A whistleblower whose 1996 lawsuit against Quorum Health Group led to an $18 million Medicare fraud settlement is headed to jail.
Wilfred Menke, 48, a former vice president of Flowers Hospital, Dothan, Ala., was fined $50,000 and was sentenced to 24 months in prison and one year of supervised release for filing false and fraudulent tax returns, the U.S. attorney in Montgomery, Ala., announced last week.
Menke, who also went by the name "William," according to U.S. Justice Department filings, was a vice president responsible for the home-care services division at the 215-bed facility. He pleaded guilty last December to one felony count of failing to report bonuses and kickbacks related to the home-care business on his 1993 tax return. Menke received large cash and stock bonuses from the sale of Flowers to Quorum and didn't report them on his taxes. He also didn't report kickbacks made to a company he owned by a computer-services vendor for Flowers' home-care business, according to U.S. Attorney Charles Nevin.
Since then, Menke has been out on bail and is expected to start serving his sentence June 22, said a spokeswoman for the U.S. attorney's office. Efforts to contact him were unsuccessful.
Quorum, Brentwood, Tenn., bought Flowers in 1992 and last year agreed to pay the Justice Department $18 million to settle allegations that the hospital improperly billed Medicare for unallowable costs. The company also paid $82.5 million earlier this year to settle broader Medicare cost-reporting fraud allegations at its owned and managed hospitals.
Menke was the whistleblower in the Flowers case.
Nevin said the Internal Revenue Service audited Flowers in 1994 and 1995 and discovered that Menke had not paid taxes on bonuses he received as a result of the sale of Flowers to Quorum. Following the audit, Menke was fired, and he subsequently filed the whistleblower lawsuit against Quorum; its hospital management subsidiary, Quorum Health Resources; and Flowers. As part of his agreement with the U.S. attorney's office in Birmingham, Ala., which was handling the Medicare fraud case against Quorum and Flowers, he was not prosecuted for Medicare fraud but also did not receive a portion of the settlement.
Normally, if the federal government joins a whistleblower lawsuit, the whistleblower can receive between 15% and 25% of the settlement proceeds, said Justice Department spokesman Charles Miller. Though he would not speak specifically about the Flowers settlement, he said that "there are stipulations that if the relator has been involved knowingly in the fraud, they would not share in the proceeds."
Triad Hospitals, Dallas, bought Quorum-and Flowers-last month.