Medicaid Fraud: A Business Model Whistleblowers Can Help End

05/21/2013 // Whistleblower Law Firm // Keller Grover LLP // (press release)

(Medicare fraud news) When it filed for Chapter 11 bankruptcy protection on April 15, Scooter Store Holdings appeared to be one more victim of challenging economic times. Yet a look at court documents reveals more troubling circumstances. Of the more than $50 million in debt listed by the Texas-based provider of motorized scooters and wheelchairs, nearly $20 million was owed to the Centers for Medicare and Medicaid Services (CMS), the government agency that runs the two taxpayer-funded insurance programs. This was the amount Scooter Store had previously agreed to pay after an audit found that the company had overbilled Medicare and Medicaid by up to $87.7 million between 2009 and 2011.

“Medicaid/Medicare fraud is a problem for the government and taxpayers but it is, sadly, a business model for some healthcare providers,” says Jeffrey F. Keller, a veteran whistleblower attorney and a founding partner at the labor and employment law firm Keller Grover. “This was a company that went direct to consumers in advertising campaigns and was huge. Now it turns out that their profit center was Medicaid fraud. Once that got shut down they couldn’t survive.”

In its filing with the U.S. Bankruptcy Court in Wilmington, Delaware, Scooter Store listed assets of less than $10 million and stated that it planned to sell virtually all of its assets. In March, agents of the Federal Bureau of Investigation and other agencies had raided the company’s headquarters in New Bruanfels, Texas. A government audit had found that senior citizens with no medical need for a motorized chair had nonetheless been provided one — with Scooter Store improperly billing the government.

“There are countless other business models like this,” says Keller, whose firm has offices in Los Angeles and San Francisco. “Businesses that can only survive by ripping off Medicare, they need to be shut down.”

In the fight against such fraud, one increasingly powerful weapon has proven to be whistleblowers — individuals who have inside knowledge of improper behavior and speak out about it. Today, significant whistleblower laws — on both the state and federal levels — support these individuals as they help uncover fraud and other wrongful acts. The gold standard of U.S. whistleblower laws, the False Claims Act, enables citizens to bring a lawsuit against those who defraud the government, and share in any ultimate recovery. The False Claims Act alone has helped recover more than $30 billion since it was significantly modified in the mid-1980s.

“Fraud may be a growing problem but the good news is that efforts like the whistleblower laws have laid a solid foundation for identifying it and rooting it out,” says Keller. “We are constantly being told that if we see something, we should say something. The incentives and protections of whistleblower statutes are enabling ordinary citizens to do just that — and when they do, we all benefit.”

Source: Whistleblower lawyers of Keller Grover LLP

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