AIDS foundation accused of defrauding feds to tune of $20 million

The largest supplier of HIV and AIDS medical care in the United States was accused of defrauding Medicare and Medicaid in a $20 million scheme spanning 12 states, according to a lawsuit filed in a Florida district court. Three former managers of the AIDS Healthcare Foundation (AHF) filed the complaint alleging that AHF paid kickbacks to employees and patients for referrals in order to boost federal payments. AHF paid $100 bonuses for referring patients testing positive to HIV to its clinics and pharmacies.

Headquartered in California, AHF is leading a mass testing initiative to identify and treat an estimated 25 million people worldwide who do not know they are infected with HIV. AHF provides medicine and advocacy to over 400,000 patients in 36 countries.

Alleged scheme

According to the complaint, starting no later than in or about 2010, AHF instituted a scheme to generate consumer demand for its programs by implementing a system of illegal incentive payments that caused self-referrals by patients to utilize AHF services and that rewarded employees for referring patients to AHF’s testing, clinical, pharmacy, and insurance service centers, all in violation of the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)). The payments to AHF under HIV testing contracts were either allocated as lump sum amounts paid in equal installments or on a per test cost reimbursement throughout the year.

It was alleged that AHF contracts stipulated that AHF perform a certain volume of testing and demonstrate “linkage” between the HIV positive test result and clinical care for the individual; failure to meet the stipulated goals resulted in payment reductions. The complaint detailed a contract with the Florida Department of Health (FDH) that required the provider to link at least 95 percent of clients with a positive test result to medical care. In the FDH contract, failure to conduct a minimum of 950 HIV tests quarterly would result in a reduction in payment in the amount of $24.86 per HIV not performed; failure to screen, test or treat a minimum of 750 individuals per quarter would result in a reduction of $52.50 per individual.

As such, the complaint alleged that the “linkage” was a key component of AHF’s business model. In order to ensure compliance with these contracts and avoid losing federal funding, AHF illegally incentivized its employees to increase the volume of HIV test referrals to AHF’s testing locations and refer patients with positive test results to AHF clinical service centers. AHF, in turn, sought additional reimbursement under Medicare and Medicaid for rendering services to those patients.

Complaint

Filed in the U.S. District Court for the Southern District of Florida, the complaint was brought by whistleblowers Jack Carrel of Louisiana, Mauricio Ferrer of Florida, and Shawn Loftis of New York. As noted, all held management positions at AHF prior to their jobs being terminated—despite having federal protection under the False Claims Act—after they notified their supervisors about the AHF’s practices.

“AIDS Healthcare Foundation’s fraudulent conduct is made even worse by the fact that these funds were entrusted to this healthcare company for the purpose of assisting a vulnerable patient population consisting of individuals living with HIV/AIDS, of whom more than 1.1 million reside in the United States,” said lead counsel Theodore Leopold of Cohen Milstein Sellers & Toll PLLC, whose firm, along with Salpeter Gitkin, LLP, and Kaiser Law Firm, PLLC, represents the three former managers.