In 2014, three former managers of AIDS Healthcare Foundation, Inc. (AHF) filed Federal and Florida State Whistleblower Act claims against the company, which is the nation’s largest supplier of HIV/AIDS medical care, for allegedly paying illegal kickbacks for patient referrals, and then fraudulently billing government healthcare programs such as Medicare, Medicaid and Health and Human Services HIV/AIDS grant programs like Ryan White at least $20 million a year since 2010 for care rendered to the illegally referred patients.

Case Background

According to the operative complaint, pending in the U.S. District Court for the Southern District of Florida, AHF, in an effort to boost federal funding, generated patient referrals to the company’s various service centers by unlawfully paying referral incentives to employees in violation of the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b). These referrals led to the provision of medical services, treatment, and medications to thousands of patients, for which AHF submitted “false and fraudulent” claims under the Federal Civil False Claims Act (“FCA”), 31 U.S.C. §§ 3729, et seq., and Florida False Claims Act, §§ 68.081, et seq., Fla. Stat., resulting in its recovery of at least tens of millions of dollars in fraudulent payments by federal health care programs, including Medicare and Medicaid, as well as HIV/AIDS assistance programs funded by HRSA and CDC, like the Ryan White program.

“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 relators.

According to the complaint, the linkage – or the illegal referral of HIV-positive patients into AHF’s constellation of services – was key to AHF’s business model. As part of this model, a bonus compensation of up to $100 was paid to AHF employees who “linked a patient” with a positive HIV test result to treatment with AHF, thereby increasing the number of AHF’s patients and increasing its opportunity to bill federal programs for treatment rendered to those patients. This was directly in line with the direction of “AHF’s President Michael Weinstein [who] personally advocated for 1) increased testing to raise HIV ‘positivity’ rates; 2) improved “linkage” of patients to and retention in AHF medical care; and 3) the payment of financial incentives to patients for the purpose of inducing self-referrals to AHF medical care.”

“The resulting illegal referrals produced thousands of ‘false and fraudulent’ claims under the Federal False Claims Act and Florida False Claims Act and caused tens of millions of dollars in payments by federal health care programs,” said James P. Gitkin of Salpeter Gitkin, LLP.

In July 2016, the Court ruled that the case may go forward with regard to the two specific claims the relators identified in their complaint to demonstrate concrete examples of AHF’s payment of commissions in exchange for patient referrals and AHF’s practice of billing government programs for treatment rendered to the referred patients. Discovery with regard to these claims is ongoing.

In addition to Leopold and Gitkin, the relators are represented by Diana L. Martin and Leslie M. Kroeger, of Cohen Milstein Sellers & Toll PLLC, Palm Beach Gardens, Fla., office; and Geoffrey R. Kaiser, Esq., of Kaiser Law Firm, PLLC, in New York.

The case is entitled United States of America and the State of Florida ex rel. Jack Carrel, Mauricio Ferrer and Shawn Loftis v. AIDS Healthcare Foundation, Inc.

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