Home > Qui tam Legal News >
Posted on February 22, 2013 by LaBovick Law
Thank you Senator Chuck Grassley.
Finally the grinding slow wheels of the IRS are moving on qui tam tax cases. We have recently filed a large (not enormous) tax whistleblower (also called a qui Tam). We expected a call and letter from an IRS intake attorney within about 6 months. We got that call in 3 weeks! That was a surprise. I can tell you, unequivocally, that Marcie Dodson in our office prepared that case as if she were a top notch Forensic CPA instead of a Cornell University lawyer. Initially that is what I thought caused the quick turnaround. Sure the numbers are pretty large – but a super fast turnaround by the IRS - What gives?
When we called the agent in charge we made an off-hand comment about the speed they reviewed the case. We actually made a self laudatory statement which said something like: “Boy you guys must have loved how organized our package was when it came in. It took you literally no time to complete your review and call us!”. In response to our comment we heard the words I spoke initially; “Say thank you to Senator Grassely. He is pushing us to turn around our qui tam/whistleblower cases quicker.” So, that is what I am doing publicly. Thank you Senator Grassley. It is about time someone with commonsense sees how important tax whistleblower cases are to the government.
If this is the first you have ever heard of the IRS Tax Whistleblower program here is your quick primer:
The law provides many different ways you can “blow the whistle” on anyone who is ripping off the government. That means, ripping off the government by submitting anything false to the government and getting them to pay you unnecessarily. So, in a contract for selling them paper clips to the government, or a contract to fix or build roads, or even taking government subsidized tuition dollars and not providing the education. In each of those examples there is a way to report the fraud and as the whistleblower you get a reward when the government gets paid!
The problem was that historically, prior to 2006, the IRS didn’t have a set law that fixed the amount the IRS would pay to the whistleblower. The “award” was discretionary or rather, was based on whatever the IRS decided was equitable. Obviously the IRS had a different feeling about what was equitable compared to the person who risked so much to report the tax fraud. We have worked on these types of whistleblower cases (called qui tam cases) for a long time. Prior to 2006 when a person called for a consultation regarding being a tax whistleblower we would have to explain that there was no right to enforce any award to them. As soon as we explained that they would say ”No thanks” and hang up. You know what? I don’t blame them, without a reward why take the risk and get involved?
However, in 2006 the whistleblower office and the new Federal Tax Whistleblower statute were enacted. Now the IRS has the obligation to pay the whistleblower an award when the government collects unpaid taxes after someone turns in a tax cheat. However, the qualification is that the tax cheat must be a significant tax cheat not a small time tax cheat. What is “substantial”? Under the federal law a substantial tax cheat is anyone who underpaid $2 million or more. They needed to limit it to big time tax cheats so the IRS isn’t crushed by everybody turning in their neighbors. The IRS doesn’t have the man power to investigate anything unless the cases are large.
Since 2006 the IRS has recovered huge sums though whistleblower information. But, they have been both slow and stingy in giving out the awards. Last year the IRS broke the ice in a big way and awarded a $104,000,000 award (that is right, $104 Million!) to a tax whistleblower. The tax cheating bank paid $780 million in that case in back in taxes to the government and the guy who reported the bank got $104 million of it!
Our office has designed a group just for large qui tam/whistleblower tax matters. We have partnered with forensic CPAs and have attorney who have worked their whole career in financial fraud detection. We can figure out your tax situation even with minimal paperwork. Don’t let anyone get in the way of your tax qui tam matter. Use attorneys who have experience dealing with the US government and make sure your whistleblower case comes to fruition.
Posted on January 17, 2013 by LaBovick Law
A long time employee of Amgen, Jill Osiecki, wore a recording device, hidden under her shirt to catch Amgen in their misbranding of the blockbuster drug Aranesp. With all the alleged federal oversight, it is still the whistleblowers who are the best resource for catching “big pharma” in their schemes to defraud the public. Amgen bragged about giving a $10,000 “unrestricted grant” to a special doctor who was an advisor to the local Medicare contact. He used the funds for his own project.
For the money the doctor helped convince the Medicare contact to provide reimbursement for prescribing Aranesp for unapproved uses. Aranesp is an anemia drug and cannot be prescribed for other uses. This was an open and shut illegal Medicare reimbursement scheme based on false claims, and the Federal False Claims Act allowed New York Attorney General Eric Schneiderman to leverage Amgen to pay a $612 million national settlement for marketing these drugs for kidney disease and cancer over the past decade.
Amgen pleaded guilty to a criminal misdemeanor in Federal Court that will require an additional $150 million fine. This outcome concluded a five-year investigation into Amgen’s marketing practices, and will settle the claims in all 50 states and the District of Columbia. How much money did Amgen actually make on Aranesp? I can’t imagine. It appears the drug companies make more than enough to continue to take liberties with illegal marketing schemes and other illicit practices. This is just one in a long series of huge settlements which are helping to refund the prosecution’s coffers.
Posted on July 23, 2012 by LaBovick Law
In Washington, D.C., on June 22, 2012, the Privacy Act case of former U.S. prosecutor Richard Convertino was reinstated by the U.S. Court of Appeals for the District of Columbia. This Privacy Act case accused the Bush Administration of deliberately leaking illegal information that was used to attack and tarnish the reputation of Mr. Convertino. The Court of Appeals’ decision now allows Richard Convertino to continue his research in order to figure out which current and/or former Justice Department employees went against the Privacy Act and attacked Mr. Convertino.
Richard Convertino blew the whistle on former Attorney General Ashcroft due to his poor handling of terrorist prosecutions in 2003. Despite being a former award-winning prosecutor who led many terrorism cases at the Department of Justice, Department of Justice officials sought revenge and leaked untrue and damaging information about Mr. Convertino to The Detroit Free Press. Mr. Convertino subsequently made a Privacy Act complaint in an attempt to oust the individual(s) who leaked the false information about him.
Stephen M. Kohn, Executive Director of the National Whistleblowers Center, spoke about Richard Convertino’s case:
“The Justice Department’s policy of criminally investigating whistleblowers who ‘leak’ information, while at the same time aggressively defending its own ‘leakers,’ is hypocritical. In Mr. Convertino’s case, the Justice Department intentionally leaked information to destroy the reputation of the distinguished prosecutor who had the courage to challenge the Attorney General’s conduct in the ‘War on Terror.’ Moreover, the Justice Department has, for years, aggressively stood in the way of Mr. Convertino’s attempts to discover which official(s) retaliated against him.”
This case reversal is seen as a significant blow to the U.S. Department of Justice’s “War on Whistleblowers” and will hopefully result in reform regarding the double standard in the treatment of government “leakers.”
