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Whistleblower-Retaliation Suit Brought Against Middletown Community Health Center Inc.

Edgar Rivera, Esq.

In a complaint filed in the Southern District of New York on December 21, 2015, Debra Martin, a former employee of Middletown Community Health Center Inc. (“MCHC”), alleged that MCHC unlawfully terminated her employment due to her reporting to her superiors that MCHC had misused of federal funds and over billed Medicare and Medicaid.

MCHC, a federally qualified non-profit health center, provides community health care services in several locations in New York and Pennsylvania. Ms. Martin, who was charged with reviewing MCHC’s finances, claims that MCHC misused funds it received from the Health Resources and Services Administration and billed Medicare and Medicaid for services that it had not provided. She alleges that MCHC’s director, Theresa Butler, knew, approved, and often directed these practices.

Ms. Martin alleges that between November 2014 and July 2015, she reported several instances of purportedly illegal activity to MCHC’s president of the board of directors, Joe Palughi. In May 2015, Ms. Martin told Mr. Palughi that Ms. Butler was drawing down sums from a Health Resources and Services Administration grant in amounts larger than permitted by regulation and that continuing to do would exhaust those funds four months before they were supposed to. On multiple occasions, Ms. Martin reported to Mr. Palughi that MCHC was not paying bills required to maintain medical supplies necessary for the proper operation of the health care center. She also advised him that MCHC was deducting amounts equal to health insurance premiums from employees’ payroll checks without paying such premiums to its employees and then co-mingling those deductions with general operating funds. Ms. Martin also expressed concerns to Mr. Palughi that if Ms. Butler learned that she had reported these activities to Mr. Palughi, she would be fired. On August 24, 2015, MCHC terminated Ms. Martin, alleging that she had breached confidentiality without further explanation. In the aftermath of her termination, Mr. Palughi refused to speak to Ms. Martin.

Ms. Martin brings claims pursuant to False Claims Act (the “Act”), which protects employees from retaliation based on efforts to stop violations under the Act, which includes defrauding governmental programs. The Act is the federal government’s primary litigation tool in combating fraud. Passed during the Civil War in response to army contractors knowingly selling damaged and defective equipment to the Union Army, the Act allows individuals who are not affiliated with the government to take on the role of a “private attorney general” by filing actions on behalf of the government against private entities that have defrauded the federal government. Between 1987 and 2013, the government recovered approximately $38.9 billion under the Act, and since the Obama Administration’s creation of the Health Care Fraud Prevention and Enforcement Action Team (“HEAT”) in 2009 to 2013, the government has recovered approximately $2 billion each year in health care fraud alone. In 2015, HEAT coordinated the largest-ever national health care fraud takedown involving $712 million in fraudulent billing.

If you feel you have been retaliated against for raising issues of fraud against the federal government, please contact The Harman Firm, LLP.

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