DOJ announces New Jersey Medicare and Virginia Medicaid fraud schemes

The U.S. Department of Justice (DOJ) announced that (1) a New Jersey woman has pled guilty in a $1 million Medicare fraud scheme that deceived seniors into unnecessary DNA tests, and (2) three Bristol, Virginia individuals have been indicted for fraudulently billing over $350,000 to Virginia Medicaid for services under the Virginia Medicaid Intellectual Disability (ID) waiver program that were not provided.

New Jersey fraud

Sheila Kahl, 44, admitted that she wrongfully accessed protected health information (PHI) and paid kickbacks to healthcare professionals on behalf of a Medicare fraud scheme involving a purported non-profit, The Good Samaritans of America. Sentencing is scheduled for March 14, 2017.

A DOJ press release from the District of New Jersey, based on the criminal information and court statements, alleged that from July 2014 through December 2015, Seth Rehfuss, 42, of Somerset, New Jersey, Kahl, of Point Pleasant, New Jersey and others used. The Good Samaritans of America as front to present information about genetic testing to seniors in low-income housing projects.

In order to convince senior citizens to submit to genetic testing, Rehfuss allegedly used fear-based tactics, including suggesting the senior citizens would be vulnerable to heart attacks, stroke, cancer and suicide if they did not have the genetic testing. Rehfuss also allegedly claimed that the genetic testing allowed for “personalized medicine.”

Rehfuss was previously charged on December 2, 2015. The pending criminal complaint against Rehfuss contains mere allegations, and he is considered innocent unless and until proven guilty.

Virginia fraud

A grand jury, sitting in the Western District of Virginia, charged Deborah Branch, 64, Melissa Harr, 49 and Bryan Harr Sr., 40, with one count of health care fraud, one count of conspiracy to commit health care fraud, and two counts of wire fraud.

According to a DOJ press release from the Western District of Virginia, the indictment alleged that Melissa and Bryan Harr Sr., hired Branch to work with one of their children, who suffers from intellectual and physical disabilities and qualifies for services paid for by Virginia Medicaid, under the Virginia Medicaid’s ID waiver program. Branch was allegedly paid through two different Virginia Medicaid contractors.

The indictment further alleged that from January 2010 until September 2015, Branch submitted time sheets claiming she was providing services for Harr’s disabled son when she was not. In exchange for assisting Branch in getting paid for work she did not do, Branch allegedly paid the Harrs approximately $200 every two weeks. Virginia Medicaid paid out $350,641.02 to two different Virginia Medicaid contractors, Public Partnerships, LLC and ResCare (formerly known as Creative Family Solutions), based on Branch’s time sheets, of which $207,854.43 was paid to Branch.

DOJ recovers almost $2B in health care false claims

The Department of Justice (DOJ) obtained more than $3.5 billion in False Claims Act settlements and judgments in fiscal year (FY) 2015, more than half of which—$1.9 billion in federal losses—came from companies and individuals in the health care industry. These cases included companies and individuals that allegedly provided unnecessary or inadequate care, paid kickbacks to health care providers to induce the use of certain goods and services, or overcharged for goods and services paid for by Medicare, Medicaid, and other federal health care programs.


The False Claims Act (FCA) (31 U.S.C. §3729 et seq.) is the federal government’s primary civil remedy to redress false claims for government funds and property under government contracts and programs including Medicare and Medicaid. Most false claims actions are filed under the FCA’s whistleblower, or qui tam, provisions that allow individuals to file lawsuits alleging false claims on behalf of the government. Section 1313 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) provided additional inducements and protections for whistleblowers and strengthened the provisions of the federal health care Anti-Kickback Statute (AKS) (42 U.S.C. §1320a-7b). If the government prevails in the action, the whistleblower, also known as the relator, receives up to 30 percent of the recovery. In fiscal year 2015, whistleblowers filed 638 qui tam suits leading to $2.8 billion in DOJ recoveries, with awards to relators totaling $597 million.

Health care fraud

In addition to recovering losses from health care fraud that has already occurred, the DOJ says that its continuing pursuit of fraud deters individuals who might otherwise cheat the system and prevents billions of additional lost dollars. The DOJ’s focus on health care fraud is a priority of the Obama Administration, which created the Health Care Fraud Prevention and Enforcement Action Team (HEAT), an interagency task force to increase coordination and optimize criminal and civil enforcement. Additional information on the government’s efforts in this area is available at, a webpage jointly established by the DOJ and HHS.

Largest recoveries

The largest health care recoveries in FY 2015—October 1, 2014, through September 30, 2015—were from DaVita Healthcare Partners, Inc., the nation’s largest dialysis provider. DaVita entered into an agreement with the DOJ to pay $350 million to settle claims that it violated the AKS by soliciting and entering into joint venture agreements with physicians who had large renal patient bases, and agreed to a civil forfeiture of $39 million, totaling $389 million (see DaVita filters $350M to feds in dialysis scheme, Health Law Daily, October 23, 2014; DaVita to pay $389M in largest kickback-only case in healthcare history, Health Law Daily, October 27, 2014). A few months later, DaVita agreed to pay $450 million to resolve claims that it for knowingly created unnecessary waste in administering the drugs Zemplar® and Venofer® to dialysis patients (see Another day, another DaVita settlement; $450M this time, Health Law Daily, June 25, 2015).

Among the other health-care-related FCA recoveries were $330 million in settlements and judgments involving hospitals (see Whistleblowers rake in heart-stopping $38M in cardiac device FCA settlements, Health Law Daily, November 2, 2015), several Stark Law (42 U.S.C. §1395nn) settlements involving financial relationships between hospitals and doctors that could improperly influence patient referrals, $96 million in settlements and judgments involving the pharmaceutical industry., and many civil fraud and false claims actions against skilled nursing homes and rehabilitation facilities. The DOJ also made note of actions it successfully pursued against individual providers or facility owners and operators.

Other recoveries

Following health care fraud and abuse, the next largest recoveries were in connection with government contracts. This is the fourth year in a row that the DOJ has recovered more than $3.5 billion in FCA claims. Since January 2009, the DOJ has recovered $26.4 billion under the FCA, nearly $16.5 billion of which is attributed to health care fraud. Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, said, “The False Claims Act has again proven to be the government’s most effective civil tool to ferret out fraud and return billions to taxpayer-funded programs. The recoveries announced today help preserve the integrity of vital government programs that provide health care to the elderly and low income families, ensure our national security and defense, and enable countless Americans to purchase homes.” Overall, the DOJ collected $23.1 billion in civil and criminal cases in FY 2015.