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Fraud allegations: Region 8 mental health center pays back $7M to DOJ

Following a years’ long legal battle over allegations of fraud, the Region 8 Community Mental Health Center has agreed to pay back the federal government nearly $7 million.

A U.S. Department of Justice news release said this resolves “allegations that it was paid for services that it either did not provide or that were not provided by qualified individuals as part of its preschool Day Treatment program.”

Related: Mobile crisis teams fill gaps in Mississippi’s mental health system

Nearly a decade ago, Region 8 operated a day treatment program for preschool-age children in Simpson County. The news release said the Department of Justice, Department of Health and Human Services and Office of Inspector General found “many of the claims submitted for payment from 2004 to 2010 were for services that were either not provided or were not provided by qualified individuals.”

Region 8 officials maintain they believe they did nothing wrong, and the program has since closed.

“Obviously anyone that is concerned about mental health in our state would be troubled with this situation,” said Angela Ladner, director of the Mississippi Psychiatric Association. “And I think as this continues to evolve — it’s not isolated. It’s not just about this. It’s about our whole approach (to mental health). We need some oversight in mental health and we just don’t have that at this point.”

Also read: Judge unseals mental health report that blasts state

Ladner sits on the Mississippi Mental Health Task Force, which has been established to tackle issues facing the state’s delivery of mental health care. Region 8 Director Dave Van is also a member of the task force.

The allegations against Region 8 arose from a lawsuit filed by a whistleblower and former employee under the False Claims Act. That person will receive more than $1 million of the settlement, according to the news release. 

The federal government estimates the settlement, $6.93 million, is the largest False Claims Act health care settlement in the state’s history.

“Our children are among the most valuable and vulnerable in our society, and it is imperative that we do all that we can to protect the programs that offer them the services that they need,” U.S. Attorney Mike Hurst said in the release.

Region 8, which covers Copiah, Lincoln, Madison, Rankin and Simpson counties, is one of the state’s 14 Community Mental Health Centers, which deliver the majority of public outpatient mental health services in the state. The Department of Mental Health does not run the regions, but it does certify and provide grant funds to them.

Region 8 released a statement in response to the announcement: “Region 8 cooperated with government officials and worked to address their inquiries over the past several years as it continued to provide the highest level of mental health programs and services to those in need across the region. It is important to note that the allegations relate to one specific program conducted in one county that is no longer ongoing and has been shut down for 7 years. While Region 8 would have preferred to spend its resources on the community it serves and does not believe it did anything wrong, it came to the realization that protracted litigation with the government was not in the best interest of Region 8 or the people they serve. Region 8 admits to no wrong doing in this settlement and the settlement will not disrupt or impact the services Region 8 provides to the community.” 

 

 

Northbrook chiropractor sentenced to 20 months for health care fraud

A Northbrook chiropractor was sentenced to 20 months in federal prison Tuesday for billing an insurance carrier for medically unnecessary or nonexistent services, according to the U.S. Attorney’s Office.

Steven Paul, 46, of Northbrook, previously pleaded guilty to one count of health care fraud. Judge Ronald A. Guzman cited Paul’s “extraordinary cooperation” during the investigation as he imposted the lowest possible prison sentence for the charge, according to a U.S. Attorney’s Office news release.

Paul and co-defendant Bradley Mattson, a chiropractor, stated in plea agreements that they required patients to receive an initial x-ray and a pre-set schedule of clinic visits for a period of six months “without regard to the medical necessity of the visits,” according to the release.

Paul stated that from 1999 to 2008 he directed $3.65 million in bills to Blue Cross Blue Shield for medically unnecessary tests or physical therapy services that were not provided, and his clinics received $1.33 million in fraudulent reimbursements from the insurance company, prosecutors said.

Banks shamed for refusing to help victims of internet fraud: Damning report demands institutions ‘step up’ to deal …

  • It emerged online fraud is now the most prevalent crime in England and Wales
  • MPs have warned the banks are not doing enough to tackle the problem 
  • They demanded banks do more as it is too big a problem solely for Government
  • MPs say banks must do more to return money to victims of online fraudsters

Claire Ellicott Political Correspondent For The Daily Mail

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Banks are not doing enough to combat online fraud and need to take greater responsibility, MPs have said.

They demanded financial institutions ‘step up’ to tackle the issue as the problem is ‘too vast’ to be tackled solely by Government.

Ministers must ensure that banks find more ‘effective’ ways to tackle fraud and that they are held to account for this.

They also need to be held responsible for returning money to customers who have been the victim of scams, the MPs said.

