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

The Atlanta based home builder, Beazer Homes USA Inc. settled a qui tam suit involving mortgage fraud with Federally insured mortgages. Beazer Homes USA has agreed to pay $50,000,0000  to the United States to be shared with victimized private homeowners, to resolve allegation. 

According to published reports by the DOJ, the Builder's mortgage company made Federal Housing Administration (FHA) insured mortgage loans for the purchase of homes built by the Builder and both companies fraudulently and improperly:

1) required purchasers to pay "interest discount points" at closing, but then kept the cash and failed to reduce interest rates;
2) provided cash "gifts" to home purchasers through certain charities, so purchasers could come up with minimum required down payments, with assurances the "gifts" would not have to be repaid, and then increased home purchase prices to offset the amount of the gifts;
3) obscured which of its branches made defaulting mortgage loans to avoid FHA detection of excessive default rates, and;
4) ignored "stated income" requirements in making loans to unqualified purchasers.

The Attorney General's Office is serious about fighting mortgage fraud. The US Attorneys Office along with the Department of HUD are working together to crack down on fraudulent mortgage practices by firms.  Assistant Attorney General Tony West, who heads the Civil Division stated recently:

"We will aggressively pursue fraud claims against federal mortgage insurance programs, which are so vitally important to this economy."

This is further echoed in a statement by HUD Secretary Shaun Donovan, that the lenders will be held accountable for their actions if they are involved with mortgage fraud:

"This action shows that the Administration is serious about making the housing market safe from mortgage fraud and will crackdown on those who violate the trust of American homebuyers."

Beazer has agreed to provide appropriate restitution to buyers and have established a national restitution fund. The Chief Executive Officer and Chief Operating Officer are voluntarily contributing funds from their 2008 year end bonuses to the restitution fund. This was a smart move on their part. However, they should have thought about the repercussions of the company's actions beforehand.

It is interesting that we covered Beazer Homes on our Law Planet Blog recently regarding the SEC charging Chief Accounting Office, Michael Rand of misleading investors by inflating earnings.  This was the first time that a firm made The Whistleblower Law Blog and The Law Planet Blog both in the same week.

Note to all firms committing mortgage fraud: "if you are actively engaging in fraudulent behavior that can be construed as mortgage fraud, you will be caught and prosecuted by your actions.  Whistleblowers are bring educated on "what is qui tam" and the False Claims Act and are stepping forward with information on mortgage fraud. Based on the nature of their information, they may get a Whistleblower reward, which can be 15% - 30% of what the US recovers based on their information. Be advised... Your secrets will come out and you will be caught and brought to justice. Thanks to a Whistleblower stepping forward and bringing this information to light with a qui tam attorney.

To learn more on qui tam and the rights of Whistleblowers, click on the following links on qui tam and the False Claims Act.

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The whistleblower case, Graham County Soil & Water Conservation District v. United States ex rel. Wilson, 08-304 was granted certiorari by the Supreme Court.

This case has special implications for the business community, especially  whistleblower lawsuits against drugmakers, and biotechnology companies. Several organizations such as National League of Cities, Pharmaceutical Research and Manufacturers of America, Chamber of Commerce of the United States of America, and the  Washington Legal Foundation, filed amici curiae Briefs

The central players in this case include the Graham County water district from North Carolina and a former secretary at Graham County water district. The main argument in the case is whether the whistleblower can bring a qui tam case against the water district for allegedly fraudulently seeking federal money for storm cleanup, since the allegations are based on information made known in publicly available in state documents. 

According to the Supreme Court Docket Report from Appellate.Net of the Mayer Brown Law Firm:

"The decision in Graham County will be especially significant to businesses that are subject to inspections and audits by state and local government agencies, because the results of those inspections and audits are frequently made available to the public, and thus to potential relators and their lawyers."

The Solicitor General, Elena Kagan and the United States asserts the following in the discussion of this case in the May 2009 Amicus Curiae Brief for Graham County Soil & Water Conservation District v. United States ex rel. Wilson, 08-304.

"The court of appeals correctly construed the second clause of the “public disclosure” bar contained in 31 U.S.C. 3730(e)(4)(A). The court’s decision, however,
deepens a pre-existing circuit conflict regarding whether state and local administrative audits and reports fall within the scope of the FCA’s “public disclosure” provision. This Court should grant the petition for a writ of certiorari to resolve the split among the circuits on an important legal issue affecting the federal courts’ jurisdiction over FCA qui tam actions."

