New Indictments, Arrests in Multi-State Health Care Fraud Scheme

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On June 24, 2009, Federal agents descended on Miami, Detroit and Denver, as well as other major cities, in a new round of arrests targeting Medicare fraud in those cities. Fifty-three Federal indictments were handed down early in the day by a grand jury in Detroit, and a wave of arrests soon followed. All tolled, the newly indicted suspects are charged with conspiring to defraud Medicare of over $56 million.

The indictments involve fake prescriptions, cash bribes, and stolen Medicare information, including physician identification numbers. As reported in our earlier blog posting, Federal and state government authorities under the Health Care Fraud Prevention & Enforcement Action Team (HEAT) taskforce have recognized the severity of healthcare fraud in South Florida and have been cracking down on these fraudulent schemes. Heightened enforcement in South Florida forced the group to extend their scheme to Detroit, which has become the latest site for Medicare fraud, and other cities to take advantage of Medicare funds.

According to the indictments, the defendants – including doctors, clinic owners, assistants, and patients – submitted millions of dollars in false claims to Medicare for infusion therapy, injection therapy, and other high-priced medical treatments that are designed to treat patients suffering from illnesses such as HIV, AIDS, and cancer.

“As demonstrated by today’s charges and arrests, we will strike back against those whose fraudulent schemes not only undermine a program upon which 45 million aged and disabled Americans depend, but which also contribute directly to rising healthcare costs that all Americans must bear,” U.S. Attorney General Eric Holder said at the press conference announcing the indictments and arrests.

The suspects identified in the Detroit indictments have clear connections to Miami, Florida. In 2008, it is estimated that that city’s prosecutions account for more than one-third of all Medicare fraud cases nationwide. “In fact, ten of the defendants named in the indictments unsealed today are alleged to have brought their fraud schemes from Miami to Detroit,” reported Holder. “Strike force operations in Miami have seen instances of fraud spread quickly through communities in that area. After we arrested and charged criminals in Miami, their cohorts simply moved their schemes to Detroit.”

All together, strikes forces in Miami, Los Angeles and Detroit have charged 249 defendants for Medicare fraud involving about $600 million in false claims for mostly HIV infusion services and medical equipment.

For the U.S. Attorney General’s press release on the indictments and arrests, click here.

For more information about how Fuerst Ittleman can assist your Medicare and health care regulatory compliance and protect against fraud, please contact us at 305-350-5690 or contact@fidjlaw.com.

Court Authorizes Refund of EU Retaliatory Duties

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On June 16, 2009, Gilda Industries, a small bakery and importer in Hialeah, Florida, struck a blow for importers everywhere when it prevailed in its case in the U.S. Court of International Trade.  The result of this case is that importers everywhere may qualify for a full refund of the 100% retaliatory duties paid to U.S. Customs and Border Protection (CBP) on certain products imported from the European Union on or after July 29, 2007.

The decision in Gilda Industries v. United States becomes the latest chapter in what is known as the “EC-Beef Hormones” dispute.  The dispute began in 1985 when the European Community (now the European Union) banned imports of beef and beef products from the United States that had been treated with hormones.  As a result, the U.S. imposed a 100% retaliatory tariff on a “retaliation list” of European Union products.

In theory, the retaliatory measures should have ended in mid-2007.  However, when CBP continued to collect the retaliatory tariffs after that date, Gilda took the matter to court.

The Court found that the 100% retaliatory tariffs did, in fact, terminate on July 29, 2007, and it ordered CBP to refund the retaliatory duties collected on Gilda’s imports after that date.  The Court’s opinion, however, opens the door for a full refund on all of the retaliatory duties paid to CBP after that date for all of the affected products

Importers who qualify for refunds should immediately file an action with the U.S. Court of International Trade to preserve the right to the refunds.  These actions must be filed before July 29, 2009.

The list of products subject to the 100% retaliatory duties – for which refund may be due -includes various meats, cheeses, vegetables and other food items.  For the complete list of products affected, click here.

