by Ben Vernia | August 20th, 2012
On August 10, the Department of Justice announced that several companies and their owner have agreed to pay $9 million to resolve a False Claims Act lawsuit brought by the government, which alleged that the companies concealed their related status in order to charge inflated management fees. According to DOJ’s press release:
James W. Carell, CareAll Management LLC (formerly known as Diversified Health Management Inc.), C are All Inc., the James W. Car ell Family Trust, VIP Home Nursing and Rehabilitation Services LLC, Professional Home Health Care LLC, University Home Health, LLC and Elizabeth Vining (as representative of the Estate of Robert Vining) have agreed to pay $9.375 million to the federal government. This payment is to resolve the lawsuit that the United States filed in 2009 alleging that they violated the False Claims Act, caused Medicare to pay out money through mistake of fact, and were unjustly enriched by falsely concealing the home health agencies’ relationship with their management company, the Justice Department announced today.
VIP, Professional and University now operate under the name CareAll. James W. Carell and the related CareAll entities named above also agreed to be bound by the terms of a Corporate Integrity Agreement with the Department of Health and Human Services – Office of Inspector General (HHS-OIG).
CareAll and its related entities are one of the largest home health providers in Tennessee. This settlement resolves the United States’ lawsuit alleging that the CareAll entities fraudulently submitted eight cost reports for fiscal years 1999, 2000 and 2001 to support their Medicare billings. The United States alleged that these cost reports were false because they knowingly hid the relationship between the management company and the home health agencies. According to the complaint the United States filed in this case, the cost reports should have disclosed that the management company was related to the home health agencies, which would have lowered the Medicare reimbursement for the management company’s services. During the relevant years, the United States alleged that James W. Carell owned the management company, and his friend Robert Vining – an attorney who lived in Missouri – served as the nominee or “sham” owner of the home health agencies.
The United States further alleged in court filings that the management company exerted significant control over the home health agencies in a myriad of ways, including: James. W. Carell’s key role in facilitating Robert Vining’s purchase of the home health agencies; loans worth millions of dollars from companies owned by James W. Carell to the home health agencies; cash transfers for millions of dollars from the management company to the home health agencies; the management company’s day to day control over the home health agencies’ operations; and Robert Vining’s role as a mere figurehead owner. The United States also alleged in court filings that James W. Carell profited greatly from this “sham” owner relationship and that he monetarily rewarded Robert Vining for his participation in this scheme.