Whistleblower Protections Leads to Allegations Against St. Joseph’s in Atlanta

SAINT JOSEPH’S HOSPITAL OF ATLANTA PAYS $26 MILLION

TO SETTLE FALSE CLAIMS ACT ALLEGATIONS

Settlement Resolves Investigation of Hospital’s Claims For Inpatient Admissions

Atlanta, GA - The United States Attorney’s Office today announced that Saint Joseph’s Hospital of Atlanta, Inc. and Saint Joseph’s Health System, Inc. have agreed to pay $26 million to settle allegations raised in a so-called “whistleblower” lawsuit that the hospital violated the federal False Claims Act with regard to billing for inpatient admissions and other services.

United States Attorney David E. Nahmias said, “This significant settlement demonstrates our commitment to protect public funds from fraud and abuse. Every hospital that submits claims to the Medicare program must ensure that its services are billed appropriately. We will continue to vigorously pursue Medicare providers who disregard billing rules.”

In Washington D.C., Jeffrey S. Bucholtz, the Acting Assistant Attorney General for the Civil Division, said, “Health care providers in the Medicare program have an obligation to turn square corners when dealing with the government. This means that hospitals must go the extra mile to ensure that any claims for payment they submit to Medicare reflect the correct level of service.”

Also in Washington, United States Department of Health and Human Services Inspector General Daniel R. Levinson said, “Any time a false claim is submitted for payment, the Medicare program suffers. OIG will work closely with our law enforcement partners to identify and hold accountable providers who obtain crucial Medicare dollars through inappropriate billing.”

The settlement resolves an investigation primarily focusing on Saint Joseph’s Hospital’s submission of Medicare claims from the years 2000 through 2005, where services that should have been billed as “outpatient visits” were billed as “inpatient admissions.” The qui tam, or whistleblower lawsuit, filed by a former employee of Saint Joseph’s Hospital, Tami Ramsey, a registered nurse, alleged, in part, that the hospital routinely submitted claims to Medicare for inpatient services when only outpatient-level services were provided. Under the Medicare payment methodology, the Hospital received much higher payments to which it was not entitled because the services were billed as inpatient stays instead of outpatient visits.

The settlement covers claims submitted by Saint Joseph’s Hospital for short inpatient admissions, usually of one day or less but sometimes longer, where the services were such that they should have been billed on an outpatient “observation” basis or as an emergency room visit. It also covers claims where the hospital admitted patients for three days, without meeting the criteria for a covered admission, so the patients would qualify under Medicare payment rules for subsequent coverage for skilled nursing facility services. In addition, the settlement includes certain claims submitted by the hospital for inpatient admissions relating to placement of carotid artery stents, which were not covered under Medicare benefits.

The United States has agreed to dismiss the lawsuit in exchange for the $26 million payment. As a condition of continued participation in federal health care programs, the Office of Inspector General of the Department of Health and Human Services has required Saint Joseph’s Hospital and Health System to enter into a Corporate Integrity Agreement. The Corporate Integrity Agreement subjects Saint Joseph’s to strict policies and procedures to ensure future compliance with applicable statutes and regulations that govern the use of federal health care funds. Under the qui tam provision of the False Claims Act, the whistleblower, Tami Ramsey, will receive $4.94 million as her share of the recovery in the case.

The investigation was jointly handled by the United States Attorney’s Office for the Northern District of Georgia, the Commercial Litigation Branch of the Department of Justice, and the Department of Health and Human Services, Office of Inspector General.

Assistant U.S. Attorney Mina Rhee handled the case for the U.S. Attorney’s Office. Senior Trial Attorney Marie Bonkowski, of the Department’s Civil Division, Commercial Litigation Branch, also assisted in this case.

For further information, please contact David E. Nahmias (pronounced NAH-me-us), United States Attorney, or Charysse L. Alexander, Executive Assistant United States Attorney, through Patrick Crosby, Public Affairs Officer, U.S. Attorney’s Office, at (404) 581-6016. The Internet address for the HomePage for the U.S. Attorney’s Office for the Northern District of Georgia is www.usdoj.gov/usao/gan.

Armas, Merren Sentenced, Redstrom May Have to Stand Trial

Rome, GA - MARIO ARMAS, a/k/a “Mario Doninelli,” 45, of Rome, Georgia, was sentenced today on charges of conspiracy to distribute and possess with intent to distribute marijuana and money laundering relating to a violent drug operation in Northwest Georgia.

