctors were listed in the federal complaint and settlement agreement: Ram Kancherla, Ponciano Reyes, Michael Maresca, Lev Davidson, Julia Schaefer-Cutillo, Jeffrey Steward, Gerald Colvin, Tauseef Ahmed, John Nelson, Carmella Puccio, Karen Seiter, Delong Liu, Asim Aijaz and Sheetal Shrimanker.

How those revelations came to light is representative of the growing success of False Claims Act whistleblower lawsuits in health care cases.

Last December, the Department of Justice announced it had obtained more than $3.6 billion in settlements in fiscal year 2015. It marked the fourth year in a row the department had exceeded that total. Health care cases accounted for the largest share of those recoveries, $1.9 billion.

In the case of Hudson Valley Hematology Oncology Associates, the actions were initiated by Lucille Abrahamsen, a Highland resident who served as an accounts receivable representative and filed a lawsuit under the False Claims Act.

Abrahamsen did not return a phone message seeking comment. But her attorney, Reuben Guttman of Washington, D.C.-based firm of Guttman, Buschner & Brooks PLLC, said she contacted the law firm after she became aware of the improper billing practices.

“In this day and age, people who see wrongdoing in the workplace … know enough to see that there are red flags,” Guttman said.

Guttman said his office receives hundreds of calls a year but brings only a handful of cases. Sometimes there is not enough evidence to make a claim. Sometimes there is no wrongdoing. Sometimes there is a violation, but an action can only be brought directly by the government.

After conducting its own investigation, the law firm filed the lawsuit on Abrahamsen’s behalf on April 14, 2014.

“Once we file the complaint, the government processes the complaint and sends it to the appropriate agencies involved,” he said.

That led to a meeting at Bharara’s office, an investigation by the federal health and human services department and finally, Friday’s settlement.

“This is a terrific result,” Guttman said, “and it is an example of how efforts to combat Medicare and Medicaid fraud are now being carried out the provider level.”

Whistleblower Case Results In $28 Million Settlement; Case Is Reminder That Healthcare Fraud Is An Important Election Year Issue

Washington, D.C. — A whistleblower case alleging the payment of kickbacks by Abott Laboratories to induce prescriptions for the drug Depakote, for elderly patients in nursing homes, has resulted in a $28 million dollar settlement with one of the nation’s largest long term care pharmacies, Omnicare.

“This case is a reminder – especially in an election year with healthcare and the conduct of big pharma at issue – that healthcare fraud and waste continues to compromise patient care and drain valuable healthcare dollars,” said Reuben Guttman of Guttman, Buschner & Brooks (GBB) PLLC which represented lead whistleblower, Meredith MCcoyd. In addition to Guttman, the GBB team included Traci Buschner and Caroline Poplin, MD, JD, the firm’s Medical Director.

The case was filed and resolved under the Federal False Claims Act (FCA). That statute allows whistleblowers to bring suit in the name of the government.

According to the complaint in intervention filed by the United States Department of Justice (DOJ), “By knowingly and actively soliciting kickbacks to promote Depakote, Omnicare enhanced its profits at the expense of the elderly nursing home residents it purported to protect. . .”
The government’s complaint in intervention also alleged that “in exchange for Abbott’s kickbacks, Omnicare engaged in intensive efforts to convince nursing home physicians to prescribe Depakote. . .”

Guttman, Buschner & Brooks PLLC, www.GBBlegal.com, is one of the nation’s leading whistleblower law firms. Attorneys at the firm have represented whistleblowers in cases returning more than $5 billion to state and federal governments. For more information on the False Claims Act go to www.whistleblowerlaws.com

A National Education on Hostile Work Environment

The US presidential election campaign has created a national dialogue about what it takes to create a hostile work environment and could change judges’ perspectives on the issue, writes trial lawyer Reuben Guttman.

Title VII of the 1964 Civil Rights Act generally proscribes employment discrimination based on an individual’s “race, color, religion, sex, or national origin.” The breadth of the law’s proscriptions, the burdens of proof and the facts needed to prove a violation have, over the years, been the subject of much litigation.

Twenty two years after Title VII’s passage, the United States Supreme Court issued its opinion in Meritor Savings v. Vinson, 477 US 57 (1986). In Meritor, the Court established a cause of action under Title VII for gender discrimination where an employee has been subject to a “hostile work environment.” In issuing its Opinion, the Court quoted the decision of the United States Court of Appeals in Henson v. Dundee, 682 F.2d 897, 902 (11th Cir. 1982):“Sexual harassment which creates a hostile or offensive environment for members of one sex is every bit the arbitrary barrier to sexual equality in the workplace that racial harassment is to racial equality. Surely, a requirement that a man or a woman run a gauntlet of sexual abuse in return for the privilege of being allowed to work and make a living can be as demeaning and disconcerting as the harshest of racial epithets.” In Meritor, the Court noted that the alleged conduct was “not only pervasive but also criminal conduct of the most serious nature.”

