Morgue Whistle-Blower Can Advance Fraud Case

(CN) - A mortuary cannot dismiss claims that it conspired with an organ-donor center on tissue recovery to defraud the U.S. government, a federal judge ruled.

Barry Taul hopes to blow the whistle on his former employer, Nagel Enterprises, thus entitling him to a percentage of the government's recovery.

The lawsuit alleges that Taul was working for Enterprises in June 2009 when he overheard a conversation about a kickback scheme with the Alabama Organ Center.

Jed Nagel allegedly told Taul "that it takes a little grease on some palms sometimes to make money," and confessed the existence of the scheme.

Taul said he informed the FBI of the scheme in August 2010, but Nagel claimed in a motion to dismiss that Taul has not shown that he had "direct and independent knowledge of the information" making up his allegations.

Justice Department records show that federal prosecutors brought fraud charges against Alabama Organ Center officials back in 2011. In relation to that investigation, FBI agents in August that year froze several bank accounts belonging to Jed Nagel and Nagel Enterprises Inc. dba Abanks Mortuary, totaling millions of dollars.

A 2013 ruling in that government action describes AOC as Alabama's designated federally approved organ-procurement organization.

"Abanks Mortuary was the only funeral home involved in AOC's tissue procurement process," according to the ruling, which summarized allegations from the amended information.

U.S. District Judge Virginia Emerson Hopkins in Mobile, Ala., refused to dismiss Taul's claims against the Nagels on Thursday.

"Because satisfying the False Claim Act's jurisdictional bar is obviously a prerequisite to the survival of the rest of Mr. Taul's other claims, dismissing his action without permitting such procedural safeguards as discovery and a hearing would be unjustifiably premature," the decision states.

"The facts corroborate that [Taul] had direct and independent knowledge of the information on which he made his later allegations and that he voluntarily provided the information to the government before he filed the present action," Emerson Hopkins added.

Alabama Organ Center's former director, Demosthenes Lalisan, and its associate director, Richard Alan Hicks, pleaded guilty in November 2011 to one count each of conspiracy to commit health care fraud, health care fraud, and mail fraud.

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