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IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF MICHIGAN

UNITED STATES OF AMERICA and

THE STATE OF MICHIGAN ex rel.
GEORGE KARADSHEH, and GEORGE
KARADSHEH, individually,
Plaintiffs,
v.
MICHIGAN HEMATOLOGYONCOLOGY, P.C., a Michigan
corporation; FARID FATA, M.D.; and
SAMAR FATA, QUEST DIAGNOSTICS,
INC., a Michigan Corporation CLARIENT
DIAGNOSTIC LABORATORY
SERVICE, INC, a Delaware corporation;
SWAN FOR LIFE CANCER
FOUNDATION, a Michigan nonprofit
corporation.

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FILED UNDER SEAL

PURSUANT TO
31 U.S.C. 3730(b)(2) and
MCL 400.610a(2)

DO NOT PLACE IN PRESS BOX

DO NOT ENTER ON PACER

Case No.
Honorable

Defendants.

COMPLAINT FOR VIOLATION OF FALSE CLAIMS ACT

(31 U.S.C. 3729 et seq.) AND MICHIGAN MEDICAID FALSE
CLAIMS ACT (M.C.L. 400.601 et seq.)
TRIAL BY JURY REQUESTED
Pursuant to 31 U.S.C. 3730(b)(1) and M.C.L. 400.610a(1), Relator George Karadsheh,
for himself and on behalf of the United States of America and the State of Michigan, by his
attorneys, Foley & Mansfield, PLLP, brings this civil action under the federal False Claims Act
and the Michigan Medicaid False Claims Act.
INTRODUCTION
This case involves claims for chemotherapy, oncological treatment services and
diagnostic tests that were improperly submitted, or caused to be submitted, to the Medicare or

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Medicaid programs by Dr. Farid Fata (Fata) and seven clinics that Fata operated in Michigan.
Specifically, Fata and the clinics engaged in a scheme whereby government-funded health care
programs were billed for services that were not provided as billed; medically unnecessary; or
provided in violation of program guidelines.
Additionally, Fata and the clinics provided unlawful kickbacks to referring physicians to
induce them to refer their hematology and oncology patients to Fatas clinics for services, which
were later billed to Medicare and/or Medicaid. Such actions constitute a violation of the federal
Anti-Kickback statute, 42 U.S.C. 1320a-7b(b).
Fata also inappropriately referred patients to his own pharmacy and PET imaging
facility and radiation oncology center in violation of Stark guidelines.
Through the above and other actions actions, Fata and the clinics intentionally defrauded
the federal government and the State of Michigan by improperly submitting or causing to be
submitted claims for payment, then retaining the payments to which they were not entitled.
To support his claims for this fraudulent conduct, Relators allege as follows:
JURISDICTION AND VENUE
1.

This action arises under 31 U.S.C. 3729 et seq., also known as the False Claims

Act (the FCA), the Michigan False Claims Act and the common law to recover treble
damages and civil penalties on behalf of the United States of America arising out of
Defendants violations of the FCA.
2.

Under 3732 of the FCA, this Court has jurisdiction over actions brought under

the FCA. Furthermore, jurisdiction over this action is conferred on this Court by 28 U.S.C.
1331 because this civil action arises under the laws of the United States.

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3.

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This Court has supplemental jurisdiction over all other claims set forth in this

Complaint because these claims are so related to the claims arising under the FCA that they
form part of the same case or controversy. 28 U.S.C. 1367.
4.

Venue is proper in this district pursuant to 3732(a) of the FCA, which provides

that any action under 3730 may be brought in any judicial district in which the Defendant or,
in the case of multiple Defendants, any one Defendant can be found, resides, transacts business,
or in which any act proscribed by 3729 occurred. At all times material hereto, Defendants
regularly conducted business within the State of Michigan, and maintained permanent
employees and offices in the State of Michigan, within this judicial district. Additionally, venue
is proper in this district pursuant to 28 U.S.C. 1391(b)(1)-(2).
FILING UNDER SEAL
5.

Under the Act, this Complaint is to be filed in camera and remain under seal for a

period of at least sixty (60) days and shall not be served on Defendants until the Court so orders.
The United States Government and/or the State of Michigan may elect to intervene and proceed
with the action within sixty (60) days after the Government receives the Complaint.
6.

As required by both False Claims Acts, Relator is an original source of and has

disclosed substantially all material evidence and information in his possession to the United
States Attorney General and the Michigan Attorney General.
PARTIES
7.

