Category: US Department of Justice

Source: United States Department of Justice

Oak Street Health, headquartered in Chicago and a wholly-owned subsidiary of CVS Health since 2023, has agreed to pay $60 million to resolve allegations that it violated the False Claims Act by paying kickbacks to third-party insurance agents in exchange for recruiting seniors to Oak Street Health’s primary care clinics.

The Anti-Kickback Statute prohibits anyone from offering or paying, directly or indirectly, any remuneration — which includes money or any other thing of value — to induce referrals of patients or to provide recommendations of items or services covered by Medicare, Medicaid and other federally funded programs. Under the Medicare Advantage (MA) Program, also known as Part C, Medicare beneficiaries have the option to obtain their health care through privately-operated insurance plans known as MA plans. Some MA Plans contract with health care providers, including Oak Street Health, to provide their plan members with primary care services.

The United States alleged that, in 2020, Oak Street Health developed a program to increase patient membership called the Client Awareness Program. Under the Program, third-party insurance agents contacted seniors eligible for or enrolled in Medicare Advantage and delivered marketing messages designed to generate interest in Oak Street Health. Agents then referred interested seniors to an Oak Street Health employee via a three-way phone call, otherwise known as a “warm transfer,” and/or an electronic submission. In exchange, Oak Street Health paid agents typically $200 per beneficiary referred or recommended. These payments incentivized agents to base their referrals and recommendations on the financial motivations of Oak Street Health rather than the best interests of seniors. The settlement resolves allegations that, from September 2020 through December 2022, Oak Street Health knowingly submitted, and caused the submission of, false claims to Medicare arising from kickbacks to agents that violated the Anti-Kickback Statute.

“Health care providers that attempt to profit from kickbacks will be held accountable,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We are committed to rooting out illegal practices committed by Medicare Advantage providers, insurance agents and brokers that undermine the interests of federal health care programs and the patients they serve.”

“Kickbacks, in any form, have no place in our federal healthcare system” said Acting U.S. Attorney Morris Pasqual for the Northern District of Illinois. “My office is alert for kickbacks that can subvert patient choice and defraud federal health care programs. This investigation and settlement help to ensure that patient choice is prioritized above a provider’s bottom line.”

“Kickbacks impose hidden costs on the federal health care system and compromise medical choice and decision-making,” said Special Agent in Charge Mario Pinto of the Department of Health and Human Services Office of the Inspector General (HHS-OIG). “Working determinedly with our law enforcement partners, HHS-OIG will continue to protect the integrity of federal health care programs, and we encourage the public to come forward with information about violative conduct.”

The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Joseph Stinson. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned U.S. ex rel. Stinson v. Oak Street Health, et al., No. 20-cv-7381 (N.D. Ill.). As part of today’s resolution, Mr. Stinson will receive $9.9 million.

The resolution obtained in this matter was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Northern District of Illinois, with assistance from HHS-OIG and the FBI.

The investigation and resolution of this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to HHS at 800-HHS-TIPS (800-447-8477).

Trial Attorney David G. Miller of the Justice Department’s Civil Division and Assistant U.S. Attorney Jonathan C. Haile for the Northern District of Illinois handled the matter.

The claims resolved by the settlement are allegations only. There has been no determination of liability.

Settlement

Source: United States Department of Justice Criminal Division

A federal jury in San Diego convicted a California man yesterday of wire fraud, conspiracy and tax crimes for schemes to defraud COVID-19 relief programs and to file false tax returns.

According to court documents and evidence presented at trial, Leronce Suel was the majority owner of Rockstar Dough LLC and Chicken Feed LLC, both of which operated restaurants in the San Diego area, including Streetcar Merchants in the North Park neighborhood. He conspired with others to underreport over $1.7 million in gross receipts on Rockstar Dough’s 2020 corporate tax return and COVID-19 relief applications. Suel’s businesses fraudulently received $1,773,245 million in COVID-related Paycheck Protection Program loans and Restaurant Revitalization Fund grants, two programs created to provide financial assistance to Americans suffering economic harm as a result of the COVID-19 pandemic. Suel and his co-conspirator misappropriated COVID-19 relief program funds by making substantial cash withdrawals from their business bank accounts, purchasing a home in Arkansas and keeping more than $2.4 million in cash in his bedroom.

Suel did not file timely tax returns for 2018 and 2019, despite being legally required to do so. In addition, during the period 2020 through 2022, Suel did not file personal returns that reported flow through income from his businesses and personal income he received from his business, including millions of dollars in cash he withdrew. In 2023, Suel filed false original and amended tax returns for several years, including personal returns for 2016 and 2017 that included false depreciable assets and business losses.

