Health Services Contractor Agrees to Pay $3.818 Million to Settle False Claims Act Allegations for Double-Charging And Mischarging Medical Services on Internal Revenue Service Contract

Baltimore, Maryland – Comprehensive Health Services, Inc. has agreed to pay the United States $3,818,881 to settle allegations under the False Claims Act that it submitted false claims to the United States by double-billing and mischarging for medical services in connection with work performed on an Internal Revenue Service (“IRS”) contract.

The settlement was announced by United States Attorney for the District of Maryland Rod J. Rosenstein, and Acting Special Agent in Charge Paul Desautels of the Treasury Inspector General for Tax Administration’s Procurement Fraud Division.

“Businesses that knowingly overcharge the government should be held accountable and penalized,” said U.S. Attorney Rod J. Rosenstein. “Whistleblower lawsuits are a valuable tool to deter fraud and punish perpetrators.”

“The settlement strongly demonstrates TIGTA’s continued efforts to protect the integrity of the federal acquisition process, as well as IRS contracts and financial expenditures,” said Acting Special Agent in Charge Paul Desautels. “It serves as a reminder that all government contractors need to be good stewards of taxpayer money, and those who seek to defraud the Federal government through contracts will be prosecuted to the fullest extent.”

Comprehensive Health Services, Inc. (“CHSi”) is a Florida-based company that is one of the United States’ largest providers of workforce medical services. CHSi implements and manages for the United States government and commercial companies customized medical programs for large workforces that range from pre-placement, pre-deployment, and fitness-for-duty medical examinations to medical surveillance and health wellness programs. In February 2009, CHSi was awarded an IRS contract, under which it was required to provide medical services to IRS-Criminal Investigation special agent applicants and incumbent special agent personnel. Among other things, the IRS contract required CHSi to provide pre-placement medical examinations to evaluate special agent applicants’ medical qualifications. The pre-placement medical examinations included a range of tests, including resting electrocardiograms and vision tests, that were required to be billed as part of a bundled fee. The IRS contract also required that CHSi conduct certain medical tests to determine incumbent agents’ ability to participate in physical fitness programs and their fitness for duty. Such medical services included physical fitness examinations which were to be billed only if such examinations were medically necessary, and blood specimen collection, which was to be billed as part of a bundled fee.

The settlement agreement resolves allegations that from April 2009 through April 2014, CHSi knowingly double-charged the United States for vision screenings, resting electrocardiograms, and for the collection of blood specimens provided to IRS agents when those costs were already included in the bundled price for the IRS new applicant pre-placement exam. The civil settlement also disposes of the allegation that CHSi charged the United States for annual full physical exams for IRS agents despite the IRS specification that the exam was to be administered only if it was determined to have been medically indicated and no such determination occurred and the exams were never actually performed.

The civil settlement resolves a lawsuit filed by James J. Kerr, Jr. under the whistleblower provision of the False Claims Act in United States ex rel. James J. Kerr, Jr. v. Comprehensive Health Services, Inc., Civ. No. RDB-14-1769 (D.Md.). The Act permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the United States’ recovery. As part of the civil resolution, Mr. Kerr will receive approximately $645,391. The claims resolved by this settlement are allegations; there has been no determination of liability and CHSi cooperated in the investigation.

United States Attorney Rod J. Rosenstein commended the Treasury Inspector General for Tax Administration for their work in the investigation and thanked Assistant U.S. Attorney Tarra DeShields who handled this case.