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Banks are not doing enough to combat online fraud and need to take greater responsibility, MPs have said (file photo)

The Public Accounts Committee (PAC), revealed that online fraud is now the most prevalent crime in England and Wales.

It estimates that the cost of the crime is £10billion, with around two million incidents of cyber fraud last year.

However, this is a huge underestimate of the ‘enormous issue’ as just 20per cent of fraud is thought to be reported to police, they say.

The crime does not just affect victims financially, but causes ‘untold distress’ to those affected which deters them from coming forward, it adds.

It said the problem was ‘too vast’ to be handled by the Home Office alone and banks should take more responsibility.

The Home Office response had been ‘too slow’ and the banks were ‘unwilling to share information’ about fraud with its customers, it said.

The report concludes: ‘The balance needs to be tipped in favour of the customer.’

It also criticises the response from police across England and Wales as ‘inconsistent’ and urges them to prioritise online fraud.

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They demanded financial institutions ‘step up’ to tackle the issue as the problem is ‘too vast’ to be tackled solely by Government. The problem is affecting young people, MPs say (file photo)

But most of its criticism is reserved for banks, who it says need to take more responsibility and to offer protection from scams.

It said that banks do not accept enough responsibility for preventing and reducing fraud as they are not required to provide data for individual institutions.

This means that customers do not know which banks are best are protecting them from online fraud.

The report concludes that shifting more responsibility on to banks for scams is likely to make them better at protecting customers.

‘Banks are not doing enough to tackle online fraud and their response has not been proportionate to the scale of the problem,’ the report said.

‘Banks need to take more responsibility and work together to tackle this problem head on.

‘Banks now need to work on information sharing so that customers are offered more protection from scams.’

d69ae_4707634600000578-5149813-image-a-1_1512519980673 Banks shamed for refusing to help victims of internet fraud: Damning report demands institutions 'step up' to deal ...

Age UK said that elderly people stopped using their computers, unplugged their phones and, in the worst cases, ended up in care homes because they have been victims (file photo)

It adds: ‘The Department must also ensure that banks are committed to developing more effective ways of tackling card-not-present fraud and that they are held to account for this and for returning money to customers who have been the victims of scams.’

MPs also say that campaigns to educate people and keep them safe online have so far been ineffective and are ‘supported by insufficient funds and resources’.

They warned that the problem was starting to affect young people, despite the perception that it only affects older people.

The report warns that social media plays a significant role in online scams and said further education was needed to make young people aware of the dangers of sharing personal information online. 

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Labour MP Meg Hillier chaired the committee that said Banks need to do more to combat internet fraud

The City of London Police told the committee that young people can be more vulnerable to fraud than older generations as they have a very different approach to personal information.

They cited examples of young people sharing pictures of their passports and driving licences on social media.

Age UK told the committee that elderly people stopped using their computers, unplugged their phones and, in the worst cases, ended up in care homes because they have been victims.

The committee’s chair, Labour MP Meg Hillier, said: ‘Online fraud is a virulent and unprecedented threat that has taken hold rapidly, causes untold misery and costs individuals and businesses billions of pounds each year.

‘The Government accepts there is an enormous amount of work needed to tackle the problem – work that in our view must put people first.

‘Banks in particular need to step up, take responsibility and focus sharply on protecting and informing their customers.’

She added: ‘Online fraud affects people of all ages and backgrounds. Young people are increasingly likely to fall victim to a crime which is perceived primarily as affecting the elderly and vulnerable.

‘The Government must get better at explaining the tricks employed by fraudsters to target different groups, and set out clearly the action it is taking to tackle them.’

 


d69ae_4707634600000578-5149813-image-a-1_1512519980673 Banks shamed for refusing to help victims of internet fraud: Damning report demands institutions 'step up' to deal ...

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Cop accused of iPhone theft now faces health care fraud charge

A Pleasantville police officer who was charged with stealing an iPhone has now also been accused of committing health care fraud for years, officials said. 

Juan Forero, 34, of Pleasantville, was arrested and charged with theft by unlawful taking after removing an Apple iPhone 7 Plus from a shopping cart at ShopRite in Somers Point in April, the Atlantic County Prosecutor’s Office said last week.

While investigating the theft, authorities learned Forero had been listing his former wife as a beneficiary on his health care plan even though they divorced in 2011, authorities said.

As a result, Blue Cross Blue Shield paid more than $90,0000 toward her health care since the two divorced, officials said. If the woman paid out of pocket, it would have cost $320,000.

