Medstar Ambulance to Pay $12.7 Million to Resolve False Claims Act Allegations Involving Medically Unnecessary Transport Services and Inflated Claims to Medicare

(Press Release) Medstar Ambulance Inc., including four subsidiary companies and its two owners, Nicholas and Gregory Melehov, have agreed to pay $12.7 million to resolve allegations that the Massachusetts-based ambulance company knowingly submitted false claims to Medicare, the Department of Justice announced today.

“We expect those who participate in the Medicare program to provide services, including ambulance services, based on the medical needs of patients rather than their desire to maximize profits,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “The Department of Justice is committed to ensuring that those who abuse the Medicare program will be held accountable for their actions.”

The settlement resolves allegations that from Jan. 1, 2011, through Oct. 31, 2014, Medstar submitted false claims to Medicare for ambulance transport services. Specifically, the United States alleged that Medstar routinely billed for services that did not qualify for reimbursement because the transports were not medically reasonable and necessary, billed for higher levels of services than were required by patients’ conditions, and billed for higher levels of services than were actually provided.

“Our office is committed to finding and eradicating Medicare fraud wherever it occurs,” said U.S. Attorney Carmen Ortiz for the District of Massachusetts. “While we recognize that Medicare does and should pay for medically necessary ambulance services, it is our job to ensure that ambulance providers do not take advantage of the system or the patients. This settlement is part of the office’s ongoing effort to eradicate health care fraud, and return money to the taxpayers.”

As part of the settlement today, Medstar has agreed to a corporate integrity agreement with the U.S. Department of Health and Human Services (HHS).

“Ambulance service companies should be focused on the needs of the patients,” said HHS Office of Inspector General Special Agent in Charge Phillip Coyne. “Billing Medicare for ambulance rides that were unnecessary or at a higher rate than could be medically justified is unacceptable. Together with our law enforcement partners, we will seek out and stop this fraudulent behavior.”

The allegations were filed in a lawsuit by Dale Meehan, a former employee in Medstar’s billing office, under the whistleblower provisions of the False Claims Act. Those provisions allow private individuals to sue on behalf of the United States and to share in the proceeds of any settlement or judgment. Meehan will receive approximately $3.5 million.

This settlement is the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the District of Massachusetts, the FBI, and HHS, Office of Audit Services and Office of Inspector General.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $31.4 billion through False Claims Act cases, with nearly $19.6 billion of that amount recovered in cases involving fraud against federal health care programs.” Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).

The case is captioned United States ex rel. Meehan v. Medstar Ambulance. Inc., et al., No. 13-CV-12495-IT (D. Mass). The claims settled by this agreement are allegations only; there has been no determination of liability.