Prosecuted and Paid: Government doles out billions in coronavirus relief money to companies that paid out millions in fraud-related cases

InvestigateTV finds companies which previously paid millions to the federal government received at least $4.5 billion in loans and grants
Published: Aug. 20, 2020 at 4:03 PM EDT
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(InvestigateTV) - In mid-April, subsidiaries of a Tennessee-based health care company finalized an agreement to pay the federal government $41 million to resolve accusations it had made false claims – billing Medicare and Medicaid for medically unnecessary drug testing.

Less than a month later, that same company, Surgery Partners, Inc., reported that the federal government gave it $120 million in advance payments for the same program it was accused of defrauding: Medicare.

Because that money is an advance, it will likely have to be repaid, but the company, which declined to comment, also received another $45 million in grant money that does not need to be paid back.

Surgery Partners, Inc. is one of 225 parent companies that InvestigateTV discovered have paid out for government fraud accusations in the last decade and also received relief money through the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

The CARES Act included $2 trillion in various relief and stimulus programs. Some funding involved applications, such as the Paycheck Protection Program that was designed to help employers cover payroll and immediate expenses.

Other funding, such as the Provider Relief Fund, went out automatically to health care providers in an effort to infuse the industry with money to help with overwhelming coronavirus-related expenses.

Since 2010, those 225 companies paid nearly $13 billion in settlements and penalties related to accusations of violating the False Claims Act, a law designed to go after people and companies defrauding the government. Most settled – others were forced to pay in court rulings.

Those companies also received at least $4.5 billion in relief money, according to InvestigateTV’s analysis of data collected by Good Jobs First, a non-profit based in Washington, D.C.

Some of these companies include tech giants like cell phone carriers, large defense contractors and major airlines, but 80% of the companies are in health care.

Health care company receives nearly $2 billion in unsolicited relief grants and loans

In February 2020, the U.S Department of Justice announced that Dallas-based Tenet Healthcare and an affiliated hospital would pay $1.4 million to resolve allegations they charged Medicare for unnecessarily implanted cardiac monitors.

Less than three months later, Tenet reported in its SEC filings that it received $1.5 billion in CARES Act advance Medicare payments. In August, it reported another $712 million in cash payments. Those funds came from relief programs that automatically distributed money to health care companies and facilities.

“I personally think we should be screening the recipients. Because I don’t think that fraudsters should pay the government out of one hand and then come back and get the money back on the other hand. But that seems to have happened quite a bit under this particular program,” said attorney Vince McKnight, who was involved in a False Claims Act case against Tenet.

Tenet is one of 11 parent companies InvestigateTV identified which received federal stimulus money and settled or agreed to make False Claims payments this year. In total, those companies agreed to or paid $150 million in 2020.

The February 2020 settlement is not Tenet Healthcare’s first run in with allegations of defrauding the government- the publicly-traded company has paid hundreds of millions of dollars related to the False Claims Act since 2010.

For example, in 2012 Tenet agreed to pay the U.S. nearly $43 million to settle allegations that it overbilled Medicare.

In 2015, Tenet was one of multiple health care companies that paid out to settle a false claims allegation that cardiac devices were implanted in Medicare patients “in violation of Medicare coverage requirements.” In short, Tenet and others were accused of implanting defibrillators in patients too soon after a heart attack or bypass surgery based on federal criteria. Tenet and 19 of its affiliated hospitals paid $12.1 million.

In 2016, Tenet and two Atlanta-area subsidiaries agreed to pay more than $513 million for allegedly “defrauding the U.S. and making illegal payments in exchange for patient referrals,” according to the Department of Justice. The subsidiaries agreed to plead guilty to defrauding the government and paying kickbacks and bribes.

“It doesn’t make sense for you to have, say within the last five years, have resolved over $100 million of settlements with the government and then turn around and get forgivable grants that exceed $100 million in the next fiscal year,” McKnight said. “By then you have washed out whatever the penalty is.”

Tenet said in a statement that the grants helped ease some of the financial burden associated with the pandemic and helped keep their facilities open for patients.

“This support has offset some, but not all, of the adverse impact on our business as we have managed through uncertainty surrounding how long the pandemic will last, the path of current and potential future waves and the detrimental impact on our patient volumes that we have experienced,” a spokesperson wrote in an email to InvestigateTV. “These funds are used only for COVID recovery and assistance.”

Months after admitting role in criminal conspiracy, cancer care company gets $67 million in grants

On April 30, Florida Cancer Specialists (FCS) agreed to pay a $100 million criminal penalty after it admitted to a conspiracy to limit care options for cancer patients in the state. The Department of Justice said that company, along with others, agreed not to compete for chemotherapy and radiation treatment options.