Posted on May 17, 2012 by LaBovick Law
Qui tam is a very interesting niche practice in the law. It has a long history in the United States and today is widely used by the Government.
The qui tam provisions started in the 1800’s during the United States Civil War. President Abraham Lincoln was getting his army requisitions ripped off and he was buying things that were not coming through once he bought them. For instance, the Union army would pay for rifles and instead of getting a thousand rifles they would get 100 rifles and they wouldn’t work.
So, they wanted to figure out a way of making sure that what they were purchasing was what in fact what they were trying to buy. They created a reward system called qui tam, which is short for a Latin phrase which means “he who sues on behalf of the king sues for himself as well.” In other words, if you as someone who knows that a deal is going through, and also knows that the person doing business with the government is going to rip off the government, and you turn them in, commonly called a whistleblower, that you will be included in part of the savings, reward, or recovery that the government gains in that transaction.
In today’s environment fraud schemes are incredibly complex. But here’s a very simple example.
Corporation A makes a deal with the government to sell them a million paperclips a month and that works for a couple of months, but that corporation realizes that nobody on the governments end is trying to count the paperclips or do anything to make sure that they are getting their million paperclips. Instead they decide “you know what, we are going to send them 900,000 paperclips a month.” Since nobody is counting, they are getting away with 10% of the deal. Then they decide to send 800,000. This goes on for five years. Five years go by of ripping off the government 20% on that contract until someone in the company finds out, and when they do and look back and realize that millions of dollars of purchased paperclips have never been sent to the government, they can tell the government about that. When the government recovers, they can recover a reward with the government.
Unfortunately, it doesn’t happen easily. First off, the schemes are very complex, so one needs the paperwork, documentation, etc. Second, the government is very apt to listen to you, and then in the end if you are not properly secured in your claim, the government may not allow you to keep that claim and not give 15-30% of that money.
That’s why it’s necessary to have an qui tam attorney to represent them in going to the government. The people that they should hire for that job should be attorneys with governmental prosecutorial experience. You would want somebody who understands how the government works and to bring the case to them in a format they understand, in a significant organized fashion. In doing so, the person who gives them the claim, the professional name for that is "relator", the "relator" secures their claim so that they can then recover in the end.
It’s a long and arduous process. It can be risky for the "relator" They have to be willing to go out and do these things. But usually, if they have a really valid claim, it can be extremely lucrative.
Posted on April 30, 2012 by LaBovick Law
Tax whistleblower cases, often referred to as Qui Tam, have become increasingly important since their inception in 2006. The program has allowed the United States Government to recover a huge amount of money from those trying to defraud the Federal Government. In fact, The Obama Administration recently announced that Qui Tam is responsible for the recovery of over twenty billion dollars, but in addition, even more money has been generated from the fines attached to such cases.
The United States Congress thought the IRS would enjoy this program as well. They envisioned Qui Tam as being a very successful way of getting people to report those that were breaking tax laws by using a cash reward incentive based upon a percentage of the recovery. But in the five years since the law went into effect, the Internal Revenue Service has issued only one, yes one reward under the Qui Tam program.
One does have to scratch their head in wonder as to why the Internal Revenue Service is not taking full advantage of this lucrative program. One would think that the IRS would be jumping at the chance to recover billions of dollars from IRS fraud and other tax violations. It’s not for a lack of Qui Tam claims being filed. Many cases have been filed under the Qui Tam, and there is not a lack of validity in several of these cases. It is reported by the IRS itself that thousands of whistleblower filings have been issued. So why has only one payment been made to a whistleblower?
Why Is The IRS Not Qui Tam Friendly?
The hang-up is the reluctance of the IRS to be on board with the program. It was reflected in a recent interview with the former Internal Revenue Service Chief Counsel, "I believe it is unseemly in this country to encourage people to turn in their neighbors and employees to the IRS." This was a shocking comment to hear from a person whose sole responsibility was to implement the laws, such as Qui Tam.
Many road blocks have been initiated by segments of the IRS, specifically the IRS office of Chief Counsel, which discourages Qui Tam whistleblowers. They have set forth several rules that narrow the sources of recovery and imposed withholding requirements on Qui Tam rewards, to name a few.
It’s a frustrating matter, especially with our current economic condition. The Qui Tam program could potentially recover several billions of dollars which could be utilized for the gap in government funding, but instead, has been road blocked with bureaucratic red tape.
Posted on April 24, 2012 by LaBovick Law
New York Attorney General Eric Schneiderman announced last week that New York state joined a whistleblower/qui tam case against Sprint-Nextel Corp. "for deliberately under-collecting and underpaying millions of dollars in New York state and local sales taxes on flat-rate access charges for wireless calling plans."
According to a Forbes Investing article*, the attorney general is proactive and engaged in this matter, as he should be, compared to the nonchalant Internal Revenue Service (IRS).
IRS whistleblower cases are complex, but by joining this case against Sprint and pushing the matter into the public eye, Schneiderman is accomplishing a lot for New York taxpayers, in addition to the potential collection of $300 million from the cell phone service provider. This announcement will hopefully encourage others to come forward about significant criminal tax acts and should encourage better New York tax law compliance.
These claims are taken seriously, and all parties need to realize that.
"Clearly, Schneiderman gets the value of whistleblowers," Erika Kelton wrote for Forebes. "The IRS, however, apparently still doesn't."
And we couldn't agree more!
Information to whistleblowers about their cases has been cut off completely by the IRS, and in the five years since the IRS tax whistleblower program was created, only one known award has been made to a whistleblower.
Whistleblower claims can be effectively managed and pursued, and the IRS should take heed from Schneiderman's actions. It's not only in New York that these issues can occur. And hopefully this case against Sprint will help collect owed taxes and narrow the state's budget gap for the greater good of New York taxpayers.
Posted on January 19, 2012 by LaBovick Law
Two billion dollar days for the US Attorney in a row! On January 6, Johnson & Johnson settled a U.S. probe into their anti-psychotic drug, Risperdal, for $1,000,000,000! According to the Bloomberg news, J&J is going to resolve their long running dispute over Risperdal for a whopping $1 billion. This settlement should cover all the damages each individual state has against J&J as well as the US government’s federal claims. Given GlaxoSmithKlein just settled a claim for $3.2 billion, this settlement shouldn’t hurt J&J too badly. Johnson & Johnson is the largest health product company in the world. If Glaxo can pay $3 billion and that doesn’t count the civil claims against them for Avandia, certainly J&J is better off settling for $1 billion now. The civil settlement may not have included a possible plea deal against Johnson for criminal penalties! Now that is HARSH! They are going to pay $1 billion and STILL pay a criminal price for their allegedly illegal sales practices. The investigation against Risperdal has been going on since 2004. The allegation is that the company was “off label” marketing the drug. That means the drug was being marketed for uses that were not approved by the FDA.