For the decision of the Court in Gilda Industries v. United States, click here.

If you are importer who believes that you may be due refunds of duties from CBP under this decision, please contact Fuerst Ittleman at 305-350-5690 or contact@fidjlaw.com.  You should not delay.

Healthcare Fraud Crackdown Expanded in Miami-Dade County

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Efforts to crack down on Medicare and Medicaid fraud has focused the radars of federal and state law enforcement onto the Miami-Dade county area. On June 19, 2009, state investigators from the Florida Agency for Health Care Administration (“AHCA”) revealed more Medicaid fraud in Miami-Dade: the state paid for unnecessary or unaccounted oxygen equipment.

Recent government studies have estimated Medicare and Medicaid fraud to be at least $60 billion a year nationwide. According to the FBI and the Department of Justice, Medicare and Medicaid fraud is big business in Miami Dade County reaching at least $2.5 billion a year.

Fraudulent billing for medical equipment is the latest scam plaguing Medicaid which, according to the AHCA, spent over $90 million on medical equipment last year alone. When over $1.4 million was spent on oxygen equipment in Miami-Dade County last year, this raised the suspicions of the AHCA.

Attempts to curb Medicaid and Medicare fraud in South Florida are nothing new. In March, Medicaid investigators commenced similar investigations of Miami-Dade’s home health industry. On June 15th, Governor Charlie Christ signed into law a bill that declared Miami-Dade a “crisis area for healthcare fraud” and tightened regulations on home health agencies, home medical equipment providers, and health care clinics.

These recent efforts by the state come on top of increased efforts by the federal government to stem the tide of fraud and wasteful government spending in Medicare and Medicaid. The first of these efforts, the Medicare Strike Force, was started in 2007. In two years, federal prosecutors have filed 87 indictments charging 159 defendants with fraud offenses. This past May, the federal government announced a new task force – the Health Care Fraud Prevention and Enforcement Team, or HEAT – which will increase healthcare fraud enforcement in Miami-Dade County.

With increased efforts of law enforcement cracking down on the industry, let FHI help your health care business with its regulatory compliance. Contact us at 305-350-5690 or contact@fidjlaw.com.

U.S.-Swiss Tax Treaty Amendments: Stricter Cooperation and Enforcement on the Horizon

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The U.S. Department of the Treasury issued a press release on June 19, 2009 to mark the successful conclusion of treaty negotiations on a plan to share tax information between the United States and Switzerland. 

From the American perspective, the treaty revisions embody an Obama Administration policy goal:  to edge closer to full enforcement of the tax-code by eliminating havens for tax evasion.  From a global perspective, the treaty revisions mark a broader campaign to meet the requirements of Article 26 of the Organization for Economic Co-operation and Development’s (OECD) Model Tax Convention on Income and Capital.  IRS Commissioner Douglas Shulman indicated participation in this global shift only a month ago at the Forum on Tax Administration, warning those “who hide assets overseas [to] expect an increasing number of revenue bodies to cooperate and share information.”

OECD summarizes Article 26 as a tool for eliminating bank secrecy in the face of warranted searches for financial information outside of signatory nations’ borders.  Several countries that historically manage large amounts of foreign capital have indicated a transition to adherence to Article 26.  Some of these jurisdictions include Hong Kong, Singapore, Austria, and Liechtenstein.  OECD’s Secretary General called these developments “a fundamental change and an important moment in the history of international tax cooperation” and characterized tax enforcement as a critical part of recovery from the global economic crisis.

Negotiations took place over about two months to revise the current treaty on tax information sharing between the two countries.  The Treasury Department expects official signing of the treaty within months.  So far in 2009, the U.S. has come to agreement on similar revisions with France and Luxembourg.

For the complete text of the IRS press release on the U.S.-Swiss tax treaty amendments, please click here.

Our professionals at FHI will be tracking this issue as it develops and the Obama Administration – in Treasury Secretary Tim Geithner’s words – carries out its “commit[ment] to reducing off shore tax evasion to help ensure that all U.S. taxpayers are playing by the same rules.”

