by Tim McInnis, Esq | Dec 13, 2024 | Our Cases
NEW YORK, Dec. 11, 2024 /PRNewswire/ — NYC whistleblower attorney Timothy J. McInnis announced a
$1,470,085 settlement against Stefano Maroni, who is the owner and CEO of GMI USA Corp. and
Belovefine, Ltd., shoe designers and importers located in NYC. The settlement resolves FaIse Claims Act
allegations in a qui tam whistleblower complaint filed under seal on March 14, 2023, in the U.S. District
Court for the Southern District of New York by former Maroni employee Devyn Taylor. Taylor alleged Maroni and his companies defrauded the SBA’s Paycheck Protection Program (“PPP”) during the COVID-19 pandemic by using the same employees to get forgivable loans for each of Maroni’s two companies, when, in fact they were essentially one and the same business. The United States government, through the U.S. Attorneys’ Office for the Southern District of New York, joined Taylor’s lawsuit on December 6, 2024, and is also a party to the settlement. The case was unsealed December 9, 2024, by United States District Judge
Jennifer H. Rearden.
According to the Settlement Agreement, the PPP program was established pursuant to the Coronavirus
Aid, Relief, and Economic Security (“CARES”) Act. The CARES Act was enacted in March 2020, and was
designed to provide emergency financial assistance to millions of Americans suffering economic effects
caused by the COVID-19 pandemic. This included authorizing forgivable loans to small businesses for
employee payroll and other expenses. To obtain a PPP loan, a qualifying business was required to submit to a participating lender, among other things, the company’s (a) average monthly payroll expenses and (b) number of employees. That information was used to determine the amount of the PPP loan.
As part of the Settlement Agreement, Maroni admitted that on paper he shifted employees from one
company to the other but applied for PPP loans in both companies’ names. He also admitted he incorrectly listed different suite numbers at the same NYC address for the two companies to falsely give the impression they were separate and distinct entities. And Maroni admitted he overstated his number of employees. As a result, Maroni obtained $1,023,322 in PPP funds.
The Settlement Agreement expressly notes it does not resolve Taylor’s allegations against Maroni, GMI and Belovefine for U.S. Customs duty fraud in a separate False Claims Act qui tam action, captioned United States ex rel. Taylor v. GMI USA Corp. et al., 16 Civ. 7216 (RWL) (S.D.N.Y.). That case, which the government did not join as to Maroni or his companies, is currently being litigated by Taylor.
McInnis noted that PPP fraud was rampant during the pandemic, and many specific instances are now
being exposed through False Claims Act qui tam lawsuits by private citizens who can receive up to 30% of any recovery. In this case, under the Settlement Agreement Taylor will receive $294,017.
On behalf of Taylor, McInnis expressed appreciation for the efforts of the U.S. Attorney’s Office for the
Southern District of New York and the SBA’s Office of Inspector General in investigating and pursuing her
allegations of PPP fraud.
The case is captioned United States ex rel. Devyn Taylor, v. Stefano Maroni., et al., 23 Civ. 2159 (JHR)
by Tim McInnis, Esq | Jul 2, 2024 | Our Cases
NYC whistleblower attorney Timothy J. McInnis announced a $354,085 settlement against The Raleigh Racquet Club, Inc. (RRC), a non-profit social and recreational club located in Raleigh, North Carolina and its former president, Kurt Harrison Ihly concerning COVID-19 pandemic relief funds. The settlement resolves FaIse Claims Act allegations in a qui tam whistleblower complaint filed under seal in April 2023 in the U.S. District Court for the Eastern District of North Carolina by former club member Lindsey Flower. On June 21, 2024, the case was unsealed by order of United States District Judge Terrence W. Boyle. Today, Flower filed a notice to dismiss the action, as required by the Settlement Agreement. The United States Attorney’s Office for the Eastern District of North Carolina, which did not formally intervened in the action, spearheaded a government investigation and oversaw the settlement negotiations, according to Attorney McInnis.