In this case, the Whistleblowing Qui Tam Plaintiff could earn $150,000,000!
Interestingly, the civil cases against J&J for Risperdal have been varied, with two states finding for against the company while two other states found for the company. We will see how this settlement effects the pending civil litigation in the future.
Posted on July 17, 2011 by Brian F. LaBovick, Esq.
Don't Play with Qui Tam Matches without being familiar with the statute - You will get burned!
This week the United States District Court (USDA) Sixth Circuit (6th Cir.) confirmed that the Plaintiff was liable for filing frivolous Qui Tam Actions. In the case of Stalley v. Mt. States Health Alliance, 2011 U.S. App. LEXIS 13895, No. 10-5211/5212 (6th Cir. Jul. 8, 2011) the District Court for the Eastern District of Tennessee held that the Plaintiff had filed a frivolous Qui Tam action against the Defendant for failure to abide by the Medicare Secondary Payer Act (MSPA).
There is no actual authority to file a Qui Tam action for such a violation. However, on it's face, it would seem that breaching any portion of Medicare could straddle you Qui Tam liability. The court said no. To make matters worse, the court granted the Defendant sanctions against the Plaintiff in the amount of $276,589.00. Feeling confident that the MSPA should apply, the Plaintiff appealed.
UH OH! The USCA 6th said WE AGREE and AFFIRM the Sanctions. They also found that the sanctions should be held against plaintiff AND HIS COUNSEL!
The real lesson here is that an unfamiliar legal niche, such as Qui Tam, is a hard place to practice if you don't know the rules.
Posted on March 25, 2011 by LaBovick Law
Posted on February 9, 2011 by LaBovick Law
Update on SENATE BILL - SB 5458
Recently, the Senate Committee on Health & Long Term Care met to discuss SB 5458. Several groups raised arguments for and against SB 5458.
Bill Sponsors included: Senators Keiser, Pflug, Kline, Becker, Conway, Pridemore, Rockefeller and Parlette.
A few PRO and CON Arguments for Senate Bill SB 5458 include the following:
Staff Summary of Public Testimony: PRO: This bill meets the growing need of the state to fight Medicaid fraud. It will address provider fraud. The bill will bring in money to the state and could bring in more if the False Claims Act qualifies for the federal rebate. It gives the AG the tools to fight Medicaid theft.
The longer statute of limitations will save the cases the AG already has. It will enable the AG to hire staff to fight Medicaid fraud and bring back recoveries to the state. DSHS does have an effective integrity program and a new fraud and abuse detection system. We are concerned about the rising costs of healthcare. Reducing waste and fraud will help to control costs.
CON: The bill will deter physician participation in the Medicaid program. Audit activities are already in existence and federal and state agencies already have activities to recover inappropriate payments. Instead of receiving more money, Washington will get less money due to the qui tam plaintiff.
This will increase costs due to increased litigation. Seventy-five percent of qui tam cases are for non-meritorious claims. We support Medicaid auditor funding and the AG having the appropriate amount of resources to defend against fraud. The bill contains a bounty hunter provision. Regarding innocent parties, damages should go both ways.
Click on the following link to read the SB Report for SB 5458
Posted on November 3, 2010 by LaBovick Law
The Corporate Lobbyists are trying to make the whistleblower provisions in the Dodd-Frank less effective for whistleblowers. We must stand up against them to help fight fraud. The National Whistleblower Center submitted very detailed comments addressing serious concerns with the recent recommendations made by the "Corporate Lobby" to the SEC..
According to the Executive Director of the National Whistleblower Center, Stephen M. Kohn,
“The Dodd-Frank Act clearly states that the rules implemented by the SEC must be ‘user-friendly’. We will be paying close attention to tomorrow’s SEC meeting to see if the SEC’s promise to protect whistleblowers is more than simple lip service.”
A few key points from the letter to the SEC by the National Whistleblower Center include the following:
- Requiring Employees to Utilize Internal Corporate Whistleblower Procedures Would Violate the Law
- The SEC Should Implement a Rule that Prevents the Regulated Industry from eviscerating the ability of Internal Corporate Compliance Programs to Properly Detect and Prevent Fraud
- The Restrictions on Attorney Fees Urged by Baker Donelson Are Radical and Without Support in Law or Policy.
- The Other Proposals Should Be Summarily Rejected.
It is important to note that the law firm of Baker Donelson made a proposal to place a restriction on attorneys who represent whistleblowers. If implemented, these restrictions would completely undermine the requirement that the Dodd-Frank whistleblower rules be "user-friendly'".
These proposed restrictions are unprecedented in law, and none of the numerous federal whistleblower laws, including the False Claims Act, contain any type of restriction that is suggested by Baker Donelson law firm. If implemented, these proposals would undermine the efforts of the Dodd-Frank Act and make it nearly impossible for corporate whistleblowers to obtain attorneys to represent them in Dodd-Frank cases.
Important Links:
NWC Letter to SEC opposing corporate lobby position
Baker Donelson letter representing corporate lobby position
Arent Fox letter representing corporate lobby position
Posted on July 15, 2010 by Brian F. LaBovick, Esq.
I knew this administration would "get it" on at least this issue: Creating qui tam and whistleblower protection is the best way to root out fraud in the government. Today, July 15, 2010 Congress passed the Wall Street Reform and Consumer Protection Act (H.R. 4173) with vote of 60 to 39. This act includes quite a few provisions which are intended to help employees report fraud on Wall Street. Now an employee who reports fraud on Wall Street will be entitled to monetary rewards for helping the government collect back those funds. Also, the bill has given teeth to provisions designed to stop retaliation against the whistleblower by having those violations reported directly to the new Bureau of Consumer Financial Protection.
Any loopholes that the Sarbanes-Oxley Act had on the issue of corporate whistle blowing against the subsidiaries of publicly traded companies are also now closed. Another great feature of the act is that it does not permit mandatory arbitration on Wall Street whistleblower claims but does allow jury trials and requires the SEC to start a new "whistleblower protection office". There is a short three year statute of limitations for retaliation cases under the False Claims Act which they should have made five or seven years but 3 is better than 2 so I shouldn't complain. Retaliation will be considered a violation of the federal Obstruction of Justice Act and that means it will have teeth!
Posted on April 9, 2010 by LaBovick Law
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.)
Continue Reading...
Posted on March 31, 2010 by LaBovick Law
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
Posted on February 22, 2010 by LaBovick Law
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.
Posted on January 28, 2010 by LaBovick Law
Upon returning from holiday recess, the 111th 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).
Posted on January 25, 2010 by LaBovick Law
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."
Posted on January 24, 2010 by LaBovick Law
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.
