published Monday, December 3rd, 2012

Judge scolds prosecutors in whistle-blower Medicare fraud investigation

U.S. District Judge Harry S. "Sandy" Mattice
U.S. District Judge Harry S. "Sandy" Mattice
Photo by Dan Henry /Chattanooga Times Free Press.

A federal judge has issued a scathing opinion in which he puts federal prosecutors "on notice" for keeping a Medicare fraud case under seal for four years, a delay he called "absurd."

The opinion and documents in the long-running case were unsealed Friday by U.S. District Judge Harry S. "Sandy" Mattice. The case details a nationwide investigation of Cleveland, Tenn.-based Life Care Centers of America.

Prosecutors allege the private health care company has bilked Medicare of potentially hundreds of millions of dollars since at least 2006 by providing unnecessary and often harmful therapies to justify higher billing.

Life Care has more than 200 facilities in 28 states and was paid $4.2 billion in Medicare reimbursements from 2006 until 2011.

In a letter to employees Friday the company disputed the allegations and claimed its therapy methods saved Medicare $400 million in that time period.

Two whistle-blower lawsuits filed in 2008 by former employees were merged this year, and prosecutors officially took the case and pressed fraud charges this fall.

The whistle-blowers are Glenda Martin, who worked at Life Care facilities in Chattanooga, Morristown and Elizabethton from 1993 until 2007, and Tammie Johnson Taylor, a former occupational therapist at a Life Care facility in Lauderhill, Fla.

But the entire lawsuit was kept under seal from the time of the filings under seemingly false pretext, according to Mattice's opinion.

Whistle-blower lawsuits are allowed to stay under seal for 60 days while prosecutors evaluate the case and determine whether the U.S. Department of Justice will get involved.

Keeping the cases sealed is supposed to "prevent alleged wrongdoers from being tipped off that they were under investigation," Mattice wrote.

But the prosecutors admitted they had begun settlement negotiations with Life Care in June 2010. The company's top officials were fully aware that they were being investigated.

"The length of time this case has remained under seal borders on the absurd," Mattice wrote.

Prosecutors were granted extensions by claiming the case was complex and resources limited.

But, Mattice said in his opinion, investigators had interviewed more than 150 witnesses across the nation, issued 35 subpoenas, received 200,000 documents from the company and had assistance from lawyers in seven U.S. attorneys' offices, 10 Health and Human Services agents and four lawyers with the Commercial Litigation Branch of the Department of Justice.

Mattice took some responsibility for the lengthy extensions he and U.S. Magistrate Bill Carter granted, but he criticized prosecutors' methods.

"Indeed, the Government's request appears to be an ambitious attempt to shield its case from scrutiny for as long as possible" while using the whistle-blower law's sealing ability as a "weapon," Mattice wrote.

The prosecution team includes Elizabeth Tonkin, who works in the U.S. Attorney's Office for the Eastern District of Tennessee in the Knoxville office, as well as attorneys from Washington, D.C., and Florida.

The U.S. Attorney's office did not respond to a message seeking comment Friday.

But Patrick Burns, a spokesman for the nonprofit Taxpayers Against Fraud, said the work that federal agents and prosecutors have to do on cases such as this one is extensive and can take years.

"The truth of the matter is this is a serious charge," Burns said. "You don't want the government to yell fraud and then say, 'Oh, we made a mistake.'"

Burns faulted the overall regulatory system's weakness for putting prosecutors in the position to have to spend so much time with the case under seal.

"I understand where the judge is coming from," he said. "But I'm going to cut [prosecutors] some slack."

Local attorney Max Bahner, whose law firm represents the Chattanooga Times Free Press and who petitioned to have the records unsealed beginning in September, called the length of time this case has been sealed "extraordinary" and something he had never seen in 50 years of practice in federal court.

Bahner said Mattice's opinion could be published and cited by other federal judges for use in determining whether to allow whistle-blower cases to remain sealed.

Near the end of his opinion, Mattice warned prosecutors that future whistle-blower lawsuits "will be met with significant scrutiny" when the government requests to keep them sealed.

about Todd South...

Todd South covers courts, poverty, technology, military and veterans for the Times Free Press. He has worked at the paper since 2008 and previously covered crime and safety in Southeast Tennessee and North Georgia. Todd’s hometown is Dodge City, Kan. He served five years in the U.S. Marine Corps and deployed to Iraq before returning to school for his journalism degree from the University of Georgia. Todd previously worked at the Anniston (Ala.) Star. Contact ...

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