Elizabeth cop charges with health insurance fraud

Pleasantville paid an additional $21,000 in premiums to cover Haydee Forero, the prosecutor’s office said. 

Before Forero became a cop he allegedly tried to pull off a similar scheme when he worked for AtlantiCare, costing them about $4,000, authorities said.

Additional charges against Forero include theft, unsworn falsification to authorities, insurance fraud.

Hired in 2015, Forero was suspended without pay after being arrested on the iPhone theft charge in April 26. His annual salary is $59,789, according to public records. 

“While I am saddened to confirm that one of our officers has been charged with criminal conduct, I am also reassured to report that the internal affairs process has worked as intended,” Chief San Riggin said. “The Pleasantville police department cannot and will not accept unethical conduct by our officers and will take swift action to investigate all claims of misconduct.”

Jeff Goldman may be reached at jeff_goldman@njadvancemedia.com. Follow him on Twitter @JeffSGoldman. Find NJ.com on Facebook.

 

Two Conway chiropractors indicted for health care fraud conspiracy

Ho-ree, Or-ee, O-ree – How do you pronounce Horry? We spoke to local historians, Horry County natives, and tourists fresh off the plane to find what’s the story with Horry, and we learned some fascinating history about our area in the process. Tune in to WMBF News at 6 p.m. tonight for this story.

Two Conway chiropractors indicted for health care fraud conspiracy

Ho-ree, Or-ee, O-ree – How do you pronounce Horry? We spoke to local historians, Horry County natives, and tourists fresh off the plane to find what’s the story with Horry, and we learned some fascinating history about our area in the process. Tune in to WMBF News at 6 p.m. tonight for this story.

Treasury Department Concludes Fraud Investigation into ComputerCOP “Internet Safety” Software

Three years ago, EFF exposed how hundreds of law enforcement agencies were putting families at risk by distributing free ComputerCOP “Internet safety” software that actually transmitted keystrokes unencrypted to a third-party server. Our report also raised serious questions about whether the company was deceiving government agencies by circulating a bogus letter of endorsement from a top official in the U.S. Treasury Department.

 This month, our suspicions were confirmed. A document obtained through the Freedom of Information Act shows that, in response to EFF’s research, the Treasury Department’s Inspector General launched an investigation into ComputerCOP. The final report concluded that the company had, in fact, doctored a government letter to improperly convince law enforcement agencies to spend asset forfeiture funds to buy the product.

Read the Treasury Department’s investigative report and exhibits

Unfortunately, the report shows that ComputerCOP dodged criminal prosecution because the statute of limitations expired. Nevertheless, the records should serve as the final nail in the coffin for this software. It was bad enough that the software was proven dangerous; it is even worse for law enforcement agencies to do business with a company that federal investigators caught forging documents. 

ComputerCOP is a CD-ROM (now also available on a USB storage stick) that promises to help parents protect their children from Internet predators. More than 240 agencies signed contracts with ComputerCOP, often worth tens of thousands of dollars. But the software was less about safety than it was about self-promotion. Elected law enforcement officials—including sheriffs, mayors and district attorneys—placed their images on the cover and recorded promotional videos about how the software was the “first step” to protecting children online. By and large, the “free” software giveaway was used to generate positive media coverage. In Arizona, for example, the software project was spearheaded by the Maricopa County District Attorney’s press officer, rather than a member of the Internet Crimes Against Children team. Marketing materials proclaimed that the software was a “Perfect Election and Fundraising Tool!”

2fb60_yt_TUZIooo9jgM Treasury Department Concludes Fraud Investigation into ComputerCOP "Internet Safety" Software2fb60_yt_TUZIooo9jgM Treasury Department Concludes Fraud Investigation into ComputerCOP "Internet Safety" Software

EFF technologists dissected the software and discovered that it contained a keylogging feature that monitored everything a computer user typed. Whenever a keyword was entered, the software transmitted the text to a third-party commercial email server, which then sent alerts to the master user (often a parent) in real time. Not only was this feature invasive and easily abused, it also had a major technical vulnerability: the software transmitted communications openly and unencrypted, so that it could be easily intercepted and read by malicious actors. The San Diego County District Attorney, which had distributed the software, issued a warning to families about the keylogging feature after EFF published its findings.

Law enforcement agencies often paid for ComputerCOP with asset forfeiture funds, that is, money seized from suspected criminals during investigations. When agencies assist in federal investigations, they sometimes receive a portion of the money through a process called “equitable sharing.” As part of its marketing materials, ComputerCOP circulated a letter from the director of the Treasury Executive Office for Asset Forfeiture, which oversees equitable sharing spending, that seemed to endorse the product. 