Relator George Karadsheh is a resident of the State of Michigan and is currently

employed as the Practice Manager for Michigan Hematology-Oncology P.C. (MHO). He

began his employment with MHO in September of 2011.
8.

Defendant Farid Fata, M.D., is a Michigan licensed physician.

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9.

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Michigan Hematology-Oncology, P.C. is a Michigan professional corporation

with its registered office address of 1901 Star Batt Drive, Suite 200, Rochester Hills, Michigan
48306. Farid Fata is the owner and resident agent of MHO.
10.

MHO provides hematology and oncology services to patients, including Medicare

and Medicaid patients, and has offices in Bloomfield Hills, Clarkston, Lapeer, Oak Park,
Rochester Hills, Sterling Heights and Troy, Michigan.
11.

All seven clinics offer hematology and oncology services, including

chemotherapy, radiation oncology and PET imaging.

12.

Upon information and belief, Michigan Institute of Professionals is the reserved

name of a parent corporation believed to be owned and operated by Defendant Farid Fata.
13.

Vital Pharmacare, LLC is a Michigan Professional Limited Liability Company

with its registered office located at 27777 Frankling Road, Suite 2500, Southfield, Michigan
48034. The registered agent is Aaron Sherbin, an attorney at Jaffe Raitt Heuer & Wesiss.
14.

United Diagnostics, LLC is a Michigan Professional Limited Liability Company

with its registered office located at 1901 Star Batt Drive, Suite 200, Rochester Hills, Michigan
48309. Farid Fata is the owner and resident agent of United Diagnostic.
15.

Upon information and belief, Dr. Fata owns a Radiation treatment center located

at Doctors Hospital in Pontiac, Michigan.

16.

Swan for Life Cancer Foundation is a domestic nonprofit IRC 501(c)(3) qualified

corporation with its registered office located at 2677 Forest Glen Court, Oakland Township,
Michigan 48306. Farid Fata is the registered agent of Swan for Life Cancer Foundation.
17.

Swan for Life Cancer Foundation is associated with Michigan Hematology-

Oncology, P.C. and shares office space with MHOs Rochester Hills clinic.

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Quest Diagnostics, Inc. is a Michigan Domestic Profit Corporation with its

registered office located at 601 Abbot Road, East Lansing, Michigan 48823.
19.

Clarient Diagnostic Laboratory Services, Inc. is a Delaware Foreign Profit

Corporation with its registered office located at 30600 Telegraph Road, Suite 2345, Bingham
Farms, MI 48025.
20.

Other individuals and entities that are involved and will be identified shortly.
OVERVIEW OF SERVICES PROVIDED AT
MICHIGAN HEMATOLOGY ONCOLOGY

21.

Michigan Hematology Oncology provides a number of services, including

chemotherapy, PET imaging, radiation oncology, laboratory services, including blood work and
bone and tissue samples.
MEDICARE PROGRAM
22.

In 1965, Congress enacted Title XVIII of the Social Security Act, 42 U.S.C.

1395 et seq., known as the federal Medicare program, which authorizes medical benefits for
the elderly, blind and disabled. The Centers for Medicare and Medicaid Services (CMS), an
agency of the United States Department of Health and Human Services, is directly responsible
for the administration of the Medicare program.
23.

Medicare reimbursements for health care services are regulated by CMS, which

issues mandatory guidelines on what types of health care services are covered and which are
non-covered. There are two controlling coverage policies: National Coverage Determinations
(NCDs) and Local Coverage Determinations (LCDs).
24.

The Medicare NCDs are set out in a series of Medicare Benefit Policy Manuals,

which detail whether specific medical items, services, treatments, procedures or technologies
will be paid for by Medicare in accordance with title XVIII of the Social Security Act and in
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compliance with Medicare regulations and rulings. LCDs are developed by each Medicare
Part B regional carrier to further specify under what clinical circumstances a service is
reasonable and necessary.
25.

The Medicare Part B Regional carrier for Michigan is Wisconsin Physicians

Service Insurance Corporation (WPS).

MEDICAID PROGRAM
26.

Medicaid was established by Title XIX of the Social Security Act of 1965, 42

U.S.C. 1396-1396v. Medicaid is a jointly-funded federal-state program and enables states

such as Michigan to provide medical assistance to persons whose income and resources are
insufficient to meet the costs of necessary medical services.
27.

