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.

Wednesday, September 03, 2014

Plainspoken Grassley criticizes ludicrous corporate arguments against the False Claims Act

One of the best and most straightforward arguments against the Chamber of Commerce’s efforts to weaken the False Claims Act was made by Sen. Chuck Grassley (R-Iowa) at a House hearing last month. Paul Barrett of Bloomberg Businessweek wrote:

Grassley, the ranking Republican on the Senate Judiciary Committee, said in written testimony (PDF) before the House panel that, given obvious self-interest, corporate whining about the FCA didn’t deserve respect—and didn’t even make sense.

“I’m always wary when I hear the biggest violators of a law hire people to talk about ‘strengthening’ it,” Grassley said. “The fact is that no other law in existence has been more effective in battling fraud than the False Claims Act has in the past 25 years.”

Amen to that Sen. Grassley. Whistleblowers are fortunate to have Grassley looking out for them. As Barrett noted, “The Chamber’s biggest foe in this fight isn’t the plaintiffs’ bar. It’s a plainspoken conservative Republican from corn country.”

Tuesday, September 02, 2014

Whistleblower and fraud news summary for week of August 25

The SEC awarded a whistleblower $300,000 for reporting audit and compliance issues to the government after the company failed to take action internally. (SEC Announces $300,000 Whistleblower Award to Audit and Compliance Professional Who Reported Company’s Wrongdoing)

Two executives for ArthroCare were sentenced to prison as part of a securities fraud scheme that artificially inflated sales and revenue, costing investors over $750 million. (Former ArthroCare Executives Sentenced for Orchestrating $750 Million Securities Fraud Scheme)

Spine 360 has agreed to pay the government $2.6 million to settle allegations that the spinal device manufacturer paid kickbacks to an Indiana-based spinal surgeon to use their products. (Elkhart Doctor, Texas Firm to Pay $2.6 Million)

A recent Delaware court case may help corporate attorneys who have been silenced from speaking about wrongdoing. According to the New York Times, Walmart has used attorney-client privilege to silence Maritza I. Munich, former general counsel for Walmart, from speaking about any potential misconduct by the company in a developing bribery case against Walmart. (Keeping Corporate Lawyers Silent Can Shelter Wrongdoing)

Friday, August 22, 2014

Whistleblower and fraud news summary for week of August 18

The Department of Justice reached a $16.65 billion settlement with Bank of America to resolve charges that the banking giant contributed to the financial crisis. Bank of America paid slightly more than $1 billion out of the total settlement to settle four qui tam lawsuits brought by whistleblowers under the False Claims Act, according to the settlement agreement. This is the largest civil settlement with a single entity in American history. (Record Bank of America Settlement Latest in Government Crusade)

Becker’s Hospital Review compiled a list of the top ten settlements so far this year involving the False Claims Act, Stark Law or the Anti-Kickback Statute:
  • Endo Health Solutions ($192.7 million)
  • Amedisys ($150 million)
  • Omnicare ($124.24 million)
  • Halifax Hospital Medical Center and Halifax Staffing ($85 million)
  • King’s Daughters Medical Center ($40.9 million)
  • RehabCare Group ($30 million)
  • Teva Pharmaceuticals USA ($27.6 million)
  • Genzyme Corp. ($22.28 million)
  • Saint Joseph Health System ($16.5 million)
  • Diagnostic Imaging Group ($15.5 million)
(10 Largest False Claims Act, Stark Law and Anti-Kickback Settlements of 2014)

Standard Chartered Bank was ordered to pay a $300 million fine after failing to follow the terms of a previous settlement by fixing problems with its anti-money laundering compliance programs. The protocol changes were part of a $132 million settlement in 2012 that alleged that the bank violated U.S. sanctions programs in Iran, Burma, Libya and Sudan. (NYDFS Announces Standard Chartered Bank to Suspend Dollar Clearing for High-Risk Clients in Hong Kong; Pay $300 Million Penalty; Take Other Remedial Steps after Anti-Money Laundering Compliance Failures)

Cardondelet Health Network, based in Arizona, has agreed to pay the government $35 million to resolve allegations that the hospital overcharged Medicare and other federal programs by submitting false bills. (Cardonelet Health Network to Pay $35 Million to Resolve False Claims Allegations Involving St. Joseph’s and St. Mary’s Hospital in Tucson)

Ralex Services Inc., a New Rochelle nursing home, has agreed to pay $2.2 million to the government for allegedly charging Medicare programs for costlier conditions and treatments. (Nursing Home Settles False Claims Act Lawsuit with New York, Feds

Monday, August 18, 2014

Medicare fraud overwhelms government; data analysis not enough

Three major newspapers recently have taken an in-depth look at various aspects of Medicare fraud and government enforcement efforts. All of them overlooked the effect that “qui tam” (whistleblower) cases have had. Data analysis is an important tool to detect Medicare fraud. But whistleblower cases are a very effective way to stop Medicare fraud and would have an even greater impact if the government put more resources into them.

