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

Medicare fraud can happen anywhere and can be detected by the most least suspecting individual in a company.  Recently, Fred Steinberg, M.D, a radiologist and owner of the chain, of  University MRI and Diagnostic Imaging Centers, located in Florida settled a qui tam suit for $7 million.  The  Florida firm denied all charges and agreed to settle the qui tam suit according to a quote in the Sun Sentinel  "to end the uncertainty of protracted litigation."

The company was accused of overcharging Medicare for Medical scans and billing the federal government for some tests that were not medically necessary. There were also allegations that that the Florida company paid doctors under the table for sending them imaging patients for tests that could cost as much as $2,500 apiece.

Why is it that when an employee reports questionable government billing practices to management, in this case Medicare bills, the company  takes the defensive and fires the employee.

In the case of the Florida Diagnostic Imaging Centers, David Clayman, M.D, a former radiologist for the imaging centers, was fired after questioning the Medicare billing practices. According to a recent DOJ release, Dr. Clayman will receive $1.75 million as his share of the $7 Million recovery.

According to the American College of Radiology, a doctors' association, in a Sun Sentinel article, the cost for Medicare and insurers is about $16 billion a year for unnecessary imaging tests ordered by doctors who made money from them. These tests not only cost the government and taxpayers, but also expose patients to radiation and and raise medical costs.

One of our favorite crusaders in the Medicare fraud fight, R. Alexander Acosta, U.S. Attorney for the Southern District of Florida, stated that  “We will aggressively prosecute any physicians, including board-certified specialists, who abuse and steal from the Medicare system to line their own pockets.”  Attorney Brian F. LaBovick mentions in an article on health care fraud for a  Thomson West Litigation Reporter, that "We must continue to prosecute fraud on all levels. New amendments are needed to continue to foster the cottage industry of civil attorneys assisting U.S. attorneys' offices around the country with their qui tam investigations. Each state must enact its own qui tam statutes (there are now 22 states with qui tam laws). This will give states the ability to potentially capture additional funds for Medicare fraud prosecution at a local level, pursuant to the Deficit reduction Act of 2005."

The Florida qui tam case discussed in this post is: U.S. ex rel. David Clayman v. University MRI and Fred Steinberg, M.D. et al. Civil Action No. 02-81143 (S.D. Fla.). 

 

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The annual ABA Seminar on Civil False Claims Act and Qui Tam Enforcement will be held in Washington, D.C.  June 11-13, 2008. 

Since, the civil False Claims Act is a growing area of federal litigation, particularly because of its unique qui tam enforcement, the conference will have experts from all areas – healthcare, defense, pharmaceutical, oil and gas, accounting and consulting, construction, higher education and grant recipients – in which qui tam lawsuits under the FCA have been filed.

Click here for the ABA Brochure on the Qui tam and False Claims Act Conference.

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This week, Defense Counsel, Mark S. Olinsky of Sills Cummis & Gross P.C., wrote an article for the Metropolitan Corporate Counsel, titled "Defending Qui Tam Suits Under New Jersey's New False Claims". One may find it strange for a Plaintiff's firm to highlight an article written by a Defense firm.  Howeverm, this article is well written, provides a good introduction of the history of the False Claims Act,  and acknowledges the New Jersey False Claims Act that will go into affect on March 13, 2008.   As previously mentioned on the Whistleblower Law Blog, New Jersey is among 20 states that have passed a state False Claims Act with qui tam whistleblower provisions similar to the Federal False Claims Act.

Mr. Olinsky reference to whistleblowers as "bounty hunters" is interesting, when he writes "New Jersey's new statute follows the federal version, and will invite suits by a new group of bounty-hunters - those involved with companies that do business with the State or "any contractor, grantee or other recipient of State funds."

At the end of the article,  Mr.Olinsky provides a useful corporate tip  when he writes "companies that do not already have in place a comprehensive compliance program - including training, anonymous reporting, and self-auditing - should make the implementation of such a program a top priority". The fines for a company found defrauding the government, can be expensive.  As he points out, "The New Jersey False Claims Act  provides for treble damages and civil penalties of at least $5,000 to $10,000 per false claim."  Several other states already have this penalty in force.

Whistleblowers or "bounty hunters" as Mr. Olinsky calls them, are out there ready and willing to report a company for defrauding the government. They get to share in the government's recovery, anywhere from 15% - 30%, depending upon the government's intervention in the case. However, despite the money, most whistleblowers would prefer for the company to stop the wrong doing and acknowledge them for reporting the fraud to management. In several instances, the whistleblower loses their job, friends and life as they know it, because the large corporations vilify the whistleblower. Just ask two of the most well known whistleblowers, Dr. Peter Rost formerly of Pfizer or Cynthia Cooper formerly of Worldcom. They told what they believed was the truth about their organizations and their worlds changed dramatically. Although both have written books and are household names  if you asked them, why they came forward, I am sure they will say "it was  to tell the truth". We believe that whistleblowers are brave individuals that give up a lot to share the truth.  A large corporation can pay defense firms millions of dollars to fight a qui tam claim and end up settling without admitting any wrongdoing. They can finance a well paid PR campaign to help with their public image, give millions to a worthy cause and life goes on as usual.  At the end of the day, who stands to lose the most for coming forward? the brave whistleblower. 

Click here and check out the article on the New Jersey False Claims Act by Mr, Mark Olinsky and make your own conclusion.

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The National Whistleblower Center requests your help in sending a message to your Representative re: The Consumer Product Safety Commission reform bill (S.2045) Whistleblower protections.

The CPSC reform bill (S.2045) needs to provide vital protections for honest employees who report safety violations--such as toxins in toothpaste and poisonous lead in our children's toys. Without these protections, whistleblowers may not come forward to report dangers of products until it is too late. 

Lobbyists, such as the National Association of Manufacturers, have declared war on the whistleblower provisions of the bill.  The House version of the CPSC reform bill does not include whistleblower protections.

Clickhere to find out how you can take action and join the Whistleblower Center in this valiant fight. to encourage Representatives to support families and not large businesses in this legislation. There have easy to use templates at this site for sending messages to Representatives. 

