DOJ Plans to Use the FCA to Attack DEI Initiatives

DOJ Plans to Use the FCA to Attack DEI Initiatives

On May 19, the US Department of Justice (DOJ) announced a novel use of the False Claims Act (FCA) to enforce Trump Administration policies against antisemitism, gender identity and expression, and diversity, equity, and inclusion (DEI) programs.

The DOJ announced its new initiative to use the FCA to target DEI policies at institutions that receive federal funds. Under this plan, the DOJ will investigate and potentially pursue claims against universities, federal contractors, federal grantees, and other recipients of federal funding that are alleged to violate federal civil rights laws while certifying compliance with those laws. The initiative is part of a broader effort by the Trump Administration to curtail DEI programs, which it claims may constitute illegal discrimination if they assign benefits or burdens based on race, ethnicity, or national origin.

Read our alert on this topic here.

Former Sales Manager Pleads Guilty in $45 Million Fraudulent Medicare Billing Kickback Scheme

James Rausch, former sales director at TCD Company, a Long Island, New York-based mobile diagnostic company specializing in transcranial Doppler (TCD) ultrasounds, agreed to plead guilty for his role in a kickback scheme that involved paying doctors $100 to $150 per TCD ultrasound ordered. Rausch provided physicians with specific diagnostic codes to use for reimbursement, even though patients did not actually have those diagnoses. According to the plea documents, the conspiracy, which ran from March 2015 to September 2020, resulted in $45.2 million in fraudulent billings, with Medicare paying out $17.6 million. Rausch received about $408,000 for his involvement, which included recruiting doctors, preparing sham contracts, and delivering cash kickbacks.

Under the terms of the plea, the government agreed to recommend a sentence of 18.5 months incarceration — well below the five-year statutory maximum. Rausch will be jointly liable for restitution of $17,573,642.24 to the Centers for Medicare & Medicaid Services and agreed to forfeit $408,437.06.

Read the DOJ’s press release here.

Connecticut Man Pleads Guilty to Federal Health Care Fraud Following Incarceration for Similar State Offenses

Ramon Apellaniz of Middletown, Connecticut, pleaded guilty in Connecticut federal court for participating in a multimillion-dollar Medicaid fraud scheme that siphoned more than $1.8 million from Connecticut’s publicly funded health care program.

According to court documents and statements made in court, Apellaniz conspired with Suhail Aponte, the sole principal and registered agent of Minds Cornerstone, a group specializing in Autism Spectrum Disorder (ASD) to submit fraudulent claims for services to children diagnosed with ASD, while patients’ parents and former Minds Cornerstone employees denied that those services ever occurred. This resulted in a loss of more than $1.8 million to the Connecticut Department of Social Services.

Apellaniz’s guilty plea comes after he finished serving seven months for his role in a separate health care fraud scheme. Apellaniz allegedly provided services to Medicaid beneficiaries, and billed Medicaid for those services along with services not rendered at all. Apellaniz was not a licensed provider at the time, and was later charged in state court with larceny, health care fraud, and identity theft. According to court documents, Apellaniz used some of the proceeds from the Minds Cornerstone scheme to pay his state court ordered restitution.

Read the DOJ’s press release here.

Former Jackson Health Foundation Executive Charged in $3.6 Million Kickback Scheme

Charmaine Gatlin, the former COO of the Jackson Health Foundation, was charged with orchestrating a multi-million-dollar embezzlement and kickback scheme. Jackson Health Foundation is the fundraising branch of Jackson Health System, a nonprofit network of medical systems in Miami-Dade County. Gatlin stands accused of submitting false invoices to the foundation, totaling at least $3.6 million for goods and services that were never provided.

Gatlin allegedly approved approximately $2 million in invoices from a Georgia-based audiovisual company for services that were not provided. The vendor paid Gatlin $1 million directly, which Gatlin used to pay her credit card bills. The indictment also alleges that Gatlin falsified invoices from a merchandise vendor to obtain luxury items from high-end brands, and used foundation money to purchase a rose gold-colored golf cart delivered to her home.

Read the DOJ’s press release here.

L3 Technologies to Pay $62 Million to Resolve FCA Allegations

L3 Technologies, Inc. agreed to pay $62 million to settle allegations that it violated the FCA and the Truth in Negotiations Act. The settlement resolves allegations that from January 2006 through February 2014, L3 knowingly submitted false claims by failing to provide accurate and complete cost and pricing data for communications equipment sold to the US Department of Defense, resulting in inflated contract prices and overpayments by the government.

L3 manufactures equipment that is used by military and intelligence agencies to operate unmanned vehicles and retrieve data and visuals. These allegations focused on L3’s submission of inflated or otherwise inaccurate cost and pricing data as required by federal procurement regulations. Of the $62 million settlement amount, $40 million is for restitution.

Read the DOJ’s press release here.