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

Hell hath no fury like a cyclist’s wrath!  Okay, so I took the saying and manipulated it a bit for effect. Poor Lance Armstrong, he is now caught in the Floyd Landis Qui Tam wrath.

For those of you not paying attention to the cycling world, Floyd Landis was an American cyclist who won the 2006 Tour de France.  After his victory he was disqualified and stripped of his title because he was busted for doping (using performance enhancing drugs). Landis disputed the charges of cheating for years, but finally came clean and admitted to doping in May 2010.  That effectively killed his biking career.

So what did Landis then do?  He turned in his golden boy yellow Live Strong rubber bracelet clad teammate, Lance Armstrong, and all the rest of his team for doping too.  Not only did Landis rat everyone else out, but he filed a qui tam/whistleblower case as well.

Last week the Department of Justice (DOJ) announced it intends on intervening in that false claims act case.  This is an extremely bad sign for Mr. Armstrong.  The lawsuit is called United States ex rel. Landis v. Tailwind Sports Corporation, et al.  An interesting point to the intervention is that the DOJ only wants to go after Tailwinds corporately, Armstrong personally and one other offender.  They are not interested in all the smaller, less important player-cyclists involved in the compliant.  It will be interesting for me to watch Landis' qui tam attorney struggle with the obligation of dealing with the defendants with whom the DOJ does not wish to go after.

Another question I initially had was: how does a private cycling team get caught up in a qui tam scheme? Qui tam, by definition, means you took money or at least tried to take government money which you didn't deserve.  What did the Armstrong team do to hustle the US Government into giving them money? The US Attorney let us know in their press release.  They stated “Lance Armstrong and his cycling team took more than $30 million from the U.S. Postal Service based on their contractual promise to play fair and abide by the rules – including the rules against doping . . ." Obviously they've all now admitted as much.  So it is just a matter of time before Armstrong's whole organization crumbles.  

If you know of someone doing or trying to steal from the government give us a call.  LaBovick Law Group offers to give you a free evaluation to help qui tam relaters.

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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.

 

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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.

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On July 14, 2012, the New York Times issued an article that uncovered a U.S. government secret spying program that targeted a group of whistleblowers working for the Food and Drug Administration (FDA).

The government program that the story uncovered is illegal. It shows how high government officials used a spy program that intended to undermine federal employees’ rights to lawfully report significant health threats and concerns to Congress, law enforcement officials and the American people.

Stephen M. Kohn, the Executive Director of the National Whistleblower Center and the head attorney for the FDA whistleblowers stressed that these employees do not give up their First or Fourth Amendment rights while holding government positions. Kohn stated that it is in fact more important for government workers to make note of wrongdoing in order to expose crimes, misconduct, corruption and wasted taxpayer dollars. 

In reference to the news article, Stephen M. Kohn also stated: “We hope that the revelations in today's New York Times will mark a turning point in the battle to stop the retaliatory surveillance of whistleblowers who risk their careers to report misconduct.”

Mr. Kohn hopes that the individuals responsible for attempting to prevent FDA agents from uncovering serious health and safety violations will be punished.

Find the New York Times article that started it all here: http://www.nytimes.com/2012/07/15/us/fda-surveillance-of-scientists-spread-to-outside-critics.html?_r=1&pagewanted=all

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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.”

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I have one question: When will the prosecutions start? What prosecutions? Financial institutions across America are filled with high ranking officials who all participated in creating a culture and system of defrauding the American public and crashing the American economy with false and fraudulent loans! Now the evidence is becoming overwhelming. Instead of giving banks bail-out money, we should have asked the government to give them one-way tickets to jail. Not all banks are bad, and not all bad loans are fraud. But the huge amount of loans were issued on fraudulent signatures and false reports, and those fraudulent activities were caused and perpetrated by bank officials who have yet to be called to justice for their misdeeds.

