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Over the past few years, skilled nursing facilities (SNFs) have been at
the epicenter of kickback schemes designed to rip off Medicare and Medicaid.
Thanks to several whistleblowers, the Government has collected more than
$150 million from SNFs and their partners for kickback violations. Under
the False Claims Act, the whistleblowers are entitled to a percentage
of what the Government collects, and these whistleblowers earned a combined
$25 million for helping the Government catch and stop these kickbacks.

I am a lawyer who represents whistleblowers who know about healthcare fraud
and violations of the Anti-Kickback Statute, and this blog is my latest
installment in a series about some of the ways SNFs are committing healthcare
fraud. Today I will be discussing four recent cases that involve SNFs
accused of paying or receiving kickbacks in order to get referrals of
healthcare business.

Hebrew Homes Health Network – 2015 – $17 Million

A whistleblower brought a successful suit against Hebrew Homes and its
former president and executive director, William Zubkoff. The company
and Zubkoff paid $17 million to settle a case in which they were accused
of paying doctors to refer patients for skilled nursing care at Hebrew
Homes facilities.

Hebrew Homes operates seven, rehabilitation and skilled nursing service
facilities (SNFs) in Miami-Dade County, Florida. The Government said the
company ran a “sophisticated” kickback scheme that involved
hiring physicians as sham medical directors.

While the medical directors signed contracts agreeing to put in a certain
number of hours monthly, Stephen Beaujon, the former CFO of Hebrew Homes,
said the medical directors collected thousands of dollars a month, yet
rarely had to perform the duties set out in their contracts. Beaujon filed
suit as a whistleblower under the False Claims Act (FCA). He accused Hebrew
Homes of violating the Anti-Kickback Statute (AKS). Beacon said that the
medical director contracts were just a cover for what Hebrew Homes really
was doing, which was paying the doctors to refer their patients to Hebrew
Homes. The Government paid Beacon $4.25 million for his work on the case.

Omnicare, Inc. – 2014 – $124.24 Million

Thanks to two whistleblowers, the Government collected $124.24 million
from Omnicare, Inc., the nation’s largest provider of pharmaceuticals
and pharmacy services. Two whistleblowers filed suit under the False Claims
Act, accusing Omnicare of paying kickbacks in order to induce SNFs to
use Omnicare pharmaceuticals for their patients. The first whistleblower
to file suit, a former Omnivore employee, collected $17.24 million for
his role in helping the Government collect on the claim.

According to the suits, Omnicare violated the Anti-Kickback Statute by
offering “prescription medication and other pharmaceutical drugs”
to SNFs at below cost. The offer came with a catch: the SNFs had to agree
to choose Cincinnati, Ohio-based Omnicare as their pharmacy provider.

The states collected $8.24 million of the $124 million to reimburse them
for the damages that the violations of the AKS caused to their Medicaid programs.

Diagnostic Laboratories and Radiology – 2013 – $17.5 Million

In 2013, two whistleblowers recovered $3,755,500 for their part in helping
the Government collect $17.5 million from a California-based company that
operated mobile lab and radiology services. Kan-Di-Ki LLC ran the mobile
lab and x-ray services under the name Diagnostic Laboratories and Radiology.
The two relators (i.e., “whistleblowers”), Jon Pasqua and Jeff Hauser, were both
former employees of Diagnostic Lab. Pasha and Hauser told the Government
that Diagnostic Lab was performing lab work at a discount for inpatients
at SNFs, in order to get the SNFs to agree to refer all of their outpatients
to Diagnostic Lab. Since Medicare paid the SNF a fixed rate for inpatient
services, the inpatient discount went entirely to the SNF. Medicare pays
for each service individually on the outpatient side, however, and Diagnostic
Labs billed Medicare and Medi-Cal, the California Medicaid program, for
those lab services.

Esformes Network – 2016 – Indictment Alleging $1 Billion Fraud Scheme

In July 2016, the U.S. charged three Miami-area men with conspiracy, obstruction,
money laundering and health care fraud. The Assistant Attorney General
for DOJ’s criminal division, Leslie R. Caldwell, called it “the
largest single criminal health care fraud case ever brought against individuals
by the Department of Justice.” The U.S. said that Philip Esformes,
who owned more than 30 skilled nursing and assisted living facilities
in the Miami area, was at the top of a fraud scheme that cost the Government
$1 billion. The Government also charged a hospital administrator and a
physician’s assistant with being involved in the scheme to admit
patients even though they did not need skilled nursing care or assisted
living services. The Government also said the trio also accepted kickbacks
in order to refer business to yet other medical providers who also provided
unnecessary services.


Lee’s peers have named her a Georgia SuperLawyer every year for two decades.