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This week the Louisiana Legislature along with Governor Bobby Jindal, launched an "Extraordinary Session". In a bi-partisan effort, the legislators joined together to introduce  and strengthen key legislation that combats government fraud in their state. The Senate, led by Senator Kostela, introduced SB 41 , a Louisiana False Claims Act, which is aimed at authorizing qui tam incentives and standing to citizens to pursue certain fraud claims. The House, led by Rep. Jim Tucker,  introduced, HB 69, which is aimed at, Authorizing a qui tam action for persons who disclose certain cases of fraud.

The Louisiana Legislator's "Extraordinary Session" started February 10, 2008 and is expected to end by  March 1, 2008.  The Session has Seven key priorities, one of which is to combat fraud and abuse. The goals included are: NO. 1 - Financial Disclosure, NO. 2 - Conflicts of Interest, NO. 3 - Transparency for Lobbyists, ITEM NO. 4 - Improving Ethics Education and Enforcement, ITEM NO. 5 - Transparency and Public Access to Information, ITEM NO. 6 - Further Combating Fraud and Abuse, and ITEM NO. 7 - Improve Campaign Finance Laws

Item NO. 6 language includes the following:

To legislate relative to other public officers and private citizens participating in the prevention of fraud and abuse by:
(1) enabling the Office of Inspector General by statute;
(2) granting authority to local inspector generals and ethical governing bodies to issue and enforce subpoenas in state court and providing for confidentiality during investigations by such;
(3) expanding whistleblower protection to prohibit threats of reprisal to public servants; and
(4) authorizing qui tam incentives and standing to citizens to pursue public fraud cases when the state refuses to act.

Continue Reading...

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New Jersey has joined in the fight against qui tam and Medicaid fraud against the government in New Jersey.  Thanks to the efforts of Senators John H. Adler and Joseph F. Vitale Co-Sponsors of S232, the New Jersey False Claims Act was approved by the Senate in a vote of of 37-0.

The New Jersey False Claims Act, Bill S232, allows residents in New Jersey to bring an action, against anyone, who intentionally causes the State to pay a false claim. If a person is found guilty in court, the bill would create civil penalties, between $5,000 and $10,000, for each verified count of a false claim, as well as imposing up to three-times the cost of any losses the public entity would have sustained because of the false claim.

The bill also sets up a whistleblower incentive to come forward with any information about false claims. If a false claim is proven in court, the whistleblower would be entitled to 15% to 25% of the proceeds recovered for New Jersey if the Attorney General brings the case, and 25% to 30% of the proceeds if the case is brought by the whistleblower. The exact amount of whistleblower compensation is determined by the courts.

I could not agree more with Senator Adler's statement of  "This bill will be another weapon in the arsenal of good government.”  It would be great if all states had a State False Claims Act that mirrored the Federal False Claims Act. It would send a strong message to individuals and corporations to think twice before defrauding the government. It would also encourage more individuals to come forward and report fraud against the government.

The Bill now heads to the Assembly before going to the desk of Governor Jon Corzine for signature of the Bill to be signed into Law. 

Click here to read the News Release from the New Jersey Senate Democrats.
Click here to read more from Jason Butkowski and PolitikerNJ.com.
Click here for a copy of the New Jersey False Claims Act.

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The qui tam complaint against Pfizer, USA rel. Polansky v. Pfizer is pressing forward according to court documents filed by the Plaintiff's legal counsel, Hagens Berman Sobol Shapiro. To view the complaint, click here. (Warning, the document is pretty lengthy, 97 pages, but worth every moment spent reading.) This comes after the whistleblower complaint being initially filed with the federal government about 3 1/2 years ago and the federal government deciding recently not to intervene.

It can be difficult for a whistleblower to press forward with a qui tam claim, they often lose their jobs, face retaliation, lose family and friends and often are forced to give up something they truly love. ). The Pharmafraud Blogger discusses challenges whistleblowers can face while trying to do what is right, in the recent post  Big Pharma Retaliation, Just More of the Same, "If you think Dr. Polansky, or I, or any other "whistleblower" was motivated by money to file a qui tam, then you are sorely mistaken. Every one of us simply tried to do what was right".  However, I must add that whistleblowers, if successful, can receive up to 30 percent of the proceeds of what the government recovers. As we mentioned in a prior Whistleblower Law Blog post, In 2007, whistleblowers were awarded $177 million for their efforts in bringing corporations to justice, most of  which came from Health Care fraud.

Another well known whistleblower and one of the most prominent in the health care segment is Dr. Peter Rost.  He knows first hand how difficult it can be to bring a claim against a large pharma giant, such as Pfizer. Dr. Rost, former VP of Marketing for Pfizer, is an outspoken pharma whistleblower that went on to become an activist on the subject. He has authored several books including: KILLER DRUG and THE WHISTLEBLOWER, Confessions of a Healthcare Hitman and maintains a blog known as Question Authority.

Is Pfizer off the hook? Can they breathe a sigh of relief? Are they in the clear with Lipitor, since the government chose not intervene in the qui tam claim? David Armstrong provides a nice answer to this in the Wall Street Journal article, "Pfizer Is Sued Over Lipitor Marketing"., when he writes "The government hasn't intervened in other cases which led to huge fines against drug companies. One example is another case involving Pfizer, this one for the off-label marketing of Neurontin." Only time will how the claim against Pfizer for questionable marketing for the billion dollar drug will turn out. May the truth prevail in this uphill battle.

According to Pfizer company issued statements, they are the world's largest research-based biomedical and pharmaceutical company. In 2006, they earned $48.4 billion in revenues and invested $7.6 billion in research and development. In a Pfizer fact sheet, the company writes, "Every day, approximately 87,000 colleagues in more than 150 countries work to discover, develop, manufacture and deliver quality, safe and effective prescription medicines to patients." One can only hope they are not doing this at the sacrifice of lives in the process.

Pfizer stock most recently closed at $22.90 on the NYSE.

Click here to read more on this this from the WallStreet Journal online.