Medicare fraud costs the government an estimated $60 billion annually. Here are the newspaper stories, which provide some insight into the problems and the challenges that the government faces:
  • Since 1998, con-artists have been sending out recruiters to elderly Medicare patients’ homes to try and convince them they needed a power-wheelchair. Patients were diagnosed for problems they did not have so that the fraudulent company could send out marked-up bills to the government, and pocket the extra cash. More than $8.2 billion has been spent on supplying these motorized wheelchairs, but “the government cannot even guess at how much of that money was paid out to scammers.  . . .The sucker in this scheme was the U.S. government.” (A Medicare Scam That Just Kept Rolling)
  • The Obama administration has made fighting healthcare fraud a top priority, with $600 million a year being wasted. However, a web of private contractors, current and former government officials, and experts in the field, have tangled the process of rooting out and stopping fraudulent practices. A new data analysis tool is now being used to detect Medicare fraud, marking potential billing issues and then sending it onto a contractor to be reviewed. (Pervasive Medicare Fraud Proves Hard to Stop)
  • The government is testing the effects of a predictive-analysis data program called the Fraud Prevention System, which, the government hopes, will be a leading way to find and deter fraud. In fiscal year 2013, the program identified or prevented $211 million in improper payments, double that of the previous year. However, the program is going up against almost $60 billion in fraudulent Medicare payments annually. The software is gaining speed, but tips are coming almost solely from tipsters and would-be whistleblowers who often have a firsthand account of the fraud. (How Agents Hunt for Fraud in Trove of Medicare Data)

Whistleblower and fraud news summary for week of August 11

The federal government has decided to intervene in a $50 million whistleblower case against Derco Aerospace Inc., which is accused of overcharging the government for aircraft parts. (Whistleblower Charges UTC Sikorsky Unite with False Claims on Aircraft Parts)

The Vanguard group is facing a whistleblower lawsuit that alleges the investment management company used illegal tax shelters to evade $1 billion in state and federal taxes. (Vanguard Faces Tax Evasion Charges in Ex-Employee’s Whistleblower Suit)

Two investigators linked to GlaxoSmithKline received jail sentences from the Chinese government after pleading guilty to trafficking personal data. Meanwhile, GlaxoSmithKline PLC Chief Executive Andrew Witty is feeling pressure due to weak sales; bribery allegations in China, Jordan, Iraq, Syria and Lebanon; and a drop in Glaxo’s stock price, according to the Wall Street Journal. (In China, British Investigator Hired by Glaxo, and Wife, Sentenced to Prison)

Thursday, July 31, 2014

Whistleblower and fraud news summary for week of July 28

The House Judiciary Committee Constitution and Civil Justice Subcommittee held a panel this week to discuss a proposal that would give companies with “gold-standard compliance programs” a “get out of jail free” pass if they were sued under the False Claims Act. Senator Chuck Grassley (R-IA), a longtime supporter of whistleblowers and the FCA, made a compelling statement opposing the change during the hearing and issued this statement:
                “I’ve long advocated companies developing strong internal compliance programs.  However, having one isn’t a reason to receive a ‘get out of jail free’ pass. I’m skeptical that companies will self-report violations, and certification of a compliance program won’t turn up the cold hard facts on whether they do or don’t self-report. That’s why the False Claims Act relies on whistleblowers, and no other law has proven as effective at recovering taxpayer dollars that would otherwise be lost.  Before the 1986 amendments which incentivized whistleblowers, $40 million was being recovered each year. At that rate, it would have recovered only $1 billion in the past 25 years. Now, thanks to courageous whistleblowers who know where the skeletons are buried, the law has recovered $42 billion since 1986.” (Grassley Skeptical of False Claims Act “Get out of Jail Free” Pass)

The firearm producer Smith & Wesson will pay the government $2 million to settle Securities and Exchange Commission charges that the company violated the Foreign Corrupt Practices Act by bribing foreign officials to win overseas contracts. (Smith & Wesson Neither Admits nor Denies, to Pay $2 Million to Settle SEC FCPA Charge)

The Department of Justice has decided to intervene in a lawsuit against Symantec Corporation. The California-based software company is accused of overcharging the government tens of millions of dollars by allegedly failing to give the government the same discounted prices for products and services that Symantec gave its commercial customers. (DOJ Joins Whistleblower Suit Against Symantec)

Infirmary Health Systems has agreed to pay the federal government $24.5 million to settle charges that the Alabama-based healthcare group allegedly paid kickbacks to doctors for patient referrals and unnecessary medical procedures. (Alabama Hospital System and Physician Group Agree to Pay $24.5 Million to Settle Lawsuit Alleging False Claims for Illegal Medicare Referrals)