Friday, November 21, 2014

SEC whistleblower program continues to grow

The Securities and Exchange Commission received a record number of tips under its whistleblower-reward program in fiscal year 2014, with more than 3,600 tips from all 50 states, Washington, DC and Puerto Rico, and 60 foreign countries.

The SEC released its annual whistleblower report about the Dodd-Frank program this week, which discussed the substantial progress being made in several areas.

The SEC awarded its largest ever award, $30 million, to a whistleblower this year.  The whistleblower, represented by Phillips & Cohen, helped uncover fraud that would not have been detected without insider knowledge. In 2013, Phillips & Cohen partner Erika Kelton predicted in a article that the SEC whistleblower program would pick-up steam, receiving more tips and producing more awards – which the SEC report proves has happened.

Another highlight in FY2014 was the SEC’s decision to exercise of its anti-retaliation authority for the first time. The SEC charged Paradigm Capital Management for retaliating against an employee who reported wrongdoing to the SEC, settling with the hedge fund advisory firm for $2.2 million. 

Whistleblower and fraud news summary for week of November 17

Sevenson Environmental Services, based in Niagara Falls, New York, agreed to pay the government $2.72 million to resolve allegations that the environmental remediation company violated the False Claims Act by accepting kickbacks in return for awarding subcontracts for work on government sites. (Sevenson Environmental Services Inc. Agrees to Pay $2.72 Million to Settle Claims of Alleged Bid-Rigging and Kickbacks)

A Miami-based chief operating officer of a psychiatric hospital pleaded guilty for his role in a $67 million Medicare fraud scheme. Christopher Gabel pleaded guilty to one count of conspiracy to commit health care fraud and one count of conspiracy to defraud the government by receiving kickbacks. (Miami-Area Hospital Chief Operating Officer Pleads Guilty in $67 Million Mental Health Care Fraud Scheme)

Washington Gas Energy Systems will pay the government $2.5 million in fines and penalties for conspiring to commit fraud against the government. The Virginia-based energy company allegedly illegally acquired contracts meant for small, disadvantaged businesses. (Washington Gas Energy Systems to Pay $2.5 Million in Fines and Penalties for Conspiring to Obtain Federal Contracts)

Whistleblower cases help government recover almost $3 billion in FY2014

The Department of Justice recovered a record-breaking $5.69 billion under the False Claims Act for the fiscal year 2014, says a DOJ statement released Thursday.

Qui tam (whistleblower) lawsuits accounted for almost $3 billion of the total, with whistleblowers receiving $435 million in rewards.

"We acknowledge the men and women who have come forward to blow the whistle on those who would commit fraud on our government programs," said Acting Assistant Attorney General Joyce Branda.

As has been the case in other recent years, the pharma industry accounted for a substantial share of the recoveries. Global health care giant Johnson & Johnson and its subsidiaries, Janssen Pharmaceuticals and Scios (J&J), paid a total of $2.2 billion to resolve False Claims Act claims and other charges relating to the off-label marketing of prescription drugs and kickbacks to physicians and nursing homes.

Recoveries under the False Claims Act now total more than $45 billion, including more than $30 billion from qui tam cases alone.

Friday, November 14, 2014

Whistleblower and fraud news summary for week of November 10

Visiting Nurse Service (VNS), based in New York, has agreed to pay the government almost $35 million for improperly billing Medicaid programs. VNS billed Medicaid for 1,740 patients who weren’t eligible for the long-term managed care plan. (Manhattan U.S. Attorney Settles Civil Fraud Claims Against visiting Nurse Service For Obtaining Millions in Medicaid Payments by Enrolling Ineligible Individuals in Its Managed Long-Term Care Plans and for Providing Substandard Services at Social Adult Day Care Centers)

CareAll Management has agreed to pay $25 million to the US and Tennessee to resolve a whistleblower case that alleged the Nashville-based home health agency submitted false claims and upcoded healthcare billings to Medicare and Medicaid programs. This is the second time in two years that CareAll will pay a settlement to the government to resolve False Claims Act allegations. (CareAll to Pay $25 Million in Medicare Settlement)

Five Florida residents have plead guilty for their role in a $6.2 million Medicare fraud scheme. The individuals used Miami-based Professional Medical Home Health to bill Medicare for physical therapy and home health services that were not medically necessary or never provided. (Five Florida Residents Plead Guilty for Roles in $6 Million Miami Health Care Fraud Scheme)

Vascular Solutions and its CEO, Howard Root, were charged this week for selling unapproved varicose vein treatments and conspiring to defraud the government by concealing sales of the product. The indictment comes after warnings form the FDA, failed clinical trials and complaints by a whistleblower to the CEO. (Vascular Solutions Inc. and its CEO Charged with Selling Unapproved Medical Devices and Conspiring to Defraud the United States)

Thursday, November 06, 2014

Whistleblower and fraud news summary for week of November 3

New York Superintendent of financial Services Benjamin Lawsky is considering using independent monitors to deter banks and other firms from bad behavior even for those firms that haven’t gotten into legal trouble. Lawsky wants to focus first on “high-risk” international transactions that could facilitate money laundering schemes, in addition to countries that are subject to US sanctions. (Regulator Wants Greater Use of Bank Monitors)