EFF obtained this letter through a state-level public records request, and it immediately struck us as odd. The letterhead seemed off-kilter, some of the text was misaligned, and the letter was undated, unsigned, and did not even include the full name of the person it was addressed to. (EFF separately discovered ComputerCOP had falsely claimed endorsements by the ACLU and National Center for Missing and Exploited Children.)

So, we filed a FOIA request with the Treasury Department to obtain the original letter, if one existed.  Not long after, the Treasury Department issued a fraud alert for the letter, and the Treasury Department Inspector General launched a formal inquest. 

New FOIA documents show that, after a multi-year investigation, the Inspector General concluded that ComputerCOP had indeed “altered the 2001 letter from TEOAF and made it appear to be blanket permission for all law enforcement agencies to use equitable sharing funds to purchase the software.” Indeed, ComputerCOP made this claim on the rate card it provided to agencies. 

As part of its investigation into the letter, Treasury investigators sent questionnaires to 240 agencies that had purchased ComputerCOP. Of the few dozen that responded, three law enforcement agencies—the Peabody Police Department in Massachusetts, the Alaska Department of Public Safety, and the Greene County Sheriff’s Office in Missouri—told Treasury that the fraudulent letter had directly influenced their decision to purchase the product. 

The closed investigative report indicates the Treasury Inspector General was unable to send the case for prosecution “due to the fact that the three year statute of limitations on the offense had lapsed.” Instead, after discussions with the Justice Department and the U.S. Marshal Service, Treasury concluded it was enough for ComputerCOP to cease using the altered letter and to post a disclaimer on their website.

Unfortunately, it may be time for the Treasury Department to re-open the case. While ComputerCOP did once advertise the disclaimer, EFF could no longer find that language anywhere on its website.  

Making matters worse, the company’s website now claims that the keylogging feature “is not intrusive in any way.” This is an outrageous claim considering that this type of technology is more commonly deployed by stalkers and malicious hackers, and, in certain circumstances, its use could violate wiretapping laws.

For the most part, law enforcement purchases of ComputerCOP have significantly declined since we issued our first report. However, the company does continue to find buyers. For example, the Lake County Sheriff’s Office, Florida purchased 1,000 copies for $5,975 in 2017, according to SmartProcure. Meanwhile McGruff the Crime Dog was handing out copies as recently as this summer at a community screening of the film “Elf.”

To law enforcement agencies, here’s some rock-solid advice: before you purchase so-called Internet safety software, spend a few moments on the Internet researching whether the software is actually safe and above board. 

ComputerCOP is neither.

Galloway drug rep pleads guilty to health care fraud, becoming 11th conspirator

WHO’S PLEADED GUILTY

• Matthew Tedesco, 42, of Linwood, a pharmaceutical representative, and Robert Bessey, 43, of Philadelphia, Aug. 17.

Michael Pepper, 45, of Northfield, a former Atlantic City firefighter, • Steven Robert Urbanski, 37, a pharmacological broker from Marlton, and Thomas J. Hodnett, 41, a pharmaceutical sales representative from Voorhees, Aug. 18.

• Margate doctor John Gaffney, 55, of Linwood, Sept. 22.

• Judd Holt, 42, of Marlton, and George Gavras, 36, of Moorestown, Sept. 25.

• Richard Zappala, 45, a pharmaceutical sales representative from Northfield, Sept. 28.

• Michael Neopolitan, 49, of Willow Grove, Pennsylvania, a pharmaceutical sales representative, Oct. 6.

• Andrew Gerstel, 39, of Galloway Township, a pharmaceutical representative, Nov. 13.

Florida doctor sentenced in health care fraud scheme

A Florida doctor has been ordered to serve four years in prison and pay $2.1 million in restitution for his part in a multimillion-dollar health care fraud and money laundering scheme.

Joaquin Mendez previously had pleaded guilty to one count of conspiracy to commit health fraud. Acting U.S. Attorney for the Southern District of Florida Benjamin G. Greenberg announced the latest plea on Thursday.

Prosecutors say three co-defendants in the case established sober homes, where people go for addiction treatment, and provided kickbacks and bribes to people with insurance who agreed to live in the homes. Their insurance was billed and members of the scheme prospered.

Records show the 52-year-old Mendez was hired to evaluate patients and prescribe treatment. Prosecutors say Mendez knew fraudulent insurance claims were being filed.

