The Department of Justice put out its own release on the Chan settlement, available here:
http://www.justice.gov/usao/waw/press/2013/June/chan.html
June 20, 2013 Lakewood, Washington -- A whistleblower lawsuit and a government investigation has led to an agreement by Alfred H. Chan, M.D., his wife and office manager Judy Chan, and their children, to pay the federal government $3.1 million. The payment settles allegations that Dr. Chan, an oncologist, and his practice placed patients at risk and fraudulently overbilled Medicare and other government programs by falsifying the amount of chemotherapy administered to patients and then falsifying the patients' medical charts so that the practice's records would be consistent with the inflated charges submitted to the government.
The “qui tam” (whistleblower) lawsuit, brought under the federal False Claims Act, was filed under seal in September 2008 in federal court in the Western District of Washington by Ruth L. Ruckman, who was employed as a receptionist by the medical practice, Alfred H. Chan, M.D., P.C. The government investigated Ruckman's allegations and then joined the case in September 2010.
“Ms. Ruckman had the courage to blow the whistle on the fraud scheme when others looked away or simply left the practice. By doing so, she ensured the safety of patients and stopped the false billings to the government. She is the hero in this story,” said Michael A. Hirst of Hirst Law Group, P.C., in Davis, California, who represented Ruckman in the case.
While working in the office, Ruckman noticed that after examining patients, Dr. Chan would prepare handwritten treatment orders on scraps of paper and provide them to the office nurse. Dr. Chan required that the paper scraps be returned directly to him at the conclusion of the patient's infusion or injection. The scraps contained the patient's name and an abbreviated list of the chemotherapy medications and dosages. Dr. Chan would promptly shred the treatment orders. Thereafter, he transcribed medical notes and completed billing records, on both of which he routinely inflated the amount of chemotherapy provided to patients and the duration of the infusion. Judy Chan, his wife, would then submit the inflated bills to Medicare and other federal programs for payment. The billed and recorded quantities were usually increased by multiples of 2 to 4, and occasionally by a multiple of 8. If the government were to have audited Dr. Chan's medical records, the falsely inflated records would have matched the falsely inflated billings, with no preserved records showing the true quantities administered to patients.
Over time, Ruckman was able to remove, copy, and replace several scraps of paper left for Dr. Chan before the doctor could shred them or discover Ruckman retrieving the scraps. She provided the scraps to her counsel, who provided a roadmap of the fraud to the government.
“Without the whistleblower's willingness to get involved and stop the fraud, it is unlikely that the government would have uncovered the fraud scheme on its own,” said Jerry L. Hurst, a health care fraud auditor at Hirst Law Group, P.C., and a former auditor for both the U.S. Attorney's Office and Department of Health and Human Services, Office of Inspector General. “In a case like this, with the patients' records showing the same quantity of medications as the billings, a routine audit would typically not catch the fraud.”
Both Ruckman's complaint and the government's subsequent complaint in 2010 noted the potential harm to patients. If another physician or hospital were to request Dr. Chan's medical records, the false information in those records regarding a patient's past cancer treatment could influence the subsequent treatment provided -- or not provided -- to the patient.
When the fraud was exposed, the Chans first tried to blame Ruckman. In papers filed with the court, they claimed that Ruckman “daily conducted activities that perpetuated what she now claims was Dr. Chan's ongoing fraudulent behavior.” Hirst stated: “Unfortunately, that's all too common. Some defendants try to blame the whistleblower for the fraud. The problem with that tactic is that government lawyers and agents are way too smart to fall for it, and the government team in this case never took that contention seriously.”
In April 30, 2009, government agents executed a federal search warrant on the clinic practice, and copied patient files, computer data, and other evidence. In February 2011, before Alfred and Judy Chan were criminally prosecuted for fraud, they fled to Taiwan. Because Taiwan does not have an extradition treaty with the United States, the Chans cannot be forced to return for the prosecution if they remain within Taiwan's borders, even though a grand jury has issued a criminal indictment against them. The government contended that, before they fled, the Chans fraudulently transferred millions of dollars in real property and other assets to their children, the children's trusts, and the Chan family LLCs -- assets beyond those already garnished by the government in the case.
In the settlement agreement, the Chan children agreed to sell property, not contest the forfeiture of assets, and give up claims to garnished funds. In total, the settlement provides a repayment to the government of $3.1 million.
The civil settlement agreement resolves the whistleblower's allegations that Dr. and Judy Chan submitted false claims to the government from April 2006 to April 2009 by:
Overcharging for quantities of medications administered to patients
Overstating chemotherapy infusion times
Double billing for medications
The settlement also resolves claims against the Chans and their children for the alleged fraudulent transfer of assets to the children, their trusts, and the family LLCs.
Hirst said that the case resolution demonstrates the diligent and successful work of Assistant United States Attorneys Harold Malkin and David East, and their investigative team led by DCIS Special Agent Andreas Kaltsounis.
The False Claims Act enables private citizens to sue entities that defraud federal and state governments and receive a reward if funds are recovered. For her work in the case, Ruckman will be awarded 20% of the government's recovery.
Hirst Law Group P.C. represents whistleblowers in federal and state False Claims Act and employment cases around the country. Cases handled by the firm's attorneys have been reported on television, radio and newspapers nationally and abroad, including the largest recovery against a single hospital in US history, which became the subject of a book Coronary (Simon and Schuster, 2007). The firm's staff includes a former supervisor of False Claims Act cases for the government and a former government fraud auditor. See www.hirstlawgroup.com.