While Meritor established the doctrine of “hostile work environment,” it failed to establish a bright line test for liability and even today’s guidance by the Equal Employment Opportunity Commission – the Agency charged with enforcing Title VII – is ambiguous. The guidance states that “petty slights, annoyances, and isolated incidents (unless extremely serious) will not rise to the level of illegality.” The guidance also says that “to be unlawful, the conduct must create a work environment that would be intimidating, hostile, or offensive to reasonable people.”

If this guidance is ambiguous, think about its application when juxtaposed against the pleading standards established by the Supreme Court in Bell Atlantic v. Twombly, 550 US 554 (2007) and Ashcroft v. Iqbal, 556 US 662 (2009). Those cases allow a trial court judge to look at the facts and determine whether a claim is “plausible.” In Iqbal, the Court explained that in determining plausibility, the “reviewing court” may draw upon its “judicial experience” and “common sense.” The Court also explained that “the plausibility standard is not akin to a “probability standard,” but it asks for more than a sheer possibility that a defendant has acted unlawfully.”

Common sense? The plausibility standard is subjective and undoubtedly may be influenced by a judge’s experiences and personal environment. And yet, as subjective as the standard is, it is the standard that allows judge’s to be the gatekeepers for the procession of claims of discrimination to proceed to discovery and perhaps trial.

Over the past several weeks neither the courts not Congress have issued an opinion or passed any law changing the way hostile work environment cases are viewed. Yet, it may be that events outside of the court room and the legislative arena have changed forever our perspective on these claims and perhaps – maybe perhaps – provided judges with a new perspective when evaluating the “plausibility” of a claim.

The release of a tape of presidential candidate Donald Trump extolling his sexual exploits, a dialogue about this same subject during a Presidential debate watched by 80 million people and news reports of women who were allegedly groped or kissed by Mr Trump has led to a national dialogue about sexual harassment. Weighing in on the subject, First Lady Michelle Obama captured the attention of the nation when she told New Hampshire voters: “And I have to tell you that I can’t stop thinking about this. It has shaken me to my core in a way that I couldn’t have predicted.”
Whether each allegation is true, the 2016 election will go down to the wire with a national dialogue about how much – or rather how little – it takes to poison an environment with hostile language or unwanted contact. It is a dialogue tantamount to an education campaign given by alleged victims, commentators and advocacy group leaders. For those judges who are tuned into their TV sets, perhaps their perspective on the plausibility of a claim of hostile work environment will forever be changed.

Reuben Guttman is a trial lawyer and one of the founding partners at Washington, DC-based firm Guttman, Buschner & Brooks PLLC.

Third Circuit Rules That Paid Meal Breaks Do Not Offset FLSA Overtime Liability

On October 7, 2016, the Third Circuit underscored the need for employers to compensate all hours worked by non-exempt employees even when employers pay employees for break time they could treat as non-compensable under the Fair Labor Standards Act (“FLSA”).

In Smiley v. E.I. DuPont De Nemours & Company, plaintiffs filed an FLSA collective action and Pennsylvania state law class action seeking compensation for unpaid time spent donning and doffing uniforms and safety gear and performing other activities before and after their shifts. Unpaid time averaged 30-60 minutes per day.

Under DuPont’s written policy, plaintiffs working 12-hour shifts were paid for a 30-minute meal break and two other 30-minute breaks per shift. DuPont classified paid break time as hours worked for overtime purposes even though the FLSA does not require it to do so. For the employees at issue, paid break time always exceeded the unpaid pre-shift and post-shift donning and doffing time.

DuPont argued plaintiffs’ claims for unpaid overtime failed because it voluntarily treated break time as hours worked, such that the time qualified as an offset against the 30-60 minutes of daily unpaid pre-shift and post-shift time. The District Court agreed with DuPont and dismissed plaintiffs’ lawsuit in its entirety.

On appeal, the Third Circuit rejected DuPont’s offset argument and overturned the dismissal. After focusing on the FLSA’s “broad remedial purpose,” the Court noted that employers have some flexibility when considering whether to treat bona fide meal breaks as hours worked but held the FLSA explicitly permits offsets against overtime pay only in three specific situations, none of which addressed paid meal breaks.

The Third Circuit concluded that nothing in the FLSA authorized an employer to offset discretionary compensation the employer included in calculating employees’ regular rate of pay. Even though the FLSA does not require DuPont to pay for meal and other breaks or to treat such time as hours worked, once it did so voluntarily, it could not use this time as an offset against other time spent working that it did not count for overtime purposes.

Smiley is an important lesson for employers to review pay practices and ensure that all hours worked by non-exempt employees are compensated. Even if an employer goes beyond what the FLSA requires and pays an employees for meal breaks, that generosity cannot be used to offset other potential overtime violations in the Third Circuit.

The Third Circuit’s decision underscores the need for technical compliance with FLSA requirements. If a pay practice is not expressly authorized by the FLSA or implementing regulations, the practice may be held to run afoul of its mandates and expose employers to class-based liability even if they have the best of intentions and are attempting to exceed its mandates. Smiley highlights the need for companies, particularly smaller companies and startups, to seek review of employment practices by sophisticated employment counsel.