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A Whistleblower took his case public and to the Web after initially being ignored. A recent article by General Counsel entitled, Employee's YouTube Video Sounds Ethics Alarm.  The article talks about how a former Lockheed Martin Engineer felt something was wrong with his company's ship shipbuilding project for the U.S. Coast Guard. In his mind he felt that the materials Lockheed were selling to the government were not up to code and that sailors and national security were at risk . This whistleblower now has filed a quitam case against  his former employer. Initially, trying to do the right thing, the whistleblower, took his complaint to his superiors, but his warnings were not taken seriously maybe because this project known as Deepwater was a cost around $100 million. He was told that his allegations were baseless.

Nearly three years later, in February 2006, this whistleblower, contacted the U.S. Department of Homeland Security's inspector general. The IG sent auditors to speak with him. Unfortunately, after several months, he felt that the investigation was going nowhere, and felt that he should matters in his own hands and decided to do something revolutionary. He took his case to You Tube, for the world to hear and see if they agreed, that the Deepwater project should be looked into for safety reasons.

His revolutionary idea worked and his idea was picked up by several media outlets. A detailed report was eventually released by the Inspector General's Office.  The 10 minute You Video made an impact. The Coast Guard reorganized the program and took oversight of project management of the deepwater program in house, instead of having the contractors perform this oversight.

It is not known how much this whistleblower's quitam or false claims act case could be worth, if anything at all. Time will tell... One thing that is important to note, is that whistleblowers are taking things to the next level when reporting quitam False Claims Act cases. 

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"How Qui tam helps fight Medicaid Fraud" - an article written by Brian F. LaBovick, Esq. was recently published  by Thomson West in the Volume 13, Issue 5 /November 2007 edition of the Andrews Litigation Reporter on Health Care Fraud.

Click Here to read the article "How Qui tam helps fight Medicaid Fraud".

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Stryker Corp and Physiotherapy Associates have agreed to pay $16 million to settle qui tam allegations on submitting false claims to Medicare and other Federal health programs, according to the Department of Justice. Stryker Corp sold its outpatient therapy division, Physiotherapy Associates in June 2007.

The settlement resolves allegations that Physiotherapy,  submitted claims for services to Medicare, state Medicaid programs, and the Department of Defense's TRICARE program that were falsely billed as one-on-one services and that Physiotherapy improperly retained excess or duplicate payments it received from federal health care programs. Under the terms of the settlement, Physiotherapy agreed also to enter into a corporate integrity agreement with the Office of Inspector General for the Department of Health and Human Services.

Stryker Corp stock closed at $70.78 yesterday, with shares being down $.09 or .13% from previously trading.

To read more about this settlement from the Department of Justice, Click here.

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The Pharma Compliance Blog, author Brian O'Rourke, makes interesting observations in his post "Removing the Silos, taking a holistic to compliance. Altruistic as it may sound, this is too significant for companies to ignore.  Should Marketing and Operations share information, should internal groups discuss best practices?  If a company is to be successful yes.

Where I tend to disagree with Mr. O'Rourke, is with his statement of "the False Claims Act is quickly becoming the Federal Government’s drink of choice".  He seems to be taking a jab at the False Claims Act. The False Claims Act has delivered over $2 billion in 2007 Quitam cases. Read more about this in a previous post on Whistleblower Law Blog.

What are your thoughts on Compliance departments and heath care organizations?  Do you believe they have a place in ensuring drug safety at pharma companies?

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The Justice Department reported this week that in Fiscal Year 2007, it recovered $2 billion in settlements in fraud cases. We are happy to report that most of the recoveries resulted from whistleblower lawsuits. The individuals who filed suit were awarded $177 million. Health care fraud accounted for the bulk of the settlements, with $1.54 billion stemming from cases involving programs such as Medicare and Medicaid.

Under the False Claims Act, whistleblowers can sue companies or individuals that they believe have filed fraudulent claims with the federal government. If successful, they can receive up to 30 percent of the proceeds of what the government recovers.

Let's hope that the legislation for Whistleblower Protections continue to be strengthened. This will encourage more Whistleblowers to come forward and report fraud against the government.

Click here to read more from the Associated Press Article.

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The Medicare Strike force has helped complete another successful qui tam case for Medicare fraud.  According to Assistant Attorney General Alice S. Fisher of the Criminal Division and U.S. Attorney R. Alexander Acosta of the Southern District of Florida, Rodolfo Aenlle, owner of Direct Nursing Assistance Inc. was recently convicted by a federal jury in Miami for Medicare fraud. 

Allegedly, Direct Nursing Assistance, Inc. submitted claims to Medicare for $1 million. Aenlle had prescription pads printed, and forged the names and signatures of physicians. For his part in this Medicare scheme, Aenlle faces a maximum of 40 years in prison. His sentencing is scheduled for Dec. 13, 2007. 

U.S. District Judge Donald Middlebrooks presided over the case and the case was prosecuted by Deputy Chief Kirk Ogrosky from the Fraud Section of the Criminal Division and Assistant U.S. Attorney Ryan K. Stumphauzer of the Southern District of Florida.

Click here to read more from the Department of Justice.

 

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Bristol-Myers Squibb Company (BMS) and its wholly owned subsidiary, Apothecon, Inc., have agreed to pay over $515 million to settle a qui tam fraud suit and other civil allegations involving their drug marketing and pricing practices, According to United States Attorney Michael J. Sullivan.

This was a collaboration of seven qui tam actions brought under the False Claims Act. Those actions include the following cases:  United States ex rel. Richardson v. Bristol Myers Squibb, Civil Action No. 06-11821-NG (D. Mass.); United States ex rel. Piacentile v. Bristol-Myers Squibb Co., Civil Action No. 05-10196-MLW (D. Mass.); United States ex rel. Forden v. Bristol-Myers Squibb Co., Civil Action No. 04-11216 -RGS (D. Mass.); United States ex rel. Cokus v. Bristol Myers Squibb, Civil Action No. 01-11627-RGS (D. Mass.); United States ex rel. Barlow v. Bristol-Myers Squibb, Civil Action No. 04-11540-MLW (D. Mass.); United States ex rel. Ven-A-Care of the Florida Keys, et al. v. Apothecon, et al., Civil Action No. 00-10698-MEL (D. Mass.); and United States ex rel. Ven-A-Care of the Florida Keys, Inc. v. Bristol Myers Squibb Co., Civil Action No. 95-1354 (S.D. Fla.).