To learn more on this case read Bloomberg News, Scotus Blog, The Supreme Court, The US DOJ

Time will tell, which way the court will decide on this opinion.  Will Big Business prevail or will the Courts render an opinion that is in favor or whistleblowers and bringing FCA fraudulent activity  to light?

All eyes are on the Supreme Court. Stay Tuned....

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Today, a qui tam suit that was brought against Kindred Healthcare, Inc. was settled for just over $1.3 million.  United States Attorney Russ Dedrick announced today that Kindred Healthcare, Inc. and its successor PharMerica Healthcare Pharmacy, LLC, have agreed to settle claims that Kindred violated state and federal laws regarding over-billing TennCare and the Medicaid program for pharmaceuticals.

The healthcare corporation provides medications to patients in group homes and long-term care facilities throughout Tennessee. It was alleged that between 2003 through 2006, Kindred overbilled for a higher number of drugs than were actually administered. There were instances where the overbilling occured multiple times the proper amount. 

Thanks to the valiant efforts of a former billing clerk employee of Kindred, this qui tam lawsuit was filed on behalf of the the United States and Tennessee under the qui tam provisions of the Tennessee Medicaid False Claims Act and the federal False Claims Act.. The whistleblower/ relator in this case will be rewarded over $200,000 for her role in filing the complaint and assisting with the investigation.

As mentioned previously on the Whistleblower Law Blog:

In a qui tam suit,  the whistleblower also known as a "relator" may be entitled to
15-30% of the government's total recovery, which includes damages for the false bills, tripled, plus civil penalties of from $5,000 to $10,000 per false claim. However, it is important to mention, that the relator/whistleblower must have complied with the statutory requirements to be eligible for the whistleblower reward.

To learn more on the Kindred settlement, read the DOJ release reqarding the qui tam settlement for Kindred Health.

To learn more on qui tam and the federal false claims act, visit our qui tam section on the LaBovick website.

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Capmark Finance Inc., a California-based mortgage lender, is the target of a qui tam suit filed by the Department of Justice. In this suit, the Justice Department alleges that the company has committed mortgage fraud and is seeking reparations under the False Claims Act.

The suit against Capmark Finance stems from what the Department of Justice claims as fraudulent statements by the company on applications for federal mortgage insurance for two residential nursing home facilities. The facilities, Canoga Care Center, located in Canoga Park, California, and Hudson Valley Care Center, based in Ghent, New York, were both covered by the U.S. Department of Housing and Urban Development (HUD) under a federal program that guarantees mortgages that are used to purchase healthcare facilities. Both of these residential care institutions have both defaulted on these guaranteed loans and HUD has since had to pay approximately $26 million under the terms of the mortgage insurance agreement.

The False Claims Act, sometimes referred to as the Lincoln Law, provides for liability against entities that make false claims in order to gain government funding. An entity can be charged as much as three times the amount fraudulently taken from the government along with other civil penalties, under what is commonly known as a qui tam suit.

If a qui tam suit, is brought by a whistleblower also known as a "relator", the whistleblower may be entitled to 15-30% of the government's total recovery. This includes damages for the false bills, tripled, plus civil penalties of from $5,000 to $10,000 per false claim. However, it is important to note, that the whistleblower must have complied with statutory requirements if they are to receive a portion of the whistleblower reward.

Since the Department of Justice alleges that Capmark Finance falsified information on paperwork in order to receive protection from the Department of Housing and Urban Development, the False Claims Act covers this case of suspected mortgage fraud. The United States is also seeking the highest possible dollar amount from Capmark in its suit.

According to Tony West, Assistant Attorney General for the Justice Department's civil division:

"Mortgage fraud is a top priority for this administration, especially when public dollars are at stake.  This complaint sends a clear message that we will aggressively pursue allegations of fraud on federal mortgage insurance programs, which are so vitally important to this economy."

Capmark Finace had its early beginnings in 1994, when the company operated under General Motors ownership as GMAC Commercial Mortgage Corporation. In 2006, GM sold its majority interest in GMAC Commercial to a consortium including Five Mile Capital Partners, Kohlberg, Kravis Roberts & Co., and Goldman Sachs. The company was then renamed as Capmark Financial Group. Capmark now bills itself as a diversified company that offers a variety of financial services in the commercial real estate industry. Capmark’s three areas of focus include investments and funds management, mortgage banking and lending, and servicing
 

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Another successful case in the win column for whistleblowers (relators) bringing qui tam suits, In this most recent instance, whistleblower, Steve Pogue, and his legal team can breathe a sigh of relief, because the litigation against Healthways that took 15 years has finally settled for $40,000,000.

