IT Company Resolves FCA Allegations for Nearly $15 Million

IT Company Resolves FCA Allegations for Nearly $15 Million

On July 14, the US Department of Justice (DOJ) announced that Hill ASC Inc., an information technology (IT) staffing company, agreed to pay $14.75 million to resolve allegations that it violated the False Claims Act (FCA). Hill contracts with federal government agencies and organizations to support their technology and IT infrastructure needs.

Hill solicited and received a General Services Administration (GSA) Multiple Award Schedule (MAS) contract. The government alleged that in connection with Hill’s GSA MAS contract, Hill submitted false claims by, among other things, (1) including in its invoices unapproved fees for administrative, overhead, and management support fees, (2) submitting invoices to the US Department of the Treasury and DOJ that omitted a required 5% discount if the federal agency paid Hill’s invoice within 10 days, (3) billing for the labor of IT personnel who did not meet the experience or education requirements set for in the GSA MAS contract, and (4) submitting invoices for task orders for services that were outside the scope of the GSA MAS contract.

Under the settlement agreement, Hill and the government agreed to a payment schedule that requires Hill to make payments, including interest, over time through December 31, 2029. The settlement agreement provides that it is neither an admission of liability by Hill nor a concession by the government that its claims are unfounded.

Read the DOJ’s press release here.

California Man Pleads Guilty for Role in $16 Million Medicare Fraud

On July 14, Juan Carlos Esparza of California pleaded guilty for his participation in an alleged scheme to defraud Medicare of nearly $16 million and related money laundering.

The government alleged that, between July 2019 and January 2023, Esparza and his co-defendants operated four sham hospices and billed Medicare for hospice services that were not medically necessary and were never provided. According to the government, Esparza owned one of the hospices and, together with his co-defendants, concealed the alleged Medicare fraud by opening bank accounts, submitting information to Medicare, and signing property leases under the names and personal information of foreign nationals.

The government also alleged that Esparza and his co-defendants laundered the approximate $16 million paid by Medicare to the sham hospices to conceal the scheme. In particular, the government alleged that Esparza and his co-defendants moved funds between numerous accounts and assets, including for shell companies.

For his role in the scheme, Esparza pleaded guilty to health care fraud and transactional money laundering. His sentencing is currently scheduled for October 6. Both the health care fraud and money laundering charges carry a maximum penalty of 10 years.

Read the DOJ’s press release here.

Delta Air Lines Settles FCA Allegations for $8.1 Million

On July 15, the DOJ announced an $8.1 million settlement with Delta Air Lines to resolve allegations that Delta violated the FCA by exceeding compensation limits it agreed to abide by as a participant in the Treasury’s Payroll Support Program (PSP).

The PSP provides payroll support to passenger and cargo air carriers and certain contractors for the continuation of payment of employee wages, salaries, and benefits. The PSP was established in March 2020 as part of the Coronavirus Aid, Relief, and Economic Security Act. Notably, participating air carriers were required to enter into Payroll Support Program Agreements (PSPAs) to receive PSP funds. The PSPAs impose a variety of conditions on participating air carriers, including placing limits on the amount of compensation corporate officers and employees earning more than $425,000 annually can receive, recordkeeping requirements, and quarterly reporting requirements.

According to the government, Delta exceeded these compensation limits and then violated the FCA by falsely certifying in quarterly reports that it was in compliance with PSP requirements. The government also alleged that Delta failed to notify the Treasury once it discovered its noncompliance. The settlement also resolved allegations brought under the whistleblower provisions of the FCA, which received $850,500 in recovery. The settlement agreement provides that it is neither an admission of liability by Delta nor a concession by the government that it claims are unfounded.

The qui tam case is captioned United States ex rel. H Remidez LLC v. Delta Air Lines Inc., No. 1-23-cv-01116 (N.D. Ga.).