Mortuary Must Pay $15 Million to Whistleblower Threatened With Cremation

Author: Robert S. Teachout, XpertHR Legal Editor

March 22, 2018

A mortuary has been ordered to pay $14.7 million by an Alabama federal court in a False Claims Act lawsuit brought by a former employee. The employee alleged that the mortuary owner had threatened to cremate him alive, among other threats, after he reported an illegal kickback and false billing scheme.

Abanks Mortuary and Crematory in Birmingham had an arrangement to collect tissues for the Alabama Organ Center for transplants and medical research from the deceased prior to cremation. While employed there, Barry Taul discovered that the owner, Jed Nagel, made illegal kickback payments to the center's director and associate director in exchange for business referrals. He also learned that the mortuary regularly padded the Center's bills by overstating how far they were traveling to pick up dead bodies to get more federal money. The scheme resulted in an estimated $60,000 per month in fraudulent charges. Such practices violate the federal False Claims Act and the Anti-Kickback Statute.

Taul claimed that he suffered physical abuse and death threats against him and his family by his employer in an attempt to prevent him from reporting the wrongdoing. He also alleged that after leaving employment Abanks blacklisted him, testifying that he was "disparaged and falsely maligned to future employers, resulting in his being wrongly terminated from other positions." Under the False Claims Act, Taul is entitled to 27.5 percent (approximately $4 million) of the amount awarded as a whistleblower reward for bringing the lawsuit.

The False Claims Act is one of the federal government's most potent tools for regulating health care fraud and serves as the government's primary civil remedy to redress false claims for government funds and property under government programs and contracts. For the 2017 fiscal year, the Department of Justice announced $3.7 billion in monetary recoveries under the False Claims Act. The law has counterparts at the state and municipal level and has been used to target compliance and ethics issues in various industries throughout the nation.