A whistleblower was instrumental in bringing a Medicare fraud case that ended with a jury verdict of nearly $11 million against a Gulfport, Mississippi, hospital owner.
“One of the most egregious cases of Medicare fraud”
U.S. Attorney Mike Hurst described the case against Ted Cain, owner of Stone County Hospital, and his wife Julie Cain, as “one of the most egregious cases of Medicare fraud” ever litigated in Mississippi.
Whistleblower James Aldridge sued the 25-bed rural hospital, classified by the government as a “critical access hospital” due to its presence in a rural, underserved community on behalf of the federal government.
He alleged that from 2004-2015, Mr. Cain billed Medicare $17.7 million for his annual salary when evidence showed he did no reimbursable work at the hospital. Additionally, Mr. Cain billed Medicare for nearly $1 million for his wife Julie’s salary after naming her Administrator of Stone County Hospital and putting her on the payroll as a consultant.
After a nine-week trial, the jury found that Mrs. Cain rarely ever worked at or for the hospital and that other individuals were responsible for its operation.
In total, Medicare reimbursed Stone County Hospital nearly $11.8 million for Mr. Cain’s compensation and nearly $854,000 for Mrs. Cain’s bogus administrative salary, consulting, and director’s fees. The jury awarded the U.S. nearly $9.62 million in damages for Mr. Cain’s fraudulent compensation and $853,964 for the reimbursements Mrs. Cain received from Medicare.
Additionally, an audit conducted by the Mississippi Division of Medicaid found discrepancies in Medicaid and Medicare home office statements that resulted in Medicare reimbursements of more than $381,000. Those claims were made by Corporate Management Inc., through which the Cains billed Medicare and the company’s CFO, Tommy Kuluz.
Civil Liability Breakdown
The total amount of the defendant’s civil liability in this whistleblower case, which the court will determine, will be much higher than the jury verdict. Damages are automatically trebled under the False Claims Act. The court also imposes a statutory penalty of $5,500 to $11,000 for each false claim made between 2004 and 2014 and $11,181 to $22,363 for subsequent years. In this case, the higher penalties would be applied to Stone County Hospital’s 2015 cost reports.
Because Mr. Aldridge filed suit under the whistleblower provisions of the False Claims Act on behalf of the U.S., he will receive an award of up to 25% of the total recovery. The amount of Mr. Aldridge’s whistleblower award will be determined after the final damages are assessed.
If you have any questions about whether you qualify as a whistleblower, contact one of the lawyers on our firm’s Whistleblower Litigation Team for a free and confidential evaluation of your claim. Beasley Allen lawyers Larry Golston, Lance Gould, Paul Evans, Leon Hampton, Tyner Helms, and Lauren Miles are working in this area of law known as “qui tam” cases. A lawyer on the team will be glad to discuss the potential claim with you either in person or by phone.