Health Care Fraud: Ted and Julie Cain of Ocean Springs Finds Guilty Of Submitting False Claims to Medicare

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<h2>Federal Jury finds Defendants Guilty of Submitting False Claims to Medicare under Civil False Claims Act<&sol;h2>&NewLine;<p><strong>Jury verdict results in recovery of more than &dollar;10&period;85 million to the Medicare program<&sol;strong><&sol;p>&NewLine;<p>Gulfport&comma; Miss&period; – Following a nine week trial&comma; a federal jury in Gulfport returned a guilty verdict yesterday against Ted and Julie Cain of Ocean Springs&comma; Ted Cain’s companies&comma; Stone County Hospital &lpar;Wiggins&rpar; and Corporate Management&comma; Inc&period; &lpar;Gulfport&rpar;&comma; and Tommy Kuluz&comma; Chief Financial Officer of Corporate Management&comma; Inc&period; for violating the Civil False Claims Act&comma; announced U&period;S&period; Attorney Mike Hurst and Derrick Jackson&comma; Special Agent in Charge of the Office of Inspector General for the U&period;S&period; Department of Health and Human Services&period;<&sol;p>&NewLine;<p>&OpenCurlyDoubleQuote;This verdict is a victory for the American taxpayer and all the beneficiaries of Medicare and other government programs&comma;” said U&period;S&period; Attorney Mike Hurst&period; &OpenCurlyDoubleQuote;This was one of the most egregious cases of Medicare fraud we have litigated in the State of Mississippi&comma; and I am grateful to our prosecutors and DOJ attorneys and investigators for tenaciously pursuing and holding these fraud takers accountable&period; We will remain vigilant in protecting American taxpayer dollars and rooting out waste&comma; fraud and abuse throughout government&period;”<&sol;p>&NewLine;<p>The Government’s complaint and evidence at trial established that these defendants used Stone County Hospital&comma; formerly a 25-bed critical access hospital and Medicare provider&comma; to defraud Medicare of more than &dollar;10&period;85 million through fraudulent annual Medicare cost reports for the years 2004 through 2015&period; The majority of the damages sustained by the Government resulted from Ted Cain’s multi-million dollar compensation&comma; billed to Medicare through Stone County Hospital and Corporate Management&comma; Inc&period; For years&comma; Corporate Management&comma; Inc&period; passed on the vast majority of Ted Cain’s multi-million dollar compensation to Stone County Hospital&comma; which Medicare reimbursed for costs at 101&percnt; from 2004 through April 1&comma; 2013&comma; and 99&percnt; from April 1&comma; 2013 through 2015 under special reimbursement principles for critical access hospitals that help rural&comma; underserved areas&period; For the cost reporting years 2004 to 2015&comma; Corporate Management&comma; Inc&period;&comma; through Ted Cain and Tommy Kuluz&comma; assisted by Julie Cain&comma; requested more than &dollar;17&period;69 million in compensation for Ted Cain despite no evidence that Ted Cain did any work for Stone County Hospital that qualified for Medicare reimbursement and that his compensation was unreasonable&period; In total&comma; Medicare reimbursed Stone County Hospital nearly &dollar;11&period;8 million for Ted Cain’s compensation&period; The jury awarded the Government nearly &dollar;9&period;62 million in damages for Ted Cain’s fraudulent compensation&period;<&sol;p>&NewLine;<p>Ted Cain’s wife&comma; Julie Cain&comma; who Ted Cain placed in the position of Administrator for Stone County Hospital from 2003 to 2012&comma; also fraudulently received more than &dollar;704&comma;454 in compensation reimbursed by Medicare&period; The evidence at trial showed that Julie Cain rarely worked at Stone County Hospital&comma; while others ran the hospital&comma; and Julie Cain’s compensation was unreasonable&period; After Julie Cain resigned as the Administrator of Stone County Hospital&comma; she immediately started receiving compensation from Corporate Management&comma; Inc&period; for alleged consulting work and director’s fees&period; Neither Julie Cain nor any other defendant could identify any consulting work she did for Stone County Hospital&period; Medicare reimbursed &dollar;149&comma;510 in Julie Cain’s fraudulently obtained compensation for consulting and director’s fees&period; The jury awarded the Government a total of &dollar;853&comma;964 in fraudulent compensation paid for Julie Cain&period;<&sol;p>&NewLine;<p>Moreover&comma; an audit conducted by the Mississippi Division of Medicaid found that for 2012 and 2013&comma; Corporate Management&comma; Inc&period;&comma; self-disallowed home office costs on its Medicaid home office statement but charged those costs on its Medicare home office statement&comma; despite that Medicare and Medicaid follow the same reimbursement rules&period; Chief <a class&equals;"wpil&lowbar;keyword&lowbar;link" href&equals;"https&colon;&sol;&sol;www&period;fraudswatch&period;com&sol;tag&sol;financial-fraud&sol;" title&equals;"Financial" data-wpil-keyword-link&equals;"linked" data-wpil-monitor-id&equals;"955">Financial<&sol;a> Officer Tommy Kuluz could provide no explanation for this discrepancy&comma; and despite the fact that he knew about the discrepancies at least by 2016 when Medicaid conducted an audit&comma; defendants made no effort to repay Medicare for the over-allocation to Stone County Hospital&period; Because of this fraud&comma; Medicare reimbursed Stone County Hospital more than &dollar;381&comma;866 in fraudulent costs that it should not have&period;<&sol;p>&NewLine;<p>The jury made a number of findings in its verdict&comma; resulting in recovery of more than &dollar;10&period;85 million to the Medicare program&period; Damages are trebled under the False Claims Act&period; The Court also imposes a statutory penalty of &dollar;5&comma;500 to &dollar;11&comma;000 for each false claim for cost report years 2004 to 2014 and &dollar;11&comma;181 to &dollar;22&comma;363 for the 2015 cost report&period; Accordingly&comma; the total amount of defendants’ civil liability will be determined by the Court&comma; using the findings in the jury’s verdict&period;<&sol;p>&NewLine;<p>The jury’s verdict resolves a lawsuit that was filed by James Aldridge under the qui tam or &OpenCurlyDoubleQuote;whistleblower” provisions of the False Claims Act&comma; which permit private individuals to sue on behalf of the government for false claims and to share in any recovery&period; The Government investigated and intervened in the lawsuit and prosecuted the case&period; The case is captioned United States ex rel&period; Aldridge v&period; Corporate Management&comma; Inc&period;&comma; et al&period;&comma; Case No&period; 1&colon;16cv369-HTW-LRA &lpar;S&period;D&period; Miss&period;&rpar;&period; The United States appreciates the relator’s interest in program integrity and his assistance with this successful outcome&period; The United States also appreciates the assistance of the Mississippi Division of Medicaid and Manuel Pilgrim&comma; who heads its audit program&period; The Department of Health and Human Services Office of Inspector General also provided assistance in the case&period;<&sol;p>&NewLine;<p>The case was prosecuted by Assistant U&period;S&period; Attorney Angela Givens Williams and Attorneys Tom Morris and Elspeth A&period; England with the Civil Fraud Section of the Commercial Litigation Branch of the U&period;S&period; Department of Justice in Washington&comma; D&period;C&period;<&sol;p>&NewLine;

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