Slovakia has introduced a new whistleblower program that will allow whistleblowers who step forward with information about secret cartel agreements to be financially rewarded. The new program is looking to specifically target the cartel’s in Slovakia which are becoming increasingly harder to uncover. (Slovak Republic: New Whistleblower Rules In Competition Law Financially Reward Whistleblowers)

A Miami-based home health care owner was sentenced to 80 months in prison this week for her role in a $74 million Medicare fraud scheme. Elsa Ruiz pleaded guilty to conspiracy to commit health care fraud for falsely billing Medicare for physical therapy services that were medically unnecessary or not provided. (Owner and Administrator of Two Miami Home Health Companies Sentence to 80 Months in Prison for $74 Million Fraud Scheme)

Bio-Rad Laboratories, based in California, has agreed to pay the government $55 million to settle allegations that the medical diagnostic and research company violated the Foreign Corrupt Practices Act by bribing Russian officials to win government contracts. (Bio-Rad to Pay $55 Million to Settle Foreign Corruption Charges)

Friday, October 31, 2014

Whistleblower and fraud news summary for week of October 27

Dignity Health, a San Francisco-based hospital chain formerly known as Catholic Healthcare West, has agreed to pay the government $37 million to settle allegations that 13 of its hospitals overcharged Medicare and TRICARE for unnecessary inpatient services that could have been done on a less costly and safe outpatient basis. (Dignity Health Agrees to Pay $37 Million to Settle False Claims Act Allegations)

A Detroit-area physical therapist assistant was sentenced to 50 months in prison for his role in a $14.9 million Medicare fraud scheme. Jigar Patel and his co-conspirators billed Medicare for services that were never provided and prescribed unnecessary painkillers and narcotics to patients to induce them to sign the false bills. (Detroit-Area Home Health Care Assistant Sentenced for Scheme to Bill Medicare Nearly $15 Million for Services Not Provided)

The medical device company Biomet Companies has settled with the government for more than $6 million over allegations that the company gave kickbacks to doctors who used its bone-growth stimulators. (Biomet Inks $6M Deal to Settle Kickback Charges)

Friday, October 24, 2014

Whistleblower and fraud news summary for week of October 20

DaVita Healthcare Partners has agreed to pay the government $400 million to settle a whistleblower lawsuit brought by Phillips & Cohen and other government claims. DaVita allegedly paid doctors kickbacks to increase referrals for dialysis patients and reduce competition. (Former DaVita Insider Helped Build Case That Led to $389M Settlement)

Science Applications International Corporation has agreed to a $1.5 million settlement to resolve allegations that the government contractor engaged in conflicting business relationships, violating the False Claims Act. SAIC paid $11.75 million in 2013 to the government for previous alleged False Claims Act violations. (Science Applications International Corporation Agrees to Pay $1.5 Million to Resolve Alleged False Claims Act Violations for Undisclosed Organizational Conflicts of Interest)

A Miami-area physician has been sentenced to 15 years in prison for taking part in a $200 million Medicare fraud scheme through the American Therapeutic Corp. Roger Bergman and his co-conspirators will pay $85.3 million in restitution on top of the jail sentence. (Miami Man Gets 15 Years in Nation’s Biggest Medicare Therapy Scam)

The founder of three Detroit-area home health care agencies pleaded guilty this week for his role in a $22 million home health care fraud scheme. Tayyab Aziz admitted in his plea agreement that he billed Medicare for services that were medically unnecessary or never performed. (Pakistani American Entrepreneur in Detroit Pleads Guilty to $22 Million Home Health Care Fraud Scheme)

Thursday, October 23, 2014

DaVita pays $400 million to settle Phillips & Cohen whistleblower case and related charges

DaVita Healthcare Partners has agreed to settle a whistleblower case brought by Phillips & Cohen LLP and government claims for $400 million. This is apparently the largest ever settlement that covers solely allegations of kickbacks in the healthcare industry.

The whistleblower lawsuit alleged that the healthcare company paid doctors kickbacks to get patient referrals for dialysis treatment and to reduce competition from other dialysis centers. DaVita rewarded doctors who referred patients to its dialysis centers by selling them shares in existing DaVita dialysis centers for less than fair-market value and buying shares in dialysis centers owned by physicians for more than fair-market value, the complaint alleged.

“Our lawsuit alleges that to disguise payments to doctors, DaVita followed the unusual business strategy to ‘buy high and sell low,’” said Eric R. Havian, whistleblower attorney for Phillips & Cohen, in a press release. “Buying high and selling low – although seemingly illogical – makes perfect financial sense if a company wants to pay doctors extra money to influence their decisions and doesn’t want those payments to be detected.”

The lawsuit was brought on behalf of David Barbetta, a former DaVita employee who worked in the mergers and acquisitions department. He spent nearly 5,000 hours over several years poring over detailed financial documents and working with his attorneys and the government on the case.

DaVita will pay $350 million to the federal government to settle the whistleblower lawsuit and other civil charges, $39 million to settle criminal charges, and $11.5 million to settle related state false claims act charges.

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)