Posted on January 19, 2010 by LaBovick Law
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
Posted on October 30, 2009 by LaBovick Law
The DOJ's Assistant Attorney General Tony West realizes that healthcare fraud is a serious issue that can't be fought alone. Since 2009, he has led DOJ's Civil Division and is requesting help from Congress to combat healthcare fraud. We applaud Assistant Attorney General Tony West for his efforts in admitting that the DOJ needs help. This is a first step in making progress.
Earlier this week, Senator's Ted Kaufman (D-Del.) and Arlen Specter (D-Pa.) and Senator Patrick Leahy (D-Vt.) introduced the Healthcare Fraud Enforcement Act to Congress. This bill outlines enforcement issues and calls for increasing rewards for whistleblowers. It is estimated that an additional $20 million is needed in federal funding to increase Medicare fraud investigations and prosecutions.
Fighting healthcare fraud is a bi-partisan effort. Senator's Chuck Grassly (R-Iowa) and John Cornyn (R-Texas) are also concerned about how the DOJ plans on fighting healthcare fraud. According to Sen, Chuck Grassley, there are over 1,040 pending qui tam lawsuits in the DOJ, some over 36 months. A strong plan of action needs to be in place to bring qui tam lawsuits to trial and swift justice for those found guilty.
Whistleblowers should be encouraged with this week's progress in the fight against healthcare fraud. Qui tam lawsuits will increase next year if Congress and the DOJ make a concerted effort to fund and staff the teams charged with handling this task.
We recommend that whistleblowers remain steadfast. Enlist legal help of a private attorney on qui tam claims. This can ease some of the burdens, when bringing a qui tam lawsuit. Also, this can help ensure that the whistleblower's rights are protected.
Posted on July 28, 2009 by LaBovick Law
On Wednesday, July 29, 2009, the Senate will be marking up its version of the Whistleblower Protection Enhancement Act of 2009 (S. 372). We encourage you to contact your Senators and President Obama and ask them to support adding jury trials for all federal employees, including national security employees.
You can participate by contacting President Obama and your Senator with an email through the Action Alert program from the Whistleblower Center. It is easy, quick and can make a difference. Don't hesitate, Act Now.
National Whistleblower Center Action Alert Link
Posted on June 23, 2009 by LaBovick Law
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....
Posted on June 15, 2009 by LaBovick Law
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.
Posted on June 14, 2009 by LaBovick Law
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
Posted on June 12, 2009 by LaBovick Law
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
Posted on June 11, 2009 by LaBovick Law
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.
Posted on June 9, 2009 by LaBovick Law
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.
Continue Reading...
Posted on June 8, 2009 by LaBovick Law
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?
Continue Reading...
Posted on April 6, 2009 by LaBovick Law
Defense Contractor Northrop Grumman Corp., has agreed to settle False Claims Act allegations for $325 million, according to the Department of Justice. Allegedly, Northrop provided and billed the National Reconnaissance Office (NRO) for defective microelectronic parts, known as Heterojunction Bipolar Transistors (HBTs).
Investigation into the HBT Action found that that Northrop and TRW failed to properly test and qualify certain HBTs manufactured by TRW from 1992 to 2002. As a result, Northrop and TRW integrated into NRO satellite equipment certain defective HBTs. The investigation further concluded that Northrop and TRW made false misrepresentations and concealed key material facts regarding the reliability of the HBTs.
U.S. Attorney for the Central District of California Thomas O’Brien and Acting Assistant Attorney General for the Civil Division Michael F. Hertz announced the settlement.
According to Acting Assistant Attorney General for the Justice Department’s Civil Division Michael F. Hertz, “The settlement of the HBT case demonstrates that the Department of Justice will investigate even the most complex and challenging allegations. The settlement demonstrates that defense contractors will be held accountable and that the government will aggressively pursue all allegations of misconduct in the procurement process.”
Kudo's to relator and whistleblower Robert Ferro, Ph.D., an employee of The Aerospace Corporation for coming forward with this case. Although, the case was filed filed in US. District Court in the Central District of California in 2002, the government intervened in the lawsuit against Northrop in November 2008. Dr. Ferro will receive $48.75 million as his relator's share of the recovery in the HBT action under the qui tam provisions of the False Claims Act.
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.
Northrop Grumman stock closed today at $47.94. According to published 4Q reports, Northrop Grumman Sales in the 4Q increased by 4 Percent to a Record $9.2 Billion. Overall in 2008, Sales increased 6 Percent to a Record $33.9 Billion. It is easy to see why they finally agreed to end the fight, admit no wrongs and settle the qui tam suit for $325 million. Hopefully, this large fine will deter other Defense Contractors from misrepresentations of products sold to the Government in the future.
Posted on March 3, 2009 by LaBovick Law
The Department of Justice has joined the qui tam lawsuit against EMC Corp for failing to disclose its commercial pricing practices during negotiation of its General Services Administration (GSA) contracts. The lawsuit also alleges that EMC provided improper payments and other things of value to Systems Integrators and other Alliance Partners on contracts with government agencies.
This qui tam suit was originally filed in Arkansas by relators Norman Rille and Neal Roberts. If Mr. Rille and Mr. Roberts allegations against EMC of submitting false claims to the United States for information technology (IT) hardware and services on numerous government contracts from the late 1990’s to the present are true, this could be an expensive qui tam payout. In their defense, According to an article by Jason Miller on Federal News Radio.com, EMC Corporation spokesman, Patrick Cooley states: "The matters at issue in this case are historical in nature; some of the allegations relate to events nearly 10 years old. According to Acting Assistant Attorney General Michael F. Hertz the government joined the suit "as a part of the Department of Justice’s continuing efforts to ensure the integrity of the procurement process." Therefore, one would believe the government wants to crackdown on its procurement process.
This raises the question, Should we give a company a free pass, if it defrauds the government for several years and then discontinues the misleading practices? Should the company not be held responsible for these corrupt practices if they knowingly and deceptively misled the government in the procurement of contracts?
Mr. Cooley goes on to say "We will vigorously defend this case and the many years EMC has spent serving the U.S. Government. And, we will continue to provide mission-critical information infrastructure solutions to numerous branches of the U.S. Government as this matter proceeds."
The EMC shares were down 36 cents yesterday in light of the DOJ lawsuit. Since EMC has not been charged with any wrongdoings and these are only allegations, the DOJ investigations will continue. The public will have to wait and see if EMC overcharged the government with deceptive pricing structures, stemming back from the 1990s. Will investors will keep the faith in EMC? Time will tell.....