Although Medicaid is funded in significant part by the States, the federal

government pays a portion of Medicaid costs. In Michigan, the federal government pays for
approximately 56 percent of all Medicaid health care serves, while the State of Michigan funds
the remaining 44 percent. Accordingly, all claims or requests for payments submitted to the
Medicaid program are subject to liability under both the federal FCA and the Michigan False
Claims Act.
28.

All providers who submit claims to the Michigan Medicaid program are required

to honor the terms and conditions of the Michigan Medicaid Provider Manual, in accordance
with the terms of their Enrollment Agreement.
29.

In other words, compliance with the terms of the Michigan Medicaid Provider

Manual is required in order to properly bill for services.

30.

With respect to coverage for diagnostic testing, the Michigan Medicaid Provider

Manual provides in pertinent part that Medicaid covers tests to diagnose a disease or medical

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condition. Diagnostic testing must be directly related to the presenting condition of the
beneficiary. Michigan Medicaid Provider Manual, Practitioner Chapter, Section 4.8 (bold
emphasis added).
31.

In summary, the reasons for the diagnostic test must be evidenced in the patients

chart or medical record. Id.

OVERVIEW OF FRAUDULENT CONDUCT AND ACTIVITIES
32.

Relator was not aware of defendants fraudulent conduct until on or about July 16,

2013 when he had a conversation with Dr. Soe Maunglay, a physician employed at MHO.
33.

During this conversation, Dr. Maunglay confided to Relator that he had

previously threatened to resign over concerns that patients were not supervised by a doctor
while receiving chemotherapy infusions, as required by National Comprehensive Cancer
Network (NCCN) guidelines.
34.

Relator had witnessed a patient collapse and had to call 911 when the patient

became unresponsive and stopped breathing while receiving unsupervised chemotherapy in

MHOs Lapeer office in April of 2011.
35.

In a second conversation with Dr. Maunglay, Relator was told that some patients

that do not have cancer are receiving chemotherapy.

These patients are purposely

misdiagnosed by Dr. Fata in order for Dr. Fata to bill for chemotherapy services.
36.

Relator also learned that patients with cancer receive chemotherapy at higher

doses than they should, and in violation of NCCN guidelines, in order for Dr. Fata to increase
the amount of bills he submits to insurance companies, including government insurance.

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In addition to patients receiving higher doses of chemotherapy in order to inflate

billings, upon information and belief patients also receive infusions of intravenous
immunoglibin, or IVIG, when it is not medically indicated .
38.

Relator became aware of an instance when an end-of-life patient was removed

from hospice by Dr. Fata and placed on chemotherapy although there was no chance, with any
degree of medical certainty, for the patients survival and, upon information and belief, the
patient, the patients family, and the patients primary care physician, has requested hospice.
39.

Dr. Fata or one of his owned entities purchased or leased a PET imaging machine

two months ago. Since that time, the practice patterns with regard to PET imaging scans has
changed dramatically. Almost all MHO patients are referred to have a PET scan performed
and certainly a much higher percentage are referred now than before Dr. Fata was able to selfrefer patients to his PET imaging machine.
40.

Medical assistants at MHO offices are instructed by Dr. Fata to change patients

diagnoses to cancer in order to successfully bill for PET scans because insurance companies
were rejecting certain bills.
41.

Defendant Dr. Fata sent out an email directing all MHO staff that all oral

oncolytics (oral chemotherapy) are to be filled through Dr. Fata and MHOs in-house
pharmacy, even if that means a patient has to wait to receive them.
42.

Based on Relators best estimates, approximately 78 percent of the patients

treated at MHO are Medicare patients and 3 to 4 percent of the patients treated at MHO are
Medicaid patients and the balance are covered by private insurance carriers.
43.

Upon information and belief, Defendant Quest Diagnostics, Incorporated

(Quest) is inappropriately paying for Defendant MHOs electronic medical record (EMR)

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system in exchange for Defendant MHO referring all of its blood testing and pathology testing
to Quest.
44.

Three employees of Quest work at MHOs Clarkston office and two employees of

Quest work at MHOs Lapeer office running Quests Complete Blood Count (CBC)
machine.
45.

Quest also pays for the monthly internet charge for MHOs Clarkston office.

46.

