Whistleblower Law Blog : Whistleblower Lawyer & Attorney : LaBovick Law Firm, Florida : Federal False Claims Act, Qui Tam

Mobil Oil and several affiliate companies have agreed to pay $32.2 million to resolve False Claims Act violation allegations. According to the Department of Justice, Mobil Natural Gas Inc., Mobil Exploration & Producing U.S. Inc. and their affiliates “knowingly underpaid royalties” owed from the production of natural gas on American Indian and Federal lands. The Justice Department alleges that from March 1, 1988 to Nov. 30, 1999, the Mobil companies underpaid multiple Native American tribes and the United States due to the systematic understating of the produced natural gas’ value. The Mobil companies’ settlement stems from a lawsuit brought by whistleblower Harold Wright. 

Tony  West, Assistant Attorney General for the Civil Division of the Department of Justice stated the following:

"The message to those who seek to evade their mineral royalty obligations is this: We will aggressively pursue you. We at the Justice Department are committed to protecting the public trust by ensuring that those who remove valuable minerals, some of which are non-renewable, from American Indian or public lands pay their full, fair, negotiated share for those assets."

Under the qui tam (or whistleblower) provisions of the Federal False Claims Act, private citizens such as Mr. Wright may file lawsuits on behalf of the United States. These provisions also allow the whistleblower to recover a portion of any settlement received by the government. Although Mr. Wright passed away before the Mobil companies settled, his heirs will receive approximately $975,000 for his role.

The U.S. Department of the Interior’s Minerals Management Service requires companies such as Mobil and its affiliates to report the value of natural gas produced on federal lands (including American Indian lands) on a monthly basis. According to the United States, the Mobil Companies “used transactions with affiliated entities to falsely reduce the reported value of gas taken from federal and American Indian leases to claim excessive deductions for the cost of transporting that gas, and to otherwise understate the value they reported each month for their natural gas production.”

Thanks to the qui tam provisions of the False Claims Act, private citizens such as Mr. Wright can bring violations to light. Thanks to Mr. Wright’s actions, the United States will receive $32.2 million, and his heirs will be rewarded $975,000 for his role in supporting justice.

Mobil Oil Companies to Pay U.S. $32.2 Million to Resolve Allegations of Underpayment of Royalties from American Indian and Federal Lands – U.S. Department of Justice

Mobil Companies Settle Unpaid Royalties Case for $32 Million - Law.com

Case Information: U.S. ex rel. Wright v. Chevron USA, Inc. et al., 5:03-CV-264 (E.D. Tex.)

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Maryland is moving in the right direction in the fight against Medicaid fraud. The Maryland Senate approved the Maryland False Claims Act of 2010 (Maryland Senate Bill 279). The new False Claims Act will allow the state to track and punish individuals and health care providers attempting to defraud low-income resident Medicaid programs run by the state. Included in the bill are provisions that permit a whistleblower to alert state investigators about fraudulent actions, and allow the whistleblower to collect a portion of any damages recovered by the state. The Maryland False Claims Act of 2010 passed by a vote of 37-8 in the Senate. Similar legislation is pending in the House.

However, the Maryland False Act presents limitations for whistleblowers in bringing  lawsuits against health care providers without intervention by the state. As a result, Maryland’s False Claims Act does not comply with Deficit Reduction Act of 2005 guidelines. This technicality reduces the state’s (and the whistleblower’s) ability to receive a larger percentage of any recovered damages.

Legal Blogger, Richard Renner, calls the Act  "watered down" in his post Maryland Senate passes watered-down state False Health Claims Act. He outlines key areas that could have strengthened the Act and questions whether the hospital administrators are important to the Maryland Senate or protecting taxpayer dollars.

Passage of the Maryland False Claims Act came after a series of amendments that received the backing of the Maryland Hospital Association, which opposed the bill last year. The Hospital Association did not want  whistleblowers to be able to bring a case on their own if the state decided not to pursue it. Their goal for the bill was to only go after "true fraud" not mistakes.

Last year efforts to pass the false claims act bill failed by one vote, largely because of vocal opponents. Lt. Gov. Anthony Brown's persistence paid off this year, with the Maryland Senate voting for this legislation the same day President Barack Obama signed an overhaul of the nation's health care system.

"This reform targets those who cheat our system and steal Medicaid dollars that belong to those most in need," Brown said in a statement.
 

Click on the following links to read more on the Maryland False Claims Act 2010:

Maryland Senate Bill 279: Maryland False Health Claims Act of 2010

Maryland Senate approves civil penalties for making a false health claim - Washington Examiner

Lt. Governor Brown Statement Applauding Senate Passage of Maryland False Health Claims Act
- Press Release

Maryland Senate approves the false medicaid Claims Bill - Baltimore Business Journal

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In Graham County Soil and Water Conservation District v. U.S. ex rel. Wilson (pdf), Justice John Paul Stevens, writing for a 7-2 majority, held that whistleblowers whose allegations are based on publicly disclosed information in state or local reports and investigations are barred from filing so-called qui tam lawsuits.