Last month Eileen Foster appeared on a national news show to discuss the numerous federal law violations, which occurred at Countrywide Home Loans while she worked there. Her testimony is proof that the financial debacle that went on at Countrywide and later Bank of America (BOA) was directly related to the fraud created by bank managers and workers to push through home loans. The show was "60 Minutes," and the link to that segment is below. "60 Minutes" is the most trustworthy news program ever produced in TV history. The fact that "60 Minutes" vetted Ms. Foster and found her to be credible and able to testify shows just how bad the corruption was at BOA and Countrywide Home Loans.

Factually, Foster worked at Countrywide starting in 2005 as a senior official. After being promoted a number of times she eventually landed in the position of Senior Fraud Risk Manager. This position put Foster as close to the epicenter of the financial collapse of the US Housing Market as anyone in history. That role allowed Foster access to data that literally detailed a mountain of evidence that corporate employees had forged signatures of clients and borrowers, and altered or simply created fake documents to prove up fake assets or income and push through poorly-placed loans for people who couldn't afford them, on property what was never worth the amount of the loan. The amount of evidence was shocking; the degree of total fraud that was being done to manipulate the bank's automated system of evaluating property value is scandalous as well.

After working in this role for a few months, Ms. Foster realized that the fraud was not local to her city but was being perpetrated across the United States. She found the same mind-blowing fraud in Miami, Las Vegas and Chicago. She then found it in San Diego, Los Angeles and Cincinnati. In other words, the fraud was being perpetrated across the entire business platform. It had become de-facto business as usual and was no longer even viewed as fraud - it was just business!

Ms. Foster figured out that the company was allowing the employee relations department (ER) and their lending managers to collude and not report fraud to the bank's normal internal reporting authority. This was being done to keep the fraudulent activity under wraps and allowed the loan officers to meet inflated closing productivity numbers, which became the norm at the bank. To keep the fraud going as long as possible, the company would allow management to retaliate against any employee who dared to question or "Whistleblow" on the banks fraud!

Prior to Countrywide merging with BOA, Ms. Foster filed a whistleblower complaint with the ER Division at Countrywide. Countrywide never told BOA about Ms. Foster's allegations. Instead they did just the opposite. Countrywide instructed their ER Department to investigate and bring a retaliatory action against Ms. Foster instead. Now that is turning justice on its head.

Once BOA took over, Ms. Foster hoped she was going to a more honest and better run company. BOA took foster in as a Senior Mortgage Fraud Investigator. She accepted that position. It was within that position that Ms. Foster finally learned that Countrywide was wrongfully investigating her. They were trying to use that investigation to cover her complaints and create a reason, outside of needing to get rid of a whistleblower, to terminate her employment with BOA. She found out that the company investigators were trying to bully Countrywide's staff into giving negative testimony against Ms. Foster. When BOA took over Countrywide's investigation of Foster, they decided to ignore the overwhelming evidence that the investigation was simple retaliation and instead they terminated her employment. They only did so after finding out that the US government regulators wanted to question her about Countrywide and BOA's suspicious actions and reporting.

It wasn't until Foster was terminated that she realized she needed to file a Sarbanes-Oxley Act (SOX) whistleblower complaint with the Occupational Safety & Health Administration (OSHA). She did so and challenged the termination. After a relatively short investigation, OSHA ruled on her complaint in September 2011. They found that Foster was the victim of whistleblower retaliation. They also found the retaliation was a violation of the Sarbanes Oxley employee protection guarantees. The Department of Labor wrote in the Order that Foster must be reinstated in her position. Further, BOA must pay her all her damages, including lost wages from the date of termination. Bank of America did not like this ruling, so they are challenging the OSHA ruling and requesting a hearing. We shall see what happens in the future.

Watch the "60 minutes" broadcast here.