Flower’s qui tam complaint alleged that RRC unlawfully applied for and received a loan under the Payment Protection Program (“PPP”), and falsely certified in the submitted application for the PPP loan, that it was eligible to obtain a loan under the PPP. Specifically, the complaint alleged that on April 15, 2020, RRC improperly received a first-draw PPP loan in the amount of $307,900. It subsequently applied for and obtained complete forgiveness of the loan sum plus accrued interest. According to the complaint, RRC was organized as a tax-exempt private club under Section 501(c)(7) of the Internal Revenue Code, a category of non-profit organization explicitly excluded from PPP first draw eligibility. Additionally, the qui tam complaint alleged that not only was the SBA’s rule barring 501(c)(7) social clubs from participating in the PPP program “clear and unambiguous” but also “widely disseminated trade publications and websites covering the 501(c)(7) social club industry repeatedly advised such clubs that they were not eligible for such loans.” According to the Settlement Agreement, the bank that processed RRC’s PPP application, North State Bank, checked a box on the application form wrongly stating RRC was a for profit “S-Corp,” suggesting this was why the SBA approved RRC’s unlawful loan application since S-Corps were permitted to obtain PPP loans.
According to the Settlement Agreement, the PPP program was established pursuant to the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. The CARES Act was enacted in March 2020, and was designed to provide emergency financial assistance to millions of Americans suffering economic effects caused by the COVID-19 pandemic. This included authorizing forgivable loans to small businesses for employee payroll and certain other expenses through the PPP. To obtain a PPP loan, a qualifying organization was required to submit a PPP loan application signed by an authorized representative. The loan application required the authorized representative to acknowledge the PPP rules and make certain affirmative certifications regarding the organization’s eligibility to obtain a PPP loan. PPP loan applications were processed by participating lenders, which received processing fees from the SBA. Following the approvals of loan applications, the participating lenders funded the loans, which were 100% guaranteed by the SBA. Non-profit corporations organized under Section 501(c)(7) of the Internal Revenue Code were not eligible to receive first-draw PPP loans pursuant to SBA, Interim Final Rule, Business Loan Program Temporary Changes; Paycheck Protection Program, 85 Fed. Reg. 20811, 20812 (Apr. 15, 2020).
Attorney McInnis noted that PPP fraud was rampant because so much PPP money was given out to so many people during the height of the pandemic without normal lending controls and oversight. A Government Accounting Office report has acknowledged that the government sacrificed safeguards for speed in disbursing funds. PPP loans were granted on a first-come, first served basis and the initial PPP appropriation was depleted after just 13 days. In this haste, many small businesses hardest hit by the pandemic were shut out of the program.
One way PPP fraud is now being addressed, according to McInnis, is through False Claims Act qui tam lawsuits by private citizens who can not only redress PPP fraud but also receive a reward for prompting a government investigation. In this case, under the Settlement Agreement Flower received $46,185.
On behalf of Flower and her attorneys, McInnis expressed appreciation for the efforts of the U.S. Attorney’s Office for the Eastern District of North Carolina and the SBA’s Office of Inspector General in recouping the PPP loan proceeds from RRC.
by Tim McInnis, Esq | May 18, 2023 | Our Cases
Whistleblower attorney Timothy J. McInnis announced his client, Clemire Young, will receive $60,000 (20%) from the proceeds of a $300,000 Government healthcare fraud settlement with The Brookdale Hospital Medical Center (“Brookdale Hospital”), a 530-bed, nonprofit teaching hospital located at One Brookdale Plaza, Brooklyn, NY.
The settlement, which was approved by US District Judge I. Leo Glasser on 5/17/2023,
resolves allegations brought by Ms. Young , a former employee of Brookdale Hospital, under the qui tam whistleblower provisions of the Federal and NY False Claims Acts. Her complaint, which had been under seal since April 2019, alleged Brookdale Hospital violated these acts by causing ineligible participants to receive WIC benefits and misappropriating WIC grant funds by, among other things, paying employees for no show jobs and buying things for personal use, such as furniture.
WIC is the Special Supplemental Nutrition Program for Women, Infants, and Children. It is a federal funded/state administered program serving low-income pregnant, postpartum, and breastfeeding women, infants, and children up to age 5 who are at nutritional risk by providing nutritious foods to supplement diets, information on healthy eating, including breastfeeding promotion and support, and referrals to health care.