In total, Suel caused a tax loss to the IRS of $1,292,976.

Suel was convicted of wire fraud, conspiracy to commit wire fraud, tax evasion, conspiracy to defraud the United States, filing false tax returns and failing to file tax returns. He was acquitted of the money laundering charges.

Following the convictions, Suel agreed to forfeit $1,466,918 in U.S. currency.

Suel is scheduled to be sentenced on Dec. 13. He faces a maximum penalty of 30 years in prison for each count of wire fraud and conspiracy to commit wire fraud, a maximum penalty of five years in prison for tax evasion and conspiracy to defraud the United States, a maximum penalty of three years in prison for each count of filing false tax returns and a maximum penalty of one year in prison for each count of failing to file tax returns. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Tara K. McGrath for the Southern District of California made the announcement.

IRS Criminal Investigation is investigating the case.

Trial Attorney Julia Rugg of the Justice Department’s Tax Division and Assistant U.S. Attorney Christopher Beeler for the Southern District of California are prosecuting the case.

Source: United States Department of Justice

The Justice Department filed a civil claim today in the U.S. District Court for the District of Maryland against Grace Ocean Private Limited and Synergy Marine Private Limited, the Singaporean corporations that owned and operated the container ship that destroyed the Francis Scott Key Bridge.

In the early morning hours of March 26, the Motor Vessel DALI left the Port of Baltimore bound for Sri Lanka. While navigating through the Fort McHenry Channel, the vessel lost power, regained power, and then lost power again before striking the bridge. The bridge collapsed and plunged into the water below, tragically killing six people. In addition to this heartbreaking loss of life, the wreck of the DALI and the remnants of the bridge obstructed the navigable channel and brought all shipping into and out of the Port of Baltimore to a standstill. The loss of the bridge also severed a critical highway in our transportation infrastructure and a key artery for local commuters.

The suit seeks to recover over $100 million in costs the United States incurred in responding to the fatal disaster and for clearing the entangled wreck and bridge debris from the navigable channel so the port could reopen.

“The Justice Department is committed to ensuring accountability for those responsible for the destruction of the Francis Scott Key Bridge, which resulted in the tragic deaths of six people and disrupted our country’s transportation and defense infrastructure,” said Attorney General Merrick B. Garland. “With this civil claim, the Justice Department is working to ensure that the costs of clearing the channel and reopening the Port of Baltimore are borne by the companies that caused the crash, not by the American taxpayer.”

The United States led the response efforts of dozens of federal, state, and local agencies to remove about 50,000 tons of steel, concrete, and asphalt from the channel and from the DALI itself. While these removal operations were underway, the claim alleges that the United States also cleared a series of temporary channels to start relieving the bottleneck at the port and mitigate some of the economic devastation caused by the DALI. The Fort McHenry Channel was cleared by June 10, and the Port of Baltimore was once again open for commercial navigation.

“The owner and operator of the DALI were well aware of vibration issues on the vessel that could cause a power outage. But instead of taking necessary precautions, they did the opposite,” said Principal Deputy Associate Attorney General Benjamin C. Mizer. “Out of negligence, mismanagement, and, at times, a desire to cut costs, they configured the ship’s electrical and mechanical systems in a way that prevented those systems from being able to quickly restore propulsion and steering after a power outage. As a result, when the DALI lost power, a cascading set of failures led to disaster.”

Indeed, the lawsuit specifically asserts that none of the four means that should have been available to help steer the DALI — the propeller, rudder, anchor, or bow thruster — worked when they were needed to avert or even mitigate this disaster.

“This was an entirely avoidable catastrophe, resulting from a series of eminently foreseeable errors made by the owner and operator of the DALI,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The suit seeks to recover the costs incurred by the United States in responding to this disaster, which include removing the bridge parts from the channel and those parts that were entangled with the vessel, as well as abating the substantial risk of oil pollution.”

“In so many ways, the Key Bridge has symbolized the resilience of both the State of Maryland and our Nation. In a very real way, the Key Bridge was a pathway to the American Dream. A part of our culture is gone,” said U.S. Attorney Erek L. Barron for the District of Maryland. “Those responsible for the Key Bridge collapse will be held accountable.” 

The Justice Department’s claim also seeks punitive damages to deter the owner and operator of the DALI and others. During a press call announcing the Justice Department’s actions, Acting Deputy Assistant Attorney General Chetan Patil of the Civil Division explained, “This accident happened because of the careless and grossly negligent decisions made by Grace Ocean and Synergy, who recklessly chose to send an unseaworthy vessel to navigate a critical waterway and ignored the risks to American lives and the nation’s infrastructure.”

