Vanguard Healthcare, a Tennessee health care firm, has agreed to pay back some $2 million to the federal government in the latest in a series of Medicare and Medicaid fraud cases brought by federal prosecutors in central Tennessee. Total recoveries so far this year in that area top $100 million. According to U.S. Attorney Jerry Martin, the settlement with Vanguard is just the latest case in an ongoing effort to detect fraud and abuse in federally-funded health care programs. His office has made health care a priority and he says they have just gotten started. It was noted that the $100 million in expected recoveries this year compares to only $3 million in the prior year. Settlements obtained are:

  • an $82.6 million judgment against Renal Care;
  • a $9.25 million recovery from Guidant; and
  • an $11.1 million recovery from MedQuest.

Some of the cases were initiated by whistleblowers with the federal government joining in on the cases, while others were directly initiated by the U.S. Department of Justice. The Vanguard case stemmed from charges first brought by a former employee in 2003. Under provisions of the federal False Claims Act, the case remained under seal until September when the Department of Justice joined in on the case. As part of the settlement, the firm, which operates 18 nursing homes, agreed to implement an internal monitoring program and to educate its employees on compliance with federal rules.

The files made public recently revealed that Vanguard was charged with double billing for some services and submitting claims for patients on feeding tubes when they no longer qualified for Medicare coverage. It was alleged in the suit that the federal Medicare program and Medicaid programs in Tennessee and Mississippi were hit with substantial overcharges. The whistleblower, William B. Caldwell, a former employee, was an operations manager at Vanguard’s Imperial Manor nursing home in Madison. Caldwell charged that he warned company officials that they were filing claims in violation of federal law and they responded by firing him.

In the MedQuest case, the company was charged with submitting claims for radiology services that were supervised by unqualified individuals. Instead of radiologists, the company enlisted the services of a pediatrician and a psychiatrist. The company also was charged with improper billing and failure to notify the federal government of an ownership change. In that case, U.S. District Judge William J. Haynes Jr., in an Oct. 21 decision, denied the company’s request to reconsider his decision against it. However, Judge Haynes did agree to a slight adjustment in the $11.1 million penalty.


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