James W. Carell, CareAll Management LLC (formerly known as Diversified Health Management Inc.), CareAll Inc., the James W. Carell FamilyTrust, VIP Home Nursingand Rehabilitation Services LLC, Professional Home Health Care LLC, UniversityHome Health, LLC, and Elizabeth Vining (as representative of the Estate of Robert Vining) have agreed to pay $9.375 million to resolve a lawsuit filed by the United States under the False Claims Act (“FCA”). CareAll and related entities are one of the largest home health providers in Tennessee, and the government’s FCA suit alleges that the CareAll entities fraudulently submitted eight cost reports for fiscal years 1999, 2000 and 2001 for their Medicare billings, failing to disclose the relationship between the management company (CareAll Management LLC) and the home care facilities owned by the management company. According to the government, if CareAll had disclosed the management company’s fiscal nexus to the home health agencies, Medicare would have reimbursed less for the management company’s services. Throughout the period alleged in the complaint, the United States claims that James W. Carell, owner of the CareAll management entity, entered into an arrangement with Robert Vining, a friend, who was appointed to be the nominee or “sham” owner of the network of home health agencies. Vining is alleged to have profited from participating in the setup. The United States’ investigation was conducted by the U.S. Attorney’s Office for the Middle District of Tennessee, the Justice Department’s Civil Division, and the Department of Health and Human Services (HHS) Office of Inspector General (OIG) in Atlanta.

The settlement is the latest in an effort known as the Health Care Fraud Prevention and Enforcement Action Team (“HEAT”) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services, in May 2009. The partnership between the two departments has ramped up efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation and sharing of information.

The FCA is a federal whistleblower statute dating back to 1863. It contains qui tam provisions that allow whistleblowers (called relators) to sue privately on behalf of the government for fraud; qui tam lawsuits resulted in over $15 billion in recoveries between 1986 and 2009, and total recoveries for the year 2012 alone are projected to be over $8 billion. When relators file suit, the government reviews the allegations in the complaint and may elect to intervene in the lawsuit. Regardless of whether or not the government intervenes, relators may press forward with their private claims, and stand to recover between 15% and 30% of any final judgment or settlement. Since 2009, passage of the Fraud Enforcement and Recovery Act (“FERA”), the Dodd-Frank Financial Reform Bill, and the Patient Protection and Affordable Care Act (“PPACA”) have put into effect amendments to the law that have, taken together, expanded the scope of liability and heightened the statute’s protections against employer retaliation. 


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