The Department’s claim is part of a legal action the owner and operator of the DALI initiated shortly after the tragedy, in which they seek exoneration or limitation of their liability to approximately $44 million.  

“Wholly preventable failures by the owner and operator of the DALI caused this tragic incident that cost six bridge construction workers their lives and closed one of the largest ports on the East Coast,” said Rear Admiral Laura M. Dickey, Deputy for Operations Capability and Policy of the U.S. Coast Guard. “The Coast Guard quickly responded by establishing a Unified Command with federal, state, and local stakeholders to rapidly open alternative channels and restore the Port of Baltimore to full operations in just over two months. We stand ready to support the Justice Department to ensure that those responsible for this tragedy pay the costs of reopening the Port.”  

The claim on behalf of the United States does not include any damages for the reconstruction of the Francis Scott Key Bridge. The State of Maryland built, owned, maintained, and operated the bridge, and attorneys on the State’s behalf may file their own claim for those damages. Subsequently, pursuant to the governing regulation, funds recovered by the State of Maryland for reconstruction of the bridge will be used to reduce the project costs paid by federal taxpayer dollars.

The United States is represented in the filed action by attorneys from the Civil Division’s Aviation, Space & Admiralty Litigation Section and from the U.S. Attorney’s Office for the District of Maryland, Baltimore Division.

The claims alleged by the United States are allegations only. There has been no determination of liability.

Complaint

Source: United States Department of Justice Criminal Division

Thank you, United States Attorney Barron. I am Chetan Patil, the Acting Deputy Assistant Attorney General of the Civil Division’s Torts Branch. This morning, attorneys within the Civil Division filed a claim against Grace Ocean and Synergy, the owner and operator of the Motor Vessel DALI, to recover more than $100 million in federal taxpayer funds that were spent in responding to the tragic destruction of the Francis Scott Key Bridge. The suit also seeks punitive damages against these entities, who reaped the profits of conducting business in American ports but did so by engaging in reckless and grossly negligent conduct that led to this catastrophe.

Our investigation remains ongoing. Nevertheless, from what we have learned already, it is clear that this accident was completely avoidable. As we outline in our claim, the electrical and mechanical systems on the DALI were improperly configured and maintained in violation of safety regulations. These configurations caused the ship to lose power, which led to subsequent equipment failures, culminating in the DALI striking one of the piers of the Francis Scott Key Bridge and causing the bridge to collapse into the Fort McHenry Channel.

We believe that the ship initially lost power when the circuit breakers tripped at an electrical transformer in the engine room due to excessive vibration problems with the transformer and its circuitry. The evidence shows that excessive vibration was a long-standing problem on the ship, which Grace Ocean and Synergy sought to remedy with makeshift, after-market fixes that fell well short of appropriate standards. 

When this transformer failed, the power should have automatically shifted to another transformer almost immediately. But, per longstanding practice, this automation had been recklessly disabled, which led to excessive delay in regaining power. Then the ship’s emergency generator also failed. Even when the crew finally did manage to regain power, the DALI lost power a second time, likely because the vessel had been using an inadequate, temporary fuel pump that could not restart after a blackout. This was another legal safety requirement that the DALI failed to follow, in order to cut costs and save time.  

Because power could not be restored, there was no way to steer the ship. And problems with the DALI’s anchor and bow thruster thwarted even last-ditch emergency efforts to avert the disaster. In sum, this accident happened because of the careless and grossly negligent decisions made by Grace Ocean and Synergy, who recklessly chose to send an unseaworthy vessel to navigate a critical waterway and ignored the risks to American lives and the nation’s infrastructure. 

The United States’ claim seeks to hold Grace Ocean and Synergy responsible for the considerable costs they imposed on the federal government in responding to the disaster. Those costs include work relating to the removal of the DALI and the remnants of the Francis Scott Key Bridge from the Fort McHenry channel, in order to restore full access to the Port of Baltimore. In addition, we seek to recover the costs incurred to abate the substantial risk of oil pollution that could have resulted from this accident, as well as costs incurred by several federal agencies as a direct result of Grace Ocean and Synergy’s misconduct. We seek punitive damages here to deter Grace Ocean and Synergy — and other vessel owners and operators — from prioritizing profits over safety and thereby jeopardizing the waterways and well-being of Americans. And we will vigorously contest Grace Ocean and Synergy’s efforts to limit their liability to the woefully inadequate amount of $44 million, which finds no legal support under these circumstances.