The settlement was by no means the effort of one person, but the joint efforts of several offices and individuals including: the Boston offices of the Office of Inspector General for the Department of Health and Human Services, the Federal Bureau of Investigation, and the Food and Drug Administration's Office of Criminal Investigations, along with Department of Justice Trial Attorney Andy Mao of the Fraud Section of the Civil Division, District of Massachusetts Assistant U.S. Attorneys Gregg Shapiro and Susan Poswistilo, and Southern District of Florida Assistant U.S. Attorney Mark Lavine.

The National Association of Medicaid Fraud Control Units participated in the negotiation of the settlement, and the Corporate Integrity Agreement was negotiated by Mary Riordan of the Office of Inspector General at the Department of Health and Human Services.

Cheers to everyone involved in making this huge settlement possible. And not to forget the brave whistleblowers who risked a lot to come forward.  They will share $50 million of the settlement for their bravery and participation. A relator can receive anywhere from 15 percent to 30 percent in a successful qui tam claim depending upon the government's involvement.

Click here to read more about this Bristol Myers Squibb Settlement from the DOJ and Bristol Myers Squibb.

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Dear Readers:

On Friday September 21, 2007 between 10:30am and 12:30pm the Senate Democratic Policy Commission will be holding a hearing on the "Mistreatment of Iraq Whistleblowers". Please click on the following link to the whistleblowers advisory hearing for more details.

A few key expert witnesses that are scheduled to attend the hearing include: Bunnatine Greenhouse, Stephen M. Kohn, Barry Godfrey, Donald Vance, Robert Isakson, and Alan Grayson.

It is important for this hearing be televised on CSPAN. To help push CSPAN to make the right decision please call or write to CSPAN to let them know you want to watch the hearing. Information for contacting CSPAN is below. Even an email will help.

Main Phone: 202-737-3220
Main Fax: 202-737-6226
Email: events@c-span.org OR viewer@c-span.org

Also, thanks to Marshall D. Chriswell the Public Affairs Director for the National Whistleblower Center for his email blast and mailer on this topic.

Thanks to you all for taking the time to care.

Brian

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Earlier this year I saw Stranger than Fiction, which is a great movie about an IRS tax agent played by Will Ferrell who plays a really nice and honorable person.  Just the name of the movie and the dichotomy of a likeable IRS auditor was humorous.  Not that I think every IRS tax agent is bad, but they are scary nonetheless. Earlier this week, I met the Director of the new IRS Whistleblower program, Mr. Stephen Whitlock, at the TAF Conference in D.C. In an earlier post on this Whistleblower Law Blog, I wrote about Mr. Whitlock in his new role. At the TAF Conference he explained the the new IRS Whistleblower program.  Mr. Whitlock is an impressive person at all levels.  Not only is he likeable, but he is competent, articulate and displays unusual candor as to what he actually knows and what is still up in the air under the new law.

 

As a quick history: the IRS has had a whistleblower program in place for many years.  It is a relatively unknown, unused, and unloved program.  It gave huge discretion of the IRS on who qualified as a relator and how much, if anything, a relator would be paid for their information.  In 1998 at the height of IRS abuse allegation, the Senate started examining the program.  Senator Harry Reid then named the unknown program "Rewards for Rats". 

 

Isn't it interesting how time and a revised frame can color the lens of what is happening.  In 1998 the frame was overly aggressive IRS.  People believed the IRS auditor and investigators were unjustifiably harassing the poor citizen/public for minor tax inconsistencies.  This led to some internal reforms at the IRS for better public relations. 

 

However, time changes the lens.  By 2005 people realized major corporations were creating illegal schemes to avoid paying taxes.  New efforts were placed into reviving the unknown whistleblower program  for the IRS.  The effort was led by the well-loved patron saint of whistleblowers and strong anti-fraud Republican Senator Charles (Chuck) Grassley.  Senator Grassley felt that a whistleblower was a patriot infused with the courage to risk losing their jobs by "exposing fraud, waste and abuse in an effort to protect not only the health and safety of the American people but the federal treasury and the taxpayer dollars." (Senator Grassley's floor statement at National Whistleblower Week 2007).  Now that is a far cry from Senator Reid's "Rate" analogy.

 

With words like that, who could resist passing a new program (created in 2006) to encourage the patriotic act of blowing the whistle on tax cheats?  Well, they didn't want to prosecute just your basic low value tax cheat.  The IRS wants to go after high value tax cheats.  Therefore, they put some parameters on the new program that would keep low value claims at a minimum.  The threshold is that the tax fraud must add up to more then $2,000,000.00 and the net earnings of the tax cheat must be in excess of $200,000 in the year the fraud occurred.  This threshold will hopefully keep nutty neighbors from reporting other nutty neighbors just to be vindictive of some dog droppings on the one neighbor's lawn.

 

As it turns out, the IRS is already prosecuting these claims.  The program rolled out and the regs were supposed to be done by the end of August, which didn't happen.  Mr. Whitlock assured the TAF conference attendees that he and his team were working on them.  However, until that time, he and three other national processors are reviewing the claims and dolling out the work to IRS field agents.  In fact, they have already paid some pretty big claims out to relators in the past year.

 

After his seminar speech I found myself with a new respect for the IRS and their agents.  I found that if the agency is as sincere and bright as Mr. Whitlock, that this program is going to work well. 

 

Actually trusting the IRS.  Now that is Stranger than Fiction.

 

Brian

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The Senate made history this week by introducing essential bi-partisan whistleblower legislation that will help protect taxpayers against fraudulent government contractors.  Senator Charles Grassley (R-IA), and Senator Dick Durbin (D-IL). were sponsors of this False Claims Act Correction Act of 2007legislation. Additional key figures involved in co-sponsoring the False Claims Correction Act of 2007 legislation include Senator Patrick Leahy (D-VT) and Senator  Arlen Specter (R-PA). The bill attempts to close loopholes in the False Claims Act, a law which permits private citizens to file suit against contractors who defraud the federal government.

