Settlement Agreement is Among Largest in Southern District of Texas …

Settlement Agreement is Among Largest in Southern District of Texas

HOUSTON–LAWFUEL –Because of a Harris County Hospital District employee’s persistence in challenging improperly filed health insurance claims, the federal Medicare and Medicaid programs will recover almost $15.5 million from the hospital district, according to the settlement agreement unsealed today by the U.S. District Court for the Southern District of Texas. The matter, filed under seal in federal court since October 2003, was filed under the powerful, but little known, whistleblower provisions of the federal False Claims Act and Texas Medicaid Fraud Prevention law. The case is styled United States ex rel. Robert E. McCaslin, Jr. v. Harris County Hospital District; No. H-03-4438.

Attorney Mitch Kreindler of Kreindler & Associates in Houston and co-counsel Matt Smith of Phillips & Cohen L.L.P., of Washington, D.C., represented the whistleblower, Robert McCaslin, during the legal proceedings in which the Harris County Hospital District (HCHD) ultimately agreed to reimburse the federal and Texas state governments for improperly filed health insurance claims during a period of six years, from 2000 to 2005. Based on its investigation, the government estimates that incorrect claims were filed on behalf of thousands of patients.

The $15,449,126.97 settlement is among the largest cases settled in the Southern District of Texas under the False Claims Act. Cases filed under the False Claims Act in fiscal year 2006 yielded more than $3.166 billion in reimbursement to the federal government, according to statistics maintained by the Department of Justice.

A patient account representative in the Patient Business Services Division at HCHD since April 2001, McCaslin first suspected a systemic problem in the way HCHD was submitting Medicare claims in May 2003. Upon reporting the discrepancy to several supervisors and compliance personnel, McCaslin observed that the erroneous claims continued. He then anonymously notified HCHD’s Medicare fiscal intermediary, Trailblazer Health Enterprises LLC, of a specific fraudulent claim. He saw that Trailblazer required HCHD to correct the claim. Secure in the knowledge that he was right, McCaslin sought outside legal assistance to pursue the matter under the provisions of the False Claims Act.

“The way this settlement evolved is a textbook example of how the False Claims Act should work. Thanks to the honesty and courage of Mr. McCaslin, taxpayers have been reimbursed, and the Hospital District has corrected process errors and made necessary staffing changes,” Kreindler explained. “The whistleblower, Mr. McCaslin, recognized the wrongdoing and called it to the attention of his supervisors. When his complaints fell on deaf ears, Mr. McCaslin continued to fight for what he knew was right. He enlisted the help of legal counsel, and we alerted the appropriate government entities, who launched an investigation. The False Claims Act empowers individuals to fight those who would defraud the government. To the Hospital District’s credit, it was close to a model citizen once it recognized that it had a significant problem.”

HCHD engaged in two separate activities that are covered by the settlement. First, HCHD charged Medicaid for medical care provided to individuals who were in the custody of law enforcement officials. Under the existing law, Medicare and Medicaid will not pay such expenses.

Second, HCHD failed to comply with the Medicare as Secondary Payer (MSP) law. Under the law, health care providers are required to seek payment from insurance coverage that is primary to Medicare and Medicaid. Of the thousands of inaccurate claims involved, the majority of improperly filed claims involved patients who had been injured in motor vehicle accidents and treated at HCHD facilities, such as Ben Taub Hospital. Despite knowing that other insurance existed in most motor vehicle accident cases, HCHD billed the individual’s medical treatment directly to Medicare. “With these claims involving car accident victims, HCHD simply bypassed submitting the claims to the primary insurance policy even when a primary insurer existed and the contact information for the insurer and its insured was already known to HCHD,” Kreindler explained.

McCaslin’s case was formally filed in October 2003 under the False Claims Act and its qui tam provisions. Qui tam allows any person with evidence of fraud against federal programs or contracts to sue the wrongdoer on behalf of the government. The act provides for the whistleblower, or relator, to receive between 15 and 25 percent of the amount recovered by the government. Under this provision, the federal government will pay $2,780,842.85 of the settlement – or about 18 percent – to McCaslin for his assistance in recovering these funds.

Kreindler & Associates was founded in November 2000 and is dedicated solely to the representation of False Claims Act whistleblowers. The firm provides an uncommon degree of client service and support to whistleblowers that have made the difficult decision to do what is right, often with significant personal hardship. With a practice that is national in scope, Kreindler’s offices are located in Houston and the Philadelphia area.

For more information about Kreindler & Associates and the whistleblower provisions of the False Claims Act, visit

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