Posted on February 10, 2009 by LaBovick Law
Yesterday, the Chairman of Orthofix International, issued a strong statement about a nominee for Orthofix Board, Steven J. Lee. In an open letter, Chairman, James F. Gero, outlined a long history of Mr. Lee's former company's unsavory history with qui tam litigation. Two of which, were Florida Based, Liberty Medical Supply and Liberty Home Pharmacy. Back in 2001, two qui tam, or whistleblower, lawsuits were filed in federal court in Miami and Boston against PolyMedica Corporation and its subsidiaries. These lawsuits alleged, that the subsidiaries violated the False Claims Act by submitting claims to Medicare without proper documentation of medical necessity, resulting in overbilling to federal health care programs.
In 2004, the company, paid $35 million to the United States government to resolve the fraud allegations, as well as to settle administrative sanctions related to the alleged misconduct. This settlement concluded an investigation lasting approximately five years that included on-site searches of PolyMedica’s subsidiary operations by FBI agents in response to federal search warrants, the removal of company documents, and subsequent shareholder lawsuits.
Two thumbs up for the Chairman publicly rejecting a man with a background that could possibly taint the image of his corporation, that he took an oath to uphold and to make better. In the wake of corporate greed and mismanagement, it is good to see that someone in corporate America still believes in integrity and ethics. There is an old saying that goes something like: "association brings assimilation".
Fraud and mismanagement of government funds should not be stood for in this day and age. Whistleblowers are speaking out and bringing the misdeeds of "greedy" corporations that try to squeeze more from the taxpayer and from the government. Good for Mr. Gero for stating that he and his board wanted no part of a man that was at the helm of a company that defrauded the government and had to pay $35 million in fines.
Click here to read more from Orthofix Chairman.
Posted on February 5, 2009 by LaBovick Law
Midsized construction firm, Mercer-Fraser agreed to pay $1.3 million to settle fraud allegations involving work under the U.S. Small Business Administration's HUBZone Empowerment Contracting program. According to the claim, Mercer- Fraser used false information to gain business. The Company misrepresented the size of their earnings and their partnerships in their application to the Small Business Administration.
Mercer-Fraser maintains that they did nothing wrong and that the error was that of the Small Business Administration.
In late 2007, the government decided to get involved with this qui tam claim after whistleblower, Mark Mann, employee of a competitor and supplier of Mercer-Fraser and affiliate Contri Construction Company brought the matter to the Department of Justice's attention through his attorney.
Congratulations to Mr. Mann for following through and stepping forward to report this wrongdoing against the government. Although, this is a small award, it is another step in the right direction for the fight against government fraud.
Posted on January 23, 2009 by LaBovick Law
Positive Steps are being made in the fight for a national whistleblower law.
The National Whistleblower Center is enlisting the help from every individual that believes we should have a national whistleblower law. They have created a petition for everyone to read and sign. Once you have signed the petition, forward it to a family member or friend.
This is something that we deeply support and believe in at our firm, LaBovick & LaBovick.
Please click on the following link to fill out the petition in support of a national whistleblower law.
" We are on the road to comprehensive whistleblower protections, but lots of work remains to be done. We must ensure Congress hears our voice now."
Posted on November 26, 2008 by LaBovick Law
Whistleblower Anthony Kite has $1.9 million reasons to be happy this Thanksgiving. The Pennsylvania based, St. Vincent Health System settled a qui tam case pay $1.9 million to the federal government to settle a whistleblower lawsuit that alleged the hospital submitted reimbursement claims to Medicare that greatly exceeded actual costs.
This is the latest in a string of whistleblower cases settled against hospitals. What makes this cases really interesting is that the whistleblower, Anthony Kite, has been instrumental in bringing several qui tam cases to light. According to Mr. Kite, St. Vincent Health System increased Medicare reimbursement claims from 2001 to 2003 with the hopes of receiving what is commonly referred to as "outlier" or supplemental payments. Surprisingly, other hospitals were doing the same thing according to allegations brought by the whistleblower.
What makes this suit fascinating is that Medicare uses "outlier" payments to hospitals for instances where costs for treating a patient exceed a predetermined reimbursement amount for a particular type of treatment. One can only imagine how many times hospitals have taken advantage of this loophole to try and take advantage of Medicare billing.
A few other qui tam suits against Hospitals and Health Care Systems include:
Cooper University Hospital in Camden, N. J., $3.85 million settlement.
Warren Hospital in Phillipsburg, N.J., $7.5 million settlement
Bayonne Medical Center in Bayonne, N.J., $2.5 million settlement
Cathedral Healthcare System in Newark, N. J. $5.3 million settlement
Raritan Bay Medical Center in Perth Amboy, N.J. $7.5 million settlement
Grand Total: $26,650,000.00 - In Qui tam/ whistleblower suits against Health Systems
Now, I must caution you to not think that every whistleblower claim produces results like these, because they do not. It takes PROOF and hard FACTS to prove the claim and it takes time. As most whistleblowers can attest to this fact.
Click here to read more on this whistleblower suit against health systems.
Click here to read more on qui tam statutes and how to file a whistleblower claim.
Posted on September 25, 2008 by LaBovick Law
Yesterday, Joe Davidson, wrote a great article Groups Seek Whistle-Blower Protection in Bailout Legislation for the Washington Post summing up how important it is for Whistleblower Protection to be considered in this bailout legislation. A letter from 40 organizations was sent to several Senate Committees urging members to include key whistleblower protection in the bailout legislation. This could be a coup for whistleblowers if the language on whistleblower protections are included in the bailout legislation.
Unfortunately, for unsung heroes such as David Ross, a former Food and Drug Administration doctor, this much needed legislation is too late. He sounded the alarms and informed management that there was fraud in the antibiotic, Ketek. Unfortunately, no one listened. Since then, users of Ketek have reportedly died or suffered liver failure. According to Ross, He tried to work through the proper channels in the system and do what was morally right. He reported findings and suspicions to his management. Unfortunately, to his dismay, he was targeted as the enemy in the agency and could not find recourse in the Courts, like so many other whistleblowers. The sad thing in this instance is that the employer was the FDA, an entity that is supposed to look out for the safety of millions of Americans. The truth was swept under the rug and the Whistleblower was left out in the cold.
I encourage to read the blog post by Dylan Blaylock and Axel V. Sabersky of the GAP - All things Whistleblower Blog. They give some interesting Commentary on the subject matter of Whistleblower legislation and the bailout proposal. According to Axel, "All new laws proposed by Congress lack provisions to guarantee jury trials to whistleblowers, which is a protected right written in Amendment VII of the Constitution". It is a sad day, when our rights to a trial are taken away from us, especially in issues relating to fraud against our government... I hope that the American Public wakes up and let their voice be heard, that whistleblower protections are critical. Especially, if we want to hold corporations, Government Agencies and individuals accountable.
