Elite Lab Services, LLC, along with its husband-and-wife owners Gerard and Suzanne Dengler, will pay the United States $3.75 million after billing Medicare for tens of thousands of miles that were never driven by Elite Lab’s personnel, announced Acting United States Attorney Brit Featherston.
“The United States Attorney’s Office for the Eastern District of Texas continues to combat white-collar fraud at every turn,” said Acting U.S. Attorney Featherston. “Medicare is designed to ensure that this country’s elderly have access to vital health care services. Unfortunately, some providers fraudulently raid these limited public funds for purely personal gain-misconduct that our office will tirelessly prosecute.”
In July 2014, former Elite Lab employee Karen Malcolm filed a lawsuit under the qui tam provisions of the False Claims Act. Ms. Malcolm filed her suit in the Eastern District of Texas in an action captioned United States ex rel. Malcolm v. Elite Lab Services, LLC, et al., Case Number 6:14-cv-662. In her action, Ms. Malcolm alleged, among other things, that the defendants inflated mileage claims submitted to Medicare from approximately 2010 through 2014. Ms. Malcolm approached the Denglers in the spring of 2014 to voice her concerns about the billing practices. Ms. Malcolm claimed the fraudulent billing was not corrected, and she then resigned her employment with Elite Lab.
The United States intervened in the action for purposes of settlement. The Denglers and Elite Lab agreed to pay the United States $3.75 million to settle the False Claims Act lawsuit. As part of the settlement announced today, the Denglers and Elite Lab admit they submitted false claims to Medicare-claims that contained inflated mileage calculations beyond those actually driven by Elite Lab employees. The settlement also resolves a separate lawsuit in which the United States sought to forfeit funds and property obtained by the Denglers and Elite Lab through their fraudulent conduct.
The False Claims Act permits a private citizen (called a “relator”) with knowledge of fraud against the Government to bring a lawsuit on behalf of the United States and to share in the recovery. Under the settlement announced today, Ms. Malcolm will receive a 21% share of the United States’ recovery, a total of $787,500.00.
“The allegations in this case are representative of profiteering at the expense of Medicare,” said HHS OIG SAC CJ Porter. “The Medicare program was fraudulently billed for excessive mileage driven to collect lab specimens. These abuses are a threat to the viability of Medicare and together with our law enforcement partners, we will doggedly pursue all manner of fraud against Medicare.” As a result of this settlement, Elite Lab Services, LLC will be excluded from participating in Medicare for eight years, Gerard Dengler will be excluded for 10 years, and Suzanne Dengler will be excluded for eight years, according to SAC Porter.
This matter was investigated by the Federal Bureau of Investigation (FBI), the U.S. Department of Health and Human Services – Office of the Inspector General (HHS-OIG), the Texas Office of the Attorney General – Medicaid Fraud Control Unit (OAG-MFCU), and the United States Attorney’s Office for the Eastern District of Texas. The civil settlement was negotiated by Assistant U.S. Attorney Joshua Russ. The civil forfeiture action was prosecuted by Assistant U.S. Attorney Bob Wells.