Ms Young, through attorney McInnis, expressed appreciation for the investigative and
settlement efforts of the U.S. Attorney’s Office for the Eastern District of New York and the Office of Inspector General for the US Department of Agriculture. “This case is an example where a concerned employee saw the tip of the iceberg and reported it to authorities who then were able to expose the whole iceberg,” said McInnis.
by Tim McInnis, Esq | Mar 12, 2023 | Our Cases
Whistleblower to Receive $210,000 from
$1M Government Customs Fraud
Settlement with Samsung C&T America
NYC whistleblower attorney Timothy J. McInnis announced that his client, Devyn Taylor, will receive $210,000 from the proceeds of a $1 million Government Customs fraud settlement with Samsung C&T America, Inc. (“SCTA”), a global trading and investment company. The settlement, which was approved by U.S. District Judge Paul G. Gardephe on February 6, 2023, resolves allegations brought by the United States against SCTA under False Claims Act. Taylor had previously filed under seal a qui tam whistleblower case pursuant to the False Claims Act against another party and that filing help lead to the Government’s settlement with SCTA, according to McInnis. The award to Ms. Taylor was also approved by J. Gardephe and publicly reported by the court on February 16, 2023.
As the U.S. Attorney for the Southern District of New York reported in a press release issued February 7, 2023, its settlement with SCTA resolved claims “that between May 2016 and December 2018, SCTA violated the False Claims Act by misclassifying imported footwear under the Harmonized Tariff Schedule (“HTS”) and by not paying the full amount of customs duties owed.”
Ms Taylor, through her attorney, McInnis, expressed appreciation for the investigative and settlement efforts of the U.S. Attorney’s Office for the Southern District of New York, the U.S. Customs and Border Protection (CBP) and Homeland Security Investigations (HIS). The Government’s case is captioned, United States of America, Plaintiff-Intervenor, v. Samsung C&T America, Inc., Defendant, 16 Civ. 7216 (PGG), in the United States District Court for the Southern District of New York. Further details of the Government’s allegations are set out in its Complaint in Intervention, which can be found on the court’s electronic docket. For additional information about this case or other False Claims Act matters, please contact:
Timothy J. McInnis, Esq.
McInnis Law
521 Fifth Avenue, 17 Fl., New York, NY 10175
(212) 292-4573
tmcinnis@mcinnis-law.com
by Tim McInnis, Esq | Oct 30, 2022 | Our Cases
NEW YORK, Oct. 25, 2022 NYC whistleblower attorney Timothy J. McInnis announced a $86,676 settlement against The Rensselaerville Institute (TRI), a non-profit organization providing educational services for young people located in Delmar, NY. The settlement resolves False Claims Act allegations in a qui tam whistleblower complaint filed by former CFO Alexandra Poole under seal in August 2021 in the U.S. District Court for the Northern District of New York. The case was unsealed October 25, 2022, by order of United States Magistrate Judge Andrew T. Baxter. The United States Attorney’s Office for the Northern District of New York intervened in the action on October 18, 2022 and spearheaded the settlement, according to Attorney McInnis.
Poole’s complaint alleged that TRI defrauded the Small Business Administration (SBA) Payroll Protection Program (PPP) by knowingly overstating its average monthly payroll. TRI did this to unlawfully increase the amount of an SBA-guaranteed loan it could receive. The SBA subsequently determined TRI had, in fact, overstated its average monthly payroll on its PPP loan application and received excess funding of $86,676. Under the terms of the Settlement Agreement, TRI acknowledged and accepted responsibility for this conduct.
As stated in the Settlement Agreement, the PPP was established pursuant to the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, in March 2020. It was designed to provide emergency financial assistance to small businesses suffering economically from the COVID-19 pandemic through forgivable loans for payroll and other specified expenses. Poole’s complaint further alleges the SBA made approximately 5.2 million PPP loans, totaling nearly $700 billion, many with little or no lending controls or oversight.
While ensuing PPP fraud was rampant, there have been very few recoveries under the civil qui tam provisions of the False Claims Act, observed Attorney McInnis. These provisions allow private citizens to sue on behalf of the Government in order to help stop fraud against the United States and recover ill-gotten gains, McInnis explained. Even more rare, is a successful qui tam suit against a non-profit organization, McInnis said, noting he believes this is the first of its kind.