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The Securities and Exchange Commission (SEC) has offered awards totaling hundreds of millions of dollars to employee whistleblowers who reported wrongdoing at their companies. Based on these whistleblowers' information, 220 companies were brought to justice in 2011. The employee reports resulted in the federal government's recovery of billions of dollars. These reports had been made over the past few years to the SEC and the companies' internal compliance programs.

The list of companies forced to repay the federal government is an impressive one. It includes Dell Inc., Qwest Communications, Citigroup, UBS Financial Services, Johnson & Johnson, JP Morgan, Deloitte and Touché, and General Electric Company.

Click here for the full list of companies.

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Avandia cases are getting ready to settle or explode:

GlaxoSmithKlien is ready to either pay out or be bleed to death in Avandia cases. Recently they agreed to pay $3 Billion dollars to the Feds to avoid criminal and civil penalties and a trial. That case dealt, at least in part, with improper marketing of their defective drug, Avandia. Over the past few years Plaintiff lawyers have gathered and filed over 30,000 Avandia injury cases in a multidistrict litigation. This is because Avandia was supposed to control diabetes but was actually causing heart attacks. Glaxo knew of the heart attack danger but covered it up. Now Glaxo has settled over 10,000 of 30,000 cases in the MDL but is still fighting the remaining 20,000 claims. So far, (above the $3 billion dollars they paid the government), Glaxo has paid about $700,000 in claims to injured patients.

Now the court is getting impatient with Glaxo. The Judge recently gave Glaxo 75 days to settle up at least 85% of the remaining cases or they would be set for trial. It seems pretty obvious to all of us attorneys involved with Avandia, that after paying a $3 BILLION dollar fine and $700 MILLION in damages, Glaxo KNOWS Avandia was a bad drug and should settle the remaining cases.

We will see that Glaxo actually does, but my bet is their bank account is a lot deeper then the remaining cases. If they can pay the government and the first set of plaintiffs 3 billion 700 million dollars, they can settle up with the rest of the poor people they injured!

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HEY WHISTLEBLOWERS! Are you interested in making a huge amount of money? I am betting there are plenty of drug company executives and sales people who are salivating at the possibility of turning their employer into the government for illegal marketing schemes. Over the past few years, the health and drug industry has been busted for multiple violations of federal law and paid huge money in Qui Tam whistleblower cases.

The numbers on some of the cases are staggering. In many health care provider cases, the payouts have been in the hundreds of millions of dollars to settle Qui Tam Whistleblower lawsuits. When this happens, the Whistleblower is entitled to between 15% and 30% of the total funds recovered by the government.

Recently, the mega drug maker GlaxoSmithKline agreed to pay $3 BILLION dollars to the Federal Government to avoid civil and criminal penalties which government prosecutors alleged were created when Glaxo orchestrated an illegal marketing scheme for a group of their most popular drugs. The allegations included ripping off the Medicaid social funds program and promoting off label use for the drugs. This is the largest settlement between a drug company and the government related to illegal marketing practices in US HISTORY! It certainly beats the pants off the 2009 settlement Pfizer paid of $2.3 billion.

This new agreement will close a long running chapter in Glaxo’s history. The US Attorney in Colorado and Massachusetts shared the investigation and prosecution of this mega case. The charges included off-label promotion of Wellbutrin a well known anti-depressant and included the Government’s investigation into the often mentioned defective diabetes drug, Avandia. You may remember Avandia being taken off the market last year by the FDA unless it was given as a drug of last report! This was because it was causing heart attacks instead of helping with diabetes, a somewhat consequential problem for Glaxo. Avandia was promoted as a safe drug when Glaxo knew that Avandia was causing heart attacks and strokes.

I am sure my Qui Tam clients are dreaming about being the Qui Tam Whistleblower’s in a $3 BILLION DOLLAR pay out case. Even at the statutory minimum payout of 15% the Whistleblower in this case should receive a nice check for $450,000,000.00!!! Now that is a good day at the office! The best part of it all is that a company that was breaking the law was brought to justice!

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

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

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

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

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

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

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

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

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

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