Filed in U.S. District Court for the Southern District of Florida on April 3 under the Federal False Claims Act and Florida False Claims Act, the complaint is based on the personal knowledge and documentation of Whistleblowers Jack Carrel of Louisiana, Mauricio Ferrer of Florida, and Shawn Loftis of New York. All held management positions at AHF prior to their jobs being terminated– despite having federal protection under the False Claims Act – after they notified their supervisors about the company’s unlawful practices.

According to the complaint, AHF conducted an organization-wide criminal effort across at least 12 states, including Florida, that boosted funding from federal healthcare programs by generating HIV/AIDS referrals to the company’s various service centers. AHF did this by unlawfully paying referral incentives to employees and patients in violation of the anti-kickback statute.

“AIDS Healthcare Foundation’s fraudulent conduct is made even worse by the fact that these funds were entrusted to this healthcare company for the purpose of assisting a vulnerable patient population consisting of individuals living with HIV/AIDS, of whom more than 1.1 million reside in the United States,” said lead counsel Theodore Leopold of Cohen Milstein Sellers & Toll PLLC, whose firm along with Salpeter Gitkin, LLP, and Kaiser Law Firm, PLLC, represents the three plaintiffs.

The complaint alleges that in 2010 AHF began to generate consumer demand for its programs by implementing a system of illegal incentive payments that rewarded patients for self-referrals to AHF services and rewarded employees for referring patients to AHF’s testing, clinical, pharmacy and insurance services centers. This practice began in California, AHF’s headquarters, and then spread to other states, including Florida, where AHF has a substantial presence. In addition to Florida and California, AHF operates in Georgia, Louisiana, Maryland, Mississippi, New York, Ohio, South Carolina, Texas, Nevada, and Washington, D.C.

According to the complaint, this “‘Linkage’ – or the referral of HIV-positive patients into AHF’s constellation of services – was AHF’s ‘holy grail’ and the key to its business model.” As part of this, a bonus compensation of up to $100 was paid to an employee who “linked a patient” with positive test result to AHF “linkage” coordinators for referral clinical services. Moreover, the complaint states that at the company’s 2013 Leadership Summit, “AHF President Michael Weinstein personally advocated for 1) increased testing to raise HIV ‘positivity’ rates; 2) improved “linkage” of patients to and retention in AHF medical care; and 3) the payment of financial incentives to patients for the purpose of inducing self-referrals to AHF medical care. He specifically directed staff to raise the patient financial incentive to $50 immediately and to implement the incentive program nationally throughout the AHF organization.”

The plaintiffs, or relators, in the case were all aware of this business model. Jack Carrel, Director of Public Health, AHF Southern Bureau, from Aug. 9, 2012 to Aug. 1, 2013, was responsible for program implementation, coordination and evaluation of the prevention division, as well as for providing guidance to program staff about budget management, and community and administrative tasks. Mauricio Ferrer, a Senior Program Manager, AHF Southern Bureau, from May 17, 2011 to Aug. 2012, was responsible for supervising the daily functions and administrative operations of the prevention and testing programs in Florida. Shawn Loftis, Grants Manager, AHF Southern Bureau, from Jan. 2, 2013 to Aug. 16, 2013, was responsible for day-to-day fiscal management of sponsored projects.

“The resulting illegal referrals produced thousands of ‘false and fraudulent’ claims under the Federal False Claims Act and Florida False Claims Act and caused tens of millions of dollars in payments by federal health care programs. Furthermore, AHF violated numerous other False Claims Act provisions by its malicious retaliation against relators Jack Carrel, Mauricio Ferrer and Shawn Loftis, including violating their civil rights through unlawful termination of employment. We plan to hold AHF accountable for all these violations,” said James P. Gitkin of Salpeter Gitkin, LLP.

The False Claims Act is a federal law that imposes a liability on persons and companies who attempt to defraud government programs. Typically, this activity comes to light and a lawsuit is initiated through whistleblowers who are allowed to file actions against these parties on behalf of the government. Those filing under the Act stand to receive a portion of any recovered damages. The Florida False Claims Act is modeled after the Federal False Claims Act.

In addition to Leopold and Gitkin, the relators are represented by Diana L. Martin and Leslie M. Kroeger, of Cohen Milstein Sellers & Toll PLLC, Palm Beach Gardens, Fla., office; and Geoffrey R. Kaiser, Esq., of Kaiser Law Firm, PLLC, in New York.

For more information about United States of America and the State of Florida ex rel. Jack Carrel, Mauricio Ferrer and Shawn Loftis v. AIDS Healthcare Foundation, Inc., visit http://www.cohenmilstein.com/news.php?NewsID=766.

Founded in 1969, Cohen Milstein Sellers & Toll PLLC is a national leader in plaintiff class action lawsuits and litigation. As one of the premier firms in the country handling major complex cases, Cohen Milstein, with 80 attorneys, has offices in Washington, D.C., New York, Philadelphia, Chicago, Palm Beach Gardens, Fla., and Denver, Colo. For more information, visit http://www.cohenmilstein.com or call (202) 408-4600.

Geoffrey R. Kaiser, of Kaiser Law Firm, is a former federal prosecutor and was Chief of Health Fraud Prosecutions in the United States Attorney’s Office for the Eastern District of New York. Specializing in white collar crime litigation, the firm is based in Hyde Park, N.Y. For more information, visit http://www.kaiserfirm.com.

Salpeter Gitkin, LLP, represents clients in the areas of class and mass actions, commercial litigation, serious personal injury, whistleblower lawsuits, and real estate litigation and transactions. Based in Fort Lauderdale, Fla., the firm maintains a national and international client base. For more information, visit http://www.salpetergitkin.com.

The complaint is lengthy, so we’ve reproduced the sections that provide the specifics of the allegations, and the factual background.

See the full complaint here (pdf)