How The False Claims Act Could Bring Down Al Capone

"Some call it bootlegging. Some call it racketeering. I call it a business."   - Al Capone

On June 5, 2015, the Northern District of Georgia and the State of Georgia’s Medicaid Fraud Control Unit announced a settlement with Dr. Dennis Jaffe, an Atlanta dentist, for $324,327.05. Dr. Jaffe was alleged to have violated the False Claims Act by fraudulently "upcoding" simple procedures as more expensive procedures and for billing Medicaid for services performed by a dental assistant while Jaffe was not at the office to supervise. In addition to the civil settlement, Jaffe was sentenced to one year of probation, 50 hours of community service, and restitution of $3,368.

Most importantly for our story, as part of his settlement agreement, Jaffe had to surrender his dental license and has been excluded from all federal and state healthcare programs.

The qui tam was brought by Michelle Smith, Dr. Jaffe's billing coordinator, who bravely stood up to Dr. Jaffe when he demanded that she defraud Medicaid at the cost of her job. Julie and I represented her in this matter at our previous firm, from intake through settlement. She will receive a relator's share of the settlement proceeds, and she also brought an individual FCA retaliation claim against Dr. Jaffe.

So, what does that have to do with Al Capone?

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Al Capone was one of the most dangerous criminals in American history. Dominating the organized crime scene, his gang operated illegal prostitution, bootlegging, and gambling, and he brutally murdered anyone who got in his way. By 1925, he was earning an estimated $100 million from his illegal activities - adjusted for inflation, in 2015, that amounts to $1.35 billion per year. But Capone was sneaky and ruthless, and so as hard as it tried, the FBI couldn't produce enough evidence to bring him down. Then, in 1927, the Supreme Court ruled that income gained on illegal activities was taxable, and Capone was indicted and found guilty on 22 counts of tax evasion. Not murder, not racketeering, but failing to pay his taxes.

On a basic level, the False Claims Act and other qui tam statutes are used to recover money that are improperly taken from the government through fraud, waste, and abuse, and our job is to recover that money on behalf of the taxpayers. But in some cases, the fraud against the government isn't the worst act being committed by the defendant. Clients bring to us stories of terrible acts against employees, consumers, or patients, for example, or claims where simple fraud might have much greater affects on the community overall.

For example, we have been able to use an FCA claim of billing fraud by defense contractors to alert the government that soldiers' lives were being put at risk with defective equipment. In another case, a settlement of kickback claims with a hospital resulted in increased supervision in the emergency room and vital improvement in patient care. For this reason, I often tell the story of Al Capone when telling people what I do. We can't directly do anything about these bad acts, but if we can get the defendant for billing fraud, we can also create other positive changes.

People may wonder why a dentist would be barred from practicing for what appears to be a relatively small amount of damages. Dr. Jaffe was our Al Capone in this case. He was alleged to have abused and mistreated patients, giving them infections by using and reusing unclean instruments, including those used for patients diagnosed with HIV and Hepatitis. He was physically violent with at least one elderly patient, and abusive to his staff. From the first time we met Michelle Smith, we knew these were not claims that could be brought as an FCA case--but by bringing civil claims under the FCA, we were able to bring his reign of terror to an end.

Although the damages were relatively small for a False Claims Act case, this may be one of the more important cases of our careers. Julie and I have no doubt that this settlement will prevent the spread of disease through Atlanta, as well as safeguarding the Georgia Medicaid program, and Bracker and Marcus LLC is proud to have played a part in protecting the citizens of its hometown.

The case was investigated by Special Agents of Health & Human Services, Office of Inspector General and the Federal Bureau of Investigation as well as investigators with the Georgia Medicaid Fraud Control Unit. The civil settlement was reached by Assistant U.S. Attorney David A. O’Neal and Georgia Assistant Attorney General Kevin D. Bradberry. The criminal case was prosecuted by Assistant U.S. Attorney Nathan Kitchens and Georgia Assistant Attorney General James P. Mooney.

Bracker & Marcus LLC congratulates Michelle Smith, the Northern District of Georgia, and the Georgia MFCU for a well-deserved settlement.

WSB Atlanta has reported on this case since its inception, including reporting on a government raid of the office in April 2014, and on criminal charges and investigation of Dr. Jaffe in February 2015.