Posted on August 21, 2008 by LaBovick Law
Virginia based Amerigroup settles Qui tam suit for $225 million for allegedly systematically avoiding to enroll pregnant women and unhealthy patients in their Medicaid managed-care program in Illinois, which served low-income people. The company will also pay $9 million in legal fees to the United States and the State of Illinois and will not admit any wrong doing.
It is also important to note that the Whistleblower, Cleveland Tyson, will receive $56 million, a 25% share of the $225 million qui tam settlement.
According to published reports, AMERIGROUP Illinois voluntarily ended its contract with Illinois in 2006 and no longer operates in that State. The Company states that they have also has expanded internal corporate compliance program significantly to fully ensure compliance with state and federal regulations in its health plans. After paying $234 Million and their own legal fees, which are not cheap, I would think they would learn from this very expensive lesson.
Continue Reading...
Posted on August 14, 2008 by LaBovick Law
The Consumer Product Safety Improvement Act has been signed into law by President Bush. This bill covers whistleblower rights for over 20 million employees that are involved in the consumer the sale, manufacture and distribution of consumer goods.
This is a part of the Consumer Product Safety Commission Reform Act (H.R. 4040 and S.2663).
The Whistleblower Center President Stephen Kohn, issued the following statement on behalf of the NWC: "This law is a major victory. Today, despite attacks from big business, the interests of American families have prevailed. Finally, employees in the manufacturing industry have the vital whistleblower protections necessary to report hazardous products."
Click here to read H.R. 4040.
Posted on July 3, 2008 by LaBovick Law
I came across an interesting post this morning, from R. Enochs, Esq, Attorney blogger and editor of the blog for news junkies.... I might fit that bill, being that I am always tuned in and online reading any and all newsworthy information that I stumble upon. Mr. Enochs used the clever title Thinking of Whistleblowing and Filing a Federal False Claims Act ... Get comfortable in the DOJ waiting room. Bravo, he summed up the 900 pending DOJ cases with his catchy headline. We blogged about this DOJ yesterday on the Whistleblower Law Blog.
This post led me to the post by David Lat, from Above the Law, blogging about the Lawsuit of the Day: A Class Action for DOJ Honors Rejects? How did I miss this riveting story? At the forefront of this case is Belgium resident, and U.S. citizen, Sean Gerlich, charging that he and other highly qualified graduates of were not hired in the Justice Department's Honors Program, because of an "ideological bias against applicants with presumed "liberal" tendencies." I liked the following sentence from David about this case "Please compensate us for being forced to take lucrative law-firm jobs that pay several times the pittance offered by the feds." I am sure that there are many sides to this case and that more information will be uncovered as this case unfolds.
According to the Courthouse News Service, a central character in this case is former Deputy Associate Attorney General Esther S. McDonald. Allegedly, the former Deputy AG created and maintained a printout of applicants political or ideological views and attached them to the candidate's application. In the wake of Social networking sites such as Myspace, Facebook, LinkedIn, and so many others, it is pretty easy to find out about a job candidate's "true: personality" instead of the one that submits the perfect resume, answers all the right questions, and looks the part at the interview. The Internet, gives employers a way to look past the "picture perfect interviewee" and really get to know the person, by reading things about them and things by them shared in public places. Word of caution: Nothing is private on the Internet. If you say it, write it, and post it on the Internet, it can be out there in perpetuity. This another topic all together.
Pedro Ruz Gutierrez, from ALM's BLT: The Blog of Legal Times, (Note: awesome name), shared thoughts from the Plaintiff's Attorney in his post "Ex-Honors Program Applicant Sues DOJ". He quotes Daniel Metcalfe, Steve Gerlich's Attorney as saying "This is a guy who had every reason to believe that he was going to work for the government like he did the previous summer, that he would start his career there" Later on he goes on to quote Mr. Metcalfe saying that his client was n “disgracefully deprived of the opportunity to do what he had planned to do, [which was] to return to the Justice Department as an attorney and serve his country.” Are there any guarantees in life? After reading the Complaint, it made me ask this question... I do look forward to seeing how this turns out. The DOJ is an important and central figure in the prosecution of qui tam cases. I hope that this lawsuit or attention surrounding this case, does not distract their attention from such handling pressing matters such as fighting corruption, government fraud and other legal issues.
If you get chance, read the 24 page PDF of the Complaint, Gerlich v. US Department of Justice, from the Courthouse News Service. Click on the following link to David Lat's Above the Law, Blog Post. Thanks for sharing this information. It really helps put this case into perspective.
Posted on July 2, 2008 by LaBovick Law
Today, Washington Post writer, Carrie Johnson put qui tam front and center in the minds of everyone around the country, with her newsworthy and in-depth front page article "A Backlog Of Cases Alleging Fraud- Whistle-Blower Suits Languish at Justice" in the Washington Post today. I might add that this article was above the fold. The article highlighted how there are over 900 cases alleging fraud by government contractors and drugmakers for defrauding taxpayers and the government out of billions of dollars, that are in backlog because the Justice Department cannot keep up with the whistleblower cases being brought forward. As a law firm that handles qui tam cases nationwide, we can attest that this is true. However, this is not the story for this blog post, it is how much attention this Washington Post front page story has garnered in the blog-sphere.
Let's look at the time-line today, as of right now, there are over 20 blogs that have written a post about this very newsworthy story for their readers and over 150 comments on the Washington Post.com website. Given this short amount of time, for such a niche subject matter, this is amazing. I enjoy reading blog posts and viewpoints on qui tam issues, and writing is very subjective. However, I feel the best blog posts are when a blogger, shares personal views and makes a statement about something. This is what makes a reader come back for more to a blog.
Here are a few posts that I enjoyed reading today: I started out on this quest, reading a post from Jesselyn Radack of the Daily KOS. Jesselyn shares that she has first hand experience with these cases. Prior to joining the Government Accountability Project, she handled Iraq reconstruction fraud cases. Jesselyn also shares that it is not uncommon for the Justice Department to seek extensions of the seal on a qui tam whistleblower suit for 6 or 12 months while it investigates the case. The most puzzling question is why are Iraq reconstruction fraud suits, taking several years, yet remain entirely under wraps?
Jeffrey M. Hirsch of the The Workplace Prof Blog, did a fine detailed synopsis of the article in the blog post "Qui tam delays". I agree with Jeffrey's assertion that "with the recent Supreme Court qui tam decision, this relatively hidden area of the law may be getting some of the attention that it deserves". I always enjoy reading this blog.
I was intrigued by the blog post from the Wordpress blog, Slabbed entitled " Good Job Brownie: The Washington Post Reports on Qui Tam Backlog in DC" They pose the question "Is it any wonder everyday people feel the concept of justice only applies to the wealthy and big business." Great title....
