Justice Dept. joins qui tam (false claims) case against Florida home health agency

June 16, 1999 -- The Justice Department announced today that it is joining a qui tam lawsuit against a home health agency in Florida that allegedly cheated Medicare out of more than $7 million by lying about expenses and forcing employees to falsify time sheets.

Through this scheme, the qui tam lawsuit charges, Interim Healthcare of Hollywood Inc. (IHH) boosted its revenues and fraudulently recouped the costs of cocktail parties, boat trips and other entertainment for employees and doctors.

The former president of IHH, Bradley Hertz, a resident of Boca Raton, Fla., and former company vice president, John Leiti, also are named as defendants in the amended complaint filed by the Justice Department. Two former employees initiated the qui tam lawsuit.

"Only insiders were likely to have known what IHH was doing," said Stephen Meagher, a San Francisco attorney with Phillips & Cohen, which is representing the whistleblowers. "The merits of this qui tam case are clear from the Justice Department's decision to join it."

The qui tam lawsuit says that IHH employees in one division were required to charge a minimum number of hours each week to Medicare, even though they did little or no work related to Medicare patients. They were told to vary the number each week to make the records "look good," the complaint says.

IHH nurses, home health aides and therapists who served primarily Medicare patients were required to say all of their time was spent on Medicare patients, even when they took care of non-Medicare patients, according to the lawsuit.

The qui tam lawsuit alleges other fraudulent practices by Hertz and IHH, which serves patients in the Ft. Lauderdale area:

  • Hertz passed on to Medicare the salary and related expenses of an IHH employee whose job it was to provide child care in his home.
  • To re-coup his lunch costs from Medicare, Hertz would choose a doctor's name at random from a stack of business cars and create a false record stating he had lunch with that doctor to discuss care of Medicare patients.
  • IHH reported advertising expenses and attorneys' fees that were not related to Medicare services as Medicare expenses.

IHH used the false documentation and submitted false claims in the "cost reports" it filed annually with Medicare. Medicare reimburses health care providers for costs related to patient care, such as overhead and new medical equipment, based on the information contained in the cost reports.

Two former IHH employees filed their lawsuit in 1995 under the False Claims Act in federal district court in Ft. Lauderdale. The case had been kept under seal until today. The law requires that qui tam cases be filed under seal to give the federal government time to investigate the allegations and decide whether it wants to join the lawsuits.

The False Claims Act allows individuals to file lawsuits against individuals and companies that defraud the federal government. The government is entitled to recover three times its losses plus $5,000 to $10,000 for each false claim. The law rewards whistleblowers with 15 percent to 25 percent of whatever the government recovers as a result of their qui tam lawsuits if the government joins the case and up to 30 percent if it doesn't.