Upon information and belief, Lance Baylis, the brother of one of Dr. Fatas

primary referral sources, Larry Baylis, D.O. (Clarkston), owns a home health agency, North
Oakland Home Health, to whom Dr. Fata, in turn, refers the majority of his home health
patients.
47.

Sue Mancuso is the Director of Practice Development at MHO. Her role is to

establish business relationships with physicians and other sources that have the ability to refer
patients to MHO. Sue's husband, Robert Mancuso, is employed with a Home Health Agency
called Blue Angel Home Care. Dr. David Debono and Dr. Soe Munglay, physician employees
of Dr. Fata and MHO, along with Dr. Fata, have referred patients to her husbands home health
agency since her employment approximately 3 years ago. Relator believes Sue Mancuso is
using her influence as an MHO employee to persuade medical staff to refer to her husband's
home care agency. Since she is married to him, the commission or benefit of these referrals go
indirectly to Sue Mancuso and directly to Robert Mancuso. In addition, every new
physician who goes through orientation is provided brochures and information on how to refer
to her husband's home care agency.
48.

Defendant Dr. Fata employs foreign medical students that are not licensed in the

State of Michigan, to present themselves as physicians, meet with patients, take histories and

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perform work-ups. Although these foreign medical students are not licensed, Dr. Fata relies on
the information they gather when making his medical decisions on patient care.
CONCLUSION
49.

In summary, the Defendants were engaged in a comprehensive scheme to bill

Medicare and Medicaid (as well as private insurers) for as many services and treatments as
possible, with complete disregard for whether the services were medically necessary or
provided in compliance with program guidelines.
50.

Through these actions, Defendants have unlawfully and improperly billed

Medicare and Medicaid, and retained taxpayer monies to which they are not entitled.
COUNT I
Violation of 31 U.S.C. 3729
51.

Relator realleges and incorporate paragraphs 1-50 of this Complaint as if fully set

forth herein.
52.

In performing the acts described above, Defendants, through their own acts or

through the acts of their officers, knowingly and/or recklessly presented, or caused to be
presented, false or fraudulent claims for payment or approval in violation of 31 U.S.C.
3729(a)(1)(A).
53.

Specifically, Defendants submitted claims for payment to the Medicare and

Medicaid programs for services that were not medically necessary; not billed as provided; or
provided as a result of unlawful kickbacks.
54.

The United States, unaware of the foregoing circumstances and conduct of the

Defendants, made full payments, which resulted in its being damaged in an amount to be
determined.

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COUNT II
Violation of 31 U.S.C. 3729(a)(1)(B)
55.

Relator realleges and incorporate paragraphs 1-50 of this Complaint as if fully set

forth herein.
56.

In performing the acts described above, Defendants, through their own acts or

through the acts of their officers, knowingly made, used or caused to be made or used, a false
record or statement material to a false or fraudulent claim in violation of 31 U.S.C.
3729(a)(1)(B).
57.

The United States, unaware of the foregoing circumstances and conduct of the

Defendants, made full payments which resulted in its being damaged in an amount to be
determined.
COUNT III
Violation of 31 U.S.C. 3720(a)(1)(C)
58.

Relator realleges and incorporate paragraphs 1-50 of this Complaint as if fully set

forth herein.
59.

In performing the acts above, Defendants conspired to commit a violation of

subparagprah (A), (B) and (G).

60.

Specifically, Defendants unlawfully retained and failed to return the

overpayments they received as a result of the false and fraudulent billings submitted to
Medicare and Medicaid.
61.

Accordingly, the United States has been deprived of the use of such monies and

has been damaged in an amount to be determined.

COUNT IV

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Violation of 31 U.S.C. 3720(a)(1)(G)

62.

Relator realleges and incorporate paragraphs 1-50 of this Complaint as if fully set

forth herein.
63.

In performing the acts above, Defendants knowingly and improperly avoided an

obligation to pay or transmit money to the United States Government.

64.

Specifically, Defendants unlawfully retained and failed to return the

overpayments they received as a result of the false and fraudulent billings submitted to
Medicare and Medicaid.
65.

Accordingly, the United States has been deprived of the use of such monies and

has been damaged in an amount to be determined.

COUNT V
Violation of the Stark Law
66.

Relator realleges and incorporate paragraphs 1-50 of this Complaint as if fully set

forth herein.
67.

In performing the acts described aove, Defendants presented or caused to be

presented a claim for designated health services furnished pursuant to a prohibited referral in
violation of the Stark Law, 42 U.S.C. 1395nn, et seq.
68.

