June 29, 2017 at 7:37 pm PST | by Karen Ocamb
AIDS Healthcare Foundation Wins Federal Lawsuit

Michael Weinstein. (Photo courtesy AIDS Healthcare Foundation)

AIDS Healthcare Foundation has been smeared for so long by some AIDS activists that the Associate Press headline hardly raised an eyebrow. “Suit claims AIDS foundation scammed Medicare for $20M,” AP blared on April 8, 2015, referring to a fraud lawsuit filed against AHF by three fired former AHF employees. But in court, facts matter more than opinions and not only was the lawsuit thrown out but the court added its own “Statement of Interest” to underscore that the legal argument pitched by the three about how the Ryan White Program was “incorrect.”

Now the former employees, Shawn Loftis, Mauricio Ferrer, and Jack Carrel, face a lawsuit of their own for allegedly stealing and making public AHF proprietary information, including hundreds of names of AHF clients who are HIV positive.
The lawsuit was filed in 2014 by Loftis, Ferrer, and Carrel, who all had worked at and been fired from a Florida AHF clinic at different times and in different divisions. They alleged that bonuses and incentives paid to people hired to recruit subjects for HIV testing were essentially kickbacks to AHF since those who tested HIV-positive were directed into care and treatment provided by AHF. They claimed that those payments violated a federal anti-kickback law known as the False Claims Act, as well as a similar law in Florida.

Since neither the federal government nor the state joined the lawsuit, the three called themselves “whistleblowers,” as if they were acting on behalf of the government and the public, which would also entitle them to a portion of any expected multi-million dollar settlement.

In a ruling dated June 9 and formally unsealed June 20, 2017, Florida Southern District Court Judge Kathleen M. Williams dismissed the case as unfounded since the Ryan White CARE Act does allow a service provider to pay bonuses and incentives to employees for HIV testing and linkage to care. AHF’s outreach program used paid AHF employees and presented each individual who tested positive with a list of names of providers, including AHF, to which the person could be linked for care.

“The fact that the federal government and the State of Florida each formally declined to intervene in the legal action brought on behalf of three former AHF employees spoke volumes about the merits of the case, and today’s dismissal of these unfounded whistleblower claims by the court is a tremendous victory not only for AHF, but for the patients and public we serve daily,” AHF President Michael Weinstein said in a statement. “We thank the court for its wisdom in this ruling.”

“Although the United States has not intervened and is not a formal party, it remains the real party in interest in this action,” The Court wrote in its special “Statement of Interest.”

“The United States also has a significant interest in the proper interpretation and correct application of the False Claims Act …and the Anti-Kickback Statute…which play a central role in the government’s ongoing efforts to combat health care fraud,” the Statement continues. “The Relators [Loftis, Ferrer, and Carrel] do not appear to challenge AHF’s position that its ‘linkage coordinator’ was a bona fide employee, or that AHF provided appropriate services to the patients the employee referred. Rather, the Relators rest their claim on the purely legal argument that a bona fide employee of a Ryan White Program grant recipient, such as AHF, may not be paid for referring patients to his or her own employer to receive appropriate services. The Relators are incorrect.”

Jim Vellequette was among those deposed during the lawsuit. He had started working for AHF in California in 2007, moved to AHF’s Southern Bureau in 2009, and left for another AHF assignment in 2011. He would not speak on the record about his perceptions of the fired employees but did talk about his deposition.

“Plaintiff’s lawyer had me read an email I wrote 7 years ago outlining the initial parameters of the testing program that was sent to the AHF leadership within the Southern Bureau,” Vellequette said. “The lawyer was trying to create a point of evidence against AHF proving that the program was designed from the beginning to limit the linkage incentive to being applied only in instances where the client was linked to an AHF HCC exclusively, and nowhere else.

“I do not know if they chose the wrong document or they had not read it fully, but when they had me read aloud the email, it clearly stated in my own words that two appointments to any medical provider was acceptable and that care was not to be specifically limited to AHF. This lawyer had already been aggressive with me during my deposition, so I thoroughly enjoyed this moment of watching as they locked, cocked and shot a bullet right into their own foot.”

Vellequette said the documents he was shown “that were numbered in unique fashion were AHF proprietary documents” and it was made clear to him that they had “been stolen by the plaintiffs, and then submitted into evidence, and the federal record for the case.”

“I was handed a large multipage Excel spreadsheet that I created back in 2009/10 that contained a long list of names and the personal data and HIV status etc., of individuals who been diagnosed as HIV-positive through an HIV test at an AHF test site,” Vellequette said.

“The chart served as a record of the clients identified as HIV positive, and the status regarding the success of the linkage coordinators’ efforts to link them into medical services at an HIV med provider. I used this chart to determine the incentive compensation that was to be received by the linkage coordinators each pay period.

As I had created the first sheet and had worked with it for several years while I was AHF, my mind focused on the questions at hand,” he explained.

“Then the plaintiff’s lawyer had me read a sheet of names that was created after I had left my position that contained multiple pages of individuals’ names, personal information and status showing them as testing positive for HIV,” Vellequette said.

“Then a sudden shock in my head snapped as realized I had read a long list of names and personal information for individuals diagnosed as HIV positive, and that now this document had been entered into the evidentiary record of a federal lawsuit.”

Vellequette said personal information was c “high regarded within AHF” and violation was considered “a highly serious breach of the federal HIPAA medical information privacy statute.”

Therefore, Vellequette said, “I was dumbstruck to be holding pages of names for possibly hundreds of people diagnosed to be living with HIV in a legal process with a half-dozen of us in the room and seemingly no concern for the gravity of the situation and all of it being entered into the federal record.”

Vellequette noted that revealing a person’s HIV status “is subject to a $50,000 fine per name, but also, and additional charge can be filed for every piece of identifying information, such as address, phone number, social security number etc., for that same person. Thus, the breach of even one name, could quickly escalate into hundreds of thousands of dollars one line at a time.”

“We currently have a suit against the disgruntled former employees for disclosure of confidential patient information which will come before the court now that the fraud claim has been summarily dismissed,” Weinstein tells the Los Angeles Blade.

“I do not know if the statute of limitations for law enforcement to pursue criminal charges against the three (and their lawyers) for stealing and publishing the protected patient data has expired or not,” says AHF Communications Director Ged Kenslea. “But the very concept of it goes to the seriousness of their misguided actions versus the ultimate vindication of AHF and our successful business model of HIV testing and linkage to care in Florida and elsewhere.”

Just days after the federal lawsuit was dismissed, AHF opened a new HIV clinic in Liberty City, Florida, to serve the predominantly African-American community. The clinic will provide free, rapid, 1-minute HIV testing, testing for Hepatitis C and information on pharmacy and healthcare services.

“We think this is a critical situation and we look at the opening of this healthcare center as an opportunity to both be a partner in the community [and] address the HIV/AIDS epidemic within this community and within the broader community,” AHF’s Imara Canady told the Miami Herald newspaper.

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