In response to this new legislation, Whistleblower Center President Stephen M. Kohn is quoted as as saying "The majority of all civil fraud recoveries in the US are based on whistleblower disclosures. Because of the effectiveness of the False Claims Act, powerful corporate interests have aggressively attacked the law in court, creating loopholes which have undermined the law and cost the taxpayers billions of dollars. The False Claims Act Correction Act is badly needed legislation to stop the hemorrhaging of the public treasury by unscrupulous beltway bandits.”

Important Highlights from the Bill include:

Makes corrections to 31 U.S.C § 3729 removing the requirement that false claims be presented to a government employee.

Amends the FCA to clarify the dismissal of parasitic claims filed based upon publicly disclosed information.

Clarifies that false or fraudulent claims against non-U.S. Government funds under the trust and control of the U.S. Government are subject to recovery under the FCA.

Clarifies a split between Circuit Courts of Appeal as to when a government employee may act as a qui tam relator under the FCA. 

Makes technical and clarifying amendments to the statute of limitations in FCA cases.

Senator Grassley gave a passionate speech when he addressed the Senate introducing the False Claims Correction Act 2007 legislation. In his speech, Senator Grassley states  " the FCA again faces a situation where it may not be as effective as intended. Recent decisions by federal courts have limited the FCA in a way that was not envisioned when I authored the 1986 amendments. ". He goes on to highlight the following three influential FCA cases and their impact on future cases: ex rel. Totten v. Bombardier Corp, Rockwell International Corp. et al. v. United States, and FCA is ex rel. DRC, Inc. v. Custer Battles, LLC.

In ex rel. Totten v. Bombardier Corp, Senator Grassley states that "false claims presented to government grantees, in this case employees at Amtrak, were not actually presented to the federal government. As a result, the government was precluded from recovering money lost to fraud and abuse perpetrated against Amtrak."

In Rockwell International Corp. et al. v. United States, Senator Grassley states that "the court interpreted an area of the False Claims Act, known as the “public disclosure bar,” which prohibits a FCA case from moving forward if the case was based upon publicly disclosed information, such as a government report, unless the whistleblower filing the case was the “original source” of the information. Here, the Supreme Court held that a qui tam whistleblower was barred from receiving a share in any money recovered unless they were the “original source” of all claims ultimately settled. This may not sound like a troublesome decision. However, the impact is that often times a case is brought by a whistleblower on a certain set of facts and then expanded by the Department of Justice who ultimately settles on other grounds. As a result, this case creates a disincentive for a whistleblower to bring forth information about fraud as they may not get to share in any part of the recovery."

In FCA is ex rel. DRC, Inc. v. Custer Battles, LLC,  Senator Grassley states that "a jury found that a defense contractor had defrauded the government of $10 million. However, the judge overturned the jury verdict finding that the money lost was not U.S. Taxpayer money, but was instead Iraqi money under the control of the U.S. Government. As a result of this case, the U.S. Government may not recover for any fraud committed against the U.S. Government if the funds are not American funds, even if the U.S. Government has been entrusted with the management of those funds."

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Senator Chuck Grassley is by far one of the strongest allies in Washington for Whistleblowers. His recent press release and letter to the FBI Director, Robert Mueller regarding alleged retaliation against FBI Agent Bassem Youssef, chief of the Communications Analysis Unit, the highest ranking Arab-American in the FBI. According to Senator Grassley's letter to FBI Director Mueller, Agent Youssef is a material witness in the Office of Inspector General’s (OIG’s) continuing inquiry into issues relating to National Security Letters and so-called “exigent letters.” 

It is refreshing to see a Senator take on the establishment and be the voice for the taxpayers and whistleblowers, even those blowing the whistle against the government.  Earlier this year, we celebrated Whistleblower Week, May 14 - May 18, 2007. At the beginning of the week, Senator Grassley, gave a moving speech to the Senate regarding the importance of Whistleblowers to our country.  This means a lot coming from the man that has been involved with getting critical legislation such as  the Whistleblower Protection Act, the Sarbanes-Oxley Act, and the False Claims Act passed. Also, it is important to note that he is the co-sponsor of  the original S.274, the Federal Employee Protection of Disclosures Act, which provides updates to federal whistleblower protections. As a result of key legislation such as the False Claims Act, the federal government has recovered nearly $20 billion since 1986. This is not a paltry sum of money to ignore. It goes to show you that whistleblowers make a difference, not only on a moral level but also on the bottom line.

Senator Grassley is quoted as saying "I would like to see the President of the United States have a Rose Garden ceremony honoring whistleblowers. This would send a message from the very top of the bureaucracy about the importance and value of whistleblowers. They deserve it, and we all ought to be grateful for what they do and appreciate the very difficult circumstances they often have to endure to do so, sacrificing their family's finances, their employability, and the attempts by powerful interests to smear their good names and intentions." Can you imagine the President of the United States honoring these brave men and women each year?  What a message it would send to corporate America and the branches of government.

The Senator is correct in his assessment that whistleblowers bear a heavy burden, when they stand up for what is right.  Hopefully, he will find supporters in the Senate that will stand with him in passing additional key legislation that will do more to protect Whistleblowers at large around the country.  We can only hope for the best and do everything in our power to ensure that  Senator Grassley has all the support that he needs in this fight for Whistleblower rights. We can start by  contacting our local legislators and encouraging them to support Senator Grassley in his efforts to pass critical Whistleblower legislation. To find your local Senator go to www.senate.gov and type in your state. You can call, write or send an email to express your views on whistleblower legislation. Remember this is a bi-partisan issue and that whistleblower rights affect everyone.

 

 

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I am sitting here in Washington DC at the initial meeting for the 7th Annual Taxpayers Against Fraud Convention listening to Jennifer Verkamp and Frederick Morgan whip through a basic overview of the Federal False Claims Act. I am carrying my Blackberry, and check it about every 5 minutes, just in case. In case what? I don't know. Regardless, I know I need to keep checking it.

