The 2015 Yates Memo continues to impact federal prosecutions as the Department of Justice continues to seek accountability from individuals responsible for corporate wrongdoings. As the two year anniversary of the Yates Memo approaches, recent FCA litigation exemplifies the Yates Memo’s intentions.
For example, on June 26, 2017, the DOJ reminded us once again that business executives may be financially responsible for claims made under the False Claims Act (FCA) against their companies. This reminder comes by way of a $13.45M settlement involving cardiac monitoring companies and one of its executives. The case involved AMI Monitoring Inc. aka Spectocor, its owner, Joseph Bogdan, Medi-Lynx Cardiac Monitoring LLC, and Medicalgorithmics SA, the current majority owner of Medi-Lynx Cardiac Monitoring LLC. The settlement’s terms require Spectocor and its owner, Joseph Bogdan, pay $10.56 million and Medi-Lynx and Medicalgorithmics pay $2.89 million. The case is United States ex rel. John Doe v. Spectocor Enterprise Services, LLC, et al., Case No. 14-1387 (KSH) (D. N.J.) (filed under seal).
This settlement is a reminder for business owners and executives: Financial responsibility under the False Claims Act can reach beyond the corporate entity and into an executive’s own pockets.
Initially litigated as a qui tam action until government intervention, Spectocor involved a Pocket ECG capable of performing three types of cardiac monitoring services, each with a different reimbursement rate. Allegedly, the enrollment process—which was purposed to determine the appropriate monitoring service for the patient—prescribed the service that had the highest reimbursement rate covered by the patient’s insurance. The DoJ argued that this led to unnecessary services and thus increased Medicare reimbursements to the defendants. Commenting on this settlement, the Acting U.S. Attorney William E. Fitzpatrick for the District of New Jersey suggested that he will keep a watchful eye for other examples of “[s]ophisticated medical technology” being used to “fraudulently increase medical bills.”
Spectocor is not the first FCA case to require a business executive contribute financially to resolve an FCA action and it certainly will not be the last. The DoJ continues to follow the 2015 Yates Memo’s directive and continues to hold individuals accountable for corporate wrongdoing. Business executives should heed Spectocor as yet another example of the Yates Memo’s policy in action. Accordingly, business executives have yet another reason to proactively monitor their business’ operations to ensure full compliance with federal laws such as the False Claims Act.