Whistleblower’s Report of Fraudulent Medicare Reimbursements Leads to $32.5 Million Settlement

A whistleblower’s information leads to a Florida medical services company, Freedom Health, Inc., to agree to pay $31,695,593 to settle allegations of fraudulently submitting inflated reimbursements under the Medicare Advantage plan.

 An investigation found that from 2008 to 2013 Freedom Health Inc., and its related corporate entities, filed inflated claims to Medicare in relation to two of its Medicare Advantage plans operating in Florida. The Department of Justice alleges that Freedom Health submitted false claims for services not performed in relation to its Medicare Advantage program. The medical services company allegedly submitted unsupported diagnosis codes to CMS.

Additionally, the company allegedly made material misrepresentations regarding the size of its network of care providers to CMS in its 2008 application so they could expand to new counties in Florida and other states. The former Chief Operating Officer, Siddhartha Pagidipati, agreed to pay over $750,000 for his role in the operation.

“Today’s result sends a clear message to the managed care industry that the United States will hold managed care plan providers responsible when they fail to provide truthful information,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.

The fraud was reported by whistleblower Darren D. Sewell, a former employee of Freedom Health, Inc. His share of the recovery has not yet been determined. However, the False Claims Act allows the whistleblower to receive a share of any funds recovered through the lawsuit.

The False Claims Act is one of the most powerful tools to combat government contract fraud. Violators of the False Claims Act are liable for three times the dollar amount that the government is defrauded and civil penalties of $5,000 to $10,000 for each false claim. A qui tam plaintiff can receive between 15 and 30 percent of the total recovery from the defendant, whether through a favorable judgment or a settlement. The whistleblower must file a qui tam lawsuit to be eligible to recover money under the FCA. Merely informing the government about the violation will not qualify you for an award.

Related Links:

•  The DOJ Press Release