So, I get an email from Juliet regarding the Georgia State False Medicaid Claims Act panel at the Southeastern Health Care Fraud Conference in Atlanta that took place yesterday. The information came from the Finch McCranie blog, where they also speak about a First Annual Whistleblower Law Symposium in Georgia at the State Bar of Georgia Association Headquarters taking place later this month.

I have noticed a trend which is coming fast to this particular legal arena and believe that State specific claims will eclipse Federal based claims. In an earlier blog post on the Whistleblower Law Blog, we wrote about Florida's recently amended False Claims Act and how it complies with the Federal Deficit Reduction Act. This opens the door to a multitude of claims brought at solely the state level.

I feel that each State with a local State False Claims Act (every State needs to step up and draft one of these) really needs to create a system of teaching their State Bar about what their Act provides. The more attorneys who recognize violations and who are aware of both the State and Federal FCAs the better for the people of the individual state. I would estimate that only 40% of the attorneys in Florida even know that these laws exist. This is not a slight. It is a fact that needs to be corrected.
So here it is:  We need a Symposium in Florida on the Florida False Claims Act." 

I will be giving a seminar on Qui Tam on Sept. 27, 2007 in Ft. Lauderdale and on Sept. 28 in Orlando for the the Florida Justice Association in the emerging areas of law seminar. If you are interested in the subject matter, please attend one of these seminars.  I will use this is a starting platform to push for a State Wide False Claims Act Symposium.

That's the goal. But goals without dates are simply dreams and I would rather set down a date. So, here it is:  Florida will hold a State wide False Claims Act Symposium on or before January 1, 2010. That gives us a bit over 2 years to put the new act to the test and get the State on board. After that we need to push for inclusion of the False Claims Act on the Bar Exam itself!

I will let you know more about the present ongoing TAF conference as it progresses. Tonight is a real treat, Stephen A. Whitlock, the Whistleblower Office Director for the IRS is speaking. We are all waiting for the new IRS guidelines on their own whistleblower provisions, so I am very excited to hear what he has to say.

Take care and thanks for reading.

Brian

PS - If you are interested in working with us on the creation of a State Whistleblowers Symposium in Florida please email us your information. I am sure this will be a successful event that will generate a lot of interest from the legal community.

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The Ninth Circuit yesterday, gave relator John David Stoner, a glimmer of hope in his qui tam case, USA Ex. Rel. Stoner v. Santa Clara, No. 04-15984 (9th Cir. Sept.7, 2007).  This is not to say that this will be a walk in the park for this pro se relator.  Circuit Judge Sandra S. Ikuta wrote a great opinion the Opinion for the Ninth Circuit. Giving both sides minor victories.

In Stoner v. Santa Clara, John David Stoner alleges that that the defendant, Santa Clara County Office of Education, East Side High School District an  three Santa Clara County Office of Education Employees, Colleen B. Wilcox, Joe Fimani, and David Wong, induced the government to give money for educational programs, based on false certifications in compliance with the Individuals with Disabilities Act.

The Ninth Circuit affirmed in part, the District Court's earlier premise that John David Stoner can't bring this qui tam action pro se to the federal court on behalf of the government.   Although, Mr. Stoner is a licensed attorney,  he is not a member of the State Bar of California and does not have admission to go before the District Court for the Northern District of California. The Ninth Circuit held that Mr. Stoner must secure counsel or obtain pro hac vice admission if he is to continue with his qui tam case before the District Court.

However, on a positive note. the Ninth Circuit agreed with Mr. Stoner that state officials sued for damages in their individual capacities are "persons" within the meaning of 31 U.S.C. 3729. The Eleventh Amendment  does not ban such suits. In the event, Mr. Stoner has the appropriate status before the court or appropriate legal representation, the case can be heard by the District Court regarding the qui tam claims and allegations against the three Santa Clara County Office of Education Employees, Colleen B. Wilcox, Joe Fimani, and David Wong.

The ball is John David Stoner's court. How he returns his serve, will be up to him. Since only Mr. Stoner knows the driving force behind this qui tam claim in the first place, the public must wait and see if he will take this ruling and return a serve with full force and take all the necessary steps to win this case or rather end the case now, if he was only trying to prove the point that he could bring the case before the court in the first place.

Time will tell.

 

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Conoco Phillips affiliate, Burlington Resources Inc. has agreed to pay the United States $97.5 million to resolve claims that it underpaid royalties owed on natural gas produced from federal and Indian leases, the Justice Department announced today. Last year, Burlington became a wholly owned subsidiary of Conoco Phillips, the third largest integrated energy company in the United States.

It is good to see that the government is not backing down on going after oil and energy companies for False Claims Act cases. It is also good to see that industry insiders are stepping up to the plate as whistleblowers and turning their companies in for fraudulent acts.

The Burlington Resources settlement resolves allegations under the False Claims Act that Burlington systematically under-reported the value of natural gas that it produced from onshore federal and Indian leases from March 1, 1988, to March 31, 2005, and consequently, paid less royalties than it owed to the United States and various Indian tribes.

The settlement with Burlington arises from a lawsuit filed by a private whistleblower under the False Claims Act, which alleges that a number of companies systematically underpaid royalties due for their federal and Indian natural gas production. The Justice Department partially intervened against several defendants in the lawsuit, and previously settled with Shell Oil Co. for $56 million and Dominion Exploration and Production Co. for $2 million. The Department is continuing to pursue claims against Exxon-Mobil Corp.

Click here to read more from the Department of Justice on this Conoco Phillips subsidiary, Burlington Resources case.

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The government gets to collect $5.2 million from IBM Corporation and PriceWaterhouseCoopers  to settle allegations that the companies solicited and provided improper payments and other things of value on technology contracts with government agencies, the Justice Department announced today. IBM has agreed to pay $2,972,038.50, while PWC will pay $2,316,662.