For assistance with navigating the changing waters of international taxation and enforcement, please contact Fuerst Ittleman at 305-350-5690 or contact@fidjlaw.com.

Fuerst Ittleman Assists Clients and Earns a “Thank You”

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Bio-Nucleonics, Inc., a leading Florida company specializing in radiopharmaceuticals, medical devices and imaging agents, gave a hearty “Thanks” to Fuerst Ittleman in its most recent issue of BioBulletin, the companys newsletter.

Fuerst Ittleman recently assisted Bio-Nucleonics with gaining FDA approval for the companys new Doral, Florida product manufacturing facility. The FDAs approval certifies that Bio-Nucleonics uses “current Good Manufacturing Practice” (cGMP) in all its production at this state-of-the art facility.

The FDA also gave approval to Bio-Nucleonics for its proposed release criteria and timeframes for specific lot release tests to be completed prior to shipment of finished drug products. The importance of this ruling is that no material is lost to radioactive decay and each dose can be shipped immediately to the customer.

FHI assisted Bio-Nucleonics with both of these efforts. We found it such a pleasure to work with clients who were as knowledgeable, dedicated, and thorough as the team at Bio-Nucleonics, and were glad that they liked working with us, too.

Let Fuerst Ittleman help guide your company to its next success. For more information, contact us today at 305.350.5690 or contact@fidjlaw.com

IRS Considers Oversight of Tax Return Preparers

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On June 4, 2009, the IRS announced plans for a comprehensive program aimed at tax return preparers.  According to IRS Commissioner Doug Shulman, the recommendations of the Service will “better leverage the tax return preparer community with the twin goals of increasing taxpayer compliance and ensuring uniform and high ethical standards of conduct for tax preparers.”

 

Recognizing that “tax return preparers help Americans with one of their biggest financial transactions each year,” Mr. Shulman announced that the IRS “must ensure that all preparers are ethical, provide good service and are qualified.”  Certainly, the need for such recommendations from the IRS is great.  A recent study by the Treasury Inspector General for Tax Administration found that 61% of tax returns completed by unlicensed paid preparers contained errors.

 

Moreover, the tax return preparation industry is enormous and getting bigger.  According to IRS estimates, over 80% of taxpayers either hire a tax preparer or use tax-preparation software.  And while enrolled agents, certified public accountants and licensed tax attorneys must register with the IRS and meet minimum training requirements, other, unregulated tax return preparers can work on tax returns without such safeguards.  “Right now, there is no clear national standard regulation of paid tax-return preparers,” said Mr. Shulman.

 

Although still in formation, the IRS reports that the potential recommendations could focus on:

  • a new model for the regulation of tax return preparers
  • service and outreach for return preparers
  • education and training of return preparers
  • enforcement related to return preparer misconduct.

The process will begin with information gathering from agents, lawyers and accountants as well as unlicensed tax preparers and software vendors.  The agency reported that it will also seek the input of consumer groups and taxpayers, and will open “a transparent and open dialogue about the issues,” according to Mr. Shulman.  “At this early and critical stage of the process, we need to hear from the broadest possible range of stakeholders.”

 

Fuerst Ittleman will continue to monitor this evolving effort by the IRS, both for how it will affect our clients and friends, but also to remain actively involved in developing the recommendations with the agency.

 

For more information, contact Fuerst Ittleman today at 305.350.5690 or contact@fidjlaw.com.

Food Safety Legislation Update

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The House Energy and Commerce Committee convened to discuss draft legislation that would broadly affect regulation of food production, importation, and manufacturing inside and outside of the U.S.  Newly confirmed FDA Commissioner Margaret Hamburg testified before the committee on The Food Safety Enhancement Act of 2009 (FSEA).

