WASHINGTON, DC, Nov. 17, 2021 – The US Supreme Court has rejected an effort by a healthcare marketing consultant to overturn a $114 million jury verdict against him and two others in a Medicare billing fraud and kickbacks case brought by the government and four whistleblowers, including one represented by Phillips & Cohen LLP.
“The Supreme Court’s decision to deny hearing the appeal ends the legal battles in a nearly 11-year-old case that began when we filed a whistleblower complaint on behalf of Dr. Michael Mayes in early 2011,” said Peter Chatfield, a whistleblower attorney and partner at Phillips & Cohen. “Now the government can collect the court-ordered judgment against the three individuals, which will be affected by ability-to-pay issues.”
The government and whistleblowers alleged that Floyd Calhoun Dent III and Robert Bradford Johnson, co-owners of BlueWave Healthcare Marketing, conspired with Tonya Mallory, the former CEO of Health Diagnostic Laboratory (HDL) in Richmond, VA, to pay kickbacks to doctors to induce them to order from HDL expensive cardiovascular blood tests for federally insured patients that were often medically unnecessary, which violated the False Claims Act.
Mallory directed HDL to pay $20 to doctors for “process and handling fees” for each blood draw and testing referral, which were in effect illegal kickbacks. In furtherance of the scheme, Mallory also caused HDL unlawfully to pay Johnson and Dent tens of millions of dollars in commissions based on the volume of blood tests that doctors ordered as a result such unlawful inducements.
In 2018, a federal district court jury in South Carolina found Dent, Johnson and Mallory liable for violating the False Claims Act and therefore subject to paying triple damages plus penalties. The district court entered judgment for the US against all three defendants for $111 million plus an additional $3 million judgment against Dent and Johnson.
In February, the Fourth Circuit Court of Appeals upheld the district court jury verdict, saying, “We affirm the judgment of the district court in all respects.”
Dent appealed to the Supreme Court, but Johnson and Mallory didn’t join the effort. The court issued an order denying a hearing on Nov. 15.
Other defendants in the case previously settled similar charges with the government. In 2015, HDL agreed to pay $47 million plus $3 million in interest and Singulex agreed to pay more than $1.5 million in separate settlement agreements. Two years later, Quest Diagnostics and Berkeley Heartlab, which Quest Diagnostics had acquired, agreed to pay a total of $6 million.
“Kickbacks can lead to unnecessary testing, which drives up the costs of Medicare and other federal healthcare programs,” Chatfield said. “Dr. Mayes was concerned about the impact on the Medicare program and played a crucial role in exposing those kickback schemes.”
The government combined the qui tam case of Dr. Mayes, an internist in Hilton Head, SC, with two other qui tam complaints that were filed after his lawsuit: a joint complaint by Christopher Riedel and Karla Webster and a separate one by Scarlett Lutz. The government pursued the litigation with assistance from the whistleblowers and their counsel.
“Dr. Mayes put a lot of effort into stopping the kickback schemes and sacrificed quite a bit as a result,” Chatfield said. “He was the only whistleblower to testify at the trial in Charleston.”
Chatfield expressed great appreciation for the outstanding efforts of the government attorneys who handled the appeal, including appellate attorneys Melissa N. Patterson and Benjamin M. Shultz of DOJ’s Civil Division, as well as the trial lawyers – Assistant US Attorney James C. Leventis Jr. of the District of South Carolina, Assistant US Attorney Jennifer A. Short of the District of Columbia and US trial attorney Michael E. Shaheen.
The False Claims Act allows individuals to sue individuals and entities that are defrauding the government and recover funds on the government’s behalf. Whistleblowers are entitled to rewards of 15% to 25% of the amount recovered when DOJ joins the case. In this instance, the whistleblowers’ rewards will be determined at a later date.
About Phillips & Cohen
Phillips & Cohen is the nation’s most successful law firm representing whistleblowers. The firm’s cases have helped recover more than $12.8 billion in civil settlements and criminal fines. Phillips & Cohen represents whistleblowers in qui tam lawsuits as well as whistleblower claims with the reward programs of the SEC, CFTC and IRS. www.phillipsandcohen.com