Moss & Gilmore Whistleblower Settlement: Pediatric Services of America to Pay $6,800,000 to U.S. Government and 17 States to Settle Whistleblower Claims

5th August 2015

First Ever Federal and 17 State Whistleblower Settlement Under Affordable Care Act Over Failure to Return Overpayments Within 60 Days

Atlanta and New York based Moss & Gilmore LLP announced today that two different Federal Courts in Georgia have approved a joint settlement of two False Claims Act lawsuits against Pediatric Services of America ("PSA"), the leading provider of home healthcare services for critically ill children, in the very first case where the U.S. Government and 17 States have intervened in a qui tam lawsuit brought under the 60 day repayment requirement under the Affordable Care Act ("ACA").

The ACA made a number of changes to the Medicare program that enhance the Government's efforts to recover overpayments and combat fraud, waste and abuse in the Medicare program and specifically requires Medicare and Medicaid overpayments be reported and returned within "60 days after the date on which the overpayment was identified." 42 U.S.C. §1320a-7k(d)(2). The ACA further provides that the failure to make a timely refund can serve as the basis for False Claims Act liability. Id. § 1320a-7k(d)(3).

PSA has agreed to pay $6,800,000 to the Federal Government and the States to resolve allegations which include that it knowingly violated Federal and State law by not timely returning Medicaid overpayments after they were identified within the 60-day repayment provision under the Affordable Care Act. The whistleblowers will share over $1.1 million as part of today's settlement. PSA also agreed to enter into a Corporate Integrity Agreement with the Department of Health and Human Services ("HHS") as part of the settlement. PSA agreed to resolve the allegations against it without acknowledging any wrongdoing.

One of the two whistleblowers, Sheila McCray, represented by Raymond L. Moss at Moss & Gilmore LLP, brought an action on behalf of the U.S. Government and 17 States and provided prosecutors with overwhelming evidence of the overpayments that was one major and unprecedented aspect of the government's case against PSA and its affiliates, one of the nation's largest focused pediatric home healthcare providers. The case, brought in the United States District Court for the Southern District of Georgia is captioned United States ex rel. McCray v. Pediatric Services of America, Inc., Portfolio Logic, LLC et al, Civil Action no. CV413-127.

Early on during her tenure at PSA, the Relator, a billing specialist hired as an hourly employee, discovered numerous other billing irregularities. Despite the risk to her position, she attempted on various occasions to address these issues with her supervisors, knowing that she was required by law, to report any violations of which she is aware. She also advised them that the unlawful actions of the Defendants, including but not limited to, keeping and not promptly refunding overpayments from Medicare and Medicaid that the Defendants and their employees were incurring significant criminal and civil liability. Her claims also included wrongful termination and retaliation under the False Claims Act, which claims were also resolved. The other whistleblower, Yvette Odumosu, a former Director of Clinical Nursing was represented by Michika Reynolds-Quillin and Julie Bracker of Bracker & Marcus LLC.

PSA's owner, Portfolio Logic, LLC, a Washington, D.C. based investment firm which acquired all of PSA in a going private transaction in 2007, was also named as a defendant in the whistleblower lawsuit filed by Ms. McCray.

The United States contended in its intervention of the aforementioned actions that it had certain civil claims against PSA for engaging in the following conduct in violation of the False Claims Act, 31 U.S.C. §§ 3729-3733 ("FCA"):

• Between January 1, 2008 and July 31, 2011, PSA knowingly submitted claims for services rendered by licensed practical nurses (LPN's) under the Georgia Pediatric Program (GAPP) out of PSA's Norcross and Savannah locations  that were not reimbursable under the Georgia Medicaid program because of PSA's failure to document that it had conducted the monthly supervisory visits by a registered nurse (RN) as required by GAPP;
• PSA knowingly failed to return overpayments that it received from federally-insured health programs, including TRICARE/TriWest and the state Medicaid programs of Arkansas, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Louisiana, Ohio, Massachusetts, New Jersey, New York, North Carolina, Oregon, Pennsylvania, South Carolina, Texas, Virginia and Washington between January 1, 2007 and June 30, 2013 on claims submitted by PSA to the federally-insured health programs;
• Between January 1, 2008 and October 31, 2014, PSA's locations in California, Colorado, Connecticut, Florida, Georgia, Louisiana, North Carolina, New York, Pennsylvania, South Carolina, Texas and Virginia knowingly submitted claims to those states' Medicaid programs for services that overstated the length of time that the services were rendered due to the fact that PSA's payroll and billing systems double rounded minutes worked between 23 and 30 minutes;
• Between January 1, 2008 and October 31, 2014, PSA' knowingly submitted claims to TRICARE/TriWest for services that overstated the length of time that the services were rendered due to the fact that PSA's payroll and billing systems double rounded minutes worked between 23 and 30 minutes.

The False Claims Act fosters a private-public partnership to fight fraud against the government. The law encourages whistleblowers to file civil lawsuits against companies that are defrauding the government by offering job protections and a reward of 15 percent to 25 percent of the government's civil recovery if the government joins, or intervenes in, the case.

The Government investigation and settlement of these allegations was handled by the United States Attorney's Office in the Northern and Southern Districts of Georgia through Assistant United States Attorneys Neeli Ben-David, Darcy Coty in the Northern District of Georgia and Edgar Bueno and Charles Mulaney in the Southern District of Georgia, Elizabeth White Assistant Attorney, Georgia Medicaid Fraud Control Unit, a division of the Office of the Attorney General, and Steven Sharobem, Assistant Attorney General for the Commonwealth of Massachusetts, Medicaid Fraud Division in Boston Massachusetts in association with the National Association of Medicaid Fraud Control Units of the 17 Participating States (including representatives from the States of Georgia, Virginia, Texas, Illinois and Washington).

Moss & Gilmore LLP, with offices in Atlanta and New York, represents whistleblowers in the U.S. and worldwide, with over $1 billion in intervened claims in federal and state false claim whistleblower and related retaliation cases. It represents whistleblowers in cases under the False Claims Act and claims under the U.S. Securities Exchange Commission, Commodity Futures Trading Commission and IRS whistleblower reward programs. For more information, please see www.mossgilmorelaw.com.

Click here for Department of Justice Press Release

Click here for the State of Massachusetts Press Release

Contact:
Raymond L. Moss
(678) 381-8601
rlmoss@mossgilmorelaw.com