Robby Moeller of the Voice in the Wilderness shared his thoughts in the post "Fraud and Uncle Sam". He adds that businesses defrauding the government is nothing new. Further, fe feels that fraud follows wherever government contracts or funds are being given out. I would love to hear a response from someone in the Federal Government to this statement.
Continue Reading...
Posted on April 15, 2008 by LaBovick Law
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.).
Posted on April 14, 2008 by LaBovick Law
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.
Posted on March 7, 2008 by LaBovick Law
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.
Posted on February 20, 2008 by LaBovick Law
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.
Posted on February 13, 2008 by LaBovick Law
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...
Posted on January 14, 2008 by LaBovick Law
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.
Posted on December 29, 2007 by LaBovick Law
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.
Posted on December 21, 2007 by LaBovick Law
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.
Posted on December 4, 2007 by Juliet Sallette
"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".
Posted on November 15, 2007 by LaBovick Law
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.
Posted on November 6, 2007 by LaBovick Law
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?
Posted on November 2, 2007 by LaBovick Law
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.
Posted on October 16, 2007 by Juliet Sallette
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.
Posted on September 30, 2007 by LaBovick Law
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.
Posted on September 19, 2007 by Brian F. LaBovick, Esq.
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
Posted on September 14, 2007 by Brian F. LaBovick, Esq.
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
Posted on September 13, 2007 by LaBovick Law
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."
Posted on September 11, 2007 by LaBovick Law
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.
Posted on September 10, 2007 by Brian F. LaBovick, Esq.
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.
Posted on September 8, 2007 by LaBovick Law
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.
Posted on August 16, 2007 by LaBovick Law
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.
Posted on August 16, 2007 by LaBovick Law
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.
Posted on August 11, 2007 by LaBovick Law
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.
Posted on August 7, 2007 by LaBovick Law
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.
Posted on August 6, 2007 by LaBovick Law
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.
Posted on July 31, 2007 by LaBovick Law
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.
Posted on July 28, 2007 by LaBovick Law
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 Private Law Firm, LaBovick & LaBovick, P.A., Civil Justice Prosecutors.
Continue Reading...
Posted on July 13, 2007 by LaBovick Law
Affiliated Computer Services, Inc. (ACS), headquartered in Dallas, Texas, has stepped up to the plate and agreed to pay the government $2,645,987.30 to resolve alleged False Claims Act allegations, announced U.S. Attorney Richard B. Roper of the Northern District of Texas. ACS allegedly violated the civil False Claims Act by submitting inflated claims for payment between 2002-2005 for programs run by and through the Federal Government.
ACS should be applauded for voluntarily admitting that it submitted inflated claims to a local agency that delivered services to workers using funds provided by the three federal departments. They took a swift cause of action after investigating the claims, by firing the four employees involved, accepting responsibility for not holding up their high standards on the contract and paying the fine for the misconduct..
If more corporations stood up and took responsibility for their actions, Corporate America would be a better place.
Click Here to read more about ACS from the Department of Justice and Washington Technology.
The Whistleblower Law Blog is presented as a service of the Private Law Firm, LaBovick & LaBovick, P.A., Civil Justice Prosecutors. LaBovick & LaBovick, P.A. is a Plaintiff's firm that represents whistleblowers in Florida and throughout the nation in qui tam (False Claims Act) litigation.
Posted on June 22, 2007 by LaBovick Law
Federal authorities have filed a qui tam suit seeking $1 million in fraudulent claims plus civil penalties against a company that operated five nursing homes in the St. Louis area, saying that the facilities provided what amounted to "worthless" health care.
The suit claims that Cathedral Rock Corp., based in Fort Worth, Texas, committed Medicaid and Medicare fraud when it billed the government for care it didn't provide, U.S. Attorney Catherine Hanaway said in a statement to the press.
Investigators, who intervened after two nurses filed a "whistle-blower" lawsuit in 2003, found numerous residents at the facilities suffered from dehydration, weight loss, and preventable bed sores that eventually led to amputations.
The two nurses, Michele Kimball and Anna Juelfs, who filed the original suit, "qui tam action" could receive 15 percent to 25 percent of the damages recovered in the action, according to U.S. Attorney Hanaway.
Click Here to read more about the case in the St. Louis Post Dispatch.
Posted on June 17, 2007 by LaBovick Law
The Department of Justice celebrates another win in the fight against fraud and False Claims Act (Qui tam) violations in a recent settlement by a major ambulance provider.
Rural/Metro Corporation, one of the nation’s largest ambulance providers, has agreed to pay the United States over $2.5 million to resolve allegations that the company violated the False Claims Act. The company was accused of providing illegal inducements to hospitals in Texas in exchange for referrals.
The settlement arose out of qui tam or whistleblower lawsuits filed in 2000 and 2001 by Daniel Block and Adam Wightman, former employees of one of Rural/Metro’s competitors. Block and Wightman will receive approximately $450,000 as a result of the qui tam settlement.
Click Here to read more from the Department of Justice.
Posted on June 6, 2007 by LaBovick Law
The United States and the State of Texas have settled a qui tam lawsuit against the Harris County Hospital District (Hospital District) for more than $15 million, according to United States Attorney Don DeGabrielle. The terms of the settlement, calls for the Hospital District to pay to the United States and the State of Texas $15,449,126. This is one of the largest settlements for cases brought under the False Claims Act in the Southern District of Texas.
The whistleblower/ relator, Robert E. McCaslin, Jr., an employee in Patient Billing Services for the Hospital, filed a lawsuit under the qui tam provisions of the False Claims Act alleging that the Hospital District was making false claims and false statements with reimbursement claims being submitted to the Medicare and Medicaid programs for the treatment of patients. The Hospital District was accused of submitting claims to the Medicare and Medicaid programs without first seeking reimbursement from primary carriers as required by each program’s rules and regulations. The end result of this practice was that Medicare and Medicaid paid claims that should have been paid by other responsible third party insurers.
The Federal and State False Claims Acts allow private citizens, often known as whistleblowers or relators, with knowledge of fraud against the government to present those claims by bringing a lawsuit on behalf of the government. If the allegations are proven to be true, the private citizen, whistleblower/ relator, may be entitled to share in the recovery. The whistleblower/ relator can receive as much as 30% of what the the government recovers, depending upon the case.
Congratulations to Assistant United States Attorney Andrew A. Bobb and Texas Assistant Attorney General Lara Silva for a job well done in conducting an excellent an investigation and settlement negotiations.
Click Here to read more from the U.S.State Attorneys Office in Texas
Posted on May 29, 2007 by LaBovick Law
Last week, the Justice Department investigators seized records from a major medical helicopter provider, Air Evac Lifeteam. They are being investigated for possible health care fraud.
The company is cooperating with authorities and have turned over documents to the Federal bureau of Investigations. Health Care investigations can typically be about improper billing matters, Medicare or Medicaid Fraud.