CONTACTS

If you have any questions or would like more information on the issues discussed in this article, please contact Justin Brooks at jbrooks@gbblegal.com.

GBB’s experienced team of attorneys provide employment counseling and litigate employment matters on behalf of both employers and employees.

Compliance enforcement for sale?

Trial lawyer Reuben Guttman questions how America’s attorney generals and the political organisations with which they associate raise funds.

Sometimes the press has a way of seeing the tip of the iceberg without enquiring into the breadth and depth of the whole mass. Such is the case with Pam Bondi, Florida’s attorney general. Amidst her purported investigation of Trump University, she took a $25,000 campaign contribution from Donald Trump’s Foundation. On the face of it, the payment violated federal law because charitable foundations cannot use their money for political campaign contributions. To make matters worse, while the New York State attorney general embarked on litigation against Trump University, Bondi chose not to jump into the fray. While it does not look good, this is perhaps the tip of the iceberg. So what’s underneath the tip?

Compliance enforcement at the state level is either for sale or has the appearance of being for sale. And as lawyers are taught in law school, even the appearance of impropriety has the capacity to impact confidence in the rule of law.

State attorney generals control the enforcement spigot. They make threshold decisions about whether to enforce a law, whether a set of facts even constitutes a violation, and whether enforcement should be privatised through retention of outside law firms.

Given their roles in making critical decisions about law enforcement, one would think that efforts would be taken to ensure that attorney general decision making is not tainted by the appearance of impropriety. Curiously, rather than steer clear of that appearance, attorney generals have institutionalised it through creation of the Republican Attorney Generals Association (RAGA) and the Democratic Attorney Generals Association (DAGA). These organisations – the officers of which are elected attorney generals – raise funds from some of the very individuals and corporations who are within the orbit of the attorney general enforcement authority.

Through various functions, RAGA and DAGA arrange settings for regulators to mingle with the regulated. This year, RAGA has events scheduled at the Broadmoor Resort in Colorado, a retreat at Pebble Beach, California and a meeting at Omni Barton Creek in Austin, Texas.  Meanwhile DAGA will be holding a reception and dinner at the Four Seasons Hotel in Washington, DC, a 2017 winter conference in Fort Lauderdale and a spring 2017 conference at the Nines Hotel in Portland, Oregon.

A glance at information gathered by the Center for Responsive Politics provides insight into DAGA’s funders and a hint at with whom the Democratic AG’s mingle. Funders range from large pharmaceutical companies – some of which have been the target of investigations and compliance enforcement – to a range of law firms, some of which have represented state agencies and even the offices of attorney generals.

A 2014 membership benefits breakdown by RAGA, disclosed by the New York Times, lists benefits accorded to those whose annual contribution is $125,000. Members of the “Edmund Randolph Club” get a “quarterly call with a featured attorney general,” the “opportunity to submit issue briefing topics and to be a panellist at a RAGA National Meeting,” and “Access to the annual RAGA (2014) retreat in San Diego.” For the record, Edmund Randolph was the first attorney general of the United States.

For its part, the DAGA website makes no bones about selling access to the offices of the attorney general the website claims to be the “second most powerful in state government.” The website states that as a supporter of DAGA, you will enjoy a list of benefits including “Issue conferences,” “AG roundtables,” “political updates,” and a “Democratic AG Directory” where “DAGA members receive a comprehensive directory of all Democratic Attorney Generals and their key staff and office contacts.” The description of the AG Roundtables makes clear that they are designed to “provide a unique opportunity for focused conversation with specific AG’s in small settings.”

The RAGA website is clear about its mission: to get Republicans elected as attorney generals. This year RAGA has focused its efforts on the race for North Carolina’s attorney general. Rather than merely promoting the qualifications of the Republican candidate, RAGA has gone one step further and launched a website dedicated to the Democratic candidate, Josh Stein. The site is called ExtremeHarvardRadical.com.  This so-called “extreme radical” is a North Carolina state senator who spent seven years as senior deputy attorney general of North Carolina and was honoured by both Mothers Against Drunk Driving and the American Association of Retired Persons. Yes, Stein is guilty of securing degrees from Harvard Law School and Harvard’s Kennedy School of Government. His campaign website also discloses that he is Jewish and that he and his wife belong to a Synagogue, which makes one wonder if calling him a “Harvard radical” is a dog whistle for something else?

The DAGA site has a more vanilla message about elections: there are 27 Republican AG’s and 24 Democratic AG’s with key races in nine states this year, including North Carolina.

Placed in context, here is a message for those nine new AG’s: Maybe you should make a clean break from accepting campaign funding from those whom you regulate? And maybe membership in DAGA or RAGA is not something to brag about?

And what about Pam Bondi?  It turns out that she is the immediate past chair of RAGA’s Executive Committee.

Reuben Guttman is a trial lawyer and founding partner at Guttman, Buschner & Brooks.