 

FSEAs major initiatives are:

  • Registration fees for domestic and foreign producers as well as importers
  • Creation of an identification system for businesses in the food supply chain
  • Risk-based frequency levels of inspection
  • Increasing FDAs subpoena power
  • Two tier approach to recalls: voluntary and mandatory

Democratic Party proponents, led by Representative Dingell of Michigan, emphasized the “dire situation” of food safety and characterized the legislation as a means of recreating the FDA with new and stronger enforcement and financing tools.  Opponents largely criticized the passing of costs to consumers, regulation that does not guarantee results, and also chided the hearing on draft legislation, rather than a finalized text.  Another recurring critique was the broad discretion given to make mandatory recalls.  Some committee members took exception to the Commissioners admission that senior officials, not only the Commissioner, might be given the power to issue mandatory recalls.

 

Commissioner Hamburg unequivocally supported the legislation, saying that it would base food safety monitoring on prevention.  She also agreed with the legislations legal empowerment of the agency as well as its requirement that user fees be generated by the food industry.

Scientific Developments in Induced Pluripotent Stem Cells

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This week has seen the publication of two reports of groundbreaking results in the field of stem cell research.

 

Scientists at San Diego Californias Salk Institute for Biological Studies have published a report in Nature describing the creation of induced pluripotent stem (iPS) cells.  Dr. Juan Carlos Izpisua Belmontes team applied gene therapy techniques to correct defective cells from patients afflicted with Fanconi anemia.  The team reports that the created iPS cells are indistinguishable from human embryonic stem cells.  Although the research has not yet been used in humans, the iPS cells create hope that such correction might be done to the diseased cells of Fanconi anemia patients. Upon correction, the cells could be reintroduced to the patient, without risk of rejection, to rid the patient of the affliction.

 

Chinese Scientists at the Shanghai Institute of Biochemistry and Cell Biology have created iPS cells adaptable to the human body from the tissue of pigs.  Similarly, the iPS cells resulting from the Chinese teams procedure are identical to embryonic stem cells.  Researchers believe that these results accomplish a necessary step towards the use of pigs to generate human-compatible organs.  Some also think this research could enable human-like simulations of human diseases and thus a platform for drug and biologic testing which would be as much like a human clinical trial as possible.

 

View the reports here:
http://www.nature.com/nature/journal/vaop/ncurrent/pdf/nature08129.pdf

http://jmcb.oxfordjournals.org/cgi/content/abstract/mjp003

 

Foreign Bank Accounts and the IRS

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Original Article: Mitchell S. Fuerst: Foreign Bank Accounts and the IRS [pdf]

The IRS Targets Taxpayers Hiding Assets in Offshore Bank Accounts

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Voluntary Disclosure Guidelines Give Taxpayers Until September 23rd to Reveal Offshore Assets

According to a statement on Offshore Income given by IRS Commissioner Doug Shulman, U.S. Taxpayers and entities that are currently hiding assets in offshore accounts have a limited voluntary disclosure period until September 23rd , of 2009 to reveal those accounts before the IRS takes the offensive. After the voluntary disclosure period, the IRS plans to aggressively pursue both civil and criminal penalties for taxpayers that fail to take advantage of the voluntary disclosure initiative. Furthermore, the IRS revealed that they are actively tracking entities and individuals attempting to clean up their act through “quiet disclosures,” the practice of Taxpayers declaring a prior increase of income through amended tax returns.

The IRS stated, “Those taxpayers making ‘quiet’ disclosures should be aware of the risk of being examined and potentially criminally prosecuted for all applicable years.”

It seems that the IRS has decided to take an aggressive position here. In a statement given by the IRS regarding the penalties for the 52,000 holders of undeclared UBS bank accounts, the IRS only mentioned a “reduction of penalties,” for those that took advantage of the voluntary disclosure practice.

Under the new IRS guidance, the quiet disclosure practice is no longer a safe measure to make amends to the IRS. President Obama recently mentioned the appointment of congressional authority to hire an additional 800 IRS agents assigned to track down and pursue illegal tax evasion and the use of undeclared offshore accounts. Though it is legal for Americans to have offshore accounts, the U.S. Treasury Department requires any account containing more than $10,000 to report the existence of the account, and taxes paid on the income as well.