Dallas jury finds practice liable for Medicare fraud that could result in more than $300 million in penalties

Medicare fraud trial ©MaksymYamilianov - stock.adobe.com

A federal jury in Dallas has returned a verdict against Healthcare Associates of Texas, LLC (HCAT), finding the company engaged in fraudulent Medicare billing practices, which could result in $304 million in penalties under the False Claims Act. The two-week trial concluded in the U.S. District Court for the Northern District of Texas, where the eight-member jury found that HCAT had submitted 21,844 false claims to Medicare between 2015 and 2021, resulting in millions of dollars in overpayments.

The case, brought by whistleblower and former HCAT executive Cheryl Taylor under the False Claims Act’s qui tam provisions, alleged multiple fraudulent schemes. These included:

• Billing Medicare for services performed by uncredentialed or unlicensed providers.
• Splitting bills to obscure the identities of treating providers.
• Charging Medicare inflated rates for services.

Taylor’s lawsuit alleges a conspiracy among HCAT entities, its founding physicians—Charles Powell, Terrence Feehery, and Walter Gaman—former CEO David Harbour, and ex-Chief Compliance Officer Kristian Daniels. The jury upheld these claims, finding all defendants liable for the schemes.

The False Claims Act is a tool for combatting fraud against government health care programs, allowing whistleblowers to file lawsuits on behalf of the United States and share in recoveries. Taylor, as the qui tam relator, will receive a percentage – typically 15%-30% -- of any recovered funds. Specific details on her award have not been disclosed.

Taylor was represented by Johnston Clem Gifford, with Robert Gifford serving as lead trial counsel. “This verdict sends a strong message about accountability in health care,” said Gifford in a statement.

The lawsuit is formally titled United States ex rel. Taylor v. Healthcare Associates of Texas, et al., Civil No. 3:19-CV-2486-N, heard in the U.S. District Court for the Northern District of Texas, Dallas Division.

This case marks one of the most significant recent whistleblower victories under the False Claims Act, according to the firm.