Animoji apps for Android? They are all a fraud

Posted:
08 Nov 2017, 09:09
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by 07e98_showimage Animoji apps for Android? They are all a fraudVictor H.

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Major investors sue Outcome Health, alleging firm committed fraud to secure $487.5M investment

Investors in Outcome Health, including a fund co-founded by gubernatorial candidate J.B. Pritzker and units of Goldman Sachs and Google, have sued the Chicago health information and advertising startup and two of its founders, alleging they committed fraud to secure almost $500 million in funding earlier this year.

Outcome Health — launched in 2006 while CEO Rishi Shah and current President Shradha Agarwal were students at Northwestern University — delivers pharmaceutical ads to patients on screens it places in doctors’ offices. The screens, free to doctors, show educational programming. Outcome Health makes money off the ads.

The lawsuit, filed Tuesday in state court in New York against Outcome, Shah and Agarwal, follows a Wall Street Journal report last month that said some employees charged pharmaceutical companies for ads on more video screens than Outcome Health had installed.

The investors, which include funds managed by Goldman Sachs Group, Chicago-based Pritzker Group Venture Capital, Google’s parent Alphabet and others, allege in the suit that they were misled by Outcome. Had they “known the truth about … Outcome Health, they never would have made their investments,” the investors allege. “Plaintiffs now hold securities that may be worthless.”

Investors sue Outcome Health, alleging fraud

Investors in Outcome Health, including a fund cofounded by gubernatorial candidate J.B. Pritzker and units of Goldman Sachs and Google, have sued the Chicago health information and advertising startup and two of its founders, alleging they committed fraud to secure almost $500 million in funding earlier this year.

Outcome Health — launched in 2006 while CEO Rishi Shah and current President Shradha Agarwal were students at Northwestern University — delivers pharmaceutical ads to patients on screens it places in doctors’ offices. The screens, free to doctors, show educational programming. Outcome Health makes money off the ads.

The lawsuit, filed Tuesday in state court in New York against Outcome, Shah and Agarwal, follows a Wall Street Journal report last month that said some employees charged pharmaceutical companies for ads on more video screens than Outcome Health had installed.

The investors, which include funds managed by Goldman Sachs Group, Chicago-based Pritzker Group Venture Capital, Google’s parent Alphabet and others, allege in the suit they were misled by Outcome. Had they “known the truth about … Outcome Health, they never would have made their investments,” the investors allege. “Plaintiffs now hold securities that may be worthless.”

Travelers prevails in computer fraud coverage dispute

c9122_8ce1c196-172b-479c-958b-c20b3805b13e Travelers prevails in computer fraud coverage dispute

A federal court has ruled that a Travelers Cos. Inc. unit’s crime policy does not cover a computer fraud case because its policyholder has not established the wired payments its supplier had inadvertently sent to an imposter can be considered its owned property under terms of its policy.

But the judge in the case, Posco Daewoo America Corp. v. Allnex USA Inc. and Travelers Casualty and Surety Co. of America, gave the plaintiff 30 days to amend its complaint.

According to the ruling by the U.S. District Court in Newark, New Jersey, Houston-based Posco Daewoo America, a chemical importer and exporter, supplied Alpharetta, Georgia-based Allnex USA with product for which Allnex owed payment.

In early 2016, an imposter posing as an employee of Daewoo’s accounts receivable department sent emails to Allnex requesting wire payments to four separate Wells Fargo Co. accounts to satisfy receivables owed by Allnex to Daewoo — which does not have any Wells Fargo accounts.

Without confirming the email’s authenticity, Allnex sent wired payments totaling $630,058. After the fraud was discovered, Allnex recovered $262,444 of the stolen funds, but the remaining $367,613 was apparently transferred to accounts in Shanghai. Daewoo alleges Allnex owed it the remaining funds, while Allnex disagrees.

Daewoo had a crime insurance policy that covered computer crime with Travelers Casualty, a unit of New York-based Travelers, which denied coverage for the missing funds.

An issue in the case is whether the loss qualified as a “direct loss” under the policy’s computer fraud provision. The parties agree an intervening event — the Allnex employer who caused the wires to be sent — occurred between the imposter sending Allnex an email and the money appearing in the Well Fargo accounts, according to the ruling.

But while Travelers argued a direct loss is an “immediate loss to the insured party,” Daewoo and Allnex said a loss that results “from an event in a chain of events can qualify as a direct loss.”

Rather than rule on this issue, however, the ruling said that under its policy’s “Ownership of Property; Interests Covered” section, Daewoo “has not plausibly pled that it owned the property, the wired payments.”