Under the terms of the Settlement Agreement, Poole, who is known as a qui tam relator, will receive $17,000 (19.6%) as a reward for initiating the lawsuit and prompting the Government’s investigation. Poole also alleged whistleblower retaliation/wrongful termination by TRI and that claim, as well as the amount of attorneys’ fees to be awarded to McInnis Law and co-counsel Tabner, Ryan and Keniry, LLP remain unresolved by the Settlement Agreement.
On behalf of Ms. Poole and her attorneys, Attorney McInnis expressed appreciation for the investigative and settlement efforts of the U.S. Attorney’s Office for the Northern District of New York and the SBA. The case is captioned, United States ex rel. Alexandra Poole v. The Rensselaerville Institute, Inc., et al., 1:21-cv-943, United States District Court for the Northern District of New York.
For additional information, please contact Attorney Timothy J. McInnis, of McInnis Law, 521 Fifth Avenue, 17th Fl., New York, NY 10175, at (212) 292-4573 or tmcinnis@mcinnis-law.com.
Complaint
ECF Settlement Agreement
by Tim McInnis, Esq | Oct 30, 2022 | Our Cases
NEW YORK, Oct. 28, 2022 NYC whistleblower attorney Timothy J. McInnis announced a $98,694 settlement against Oswego Hospital. The settlement resolves False Claims Act allegations in a qui tam whistleblower complaint filed by former employee Maureen Bradley under seal on April 10, 2019 in the U.S. District Court for the Northern District of New York. The United States Attorney’s Office for the Northern District of New York and the New York Attorney General’s Office intervened in the action on September 9, 2022 and led the settlement negotiations, which the government publicized on October 26, 2022, according to Attorney McInnis, who was co-counsel to Ms. Bradley.
The case involved allegations Oswego Hospital billed the Medicare and Medicaid programs for outpatient mental healthcare services by unsupervised licensed master social workers (LMSWs) and not making or maintaining documents to support such services.
Oswego Hospital settles whistleblower suit involving unsupervised LMSWs for $98,694 Under the terms of the Settlement Agreement, Bradley, who is known as a qui tam relator, will receive a total of $19,739 (20%) from the US and NYS governments for initiating the lawsuit and prompting their joint investigation.
“Conscientious healthcare employees, like Maureen Bradley, help foster patient safety and preserve financial resources for our healthcare system,” noted Attorney McInnis. “When they shed light on improper or fraudulent billing practices by filing a qui tam lawsuit under the False Claims Act, they can receive between 15% and 30% of any recovered funds,” McInnis added. Ms Bradley, through her attorneys, McInnis Law and Tabner, Ryan & Keniry, LLP, expressed appreciation for the investigative and settlement efforts of the U.S. Attorney’s Office for the Northern District of New York and the New York Attorney General’s Office/Medicaid Fraud Control Unit.
The case is captioned, United States of American and State of New York, ex rel. Maureen Mounce Bradley, 5:19-cv-0431 (GTS/ATB), United States District Court for the Northern District of New York.
For additional information, please contact Attorney Timothy J. McInnis, of McInnis Law, 521 Fifth Avenue, 17th Fl., New York, NY 10175, at (212) 292-4573 or tmcinnis@mcinnis-law.com.
SOURCE McInnis Law
by Tim McInnis, Esq | Oct 14, 2022 | Qui Tam
Medicare Advantage Fraud occurs when healthcare insurers knowingly abuse the Medicare Part C program in order to make money unlawfully. Many American seniors are increasingly choosing Medicare Advantage Plans (MA Plans) over traditional Medicare Part A (hospital), Part B (physician) and Part D (prescription) healthcare coverage. Under the Medicare Advantage program, healthcare insurers get a monthly capitated fee from Medicare/CMS, plus a monthly premium from the members, and the insurers are supposed to provide superior healthcare and wellness services to the plan members at a lower cost to the members and U.S. tax payers.
The capitated amount Medicare pays the MA Plan sponsor (usually an insurance company) is based on a given member’s Medicare Risk Adjustment (MRA) score. In other words, the sicker the person is the more the insurance company receives from Medicare/CMS. This simple equation has motivated unscrupulous healthcare insurers with Medicare Advantage Plans to “game” or inflate their members’ MRAs with diagnoses that make members look sicker than they really are. It also incentivizes the MA Plan sponsors to “cherry pick” healthy members and/or provide substandard healthcare services to members in order to save money improperly.
