White Collar Criminal Defense Group

Detroit Health Care Providers Sentenced For $29M Medicare Fraud

On April 21, 2015, the Department of Justice announced that three Detroit-based health care providers were ordered to collectively pay, as part of their sentences, more than $11 million in restitution for their roles in a $29 million Medicare fraud scheme.  Following a 12-week trial in the Eastern District of Michigan, a federal jury in Detroit found the three defendants  guilty of billing Medicare for health services that were not provided.  The defendants received prison sentences ranging from 4 to 10 years based on falsely billing Medicare for various psychotherapy and home health services. 

The three defendants – Felicar Williams, a former operator of a Detroit adult day care center, and Abdul Malik Al-Jumail and Jamella Al-Jumail, both former owners of Detroit-area home health care companies – were convicted on September 30, 2014.  According to the evidence introduced at trial, Williams billed Medicare, through her adult day care center, for psychotherapy services that were not actually provided to patients.  The evidence also established that, in some instances, Williams billed Medicare for services purportedly provided to patients who were already deceased.  The evidence further demonstrated that Williams also sold the private medical information of her patients to Abdul Malik Al-Jumail, who then used it to submit fraudulent claims to Medicare. 

The conspiracy did not end there – Abdul Malik Al-Jumail also obtained patients by paying unlawful kickbacks to Williams and others, and caused claims to be submitted to Medicare for home health services, including physical therapy, that were never delivered.  His daughter, Jamella Al-Jumail was also convicted of billing Medicare for home health services and physical therapy that was never actually provided to patients.  Evidence introduced at trial also showed that, on the day her father was arrested, she instructed an employee to retrieve falsified patient medical records so that she could destroy them.

Williams was sentenced to five years in prison and ordered to pay $2.4 million in restitution, representing the amount paid by Medicare for his fraudulent claims.  Adbul Malik Al-Jumail was sentenced to 10 years in prison and ordered to pay $8.4 million in restitution, while Jamella Al-Jumail was sentenced to 4 years in prison and ordered to pay $590,000 in restitution.  The case was investigated by the FBI, HHS-OIG and the IRS, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.

SEC To Companies: “Hands Off Whistleblowers!”

On April 1, 2015, the SEC announced its first whistleblower protection case involving restrictive confidentiality language.  The agency charged the Houston-based engineering and technology firm KBR, Inc., with using overly restrictive language in confidentiality agreements that allegedly obstructed the whistleblowing process. 

The provision at issue contained language that witnesses in certain internal investigations could be disciplined, or even terminated, for discussing the investigation with outside parties prior to receiving approval from KBR’s legal department.  Since these investigations included allegations of securities law violations, the SEC found that the provision violated Rule 21F-17 of the Securities Exchange Act of 1934, as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act.  Rule 21F-17 prohibits the enforcement or threat of enforcement of any confidentiality agreement that would impede an individual from communicating with the SEC.

While not admitting any wrongdoing, KBR agreed: to cease and desist from committing or causing any future violations of Rule 21F-17; to pay a $130,000 penalty to settle the SEC’s charges; and to amend its confidentiality agreement to make it clear that employees could report possible violations to the SEC as well as to other federal agencies without approval from the company or fear of retaliation.  The amended language includes the following statement:

Nothing in this Confidentiality Statement prohibits me from reporting possible violations of federal law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the Congress, and any agency Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation. I do not need the prior authorization of the Law Department to make any such reports or disclosures and I am not required to notify the company that I have made such reports or disclosures.  

The action is noteworthy not only because it was the first of its kind, but also because the SEC found no actual instances in which KBR had prevented employees from communicating with the SEC.  Such an aggressive stance demonstrates the SEC’s commitment to the anti-retaliation provisions of the whistleblower rules.  Given that many entities reporting to the SEC require employees to notify internal counsel or compliance offices if contacted by a regulator or other authority, companies should review those policies following the SEC’s KBR order.