The Court's decision -- which also drew the first dissenting opinion by Justice Sonia Sotomayor -- said the act's public disclosure bar was not limited to federal sources of information.

Click on the following link to read more on the Justices Limit Qui Tam Cases but New Health Care Law Does Opposite - National Law Journal

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In an effort to resolve a qui tam claim regarding submitting false claims to Medicaid for Nitroglycerin Sustained Release (SR) capsules, Novartis Unit, Eon Labs Inc. agreed to pay the U.S. $3.5 million. The U.S. Department of Justice (DOJ) indicated that the settlement “resolves allegations against Eon in a multi-defendant whistleblower action,” case titled United States ex rel. Conrad v. Eon Labs, Inc., et al.

The U.S. Food and Drug Administration concluded in April 1999 that Nitroglycerin SR was “no longer legally eligible for reimbursement” by Medicaid and other government-run health care programs. According to the DOJ, Eon Labs, Inc., allegedly submitted false quarterly reports that included Nitroglycerin SR to the government from April 1999 through September 2008.

U.S. Attorney for the District of Massachusetts, Carmen M. Ortiz, stated the following:

"This is the first False Claims Act agreement with a drug company that sought to charge the government for less than effective drugs, and it shows that the Department of Justice will pursue those who market such drugs and expect the government to pay for them."

Under the False Claims Act, private persons are able to file a whistleblower and qui tam lawsuit on behalf of the U.S. government. If the claim is resolved successfully, the whistleblower may be entitled to receive a share of the settlement. According to the DOJ, the whistleblower involved in this claim will receive approximately $525,000.

Click on the following link to read more on the Eon Labs False Claims Act Settlement, Department of Justice and The Wallstreet Journal.

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This week on January 28,  the Department of Healthand Human Services and the Department of Justice held an invitation only  Summit on Health Card Fraud. Key Speakers included Secretary Kathleen Sebelius and U.S. Department of Justice Attorney General Eric Holder.

The summit was an unprecedented event on health care fraud where law enforcement and the private and public sectors come together as a part of the Obama Administration’s coordinated effort to fight health care fraud. The seminar covered such topics as 

•  Use of technology to prevent and detect health care fraud and improper payments.
• Role of states in preventing health care fraud.
• Development of effective prevention policies and methods for insurers, providers and beneficiaries.
• Effective law enforcement strategies.
• Measuring health care fraud, assessing recoveries and determining resource needs. 

Highlights from some of the key speakers include the following:

Secretary Kathleen Sebelius gave a moving introduction of the significance of the summit. She reinforced the Obama Administration's stance on "zero tolerance" for criminals who cheat  taxpayers, endanger patients, and jeopardize the future of  Medicare. A few highlights from her speach include the following remarks:

"Today, the President has asked us to put these criminals on notic. The problem of health care fraud is bigger than either government, law enforcement or the private industry can handle alone. We will need all of us working together to solve it. In the fight to prevent, find, catch, and prosecute these crooks, we want every good idea we can get.

Health care fraud is a national problem. It affects federal programs like Medicare, state programs like Medicaid, and private insurance companies. We’re all part of a health care system that has been undergoing rapid growth.

Between 1970 and today, America’s annual health care spending has gone from $75 million to over $2.5 billion. That has produced significant benefits for patients. But it’s also created a much bigger target for criminals. And a much bigger challenge for investigators. The difference between catching fraud then and now is the difference between trying to find a penny in a bathtub and trying to find a penny in a swimming pool."

Attorney General Eric Holder stated in his opening remarks that the HHS-DOJ Healthcaree Fraud summit marks a critical step forward in the work being done by HEAT, our Health Care Fraud Prevention and Enforcement Action Team that was established last May. He gave several insightful comments after addressing the fact that we have a serious problem on our hands with healthcare fraud. If the agencies, concerned advocuates and citizens work together, combined forces, more progress will be made.

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Upon returning from holiday recess, the 111^th Congress of the United States introduced bill H.R. 4444, better known as the Defund the Crooks Act, in early January 2010. First introduced by Congressman Alan Grayson (D-FL), the Defund the Crooks Act prohibits the Federal Government from awarding Federal funds, contracts, or grants to covered organizations. The Act also prohibits the Federal Government from promoting certain organizations or from entering into other agreements with these organizations.

Based in part on the Defund ACORN Act of 2009, Congressman Grayson’s bill effectively broadens the scope of regulation while not basing the regulation on the acts of one organization. The purpose of the bill is essentially to ensure that Federal funds – taxpayer dollars – do not end up in the hands of organizations that fail to meet certain requirements.

According to the bill, “covered organizations” refers to several of the following examples:

• Any organization previously convicted of a Federal or State law violation
• Any organization that failed to comply with Federal or State laws leading to its corporate charter being revoked
• Any organization that has filed, transmitted, or submitted a fraudulent claim to any Federal or State agency
• Any organization that knowingly employs, contracts, or relegates authority to any individual who has been convicted of a Federal or State law violation

The Defund the Crooks Act states that no Federal funds, regardless of form, may be provided to organizations that do not meet the aforementioned requirements set out in the bill. It is important to note that the Act does not apply to organizations that received Federal funds prior to the enactment of the bill. However, if organizations that are now deemed unfit to receive Federal funds, grants, endorsements, etc. have a contract extending past the date of the bill’s enactment, they will be terminated.

