News & Views

Drummond v. BestCare: An “Open-and-Shut Case” of Medicare Fraud – Part One

Drummond v. BestCare Laboratory Services, 950 F. 3d 277 (5th Cir. 2020) is an important Medicare fraud case decided last year.  It uniquely has everything you typically find in a television procedural or satisfying courtroom drama – a fraudster executing a dastardly scheme, the theft of millions of dollars, a series of coincidences that uncovered the plot, and a Hollywood ending in which the bad guys get their just desserts.

Getting Paid for Miles Never Traveled

The facts set forth in Drummond begins with Karim A. Maghareh and his company, BestCare.  He founded the company with his wife in 2002, and he served as the company’s CEO.  BestCare provided clinical laboratory testing services for nursing-home residents, many of whom were Medicare beneficiaries.  BestCare had a number of labs throughout Texas, with the main one in Webster, Texas.

Richard Drummond was a competitor of Maghareh and became suspicious of Maghareh’s remarkable success in expanding BestCare.  His suspicion was borne of the fact that such testing for Medicare patients is not typically a high-return business.  Normally, Medicare only provides a “nominal” fee for specimen collections.

The proverbial plot thickened when Martha Shirali, the former billing manager of BestCare, took a job with Drummond’s company.  When Shirali told Drummond of how BestCare handled its billing, it became crystal clear to Drummond that BestCare was improperly billing Medicare – for a lot of money.

Maghareh’s scheme involved Medicare reimbursements for travel.  Maghareh’s company, BestCare, sought reimbursements for miles purportedly driven by technicians to collect specimens from patients.  The only problem – the specimens never traveled by car.  Instead, the samples were actually shipped one-way by airplane without any technician aboard.  To add insult to injury, BestCare frequently failed to prorate mileage, thus treating single shipments of multiple samples as though each sample had been shipped separately.

In sum, BestCare was getting millions of dollars of Medicare reimbursements for miles that its technicians never traveled.  Once Drummond learned of the apparent False Claims Act violations, he filed a qui tam whistleblower lawsuit on behalf of the United States.  Indeed, without Drummond’s whistleblowing, this massive fraud may never have seen the light of day.

After approximately 3 years of investigation while the sale remained under seal, the United States intervened, and brought additional claims for fraud, unjust enrichment, payment by mistake, in addition to the initial False Claims Act allegations.

Two Summary Judgment Motions, Calling for Recovery of $30 Million

Ultimately, the U.S. filed two motions for partial summary judgment against BestCare and Maghareh.  Both motions sought damages from a subset of fraudulent billings for trips purporting to be for 400 miles or more from 2005 to 2010.  The reason for the 400-mile limitation was because technicians never traveled more than 400 miles to collect a sample, ever.

The damages request for the first motion was $10 million, and the request for the second motion was $30 million.  The $30 million damages figure represented $10 million of actual damages multiplied by three because the False Claims Act allows for treble damages.

Conclusion

Drummond on the surface looks like a straightforward scheme to defraud Medicare, and a brave whistleblower standing up for the rights of American taxpayers.  Part Two will wrap up the Drummond case with a discussion of BestCare’s attempts to wriggle out from liability, and a description of a satisfying ending to the case.

If you have further questions on this or any Healthcare Fraud subject, please contact the Whistleblower Firm – Nolan Auerbach & White, LLP.  We have the experience and resources to protect healthcare fraud whistleblowers.  Contact us online, or by calling 800-372-8304 today.

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