Staff

by Paul J. Zwier, Reuben Guttman, Matthew J. McCoyd, Alexander G. Barney

The three case files of United States ex rel. Rodriguez v. Hughes, et al.… explore the suit brought by Juan Rodriguez, a prominent engineer, who acted as a whistleblower against his employer, Hughes Aircraft, for violations of the False Claims Act.

Richard Hughes (CEO of Hughes Aircraft) learned that the United States Department of Defense (DOD) was looking for a new helicopter to provide to the Mexican government as part of the United States’ Mérida Initiative, which provided Mexico resources to help it fight its war against the drug cartels. Hughes, on behalf of Hughes Aircraft, entered into a sole source contract with the DOD. Hughes was favorably positioned to do so as it was the sole manufacturer of the Screaming Eagle helicopter S-70, the model the DOD was seeking to purchase.

Rodriguez’s employment background put him in a position to ascertain whether his employer, Hughes Aircraft, was making false claims to the DOD. Initially, Rodriguez had been employed at Sikorsky Aircraft Inc., a predecessor of Hughes, working in the design and manufacture of the first Screaming Eagle helicopters. Later Sikorsky Aircraft was bought by Hughes Aircraft. During his tenure at Hughes, Rodriguez had designed and retrofitted early versions of the Screaming Eagle helicopter. When retrofitted with heavy missiles, one of the first versions, the UH-A, suffered cracks on landing. Accordingly, metals intended to help crash-proof the helicopter were added to the design. Hughes also started to employ Magnaflux testing to ensure that later versions of the Screaming Eagle did not have subsurface cracks.

Rodriguez claims that he saw cracks in the cabin of one of the Screaming Eagles Mexico helicopters, and that he also saw workers welding over the cracks. Rodriguez claimed that he considered the welding over of cracks in the cabin of the Screaming Eagle a “cover up” of the failure to conduct testing and thus an act of fraud—passing on defective helicopters to the governments of the United States and Mexico.

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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.”