Air Evac Lifeteam has grown their business by focusing on servicing communities in rural areas. They sell minimal annual subscriptions under $100. When the subscriber needs emergency medical attention, they call Air Evac instead of 911. This is economical compared to the cost of an ambulance ride. How does Air Evac make their money? They bill the private insurance company, Medicare or Medicaid for anywhere between $5000 - $10,000 for the helicopter ride to the hospital. I know this is a premium, service, but this price seems expensive for the service.
Time will tell if the FBI investigation will uncover a Qui Tam claim for Medicare or Medicaid or even false billing evidence against Air Evac Lifeteam. Let's hope the whistleblower in the qui tam suit had all of the necessary documents, so they can share in an award if there turns out to be one.
Click Here to Read New York Times article on Air Evac and the potential health care fraud.
Posted on May 27, 2007 by Brian F. LaBovick, Esq.
What do they say about imitation? Isn’t it the best form of flattery? Well the English, have been flattering us since we won our independence back in the 1700s. Their most recent bit of flattery/imitation is the creation of a Qui Tam law which creates a financial incentive to report fraud on the government.
Previously the laws in the United Kingdom permitted the private citizen to bring an action for fraud on behalf of the government. However, the private citizen had no right to share in any of the government’s bounty. Based on that statement alone I am sure 90% of my readers said to themselves, “Who in the heck would ever report any fraud?” In other words, we are, for the most part, capitalistic in our motivation to report fraud.
But, believe it or not, there are people who will actually sue to simply stop the fraud. Those people I affectionately call the “Crusaders.” The Crusader is zealous in their desire to stop the negative activity. It turns out that the English are pretty similar to us Americans.
In England the people who would use the old law were pretty much the Crusaders. Crusaders are almost always bound together in an organization that pursues the crusade. Take environmentalists for instance: many environmental groups will litigate over issues that have no monetary significance. The group is simply committed to its own cause and agenda, say the gopher tortoise or some unique owl. The group does not, for instance, want Johnny’s Development Corp. to tear down the trees and kill the owls and turtles. That is what the English Qui Tam law was about.
The new UK Qui Tam statute will carry far more incentives for the private citizen to report fraud then the old law. I am curious to see what happens in the future. It is my bet that the number of whistleblower claims they have pop up sky rockets. Remember that for every dollar the government now spends on Qui Tam cases they get a return on that investment of almost 15 dollars. Now that is a good investment of time and money.
Click Here to read more on the new UK Qui Tam statute from a recent article in The Times UK.
Brian
Posted on April 26, 2007 by LaBovick Law
Interesting Blog Post from the Humboldt Forest Blog on the Pacific Lumber Company qui tam suit. The post discusses the new developments in the case that accuses the Pacific lumber company of defrauding the government out of millions of dollars in the deal to preserve the headwaters Forest. The California Attorney General's office declined to intervene in the lawsuit.
Let's keep an eye on this one and the Humboldt Forest Blog. The activist group supports treesits. According to their blog site, they support love and peace for the trees. They seek donations and volunteers. If you are a tree or nature lover, check out their blog. It has lots of interesting links and articles. It is good to know that someone out there is speaking for the trees.
Click here if you want to read more from the Humboldt Forest blog post
Posted on April 26, 2007 by LaBovick Law
Three major corporations: Accenture, Hewlett Packard and Sun Micro Systems, are being charged with violating the Federal False Claims Act. The U.S. DOJ has decided to get involved with the qui tam claim. They are accused of solicting and providing improper payments and other things of value on technology contracts with government agencies.
Click Here to read more from the U.S. DOJ
Posted on March 27, 2007 by LaBovick Law
The False Claims Act's "original source" provision requires that relators have direct and independent knowledge of the information on which their allegations are based at all stages of the litigation, the U.S. Supreme Court has ruled.
The Supreme court, voted 6 to 2 in Rockwell v. United States, and said retired engineer James S. Stone can't share in a $4.2 million award he and the U.S. government won in a suit against Rockwell International, which is now a part of Boeing.
Click here to read the full text of the Supreme Court opinion.
Posted on March 9, 2007 by Brian F. LaBovick, Esq.
So
So much of what this administration does makes my smell o’ meter go off. What is the smell o’ meter? It is the common sense buzzer that goes off in my brain when I hear a story about how our government is running the business end of government.
“Ok,” you ask, “what are you blabbering about?” Here is the deal. I recently read an article in The Wall Street Journal that discussed a “no bid” contract the Administration awarded. The article was a bit of news on California’s neighbor city to the south, Tijuana. It appears that Tijuana is booming. As cities grow so does their garbage. By reputation, Mexico is not known for being the best at cleaning their garbage. Think Montezuma’s revenge after drinking the water. The city has a raw sewage problem.
Continue Reading...
Posted on March 5, 2007 by Brian F. LaBovick, Esq.
I am amazed at how many people find ways to rip off Uncle Sam. Not only do the big players figure out ways to cheat the government, but even small fish do not play it straight.
Take the case of Vidya Bhoolai. Bhoolai figured out a great way to defraud the government. Ms. Bhoolai (who is my same age) figured out she could bilk Medicaid while running two assisted-living facilities. What she did was actually quite simple. She would bill Medicaid for services which her facilities never actually provided. The total amount she billed for services she was not providing was about $210,000.00.
Last week Judge William Gary ordered Bhoolai to pay (3x) treble damages for her fraud. I love seeing that. Usually in the Qui Tam cases the Defendant somehow snakes a plea deal to avoid paying treble damages. In this case there was no plea deal. The Judge had the opportunity to come down hard. He ordered her to pay more than $640,000 for the numerous (300 or so) violations she committed. Florida has its own False Claims Act.
Continue Reading...
Posted on March 2, 2007 by LaBovick Law
Amerigroup faces up to $524.7 million in fines after being found guilty in a whistleblower lawsuit. They were found guilty of discouraging pregnant women from enrolling in their health plans. A former Amerigroup employee brought this claim to light and the jury decided that Amerigroup over 18,000 false claims against Medicaid. This form of Medicaid fraud, involving poor pregnant women, is deplorable.
The company appealed the jury decision and they are awaiting the penalty phase.
Posted on February 15, 2007 by LaBovick Law
The House Oversight and Government reform Committee approved landmark legislation to overhaul the law protecting federal government whistleblowers. H.R. 985 "The Whistleblower Protection Enhancement Act of 2007" was approved with a unanimous vote of 28-0. This is truly a a successful joint effort on behalf of the committee. Hopefully the House will come together and pass this necessary legislation without delay. This is of course after the Leadership brings this to floor for a vote.
Click Here for More from the Government Accountability Project