The complaints were originally filed in September 2004 under the qui tam or whistleblower provisions of the False Claims Act by Norman J. Rille and Neal A. Roberts. Congratulations to the brave whistleblowers in this case.  We can not emphasize enough, of how important it is for whistleblowers to take the proper steps in handling a whistleblower claim. This can make a difference in relator's portion of the government's recovery being zero and a nice thank you or a relator's share being 15% - 30% of the government's recovery. Last, but not least, talk to an experienced attorney to discuss your whistleblower claim and protect your rights.

Click here to read more from  SYS-CON Publications on the IBM and Price Waterhouse Coopers False Claims Act settlement.

The Whistleblower Law Blog is presented as a service of the Private Law Firm, LaBovick & LaBovick, P.A., Civil Justice Prosecutors.

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Earlier this week, the qui tam case of  United States ex. rel.Louanne Boothe v. Sun Healthcare Group, Inc., No. 06-2156 (10th Circuit August 7, 2007) was remanded by the United States Court of Appeals, Tenth Circuit.

This case involves allegations by former finance and accounting employee, Louanne Boothe against Sun Healthcare Group, a U.S. Healthcare provider, claiming that Sun Healthcare Group over-billed the United States in ten distinct ways. The complaint includes allegations of the following: 1)  Sun over-billed the government by abusing the Section 1010 exception in the years 2000-2002;  2) Sun defrauded Medicare by disregarding Medicare’s prudent-buyer guidelines and overcharged for therapy management services for  $2.6 million; 3) overstated its temporary nursing staff’s labor hours in 2001 and 2002 by $500,000; 4) overcharged Medicare by $240,000 in 2002 for pharmacy charges  5) improperly billed Medicare in 2001 for $200,000 worth of stolen medical supplies; 6) overcharged Medicare by $540,000 in 2000-02 by funneling costs between Denver Mediplex and an outpatient clinic; 7) filed Medicare reimbursements for $3.6 million worth of mortgage interests payment; 8) released patients earlier than its prior practice from Ballard Rehabilitation Hospital to inflate its Medicare revenue by $2 million; 9) manipulated patient discharges to impose improper costs on Medicare of $500,000; and 10) signed without the knowledge or consent of its patients admission forms for three years ending January 2003 to receive from Medicare $9 million in reimbursements for accident and injury treatments when liability potentially rested with third parties.

These allegations seem pretty specific, however, the primary issue at hand is whether the allegations are “based upon” information already in the public domain or whether Ms. Louanne Boothe is an “original source” of the information.

The district court held that it lacked subject matter jurisdiction under 31 U.S.C.§ 3730(e)(4) of the False Claims Act, 31 U.S.C. § 3729-33, to hear the case.

According to the Tenth Circuit, the district's assessment was accurate that it lacked jurisdiction in three of the claims Ms. Boothe presented. However, jurisdictional analysis of each of Ms. Boothe’s
remaining seven claims of fraud is necessary. Therefore, the United States Court of Appeals Tenth Circuit remanded the cases for further proceedings. The Court included the following language "Three bad apples does not necessarily warrant discarding the barrel". Interesting choice in words.

It is also important to note that Sun Healthcare Group tried to use the following arguments against Ms. Boothe: (1) Ms. Boothe waived her right to pursue a qui tam complaint in a severance agreement she executed upon her departure from Sun; (2) Sun’s intervening bankruptcy, from which it emerged in 2002, discharged Sun’s obligations to satisfy the claims in Ms. Boothe’s qui
tam complaint; and (3) Ms. Boothe failed to plead her qui tam complaint with sufficient particularity.

Citing lack of jurisdiction, the district court declined to address these arguments for dismissal and the Tenth Circuit did not address them either. It will be interesting to see if they come up again as this saga continues.

Let's all hope that Sun Healthcare Group is operating with the integrity and honesty that they are known for in the healthcare community rather than the over-billing of Medicaid and Medicare as was alleged in the qui tam suit of Luanne Boothe. The company has been around since 1993 and is continuously growing, serving more sick and terminally ill patients, and doing lots of business with the government. In the year, 2006, they took in $1.116 Billion in revenue according to their quarterly reports. Currently they operate 216 skilled nursing, long-term care and assisted living and mental health facilities in 25 states with approximately 23,520 operating beds according to their self published reports. The company closed out the second quarter at $446.7 million, up 73 percent compared to $258.5 million second quarter 2006. The stock price closed on the Nasdaq Friday at $15.30 per share.

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It is heating up in Gulfport, Mississippi. Yesterday, According to an Associated Press article on Forbes, U.S. Magistrate Judge Robert Walker, ordered a whistleblower case to be unsealed, even though the federal government had argued against it. The Federal government was deciding on whether or not to intervene in the qui tam lawsuit accusing insurance companies of overbilling the federal government for flood damage from Hurricane Katrina.

U.S. Magistrate Judge Robert Walker said, "The government gives no explanation for how the investigation would be compromised by unsealing the case".

It is also important to mention that this case has a twist. The Attorney for the whistleblowers, sisters, Cori and Kerri Rigsby, struck a cord with U.S. District Judge William Acker. The Judge ruled in June that the law firm "willfully violated" a court order requiring him to return all of the documents that the Rigsby secretly copied. A writer could not make up a story so interesting as this. A prominent Attorney that fights fraud against the government, being accused of criminal charges, while trying to represent his client in a whistleblower claim. I can see this as a basis for a future best seller  from the great John Grisham. This is good foundation material for a juicy novel. The ironic twist for this story is that it will be based on truth.

The saga between State Farm  Insurance, the whistleblower sisters, Cori and Kerri Rigsby and their valiant lawyer, Richard "Dickie" Scruggs, who dared to take on the major Katrina insurance carriers is bound to heat up even more. The lingering question is, Will this qui tam claim be prosecuted with the government's intervention or will the it be prosecuted on its own?  Stay tuned, for more details.

Thanks to the Torts Prof Blog, edited by Professor William G. Childs and Professor Sheila B. Scheuerman for the recent blog post on this new revelation. 

Click here to read more on this article from Forbes.

