Healthcare fraud is one of the top areas targeted by federal and state officials under the False Claims Act, and it continues to increase each year – resulting in billions of dollars in recovery. However, for some defendants, liability does not stop with the False Claims Act. As today’s case reveals, healthcare fraud defendants can face a slew of additional punishments, including restitution, criminal fines and penalties, and incarceration. If you are aware of healthcare fraud, which can be as deadly as it is costly, we urge you to contact Berger Montague as soon as possible to discuss your case.
Details of Staten Island fraud case
In an ongoing concerted investigation by the FBI, IRS, Department of Health and Human Services, and the Office of Inspector General, Staten Island, New York’s Dr. Demetrios Gabriel was sentenced in December, 2014 to 37 months in federal prison following years of litigation over allegations of fraud within his pediatrics practice. Gabriel, who is one of 33 total staff members alleged to have knowingly engaged in fraud, was implicated in a long-running fraud scheme involving Biodiagnostic Laboratory Services, LLC, a New York-based diagnostic center specializing in testing blood and tissue specimens for the treatment or diagnosis of illness and disease.
Unlike many of the kickback cases on which we report, the scam occurring between Dr. Gabriel and BLS was quite simple. In exchange for a monthly flat fee of $3,000 provided by BLS, Dr. Gabriel and the other physicians implicated in the scheme agreed to exclusively send patients to the center for diagnostic testing. If the doctors were able to reach a certain patient goal, which was measured in terms of the number of actual blood samples drawn, BLS would then send additional cash benefits congruent with the “success” of that particular month.
Dr. Gabriel ran a successful pediatric practice and to date, up to $10.3 million has been recovered from the fraudulent scheme.
Earlier this year, several New Jersey-area doctors were sentenced to prison terms for their involvement with BLS – with one doctor reportedly earning $850,000 from the center. In those cases, investigations revealed that BLS would set up its diagnostic centers in buildings owned wholly or in part by physicians, thereafter paying enormous monthly rent amounts in exchange for exclusive referrals.
Criminal penalties for false claims
As you may be aware, fraud is punishable as both civilly and criminally. Under the False Claims Act, which is a civil statute, defendants could face liability for knowingly and intentionally submitting claims to the federal government that contained fraud and misrepresentations. These defendants, as is evinced in the Biodiagnostic Laboratory Services case, can also face concurrent criminal culpability for knowingly committing fraud. Criminal fraud can carry a wide range of punishments, usually depending on the extent and severity of the scam – and how many people were financially injured. Maximum criminal penalties under federal law can reach up to $10 million in fines and up to ten years’ incarceration.
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