It started back in 1994 when Mr. Pogue was fired from his job as a marketing representative for a company called Diabetes Treatment Centers of America, (owned by parent company Healthways).. The hard work and tireless efforts for bringing justice on behalf of the United States for the Diabetes Treatment Centers for stealing millions of dollars in taxpayer money through Medicare fraud and illegal kickbacks, paid off inthe recent settlement.

Since the government decided not to intervene, whistleblower, Steve Pogue will collect 25% - 30% of the settlement as a reward.  That comes out to $10,000,000 - $12,000,000 for him stepping forward and bringing forth the qui tam claim. Hopefully settlements like these will encourage more whistleblowers to report fraud against their employers that are stealing from the government.

Legal Blogger, from Getnick & Getnick on QuitamHelp.com, made a valid point in the blog post "Healthways pays $40 million to settle 15 year qui tam suit, when they shared the following statement:

"This case “demonstrates the wisdom of Congress in deciding that the government’s decision not to participate does not mean that a case has no merit.”

Although it took 15 years, the reward was great, Unfortunately, it is not always like this and sometimes the whistleblower doesn't win such a large amount of money.  Wen working with whistleblowers around the country, most step forth and bring fraud to their employer's attention, because they want to do what is right for the company and the government. Unfortunately, most companies fire the messenger or make their lives miserable,. The whistleblower is forced is forced to seek legal counsel and bring the company's fraudulent behavior to the authorities..

Hopefully, the proposed False Claims Act Amendment will give protections to more whistleblowers so that we can prevent taxpayer fraud.  We all lose, when someone defrauds the government.  Let's all be watchful of how companies bill the government and spend government funds.  If the public doesn't keep a watchful eye out for the government, who else will? Definitely not the companies stealing and overcharging the government.

To learn more on this qui tam settlement from Healthways, read Medical News Today

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Today there is an important hearing on the  Whistleblower Protection Act being held in Washington, D.C. at 2:30pm (EST).  If you can't attend the hearing, please make an effort to call Senators Daniel Akaka (202) 224-6361 and Susan Collins (202) 224-2523, indicating your support of Whistleblower protection for all.

The purpose of the hearing is to examine problems with the current system of protections for federal employee whistleblowers and the pending Whistleblower Protection Enhancement Act of 2009 (S. 372). The hearing will also address differences between S. 372 and the House companion bill (H.R. 1507).

Watch the Whistleblower Protection Act hearing live

As an Action Member with the National Whistleblowers Center, the President, Mr. Stephen Kohn sent the following message to share with our Readers.

Message from the - National Whistleblowers Center:

The Senate is holding a hearing on the Whistleblower Protection Enhancement Act today. The public hearing will be held in the Dirksen Senate Office Building, Room 342 at 2:30 PM.

Now is the time to make your voice heard! If you have not sent an email to Congress send it now! Call Senators Daniel Akaka (202) 224-6361 and Susan Collins (202) 224-2523, the Chairman and Ranking Member of the Senate Committee on Homeland Security and Government Affairs, and tell them that all federal employees, including those who report misconduct in national security and defense, must have whistleblower protection with full court access.

During the campaign, President Obama pledged to support effective legislation that would protect all federal employees with a guaranteed right to federal court access. Please urge the Senate to back up this promise.

 

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New Jersey-based Wyeth, one of the nation's largest drug manufacturing companies recently had two qui tam lawsuits filed against them in federal court in Massachusetts. Pharma giant,  Wyeth - poised to be bought out by large pharmaceutical company Pfizer, Inc. later this year - is being accused of overcharging state Medicaid programs by failing to offer them the best price possible for the stomach acid drug Protonix. Sixteen states - as well as the Justice Department - have joined in on the lawsuits, which could result in millions of dollars in repayments to Medicaid, as well as settlements for the two whistleblowers.

The lawsuits allege that between the years 2000 and 2006, Wyeth offered very high discounts to hospitals around the country for Protonix, which is available in oral and injected forms. While these hospitals were able to take advantage of the deal for the brand name drug, the same deal was not offered to state Medicaid programs. Federal law mandates that the manufacturers of brand name prescription drugs must offer the same deal - or the "best price" - of the drugs they make to Medicaid programs and private hospitals alike.

According to to the DOJ, Tony West, Assistant Attorney General for the Justice Department's Civil Division stated,

“Our complaint charges that Wyeth created the Protonix bundle so they could increase their market share at the expense of the Medicaid program -- a program to provide the least advantaged Americans with necessary medical care and services. “By offering massive discounts to hospitals, but then hiding that information from the Medicaid program, we believe Wyeth caused Medicaid programs throughout the country to pay much more for these drugs than they should have.”