If you work in this field you may have felt at times you would like to report Part C Medicare Advantage Fraud. It is likely you’ve seen an MA Plan sponsor implement one way audit programs which seek to add supposedly overlooked negative diagnoses to ramp up MRA scores, while not looking to uncover mistaken diagnoses that caused MRAs to be artificially high. Sometimes patient medical charts may even have been fabricated with outright bogus diagnoses. Maybe you are also aware of plan member recruitment tactics designed to bring in healthier members and keep out sicker ones. And it is possible you’ve seen systemic practices where a Medicare Advantage Plan sponsor tries to save money by failing to arrange for its members to receive the level of healthcare services they need. It’s conceivable you alerted a MA Plan sponsor about specific instances where any of these or similar practices have occurred and your concerns have fallen on deaf ears. It can be extremely disheartening. There is, however, an alternative way of trying to end MA Plan fraud.
If you have observed anyconduct you believe is improper and would like to report Medicare Advantage Fraud and help stop it, your best course of action may be to contact an experienced qui tam whistleblower attorney who can help guide you, assess your rights, contact the Government to report the fraud and even file a federal qui tam whistleblower lawsuit on your behalf. Many attorneys in this field will not charge you for a consultation and any communications you have with them will be privileged and confidential.
It is always best to begin this dialogue as soon as possible, especially if you still have access to evidence that can corroborate your allegations.
by Tim McInnis, Esq | Jul 9, 2022 | Uncategorized
You can support the Department of Justice’s National Nursing Home Initiative by filing a qui tam action under the federal False Claims Act for substandard nursing home care and fraudulent billing practices.
Since March 2020, DOJ has been focusing on long-term care providers, such as nursing homes, sub-acute rehabilitation centers and skilled nursing facilities (SNFs), who provide grossly substandard care to Medicare beneficiaries and/or bill for services that have not been rendered or were “upcoded,” including, rehabilitation treatment, like physical, occupational and speech therapy.
The government is looking for whistleblower cases involving gross abuse and neglect of Medicare patients and blatantly fraudulent billing practices. This includes inadequate care stemming from severely low staffing levels and the use of unlicensed and uncredentialed healthcare providers and aides. It also includes withholding necessary services and activities, including, psychiatric care. Failing to establish or follow plans of care and treatment. And not properly creating and maintaining medical records.
The government is also very focused on significant patient safety issues, like failing to follow
hygiene and infection control protocols. Dispensing unnecessary medications or failing to
provide necessary ones. Housing residents in unsafe or unacceptable living quarters. Failing to
provide adequate food and nourishment. Not attending to bed-ridden patients resulting in
pressure sores. Infrequently bathing and washing residents. Subjecting patients to verbal or
physical abuse. Physically restraining or sedating patients when not warranted. And
inadequately protecting patients’ safety and their personal belongings.
Overbilling and gaming the system for rehabilitation services is also a potential targeted area of
concern. The government is particularly interested in cases where the provider fails to establish
compliance programs and protocols. Turns a blind eye to patient and staff complaints and
warnings. And implements polices and practices that put profits far above quality of care.
Pervasive, long-standing and widespread misconduct involving substandard nursing home care
can result in a provider’s liability under the False Claims Act and a substantial reward to
whoever alerts the government to such conditions.
In the eyes of the law it is improper to file a claim for Medicare reimbursement for services to
nursing home residents knowing the quality of the care was grossly substandard. This is
because every provider’s Medicare claim for reimbursement carries with it an implication that all
material rules and regulations concerning patients’ wellbeing, safety and care have been
complied with. When they have not, then the claim for reimbursement might constitute a false
representation.
If that is what a court or jury finds, then the provider is potentially liable for three times the
amount of the improper payments it received, plus per claim fines of over $25,000, or even
criminal penalties. And, whoever blows the whistle on nursing home or elder care fraud is
potentially eligible for as much as 30% of any funds the government recovers.
The people in the best position to bring successful False Claims Act cases for nursing home
and elder care fraud are current employees. This is because it is important to have or be able to
amass patient-specific and detailed information and evidence corroborating allegations of
substandard nursing home care or Medicare billing fraud.