The court granted Travelers’ motion to dismiss the case but gave Daewoo 30 days to file an amended complaint.

Michael S. Levine, a partner with Hunton Williams L.L.P. in Washington, who is a policyholder attorney not involved in the case, said, “I was surprised, but at the same time relieved, that the court dismissed without prejudice and gave them an opportunity amend this.”

“The case will go forward with a deeper dive on the policy language,” Mr. Levine said.

In a related case referred to in the ruling, in July the U.S. District Court in New York ruled in Medidata Solutions Inc. v. Federal Insurance Co. in favor of a cloud-based services company in a coverage dispute in a case in which the company lost $4.8 million because of spoof emails. 

Former UI student appears on computer fraud charges

DAVENPORT, Iowa (KCRG-TV9) — Trevor Graves, 19, a former University of Iowa student, appeared in federal court Thursday, November 2, in front of United States Magistrate Judge Stephen B. Jackson, Jr..

Graves appeared on a complaint charging from March of 2015 to November of 2016, Graves exceeded authorized access, knowingly caused the transmission of a code and command, and intentionally caused damage and loss that exceeded $5,000 to a University of Iowa protected computer.

Court records say while Graves was a student at Iowa, he exceeded his authorized access to the University of Iowa computer network, changed grades, and got copies of exams for himself and others.

Graves was released on conditions of pretrial release pending further proceedings.

The Federal Bureau of Investigation and the University of Iowa’s Department of Public Safety is investigating.

This case is being prosecuted by the United States Attorney’s Office for the Southern District of Iowa.

The State Of Computer Fraud Coverage Law: 5 Key Rulings

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Case Information

Case Title


State Bank of Bellingham v. BancInsure, Inc.

Case Number

14-3432

Court

Appellate – 8th Circuit

Nature of Suit

4110 Insurance

Date Filed

October 29, 2014


Case Title


Apache Corporation v. Great American Insurance Co.

Case Number

15-20499

Court

Appellate – 5th Circuit

Nature of Suit

4110 Insurance

Date Filed

September 3, 2015


Case Title


Principle Solutions Group, LLC v. Ironshore Indemnity, Inc.

Case Number

17-11703

Court

Appellate – 11th Circuit

Nature of Suit

4110 Insurance

Date Filed

April 14, 2017


Case Title


Medidata Solutions, Inc. v. Federal Insurance Company

Case Number

17-2492

Court

Appellate – 2nd Circuit

Nature of Suit

4110 CONTRACT-Insurance

Date Filed

August 11, 2017


Case Title


American Tooling Center, Inc. v. Travelers Casualty and Surety

Case Number

17-2014

Court

Appellate – 6th Circuit

Nature of Suit

4110 Contract: Insurance

Date Filed

August 29, 2017

Companies

  • Apache Corporation
  • Great American Insurance Company
  • Ironshore Inc.
  • Medidata Solutions, Inc.

Judge Analytics

Cheaper Health Plans Promoted by Trump Have a History of Fraud

Marc I. Machiz, who investigated insurance fraud as a Labor Department lawyer for more than 20 years, said the executive order was “summoning back demons from the deep.”

“Fraudulent association health plans have left hundreds of thousands of people with unpaid claims,” he said. “They operate in a regulatory never-never land between the Department of Labor and state insurance regulators.”

Association health plans, properly operated, can provide a legitimate option to small employers seeking affordable coverage, and Mr. Trump and other Republicans see the plans as an important part of any replacement for the Affordable Care Act.

In the executive order, issued on Oct. 12, Mr. Trump directed the Labor Department to expand access to the plans by making it easier for small businesses to band together and insure themselves or buy insurance as a large group.

Large group plans and self-insured plans are subject to fewer federal and state requirements than individual or small group insurance. They are, for example, not required to provide “essential health benefits” like mental health care and prescription drugs.

But Mila Kofman, a former insurance superintendent in Maine who has done extensive research on association health plans, said they also often falsely claimed to be exempt from state insurance laws, as a way to explain how they could offer premiums lower than those charged by licensed insurance companies.

When small businesses having no connection with one another buy health insurance through an association today, they are still generally treated as small businesses under the law, and coverage sold to them must comply with state consumer protection laws. But that could change under the executive order.

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Mr. Trump’s proposals could overturn longstanding interpretations of federal law. In numerous advisory opinions, the Labor Department has set forth an elaborate test for association health plans, saying they can be established only by a “bona fide group or association” of employers who are tied together by genuine economic interests other than just providing insurance to their employees.

