A Medicaid whistleblower lawsuit has resulted in a $1 million stipulated judgment against a woman who also has been banned for life from participating in Virginia’s Medicaid Program.

Defendant Dawn Sykes owned and managed Open Arms Family Support Services LLC, Open Arms Family Day Treatment Support Services LLC and Open Arms Mental Health Support Services LLC from 2010 to 2017.

According to allegations in the Medicaid whistleblower lawsuit, Dawn ran “multiple fraud schemes” throughout the years she owned and operated the facilities. Among Dawn’s alleged illegal actions were:

• Submitting claims to the Medicaid Program for reimbursement for services that were never provided
• Paying kickbacks to obtain client referrals
• Submitting claims for reimbursement for services purportedly provided to people who were ineligible for Medicaid

Medicaid Whistleblower Lawsuit Reward

Whistleblower and former Open Arms employee Susana M. said she was employed by Dawn for a year until she allegedly was wrongfully dismissed in 2013. Susana said she made it clear she was opposed to the billing practices that Open Arms had in place, and she refused to be part of any fraudulent billing activity.

Susana will receive 18 percent of the money paid by Dawn Sykes and Open Arms, according to the U.S. Attorney’s Office. The office explained the False Claims Act and the Virginia Fraud Against Tax Payers Act both allow a whistleblower to receive a portion of the funds recovered.

Dawn Sykes agreed to the Medicaid whistleblower lawsuit settlement in which she will pay an initial amount of $50,000 and agreed to a consent judgment of $1,061,613. She also agreed to a lifetime ban from the Virginia Medicaid Program. According to a press release from the Department of Justice, Dawn might satisfy the consent judgment by making regular payments totaling a lesser amount.

The federal and state false claims acts allow the government to investigate a whistleblower’s allegations and to either intervene or to join the litigation. After a joint investigation by the federal and state was complete, the government intervened in the Medicaid whistleblower lawsuit against Dawn.

The resolution was a coordinated effort between the U.S. Attorney’s Office for the Eastern District of Virginia and the Office of the Attorney General for the Commonwealth of Virginia Medicaid Fraud Control Unit. The Virginia Department of Medical Assistance Services assisted the investigation.

The oldest whistleblower law in the U.S. is the False Claims Act, which dates back to the Civil War. At that time, the False Claims Act was created to protect whistleblowers from defense contractors’ overpriced merchandise.

The False Claims Act includes a provision that enables private citizens to file suit on behalf of the government. Called qui tam, Latin for “in the name of the king,” the law allows citizens to collect 15 to 30 percent of the money recovered in the suit, and that can total up to three times the amount of the initial alleged fraud. As previously mentioned, in the Medicaid whistleblower lawsuit against Dawn Sykes, whistleblower Susana M. will receive 18 percent of the money recovered.

In an unrelated matter in 2011, Dawn Sykes pleaded guilty to theft from a health care benefit program. That case involved kickbacks and a different business that sold handicap-accessible vehicles to the Virginia Birth-Related Neurological Injury Compensation Program.

The Medicaid Whistleblower Lawsuit is Case No. 3:14-cv-316 in the U.S. District Court for the Eastern District of Virginia.