If you are aware of misconduct in a nursing home or other facility treating seniors and are
confident you have or can obtain strong proof of it, then you should immediately contact an
experienced qui tam whistleblower lawyer to learn about your rights and options.
by Tim McInnis, Esq | Jun 13, 2022 | False Claims Act
It’s no secret that private equity (PE) firms are increasingly acquiring healthcare and life science
businesses. And it is also no secret that when they do, these firms employ typical investment
strategies and practices that may make sense in some industries, but not those involving
patient treatment and care. After all, private equity (PE) firms usually seek to increase the debt
held by their portfolio companies, while trying to ramp up revenues and drastically cut costs.
In the healthcare and life science arenas this can lead to debt-laden balance sheets and
bankruptcies, unethical or unlawful sales and marketing schemes to boost revenues (including
by paying kickbacks) and massive cuts in essential staff and service levels. All of which can result
in underserving and improperly treating the patient population, many of whom are Medicare,
Medicaid and TRICARE beneficiaries. It can also lead to falsely billing government insurance
programs, resulting in False Claims Act violations and substantial rewards for whistleblowers.
Due to increasing fraud and abuse in the healthcare and life science fields, the U.S. Department
of Justice is taking a closer look at charging private equity (PE) firms with False Claims Act
“upstream” liability for the misconduct of their portfolio companies. This has resulted in a
number of large settlements in recent years.
Successfully pursuing False Claims Act cases against private equity (PE) firms requires two
things above and beyond the normal elements of proof in FCA cases. First, you need to show
that one or more members of the private equity (PE) firm had some role in causing the portfolio
company to submit false claims to a government program. This is usually done by showing their
control over, and involvement in, the day to day management and operation of the business.
For example, by controlling the board and through consulting and management service
contracts and the receipt of payments for such services. The second vital fact you need to
establish is that one or more members of the private equity (PE) firm knew about the
fraudulent and improper billing practices of the portfolio business. Often this can be proved by
showing that these investors turned a deliberate blind eye to such misconduct in their quest for
profits and/or that they failed to set up and monitor effective compliance programs.
If you believe a Private Equity (PE) firm might have upstream False Claims Act liability for the
misconduct of one or more of its portfolio companies (whether in the healthcare field or
otherwise), you should immediately contact an experienced qui tam whistleblower attorney.
Time is often of the essence, especially in larger organizations where many people know about the fraud and some may rush to preserve their rights since there is a first-to-file rule that generally bars subsequent whistleblowers from receiving a reward.
by Tim McInnis, Esq | May 21, 2022 | Uncategorized
False Claims Act Recoveries Top $5.6 Billion in 2021
In 2021, the United States government recovered more than $5.6 billion in False Claims Act
recoveries. A good deal of this money came from so-called “qui tam” law suits filed by private citizens.
Those with winning cases typically received between 15%-25% of the recovered amount, some even got
as much as 30%.
As has been true for a number of years, the lion’s share of the False Claims Act settlements and
judgments arose from healthcare fraud cases, mostly involving Medicare and Medicaid, and to a lesser
extent Tricare and Federal Employees Health Benefits (FEHB) program. We expect that trend to continue
for the foreseeable future, including in the Medicare Part C, Medicare Advantage Program, where “risk
factor gaming” has become more prevalent. Anti-Kickback Statute (AKS) and Stark Law violations for
improper referrals are also likely to loom larger. Of course, there will likely be no shortage of
unnecessary procedures, upcoding and billing for services not rendered cases.
With the trillions of dollars handed out during the COVID pandemic, one should also expect to
see any number of schemes where undeserving companies and organizations, as well as individuals, got
Stimulus money, PPP loans, CARES Act funds and Provider Relief money to which they were not entitled.
While this is not an exhaustive list of types of fraud cases heading our way, we do also want to
mention the government’s Cybersecurity Initiative, which aims to tackle the problem of hacking and
theft of government and government contractor data and the failure of those responsible for thwarting
these attacks. This is just one of the many types of procurement fraud the False Claims Act addresses,
along with more traditional defense industry and grant fraud.
If you think might have information about these and other types of potential qui tam False
Claims Act cases, you should immediately contact an experience whistleblower lawyer