While the United States remains committed to the reconstruction of the Francis Scott Key Bridge, it is not seeking damages for those costs at this time. Rather, because the State of Maryland built, owned, maintained and operated the bridge, the State, not the United States, may seek recovery for the costs of rebuilding the bridge. Funds the State may recover in the litigation will be used to repay federal money spent to reconstruct the bridge and highway.

Finally, I want to thank the attorneys of the Aviation, Space & Admiralty Litigation Section of the Civil Division for their diligence and hard work since the day this accident occurred. Their efforts and professionalism are in the finest traditions of the department.

Source: United States Department of Justice Criminal Division

Good morning. My name is Benjamin Mizer, and I am the Principal Deputy Associate Attorney General at the Justice Department. I am joined today by Chetan Patil, who is the Acting Deputy Assistant Attorney General of the Civil Division’s Torts Branch. I am also joined by U.S. Attorney Erek Barron for the District of Maryland and representatives from the U.S. Army Corps of Engineers, the Navy, and the U.S. Coast Guard.

Today, the United States filed a civil claim in the U.S. District Court for the District of Maryland against the owner and operator of the Motor Vessel DALI, the container vessel that destroyed the Francis Scott Key Bridge in Baltimore, resulting in six needless and heartbreaking deaths. The action seeks recovery of more than $100 million in damages and costs incurred by the United States in responding to the fatal disaster and reopening access to the Port of Baltimore.

In the early morning hours of March 26, the DALI left the Port of Baltimore bound for Sri Lanka. While navigating through the Fort McHenry Channel, the vessel lost power, regained power, and then lost power again before crashing into the Francis Scott Key Bridge. The whole country watched the horrifying video footage showing the bridge collapse and plunge into the water below. 

Six construction workers tragically lost their lives when the bridge collapsed. Our hearts go out to their families and loved ones for this senseless and wholly preventable loss.

In addition to the tragic loss of life, the destruction of the Francis Scott Key Bridge severely disrupted the economy of Baltimore and affected the entire nation. Not only did the bridge’s collapse sever a critical link in our highway infrastructure, but it also blocked the Fort McHenry Channel and brought to a standstill all maritime traffic in and out of the Port of Baltimore — one of the largest shipping hubs in the nation.

Just days after the disaster, President Biden pledged that the federal government would do whatever it took to get the Port of Baltimore up and running as soon as possible. What happened next was a heroic feat of governmental cooperation in the public interest. The United States led response efforts among more than 50 federal, state, and local agencies. The initial response focused on search and rescue efforts for those workers who were missing. But even as those efforts were ongoing, planning and operations commenced to remove more than 50,000 tons of steel, concrete, and asphalt from the channel and from the DALI itself. While these efforts were underway, temporary channels were also cleared to start relieving the bottleneck at the Port of Baltimore and mitigating some of the economic devastation caused by the DALI. The work was complex, costly, time-consuming — and at times dangerous. Thanks to these herculean efforts, on June 10, the United States reopened the Fort McHenry Channel, allowing commercial navigation once again to flow freely into and out of the Port of Baltimore.

I stand in awe of the remarkable work done by the U.S. Coast Guard, Army Corps of Engineers, Navy Supervisor of Salvage and Diving, and their contractors, as well as our State and local partners and countless others who supported those agencies.

As we outline in our claim, this catastrophe was entirely avoidable. We allege that the DALI’s owner and operator recklessly cut corners in ways that risked lives and the economic well-being of the nation. In particular, our claim alleges that the owner and operator of the DALI were well aware of vibration issues on the vessel that could cause a power outage. But instead of taking necessary precautions, they did the opposite. Out of negligence, mismanagement, and, at times, a desire to cut costs, they configured the ship’s electrical and mechanical systems in a way that prevented those systems from being able to quickly restore propulsion and steering after a power outage. As a result, when the DALI lost power, a cascading set of failures led to disaster.

The United States spent more $100 million responding to this disaster, to clear the channel, and to reopen the Port of Baltimore. Those costs should be borne by the ship’s owner and operator, not the American taxpayer. But that is not all. To try to keep this type of conduct from ever happening again, we are also seeking punitive damages. The Justice Department is committed to holding the DALI’s owner and operator responsible for the harm they caused and to deter them and others from taking reckless risks with American lives and infrastructure.

In bringing this civil action, I greatly appreciate the partnership we have with the U.S. Attorney’s Office for the District of Maryland, our cooperation with the State of Maryland, and the critical assistance we have received from many departments and agencies of the federal government. I am particularly proud of the work done by the Civil Division in putting together this comprehensive civil action, work that began within hours of when this tragedy occurred.

With that, I will turn it over to U.S. Attorney Barron.