By failing to offer Medicaid programs the best price for Protonix, it is alleged that Wyeth avoided paying hundreds of millions of dollars in rebates. The presence of two whistleblowers in the two lawsuits suggests that people with insider knowledge into the goings-on at Wyeth have evidence that will be presented in court during these suits. As with other past whistleblower cases, these individuals have likely already disclosed a great deal of damaging information to the government regarding Wyeth's alleged practices.

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Today, Justice Thomas delivered the opinion in the much anticipated case United States,  ex rel. Irwin Eisenstein, Petitioner, v. City of New York, et, al..  Unfortunately, the opinion, was a fatal blow for the Relator, Irwin Eisenstein, since the lower court's decision was affirmed that there is only a 30 day time limit for appeal on qui tam cases where the government decides not to intervene.

 In his opinion, Supreme Court Justice Thomas wrote:

"The question presented is whether the 30-day time limit to file a notice of appeal in Federal Rule of Appellate Procedure 4(a)(1)(A) or the 60-day time limit in Rule 4(a)(1)(B) applies when the United States declines to formally intervene in a qui tam action brought under the False Claims Act (FCA), 31 U. S. C. §3729. The United States Court of Appeals for the Second Circuit held that the 30-day limit applies. We affirm."

Petitioner filed a notice of appeal 54 days later. While the appeal was pending, the Court of Appeals sua sponte ordered the parties to brief the issue whether the notice of appeal had been timely filed. Federal Rule of Appellate Procedure 4(a)(1)(A)–(B) and 28 U. S. C. §§2107(a)–(b) generally require that a notice of appeal be filed within 30 days of the entry of judgment but extend the period to 60 days when “the United States or an officer or agency thereof is a party,” §2107(b). Petitioner argued that his appeal was timely filed under the 60-day limit because the United States is a “party” to every FCA suit. Respondents countered that the appeal was untimely under the 30-day limit because the United States is not a party to an FCA action absent formal intervention or other meaningful participation.

The Court of Appeals agreed with respondents that the 30-day limit applied and dismissed the appeal as untimely. See 540 F. 3d 94 (CA2 2008). We granted certiorari, 555 U. S. ___ (2009), to resolve division in the courts of appeals on the question,1 and now affirm."

One question at the forefront of everyone's mind is, why shouldn't all cases have 60 days to appeal? Relators without government intervention in the qui tam case have only 30 days to appeal. However, when the government decides to intervene in the case, there is a 60 day time limit for an appeal. Since the government is the beneficiary of successful qui tam litigation, doesn't it make sense to give more time to bring an appeal, whether or not the government intervenes?

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Today is Earth Day, celebrated in the United States officially, since 1970. It was founded by U.S. Senator Gaylord Nelson. Earth Day is about being environmentally friendly. This includes includes work, home and play.

Since our Readers are mostly reading the WhistleBlower Law Blog from work, we are sharing a  few Simple Steps that can be implemented in the work place. 

1. Use a Laptop at work - Laptops use 50 percent of the energy used by a typical desktop PC when plugged in and just 1 percent of the energy when running on batteries.
2. Use Double Sided Printing - Use Double Sided printing whenever possible to save on paper. This cuts down on the finished size of a multi-page document.
3. Recycle Cartridges - Recycle empty printer, copier and fax cartridges. Empty laser and inkjet cartridges can be refilled or remanufactured several times.
4. Turn Off Lights in Unoccupied Rooms - Lights should be turned off in unoccupied conference rooms and offices. If you walk by an empty conference room, switch the light off. Use Disposable Cups - Provide mugs and glasses in the office to eliminate the need to use disposable cups for beverages.
5. Use Flash Drive, PDF's and Save Paper - Save on paper, use Flash Drives, Disks and PDF's to save and share your computer files. 
6. Use teleconferencing and Webinars - Use Teleconferences and Webinars where possible to save on traffic and commute time for meetings and seminars.

Celebrate Earth Day 2009 and do your part in being more environmentally friendly at work. Check out the following book:  Easy Being Green by Crissy Trask for more tips on Being Green

Happy Earth Day!

P.S. At LaBovick & LaBovick, we are doing our part, we implement these simple steps every day in our offices.  In fact, our new headquarters is equipped with light sensors that automatically turn off lights if there is no activity or movement in a room after 10 minutes. We also recycle print, ink cartridges, cans, bottles, and paper (when possible). We hope that more businesses and individuals join us in making a difference today on Earth Day and every day of the year.

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