Friday, October 17, 2014

Whistleblower and fraud news summary for week of October 13

Bankers looking to “game the system” can easily avoid software that is built to detect potential fraud being discussed in instant messages, claims an American Banker article. This concern is another reason that whistleblowers with insider knowledge are essential for fraud detection and enforcement. (Why Didn’t IM Compliance Tools Save Banks from Scandal?)

Boeing has agreed to pay $23 million for submitting false billing claims to the government. The defense contractor allegedly charged improper labor costs that violated contracts for maintenance and repair of military airplanes, such as time mechanics spent at meetings not directly related to the contracts. (Boeing Agrees to $23 million Labor Charge Settlement)

A dozen Swiss banks are under investigation for aiding tax evasion by the US, but a non-prosecution agreement may save them from criminal charges. A Swiss newspaper reported that the banks would escape prosecution if they “detail their wrongdoing with U.S. clients and pay fines.” (Draft U.S. Deal for Swiss Banks in Tax Row Seeks “Total Cooperation”: Paper

Two Houston-area diagnostic centers have agreed to pay the government $2.6 million to settle claims that the centers improperly billed Medicare. The diagnostic centers allegedly used the provider number of a physician who had not authorized the center to do so, and billed Medicare for services the physician was not involved in. (Operators of Houston Area Diagnostic Centers Agree to Pay $2.6 Million to Settle Alleged False Claims Act Violations)

Friday, October 10, 2014

Whistleblower and fraud news summary for week of October 6

Extendicare Health Services has agreed to pay the government $38 million to settle allegations that the skilled nursing home charged Medicare for services that were not provided or were substandard. This is the largest failure-of-care settlement with a nationwide chain skilled nursing facility. The two whistleblowers in the case will receive a total of $2.05 million as a reward under the False Claims Act. (Extendicare Health Services Inc. Agrees to Pay $38 Million to Settle False Claims Act Allegations Relating to the Provision of Substandard Nursing Care and Medically Unnecessary Rehabilitation Therapy)

Northrop Grumman is under investigation again because of a whistleblower lawsuit that alleges the defense contractor took risky shortcuts and faked tests for military equipment. The government has declined to intervene but has the option to join the case later. Northrop Grumman has previously settled whistleblower cases brought by Phillips & Cohen clients that settled separately for $12.5 million, $111 million and $325 million. The latter was the largest settlement ever of a whistleblower case by a defense contractor. (Northrop Faked Tests of GPS Systems, Whistle-blower Suit Claims)

Two managers of multiple Los Angeles medical clinics were indicted for their role in a $4 million Medicare fraud scheme that paid illegal kickbacks to doctors for services that were never provided. (Manager of Three Los Angeles Medical Clinics Indicted in $4 Million Medicare Fraud Scheme)

DRS Technical Services Inc. has agreed to pay the government $13.7 million to settle False Claims Act allegations. The defense contractor allegedly billed the government for work that required high level job qualifications but was performed instead by employees without those qualifications. (Virginia Contractor to Pay U.S. $13.7 Million to Settle Charges of Overbilling)

HCA whistleblower opposes re-election of former HCA CEO as FL governor

John Schilling, a whistleblower whose “qui tam” case exposed an extensive Medicare fraud accounting scheme by hospital giant HCA, held a press conference this week to explain his opposition to the re-election of Florida Gov. Rick Scott, who was the CEO at HCA when the multi-year fraud was committed. HCA paid the government a total of $1.7 billion to settle all civil and criminal charges, with the final settlement in 2003. At the time, that was the largest healthcare fraud settlement ever.

Schilling and another whistleblower were represented by Phillips & Cohen LLP. They received a total reward of $100 million under the qui tam provisions of the False Claims Act for their information and the work on the case by them and their attorneys.

Tuesday, October 07, 2014

Whistleblower and fraud news summary for week of September 29

The Wall Street Journal says that big banks are turning away certain clients to reduce the risk of money laundering and are conducting complex investigations to root out any illegal activities by their clients. (The Morning Risk Report: Big Anti-Money Laundering Fines Reshaping Banking)

Doctors made $380 million last year from speaking and consulting fees paid for by pharmaceutical and device makers, reinforcing the “murky financial ties between physicians and the health care industry.” (Detailing Financial Links of Doctors and Drug Makers)

Three people were convicted in Detroit this week in a $29 million Medicare fraud scheme. The owner of an adult day care center was given kickbacks to release patient billing information, which was then used to bill Medicare for services that were never provided. (Detroit-Area Operator of Adult Day Care Center, Two Home Health Care Company Owners Convicted in $29 Million Medicare Fraud Conspiracy)

Friday, September 26, 2014

Whistleblower and fraud news summary for week of September 22

The SEC has awarded an anonymous whistleblower, represented by Phillips & Cohen LLP, more than $30 million for his role in helping to uncover fraud that would not have been detected otherwise. This is the largest whistleblower award given out by the SEC since the Dodd-Frank Act was enacted in 2010. (SEC Announces Largest-Ever Whistleblower Award)

Caremark has agreed to pay the federal government $6 million to settle allegations that the pharmacy benefit management company failed to reimburse Medicaid for prescription drug costs that should have been paid by a patient’s private insurance. (Caremark Will Pay $6 Million to Resolve False Claims Act Allegations)

Shire Pharmaceuticals will pay the government $56.5 million to resolve two whistleblower lawsuits and government allegations that the pharmaceutical company marketed several of its prescription drugs for off-label uses, which violates the False Claims Act. Shire allegedly overstated the effectiveness of several of its Attention Deficit Hyperactivity Disorder drugs, such as Adderall XR, and promoted certain other drugs – Pentasa and Lialda – for uses not approved by the US Food & Drug Administration. (Shire to Pay $56.6 Million to Settle False Marketing Claims)

Seven people were indicted, and three people pleaded guilty for their roles in a $56 million home healthcare scheme to defraud Medicare in New Orleans. So far thirteen people have been charged in the case, which alleges billing Medicare for services and equipment that were not medically necessary or not provided. (Seven Defendants Indicted and Three Other Defendants Plead Guilty for Their Roles in $56 Million Medicare Fraud Scheme)

Monday, September 22, 2014

SEC Awards More Than $30M to P&C Whistleblower

The Securities and Exchange Commission has approved its highest ever whistleblower award – at least $30 million to $35 million – to a whistleblower represented by Phillips & Cohen LLP.