Click on the following link to view the proposed bill H.R. 4444  introduced to Congress.

Click on the following to learn more on Congressman Grayson and the Defund the Crooks Act (H.R. 4444).

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The United States filed a qui tam or False Claims Act complaint against Johnson & Johnson (J&J) and its subsidiary companies Johnson & Johnson Health Care Systems Inc. and Ortho-McNeil-Janssen Pharmaceuticals Inc. According to the complaint, Omnicare Inc., the U.S.’s largest dispenser of pharmaceuticals to patients in nursing homes, was receiving millions of dollars in kickbacks from the companies. This complaint comes after Omnicare entered into a $98 million settlement with the federal government and multiple states in November of last year, an action that supposedly resolved Omnicare’s liability for taking previous kickbacks from Johnson & Johnson.

Allegedly, Omnicare accepted financial kickbacks in return for the company’s purchase and recommendation of Johnson & Johnson and its subsidiaries’ pharmaceutical products to nursing home patients.  Doctors accepted the recommendations of Omnicare’s pharmacists more than 80 percent of the time, and allegedly Johnson & Johnson viewed Omnicare pharmacists as “an extension of its sales force.”

Kickbacks were delivered in several ways, including:

1)      Offering Omnicare rebates when programs to increase the sale of Johnson & Johnson’s prescription drugs to nursing home patients were implemented.

2)      Paying Omnicare millions of dollars for “data”; the complaint alleges that these payments were false and used only to coerce the recommendation of Johnson & Johnson drugs from Omnicare pharmacists.

3)      Johnson & Johnson also made multiple “educational funding” and “grant” payments to Omnicare, with intent only to receive a recommendation from its pharmacists.

Assistant Attorney General for the Civil Division of the Department of Justice had this to say about the situation,

"We will pursue those who break the law to take advantage of the elderly and the poor. He went on to say that, “Kickbacks such as those alleged here distort the judgments of health care professionals and put profits ahead of sound medical treatment." 

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FORBA Holdings LLC, a dental management company, settled a qui tam claim for allegedly performing medically unnecessary dental services on children. FORBA  Holdings LLC provides administrative services to  "Small Smiles Center, a nationwide operation of 69 dental centers. The settlement calls for FORBA to pay $24 million, plus interest to the United States and participating states, for suspected medically unnecessary dental services for children on Medicaid insurance. In addition, FORBA will implement several new remedial measures, designed to prevent this type of conduct in the future.

Three whistleblowers are credited for the government’s investigation into these allegations. The whistleblowers filed lawsuits under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private citizens to sue on behalf of the United States and share in any recovery. The whistleblowers will receive payments over $2.4 million from the federal share of the settlement.

According to the Department of Justice, FORBA allegedly falsely submitted claims for dental services performed on low-income children. Many of these services performed did not meet professionally recognized standards of care or were not medically necessary.  Tony West, “Assistant Attorney General for the Civil Division of the Department of Justice stated the following:

 "We have zero tolerance for those who break the law to exploit needy children. Illegal conduct like this endangers a child’s well-being, distorts the judgments of health care professionals, and puts corporate profits ahead of patient safety."

To resolve the allegations against it, FORBA will pay $24 million, plus interest. The federal share of the civil settlement is $14,285,645, and the Medicaid share for 21 states is $9,714,355.25.  This settlement sends a clear message that the government will not tolerate fraud. U.S. Attorney for the Western District of Virgini,  Timothy J. Heaphy, is correct in the following statement:

"FORBA put greed and profits before the well-being of children. It endangered the health and safety of innocent children and defrauded the taxpayer of millions of dollars.  Today’s settlement addresses these egregious acts and sends a clear message that Medicaid fraud will be expeditiously addressed by this Department."

The False Claims Act is a powerful tool that has helped the government recover approximately $2.2 billion since January 2009 in cases involving fraud against federal health care programs and over $3 billion in False Claims Act total cases overall.

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A qui tam law suit that accuses Boston Scientific Corp. (NYSE:BSX), Johnson & Johnson (NYSE:JNJ) and its Cordis Corp. subsidiary and Abbott (NYSE:ABT) of promoting the off-label use of biliary stents to treat cardiovascular disease in hundreds of thousands of patients has been unsealed.

The Whistleblower, Kevin Colquitt, filed the qui tam lawsuit under 31 U.S.C. 3729 (False Claims Act) and other State False Claims Act Statutes for violations against Medicare, Medicaid, CHAMPUS and TRICARE.  The lawsuit allegesthat the companies involved, committed Medicare Fraud and filed fraudulent clearance applications with the FDA.

According to the New York Times, the Justice Department and two of those states, Florida and Tennessee, said in court filings that they were declining for the moment to do so, but added that they were continuing to investigate.

Click on the following link: to view the Colquitt Whistleblower Court Documents 

Click on the following links to learn more on this qui tam lawsuit,

Mass Device
The New York Times


 

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