United States Attorney David E. Nahmias said of today’s sentencings, “The evidence in this case exposed Armas as a greedy businessman willing to brazenly break the law to make more money. Armas infused more than $1 million into an enterprise responsible for transporting large amounts of marijuana into North Georgia for distribution. But he was caught, and now he will play a significant price for his crimes.”

Rodney G. Benson, Special Agent in Charge of the DEA Field Division, said, “Armas and his co-defendants were guided by greed, deceiving the community of Rome by posing as businessmen while in reality they were drug dealers and money launderers. As a result of his crimes, Armas will spend significant time in federal prison. This outcome would not have been possible had it not been for the coordinated efforts of law enforcement in Northwest Georgia.”

Rodney Clarke, Acting Special Agent in Charge of the IRS-Criminal Division said, “IRS Criminal Investigation worked closely with our law enforcement partners in this case to uncover Armas’ role in the drug and money laundering conspiracy, which included the use of his business. We applaud today’s sentencings for the crimes committed by Armas and his co-conspirators. We continue our commitment with our law enforcement partners to financially disrupt criminal organizations that commit offenses against our society.”

ARMAS was sentenced to 15 years in prison pursuant to a binding plea agreement. ARMAS was also ordered to serve 5 years of supervised release. ARMAS was ordered to forfeit $1,144,000, which will be satisfied through the sale of properties named in the indictment and seized by the United States. ARMAS pleaded guilty to the charges on October 9, 2007, one week into his federal jury trial.

Co-conspirator LONNIE MERREN, 53, of Aliceville, Alabama, was sentenced to 4 years, 7 months in federal prison, to be followed by 5 years of supervised release. MERREN pleaded guilty to drug and money laundering charges on September 18, 2007.

Sentencing for another co-conspirator, KEVIN REDSTROM, 42, of Hamilton, Texas, was continued to January 2008. The exact date will be set by the court.

According to Nahmias and the information presented at court: ARMAS, a Rome

businessman, conspired with MERREN and REDSTROM between January 2003 and November 2004 to distribute at least 1,000 kilograms of marijuana in North Georgia. ARMAS’ drug dealing was linked to other crimes including kidnaping and burglary. The defendants were also charged with money laundering in relation to the drug conspiracy.

At trial, the evidence showed that ARMAS’ criminal empire began to crumble in September 2004, when a convicted marijuana smuggler and co-conspirator was arrested on a state warrant taken out by ARMAS for Theft by Conversion of $1,114,000 in cash. The warrant alleged that ARMAS had loaned the co-conspirator $1,114,000 in cash and the debt was never repaid. In reality, ARMAS invested $1,114,000 in a marijuana transaction which went bad. Rather than purchasing marijuana with it, the co-conspirator had to use the cash to pay ransom for co-conspirators who had been kidnaped during the transaction. Thereafter, ARMAS became obsessed with recouping the lost money; this obsession caused ARMAS to threaten, harass and intimidate the co-conspirator and anyone who had connections to him, such as MERREN and REDSTROM.

The government’s case at trial was proven through ARMAS’ own words recorded by law enforcement sources during hours of undercover meetings. The testimony of cooperating co-conspirators was used to corroborate ARMAS’ admissions.

MERREN, who was the next scheduled witness at the time of ARMAS’ guilty plea, was a conduit between ARMAS and the other co-conspirators. MERREN assisted the government in its case against ARMAS, and as a result, he received a sentence less severe than he otherwise would have faced. Like MERREN, REDSTROM was a conduit between ARMAS and other co-conspirators in the scheme.

The defendants were indicted by a federal grand jury on October 5, 2006, on charges of conspiracy to distribute and possess with intent to distribute marijuana, and money laundering. That same day, search warrants were executed at multiple business and residence locations related to ARMAS and the drug scheme.

This case was investigated by Special Agents of the FBI, the DEA, and IRS-Criminal Investigation, with valuable assistance from the Floyd County District Attorney’s Office and Rome and Floyd County law enforcement agencies.

Assistant United States Attorneys Lisa W. Tarvin, Kurt R. Erskine and Evan Weitz prosecuted the case.