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The White House has suggested that the Labor Department could loosen these requirements, allowing employers anywhere in the country to join together “for the express purpose of offering group insurance.” Mr. Trump would then be taking a first step to achieve an overarching political goal. As a candidate, he often said he wanted to let Americans buy health insurance across state lines, at lower cost with fewer rules.

But history shows the risks of an expansion of association health plans. If a plan becomes insolvent, the impact on consumers can be devastating.

Robert Loiseau, who represented fraud victims in Texas, recalled their shock when they tried to receive care. “People bought insurance coverage because it was cheap and seemed to provide them with coverage they needed,” he said. “It had a veneer of legitimacy. But when they went to the doctor, they found out all of a sudden that their insurance company, their perceived insurance company, was in receivership and that they had no coverage.”

The Labor Department filed suit last year against a Florida woman and her company to recover $1.2 million that it said had been improperly diverted from a health plan serving dozens of employers. The defendants concealed the plan’s financial problems from plan participants and left more than $3.6 million in unpaid claims, the department said in court papers.

In another case, a federal appeals court found that a health plan for small businesses in New Jersey was “aggressively marketed but inadequately funded.” The plan collapsed with more than $7 million in unpaid claims.

Labor Department investigations sometimes turn into criminal cases.

A Florida man was sentenced to 57 months in prison after he pleaded guilty to embezzling about $700,000 in premiums from a health plan that he had marketed to small businesses. The Labor Department and the Justice Department said he had used some of the plan premiums to build a home for himself.

A South Carolina man pleaded guilty after the government found that he had diverted more than $970,000 in insurance premiums from a health plan for churches and small businesses. “His embezzlement and the plan’s consequent failure left behind approximately $1.7 million in unpaid medical claims,” the Labor Department said.

And in Louisiana, two people pleaded guilty to conspiracy charges after the government found that they had taken money from the medical benefit fund of a trade association and used it to pay for spa treatments, diamond cuff links, evening gowns, foreign travel and other personal expenses.

The House passed a bill in March to clear the way for an expansion of association health plans. Mr. Trump supported the bill, but only four Democrats voted for it. A similar proposal, championed by Senator Rand Paul, Republican of Kentucky, was included in a Senate bill to dismantle the Affordable Care Act, but Democrats blocked that bill after a long battle with Republicans.


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Our view: Corruption cases show health-benefits fraud out of control

Steven Robert Urbanski, 37, a pharmacological broker from Marlton, tries to avoid reporters Friday, Aug. 18, after leaving federal court in Camden, where he admitted serving as a recruiter in a prescription-fraud scheme.

Fort Worth trainer ‘Dr. Dave’ accused of $25 million health care fraud

He calls himself “Dr. Dave” and his website promotes personal training to “enhance your lifestyle.”

But for nearly five years, Fort Worth’s David Williams used his Kinesiology Specialists business to defraud health insurance companies out of more than $25 million, billing the companies for medical services even though he wasn’t a medical doctor, authorities said Friday.

When federal agents told him in May that they were investigating him for fraud, he continued fraudulently billing one of the companies under a different business name, a criminal complaint said.

Williams, 54, was arrested Thursday on a felony charge of healthcare fraud, punishable by up to 10 years in prison and a $250,000 fine.

A federal magistrate judge released him from custody Friday morning.

Wes Ball, Williams’ attorney, disputed the allegations that Williams intentionally violated health care regulations.

“Mr. Williams doesn’t believe he had done anything wrong,” Ball said.

The regulations, Ball said, are “extremely complex” and “in many instances, vague.”

“The claim is that he billed for services that he was not qualified to bill for,” Ball said. “But if you look at the language [of the healthcare regulations], it’s not a model of clarity. If you look at the policies and procedures, you can go blind reading this stuff. It’s extremely complicated and the average person can’t make sense of it.”

Williams’ Kinesiology Specialists offered in-home fitness training and therapy, including sports conditioning and arthritis exercises, according to his website, getfitwithdave.com.

The complaint alleged that Williams, beginning in 2012, advertised that his clients, most of whom worked for Southwest Airlines, could pay for the services with their health insurance.

Williams, who has a doctorate in kinesiology but is not a medical doctor, billed the insurance companies “as if he were a physician,” the complaint said.

But the services Williams provided to his clients were not eligible for health insurance, the complaint said.

Williams registered as a health care provider through the Centers of Medicare and Medicaid Services. He did this at least 19 times under different names “to divert attention away from his fraudulent billing,” the complaint said.

The criminal complaint detailed several instances in which health insurance companies notified Williams that he had improperly billed them.