As the United States was unaware of the illegality of the claims, and in reliance

on the accuracy and legality thereof, made payment upon the false of fraudulent claims, the
United States was damaged.
69.

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COUNT VI
Violation of 42 U.S.C. 1320a-7b(b)
70.

Relator realleges and incorporate paragraphs 1-50 of this Complaint as if fully set

forth herein.
71.

By knowingly and willfully offering kickbacks to induce referring physicians to

refer hematology and oncology patients to Defendant and his clinics, Defendants violated the
federal Anti-Kickback Statute, 42 U.S.C. 1320a-7b(b).
72.

Pursuant to the federal Anti-Kickback Statute, any claim that includes items or

services resulting from unlawful kickbacks constitutes a false or fraudulent claim for purposes
of the federal False Claims Act.
73.

Through Defendants actions, the United States has been damaged in an amount

to be determined.
COUNT VII
Violation of M.C.L. 400.607(1)
74.

Relator realleges and incorporate paragraphs 1-50 of this Complaint as if fully set

forth herein.
75.

In performing the acts described above, Defendants, through their own actions or

through the acts of their officers, knowingly presented, or caused to be presented, to an officer
or employee of the State of Michigan, a false claim under the Social Welfare Act in violation
of M.C.L. 400.607(1).
76.

The State of Michigan, unaware of the foregoing circumstances and conduct of

the Defendants, made full payments, which resulted in its being damaged in an amount to be
determined.

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COUNT VIII
Violation of MCL 400.603(1)
77.

Relator realleges and incorporate paragraphs 1-50 of this Complaint as if fully set

forth herein.
78.

In performing the acts described above, Defendants, through their own acts or

through the acts of their officers, knowingly made, used or caused to be made or used, a false
record or statement to get false or fraudulent claims paid or approved by the State of Michigan
in violation of MCL 400.603(1).
79.

The State of Michigan, unaware of the foregoing circumstances and conduct of

the Defendants, made full payments, which resulted in its being damaged in an amount to be
determined.
COUNT IX
Violation of the Stark Law
80.

Relator realleges and incorporate paragraphs 1-50 of this Complaint as if fully set

forth herein.
81.

In performing the acts described aove, Defendants presented or caused to be

presented a claim for designated health services furnished pursuant to a prohibited referral in
violation of the Stark Law, 42 U.S.C. 1395nn, et seq.
82.

As the United States was unaware of the illegality of the claims, and in reliance

on the accuracy and legality thereof, made payment upon the false of fraudulent claims, the
United States was damaged.
PRAYER FOR RELIEF

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WHEREFORE, Relators respectfully request that this Court enter judgment against
Defendants as follows:
a.

That the United States be awarded damages in the amount of three times the
damages sustained by the United States because of the false claims and fraud
alleged in this Complaint, as the Civil False Claims Act, 31 U.S.C. 3729 et seq.
provides;

b.

That civil penalties of $5,500 to $11,000 be imposed for each and every false
claim that the Defendants caused to be presented to the United States;

c.

That pre- and post-judgment interest be awarded, along with reasonable

attorneys fees, costs, and expenses which Relators necessarily incurred in
bringing this case;

d.

That Relators be awarded the maximum amount allowed pursuant to the False
Claims Act;

e.

That the State of Michigan be awarded damages in the amount of three times the
damages sustained by the State of Michigan because of the false claims alleged
in this complaint, as the Michigan Medicaid False Claims Act, M.C.L. 400.612,
provides;

f.

That necessary expenses, costs, and reasonable attorneys fees be awarded as

provided by the Michigan Medicaid False Claims Act;

g.

That Relators be awarded the maximum amount allowed pursuant to the

Michigan Medicaid False Claims Act, and;

h.

That this Court award such other and further relief as it deems proper.
DEMAND FOR A JURY TRIAL

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Relators demand a jury trial on all claims alleged herein.

Respectfully submitted,
Foley & Mansfield, PLLP

Date: August 4, 2013

By: /s/ David L. Haron

David L. Haron (P14655)
Maro E. Bush (P71930)
Attorneys for Relator
130 East Nine Mile Road
Ferndale, MI 48220
(248) 721-4200- (248) 721-4201 (FAX)
dharon@foleymansfield.com
mbush@foleymansfield.com

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