For further information please contact David E. Nahmias (pronounced NAH-me-us), United States Attorney, or Charysse L. Alexander, Executive Assistant United States Attorney, through Patrick Crosby, Public Affairs Officer, U.S. Attorney’s Office, at (404) 581-6016. The Internet address for the HomePage for the U.S. Attorney’s Office for the Northern District of Georgia is www.usdoj.gov/usao/gan.

Local Perspective:

Mario Armas sat comfortably in his chair, after walking in, flanked by two Unites States Marshalls. Orange prison pants, and a gray, long sleeve t-shirt, topped off by a warm looking, dark blue sweat shirt. He could have been an Auburn fan waiting for a football game to begin.

His family blew him kisses, and once court started, there were no big surprises. As per his Plea Agreement, Mario Armas will spend the next fifteen years as a gust of the Federal Prisons and Paroles Board, instead of life, because he cooperated with the government since his Plea Deal was designed.

In discussing the sentence, Judge Robert L. Vinings, Jr., told Armas that he thought this was a very fair deal, considering what he had heard during the trial, and had read since in the trial in pre-sentencing reports. “And of course I have read Pre-sentencing reports until I am blue in the face”, Vinings mused. Vinings acknowledged that he was taking in to account the scope of the participation by each of the defendants. Mario Armas supplied the money to get the product, Collins supplied the product, and Carlo Jackson moved the product.

“That’s the way they used to do business here in Georgia, but it was spreads then, now its carpets”, noted Judge Vinings.

The big news of the day was the sentencing of 52 year old Lonnie Merrin, and the continuance of the sentencing for Kevin Redstrom.

While trial watchers never got to see these two in court, they facilitated much of the middle man negotiations between Jimmy Collins and Mario Armas’ marijuana ventures.

Special Drug Prosecutor Lisa Tarvin told the court today, “In all my career, I have never had a cooperating witness who did not ask, “What can you do for me”, until I met Lonnie Merrin. Lonnie Merrin never asked ‘What can you do for me”.

DEA Agent Tim Spears, who looks like an NFL Defensive lineman, testified on behalf of Lonnie Merrin, detailing his cooperation. Between Special Agent Spears, and Merrin’s attorney, Calhoun, Georgia attorney Scott Forster, a picture of a middle aged business man who became deeply indebted to Mario Armas through Armas’ loan sharking, was forced in to becoming a middle man for Mario Armas, through extreme intimidation and coercion, by repeatedly threatening the safety and welfare of Merrin’s family.

Spears testified that it was clear to him that Merrin cooperated to do the right thing, and to protect his family, and that this was his only concern. SA Spears noted that each time he interviewed Merrin, “It always came to one point - his family. Mr. Merrin would shake and tear up”.

Spears related Merrin’s account of the kidnapping by Armas and two unidentified men, of Kevin Redstrom several years ago, at the Carl Black Trailer dealership in Hiram, Georgia. The men had forced Merrin in to a car, and made him show them where Redstrom could be found, and then Merrin witnessed them force Redstrom, at gunpoint, in to the car.

Spears indicated that Merrin was convinced Mario Armas would make good his threats to hurt Merrin’s family, if he did not cooperate in the illegal marijuana dealings.

In the end, Judge Vinings sentenced Lonnie Merrin to 55 months, giving him credit for 32 months off of the sentencing guidelines starting point of 87 months.

Attorney Scott Forster argued that because Merrin’s participation met all five elements of a lower sentencing starting point, including coercion, that the 32 month credit should be applied to a 57 month starting point. But Judge Vinings explained that while Mr. Merrin may have been fearful, and coerced, that the deals went on for a significant period of time, during which Merrin never contacted the authorities.

Merrin has been out on bail, and will not have to report to begin his sentence until January 15, 2008. Judge Vinings promised to request a facility near Merrin’s home in Alabama, because his cooperation with the Mario Armas case was so immediate, direct, detailed and honest, as SA Tim Spears had testified.

I was impressed with Judge Vining this morning, when he apologized to the court for having to postpone the sentencing on the Plea Deal of Kevin Redstrom. “I read the plea deal and the pre-sentencing reports five or six times” Vinings admitted, and something about the Plea Deal just did not fit. I didn’t catch it until about 6:00 am this morning”.

Vinings asked for some more time to determine whether he will accept Redstrom’s Plea Deal, or order a trial. Logistics will be decided later, and should be set for sometime in January.

Teresa Watson