Lawsuit States that AIDS Foundation Defrauded Medicare

The AIDS Healthcare Foundation is one of the nation’s largest suppliers of AIDS and HIV medical care. They serve more than 400,000 patients around the world. They lead a mass initiative to identify and treat those who may be HIV positive, but do not know it yet—an estimated 25 million people.

In early April 2015, three former managers of the AIDS Healthcare Foundation filed suit against the company. The managers are alleging that AIDS Healthcare Foundation paid both patients and employees for referrals so they could boost the funding provided from federal healthcare programs. The three managers involved in the suit were apparently fired after notifying their supervisors about their concerns. The managers are from Louisiana, Florida, and New York. The case was originally filed about a year ago, but the plaintiffs just revised their complaint in early April.


The Referral Program

The suit alleges that, beginning in 2010, employees were paid $100 bonuses for referring patients who tested HIV positive to the clinics and pharmacies. This practice had apparently started in the California headquarters, and then spread to the Florida location and other locations. They are alleging that the “scam” cost Medicare $20 million, and the practice spanned at least 12 states.

However, the company’s President, Michael Weinstein, has specifically stated that he does not think the company has done anything wrong. Instead, he argues that their approach is a proactive way to connect HIV-positive individuals with treatment. In fact, he actually spoke about the practice and its benefits at a 2013 summit. He also points out that neither the federal government nor the State of Florida has opted to get involved with the lawsuit, and he thinks that “speaks volumes about the merits of the case.”


Wrongful Termination

One of the claims that the managers are alleging is for wrongful termination. They are arguing that they should not have been terminated after “whistleblowing” on the company. State and local laws both prohibit punishing whistleblowers, including a federal law, the Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley Act was originally created in the wake of large-scale scandals like Enron. It is geared toward encouraging employees to report wrongdoing so that the state or the federal government can prevent these large-scale frauds.

Under Sarbanes-Oxley, an employee who reports that their employer is breaking the law is protected from retaliation, like loss of their job. It only applies to laws relating to securities, wire or mail fraud, bank fraud, or shareholder fraud, however. It will likely apply in this case because the employees were reporting a version of securities or shareholder fraud, although the connection is a little questionable.

Many states have similar protections for employees; those complaints can be related to other areas, including discrimination, state wage or hour violations, or violation of state law requiring family and medical leave. It is unclear whether this case is based on state law, federal law, or both. However, given that it involves plaintiffs from three states, it is a safe bet that they are using a federal law for their wrongful termination claims.

Posted in Federal Lawsuit, Whistle Blowers.