In December 2015, he agreed to pay back $630,000 to United HealthCare Services, and then continued billing the company for more than $13 million using different tax identification numbers, the complaint said.

Pair faces fraud charges tied to Medicaid payments to Jacksonville mental health business – Florida Times

A Jacksonville mental-health clinic president and a former health-care business operator from North Carolina will face federal judges in Jacksonville over charges involving about $1.4 million in Medicaid fraud.

Shawn Thorpe, president of Coastal Bay Behavioral Health Inc. on Touchton Road, has been charged with conspiring to defraud the federal government by secretly partnering with a man who was already blacklisted from Medicaid.

That man, Ruben McLain, ran a series of health-care companies around Winston-Salem, N.C., before being sentenced to two years in prison for health-care fraud and tax crimes.

Medicaid wouldn’t have paid for work involving McLain, so he used an alias — Julian Winchester — to do work at Coastal Bay that ranged from seeing patients to hiring and firing people, prosecutors charged in court documents.

Thorpe knew the name was fake, too, and knew McLain couldn’t be paid by Medicaid, according to a document often used when a defendant agrees in advance to plead guilty to a specific charge. Both Thorpe and McLain are scheduled to enter pleas Tuesday morning in hearings before different judges.

In the information, prosecutors charged McLain received about $1.2 million from Medicaid by working through Coastal Bay between early 2014 and last month.

At least part of that time, he apparently owed the federal government a lot of money and was pleading he couldn’t pay it. McLain had been ordered to pay $1.3 million in restitution when he was convicted in 2011, and was told to pay at least $100 a month when he got out of prison.

But in January 2015, a federal judge approved a months-old application to lower that payment to $25 per month. The application said McLain was trying to support his wife and four kids on a net income of just $460 a month earned from part-time work at a health-care company, federal court records show.

Prosecutors want McLain to forfeit about $1.2 million and Thorpe to forfeit $211,000.

How Thorpe and McLain would have ever crossed paths isn’t clear from court records, but they appear to have had some connection for years.

Court records from North Carolina say that McLain and his wife opened a bank account in the name Triage Behavioral Health System in 2006. McLain dissolved a company with that name in 2008. Thorpe created a company in Fort Lauderdale called Triage Behavioral Health and Human Services LLC in 2010, less than two weeks before McLain was indicted, and dissolved it the next year, state records show.

Thorpe is being represented by an attorney from Winston-Salem, Chris Beechler. A court docket on Friday listed Thorpe as a fugitive, but Beechler told a reporter that wasn’t accurate.

“Mr. Thorpe is scheduled to appear in court Tuesday, and he and I will be present,” Beechler said by email.

A U.S. Attorney’s Office spokeswoman later said that prosecutors don’t consider him a fugitive.

Besides Jacksonville, Coastal Bay’s website lists locations in Orlando, Tampa and West Palm Beach, but phone numbers posted for those were all disconnected Friday.

Steve Patterson: (904) 359-4263

Pharmaceutical sales rep admits role in NJ health benefits fraud

CAMDEN — A Pennsylvania pharmaceutical sales representative admitted Friday in Camden federal court that he scammed New Jersey state health benefits programs and other insurers out of millions of dollars by submitting fraudulent claims for prescriptions that were not medically needed.

Michael Neopolitan, 49, of Willow Grove, pleaded guilty to a charge of conspiracy to commit health care fraud, Acting U.S. Attorney William E. Fitzpatrick and New Jersey Attorney General Christopher Porrino announced in a news release. Neopolitan was the tenth person to plead guilty in the fraud.

Neopolitan recruited people in New Jersey to obtain pricey medically unnecessary compounded medications from an out-of-state compounding pharmacy in the scam that ran between January 2015 and April 2016, according to court filings. Conspirators found some compound medications — for pain, scar, anti-fungal, and libido creams and vitamin combinations — were reimbursed for thousands of dollars for a one month supply.

Various state and local government employees had insurance coverage for the compound medications, according to court documents. The scammers recruited public employees and others to fraudulently obtain the compounded medications from the out-of-state pharmacy without any evaluation by doctors that they medically needed.

The pharmacy, in return, paid one of the conspirators a percentage of each prescription in the scheme, court filings said. The compounding pharmacy was paid more than $50 million for medications mailed to New Jersey residents.

Under a plea agreement, Neopolitan must forfeit more than $198,000 in ill gotten gains for his part in the fraud and pay restitution of at least $762,519. He faces a maximum 10 year prison term and a $250,000 fine at sentencing Jan. 12, 2018.