“Our client exposed extraordinarily deceitful and opportunistic practices that were deeply entrenched and well hidden,” said Phillips & Cohen partner Erika Kelton. “Federal regulators never would have known about this fraud otherwise, and the scheme to cheat investors likely would have continued indefinitely,”

Under the 2011 Dodd-Frank Act, the SEC is authorized to award whistleblowers between 10 to 30 percent of a total recovery. The whistleblower is a foreign citizen.

"Whistleblowers from all over the world should feel similarly incentivized to come forward with credible information about potential violations of the U.S. securities law," said Sean McKessy, Chief of the SEC's Office of the Whistleblower.

“This record-breaking award sends a strong message about our commitment to whistleblowers and the value they bring to law enforcement,” said Andrew Ceresney, director of the SEC’s Division of Enforcement, in a press release.

Friday, September 19, 2014

Whistleblower and fraud news summary for week of September 15

U.S. Attorney General Eric Holder is urging Congress to increase rewards for Wall Street whistleblowers. Holder says the increased rewards will encourage potential whistleblowers to come forward, potentially preventing another financial bubble. (Eric Holder to Call For Bigger Wall Street Whistleblower Rewards)

Three patient recruiters for the defunct home health care company Trust Care Health Services Inc. were sentenced to prison for their involvement in a $20 million healthcare fraud scheme. The recruiters received kickbacks from the company for bringing in patients, while the company billed Medicare for services that were not medically necessary or weren't provided. (Three Patient Recruiters Sentenced in $20 Million Miami Health Care Fraud Scheme)

IRS Commissioner John Koskinen called himself a “big believer” in the IRS whistleblower program Monday during a speech at the Taxpayers Against Fraud Education Fund conference in Washington, DC, this week. Koskinen also said the whistleblower’s office will see a 70 percent staffing increase to help with the caseload. (Koskinen: I love whistleblowers)

A Plus Home Health Care Inc. has agreed to pay $1.65 million to the government to resolve allegations that the home health care company offered kickbacks to encourage patient referrals. A Plus allegedly hired physicians’ spouses for a marketing position where little to no work was performed and used the spouses’ salaries to induce the physician to refer Medicare patients to A Plus. (Florida Home Health Care Company and its Owners Agree to Resolve False Claims Act Allegations for $1.65 Million)

Friday, September 12, 2014

Whistleblower and fraud news summary for week of September 8

Meridian Surgical Partners has agreed to pay $3 million to settle a whistleblower lawsuit that claimed the surgery center operator paid doctors above fair market value for services, which is against the anti-kickback statute of the False Claims Act. (Meridian Surgical Partners pays $3M fine to settle suit)

Health Diagnostic Laboratory is the most recent medical laboratory being scrutinized for its practice of paying doctors for sending in patients’ blood for testing. Medical labs are allowed to compensate doctors for certain related services, but any payment that offers a financial incentive to doctors is considered a kickback. (A Fast-Growing Medical Lab Tests Anti-Kickback Law)

Merck’s 95 percent effective mumps vaccine may not actually be that effective, alleges a False Claims Act lawsuit. Former employees are claiming the pharmaceutical company mislabeled the vaccine that might not be providing the necessary protection from the disease that already has infected over 900 people this year. (Did Merck Unfairly Monopolize the Market for Mumps Vaccine?)

Friday, September 05, 2014

Whistleblower and fraud news summary for week of September 1

Smith & Nephew agreed to pay the U.S. government $11 million to settle a whistleblower lawsuit that claimed the London-based medical device maker sold the U.S. devices it said were U.S.-made but were actually produced in Malaysia. The whistleblower claimed Smith & Nephew violated the federal Trade Agreements Act, making this apparently the first False Claims Act settlement involving a medical device and false country of origin claims. (Smith & Nephew to Pay $11 Mln in Whistleblower Suit)

A Reuters analysis shows that U.S. judges are giving increasingly longer prison terms for those found guilty of insider trading, and the trend is expected to continue. The length of prison sentences have increased over 31 percent within the last five years, partly due to the increased profits these traders are netting from the illegal schemes. (Insider Traders in U.S. Face Longer Prison Terms, Reuters Analysis Shows)

Two rehabilitation therapy facilities will pay the government $3.75 million for allegedly billing Medicare for unnecessary therapy treatments. (Two Companies to Pay $3.75 Million for Allegedly Causing Submission of Claims for Unreasonable or Unnecessary Rehabilitation Therapy at Skilled Nursing Facility)

Thursday, September 04, 2014

DOJ settles first case involving Stark violations by a physician practice

The Department of Justice broke new ground last month in its ongoing campaign to aggressively enforce the Stark Law to combat improper payment for referrals.

New York Heart Center settled a case with the government on Aug. 14 for $1.3 million that alleged the cardiology group practice violated the Start Act by compensating physician members for referrals they made to other physicians in their group practice. The Stark Law bans Medicare payments to an entity for certain medical services if those services were ordered by a physician who has a financial relationship with that entity.

Most previous Stark cases involve hospitals paying physicians for referrals. This settlement is the first of its kind that results from physician compensation inside a practice, unrelated to hospital referrals.