 

 

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Friday, President Bush signed into law three new whistleblower protections, covering truck drivers, railroad workers and public transit employees. Congratulations for the President in taking bold steps of progress and passing some of the best whistleblower protection laws that have ever been ever passed. Representative Edward J. Markey (D-MA), a senior member of the House Homeland Security Committee, was instrumental in working with Congress to craft the legislation. 

 According to Representative Markey, "The new law which the president just signed will,  finally close key loopholes in our homeland security defenses. Passing this law is a major achievement for the new Congress."

The new bill will have new whistleblower protections for public transit and rail safety and security employees. The transit employees are our “eyes and ears”. The new law ensures that these modern-day Paul Reveres have recourse if they are retaliated against for pointing out a safety or security flaw.

This is a major step in the right direction for transportation employees, but we can't forget about "all employees". Let's hope these new laws will be the beginning and that our legislators work together and craft legislation that looks out for everyone who is brave enough to step up and blow the whistle on wrongdoings of their employers.   

You can do your part by contacting your local Congressman and encouraging them to embrace change and to continue down these bi-partisan lines and develop a National Whistleblower Protection Act. You can use the following site www.congress.org to locate your appropriate Representative.

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Oakland City University will pay  $5.3 million to settle a qui tam case where the whistleblower, Jeffrey Main, former director of Admissions accused the university of paying incentives to admissions recruiters and then failing to report those payments to the federal government. Mr. Main's relator's portion of the government's recovery was $1.4 million.  

Under the Civil False Claims Act, a person who submits a false claim for payment to the government can be liable to the United States for up to three times the amount of the loss plus civil penalties.

The Higher Education Act of 1965 prohibits colleges and universities that receive federal student aid, from paying incentives to recruiters. The ban is intended to prevent colleges from abusing the aid programs by signing up unqualified students. Unfortunately, Educational  Institutions make costly mistakes, such as in the case of Oakland City University. 

A word of caution to Institutions receiving federal aid, employees are empowering themselves with knowledge of the law. They are seeking legal counsel from qualified and skilled qui tam attorneys, as to their rights under law. They are sharing confidential information on their employers wrongdoings. Under the False Claims Act, they are being compensated for their actions in the neighborhood of 15% to 30% of the government's recovery. In addition, occasionally, their legal fees are awarded as a part of the settlement. Should this make Institutions look over their shoulder and make sure they are following the government guidelines to the letter?  I would think so, if they want to avoid paying costly fees as in the Oakland City University Case.

Click Here to read more on the case from The Evansville Courier & Press.

The Whistleblower Law Blog appears as a courtesy of LaBovick & LaBovick, Civil Justice Prosecutors, A Private Law Firm.

 

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Yesterday, Whistleblowers in  United States ex. rel.Fowler v. Caremark Rx.L.LC.., No. 06-4419 (7th Cir. July 27, 2007), lost their qui tam claim against Caremark Rx. LLC on Appeal.  The Seventh Circuit Court affirmed the lower courts decision on the merits.  I want to make note that I found out about this decision on the humorous and clever Blawgletter, by Barry Barnett. Thanks Barry for being one of the first to cover this recent decision on your blog.

There are few things about this qui tam claim that are important to point out. First let's look at the background of the United States ex. rel.Fowler v. Caremark Rx.L.LC case. The whistleblowers or relators in the case, Michael Fowler, Peppi Fowler, Victor Cortes and Danny Nevarez, were all former employees of Caremark at two of its prescription drug processing facilities. Caremark Rx LLC merged with CVS Corporation in March of this year, making it one of the largest pharmaceutical services companies and provider of comprehensive drug benefit services to health plan sponsors throughout the U.S. 

The whistleblowers brought a False Claims Act suit on behalf of the United States alleging that Caremark engaged in six fraudulent schemes: (1) failing to provide a credit for returned prescription drugs; (2) changing prescriptions without proper approval; (3) misrepresenting the savings obtained from its recommendations; (4) failing to substitute a generic version of “Prilosec;” (5) failing to credit for prescriptions lost in the mail; and (6) manipulating the mandatory times for filing prescriptions.  This seems to be quite a comprehensive claim and on face value, it appears that the whistleblowers had their bases covered in their complaint and would have uncovered something to support their false act claim. Unfortunately, the whistleblowes found no such luck. 

The original false claims act complaint was filed in December of 2003, and since that time, the whistleblowers have filed three amended complaints. This is a perfect example of how long and arduous the process can be for a whistleblower. Despite the hard work, the loss of job, reputation, the whistleblower can lose a qui tam case. This is not to sound discouraging. It is to promote how important it is for whistleblowers to have concrete critical facts, proof, data and a means to corroborate the claims. If not, it will be a very hard life lesson that the whistleblower will never forget. Another important lost qui tam case for the whistblower was the highly publicized Supreme Court Case Rockwell Int'l Corp. v. United States, No. 05-1272 (U.S. Mar. 27, 2007). This case involved a different set of circumstances than United States ex. rel.Fowler v. Caremark Rx.L.LC, but the results were the same, the relators lost their case. In  Rockwell Int'l Corp. v. United States, the whistleblower, former engineer, James Stone, died this year at the age of 82, a few weeks after he lost the case for his relator's claim of $1 million.

On a positive note, Whistleblower Statistics or Qui Tam Statistics showing money recovered by the government as a result of fraud or qui tam claims, show positive figures. In 2006, The government recovered $255,006,432, of which, $174,358,450 was qui tam related and $42,067,470 was the relator's or whistleblowers share. In an earlier post on the The Whistleblower Law Blog, we covered a post on whistleblower statistics and numbers of qui tam cases submitted. These numbers should give relators hope. The financial rewards for a successful qui tam claim can be very rewarding.

We can not emphasize enough, of how important it is for whistleblowers to take the proper steps in handling a whistleblower claim. This can make a difference in relator's portion of the government's recovery being zero and a nice thank you or a relator's share being 15% - 30% of the government's recovery. Last, but not least, talk to an experienced attorney to discuss your whistleblower claim and protect your rights.

The Whistleblower Law Blog is presented as a service of the P