“For almost two decades, FCS and its co-conspirators agreed to cheat by limiting treatment options available to cancer patients in order to line their pockets,” said DOJ Assistant Attorney General Makan Delrahim in an April news release.

Less than two months later, the federal government voluntarily gave that company $67 million in grant money.

A company spokesperson told InvestigateTV in a statement that it received a significant amount of money because the formula relied on Medicare patient numbers. The company has 85 facilities and many Medicare patients.

“FCS did not request these funds. This is not a loan and it is not part of the [Paycheck] Protection Program administered by the Small Business Administration,” the spokesperson wrote.

The federal government does require the money to be spent on COVID-related expenses and burdens.

“Throughout this pandemic, we have worked to keep our treatment offices open, despite a decrease in patient visits. We have adapted our operations to ensure that our patients continue to receive safe, high-quality cancer care with minimal disruption,” wrote the FCS spokesperson.

Senators call for look at health care relief funding

On July 1, nine Democratic and Independent senators signed a letter to the Department of Health and Human Services Secretary Alex Azar. The letter questioned specifically how the agency distributed CARES Act Provider Relief Funds.

“We are deeply concerned that HHS has not placed adequate limits on the extent to which wealthy health care companies can use taxpayer funding to line the pockets of executives and private equity owners, while cutting pay, furloughing, or firing doctors, nurses, and other essential workers,” the senators wrote.

Senator Sherrod Brown, a Democrat from Ohio, said companies should potentially be cut out of government relief programs if they have histories of fraud accusations.

“They should be disqualified if they cheated the government,” Brown said. “If you’re a big hospital or any health care organization and you’ve defrauded Medicare and your executives have benefitted from that, you shouldn’t be getting federal money. You should be paying a penalty and a price for the corruption and greed.”

These companies should face extra scrutiny, Brown said. “I think you want extra scrutiny. You also want to make sure they were held accountable.”

In recent months, the Paycheck Protection Program portion of the CARES Act has received a lot of scrutiny – with some large companies even returning their money. The program was designed to help companies with fewer than 500 employees.

But other programs created under the CARES Act have not faced similar examination.

Phil Mattera, the research director at Good Jobs First, said there are bigger slices of the stimulus and relief pie that should be examined – such as those that went to health care companies with histories of major penalties and settlements.

“If you’re going to do any auditing or oversight, you might want to start with the recipients which got much larger sums of money,” said Mattera. “These companies have a track record of misconduct, or at least alleged misconduct, because in many cases they settled those allegations without admitting any guilt.”

McKnight, the attorney who has worked on cases against Tenet, said that’s one of the key issues: many of these cases settle.

“There is no admission of liability, and then they go back to business again. You will find that some people settle a case one month and have another contract the next month,” McKnight said.

Florida Cancer Specialists Full Statement

“Florida Cancer Specialists (FCS) received an unsolicited grant of $67 million from the Department of Health & Human Services (HHS). Known as “Provider Relief Funds,” these dollars were automatically distributed to help healthcare providers mitigate economic harm associated with the impact of the Covid-19 pandemic. The amounts were based on Medicare fee-for-service reimbursements in 2019.

“Based on the criteria applied by HHS, and since we serve a significant number of Medicare patients across our 85 treatment facilities, our grant amount was significant.

“FCS did not request these funds. This is not a loan and it is not part of the Payroll Protection Program administered by the Small Business Administration.

“Throughout this pandemic, we have worked to keep our treatment offices open, despite a decrease in patient visits. We have adapted our operations to ensure that our patients continue to receive safe, high-quality cancer care with minimal disruption. And, we have ensured that our physicians and employees have the necessary equipment and support to maintain their personal health and safety.

“FCS is proud of our 36-year track record of consistently providing high-quality, value-based care. We are focused on continuing to provide our patients with world-class cancer care in community-based settings, close to home.”

Tenet Healthcare Full Statement

“CARES Act grants are designed to provide needed support to hospitals and caregivers on the front lines caring for those with COVID in our communities. The grants have helped us maintain our ability to serve public health needs and deliver uninterrupted medical care to patients at all times, while providing an important bridge to minimize the financial crisis created by the pandemic. This support has offset some, but not all, of the adverse impact on our business as we have managed through uncertainty surrounding how long the pandemic will last, the path of current and potential future waves and the detrimental impact on our patient volumes that we have experienced. These funds are used only for COVID recovery and assistance.”

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