"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.)

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

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.

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

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

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

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

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

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

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

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." 

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.

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


 

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.

National Whistleblower Center Action Alert Link

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....

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.

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
 

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

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.

 

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.

As expected, representatives for Wyeth have defended their methods. Spokesperson Doug Petkus issued a statement saying that Wyeth stands behind its pricing. However, if Wyeth is found guilty of defrauding Medicaid - a state program that aids poor citizens in their medical coverage - it could face steep fines as well as be held responsible for restitution. On top of that, Wyeth would likely have to pay damages to the two whistleblowers involved in the suits.

In addition to the Justice Department, 16 states have joined in the two lawsuits filed in Massachusetts. The states are: Florida, Delaware, California, Indiana, Illinois, New York, Massachusetts, Louisiana, Michigan, New Hampshire, Nevada, Tennessee, Virginia, Wisconsin, Texas and Washington, DC.
 

 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?

"The Supreme Court in Eisenstein has once again chipped away at the ability of whistleblowers to challenge corrupt contracting practices under the False Claims Act. The ruling demonstrates a fundamental misconception of the purposes behind the False Claims Act, the most important anti-fraud law in the United States. The Court ruled that FCA cases pursued by whistleblowers are similar to private lawsuits. This is wrong. Whistleblowers under the FCA have a powerful right to file cases on behalf of the United States, and the vast majority of any recovery in these cases is paid to the U.S. Treasury -- not the whistleblower. Taxpayers are the main beneficiaries of these cases -- the rules concerning filing deadlines should reflect the intent of the law, and should also reflect the fact that the United States, recovers no less then 70% of all monies obtained in an FCA case. In today's environment, the Supreme Court should be strengthening anti-fraud laws, not continuously chipping away at the ability of whistleblowers to present their cases."

Time will tell if this decision will affect other qui tam litigation pending appeal. Maybe we should seek relief from the legisature to help increase the time limit in bringing a False Claims Act Appeal for Relators. As a nation, we can't afford to allow the guilty to get away with fraud and use loop holes in the court to escape justice.  Let's hope that this case will help raise awareness that we need to continue to strengthen our False Claims Act, not "Chip away at it".

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.

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.....

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.