Wednesday, May 20, 2015

Five banks plead guilty to Forex-manipulation charges and pay $2.5 billion

The guiding philosophy of a number of banks in the foreign currency exchange markets seems to have been, "If you ain’t cheating, you ain’t trying," as one Barclays executive wrote in a online chat.

At least five major banks – Citicorp, JPMorgan Chase, Barclays, The Royal Bank of Scotland and UBS – “tried” hard. The US Justice Department announced today that those banks have agreed to plead guilty to felony charges of conspiring to manipulate the foreign currency exchange market and pay a total of $2.5 billion in criminal fines.

Between 2007 and 2013, bank traders known as “The Cartel” used private chat rooms and coded language to manipulate US and euro exchange rates to increase their profits. The traders withheld bids and offers for the dollar and euro to manipulate the supply or demand for the currency, suppressing competition.

Barclays has agreed to an additional $60 million criminal penalty for violating a 2012 non-prosecution agreement that resolved the Department of Justice’s investigation into previous LIBOR and other interest rate manipulation. UBS has also agreed to a $203 million criminal penalty for violating the same non-prosecution agreement set by the DOJ.

All five banks have agreed to a three-year corporate probation where they will be required to report regularly to authorities and cease all other criminal activity.

It was an expensive day for Barclays. The bank also paid $400 million to settle charges brought by the Commodity Futures Trading Commission for attempted manipulation, false reporting and helping other banks manipulate global foreign exchange benchmark rates. 

Monday, May 11, 2015

Treatment Description On Medical Bills Could Help Deter Fraud

In the New York Times article, “The Medical Bill Mystery,” reporter Elisabeth Rosenthal overlooked one important point about the lack of information in medical bills: It enables unscrupulous healthcare providers to get away with fraud.

By listing only medical codes and not providing common-language descriptions of the services for which the patient has been billed, healthcare providers can make false claims – for instance, upcoding and unbundling treatments and services – and no one knows. Patients could be the best guardians against such fraud, because they know what services were provided.  However, in our experience as whistleblower lawyers, patients are rarely whistleblowers. The format of medical bills explains why.  Standardized medical bills with detailed descriptions would not only benefit patients but also would help reduce Medicare fraud and thereby benefit all taxpayers.

Friday, May 08, 2015

Treasury Dept. holds virtual currency exchanger to same standards as banks

In recent years, traditional financial institutions such as HSBC and BNP Paribas have been subject to multi-billion dollar fines for allegedly violating money-laundering standards. Now the US Treasury Department has turned its sights on the virtual currency exchangers holding them to the same standards of transparency and accountability – which is the right approach.

Treasury announced this week a $700,000 penalty against Ripple Labs Inc., a virtual currency exchanger, and subsidiary XRP II for alleged violations of the Bank Secrecy Act. Ripple Labs is the developer of a convertible virtual currency known as XRP, as well as systems for exchanging virtual currency payments. 

The government alleged that Ripple Labs was operating a money services business and selling a virtual currency without following federal law governing financial institutions, such as implementing an anti-money laundering program or registering with the Treasury Department’s Financial Crimes Enforcement Network. 

As virtual currencies continue to grow, it will become increasingly important that virtual currency exchangers and administrators operate with transparency and accountability. Regardless of whether the financial system is traditional or virtual, sunshine remains the best disinfectant for financial abuses and fraud.

Wednesday, May 06, 2015

SEC Chair White strongly endorses whistleblower program

Securities and Exchange Commission Chair Mary Jo White gave an important speech about whistleblowers last week, saying the SEC whistleblower program has “proven to be a game changer.”

The SEC whistleblower program has brought more and higher-quality tips since it was implemented four years ago, according to White. This has led to “significant enforcement actions on a much faster timetable than [the SEC] would be able to achieve without the information and assistance from the whistleblower,” says White. In fiscal year 2014 the SEC received more than 3,600 tips, a 20 percent increase from the previous year.

White discussed the issue of company confidentiality agreements that discourage employees from reporting concerns about potential wrongdoing to the SEC. Those agreements need to be clear that employees are always allowed to contact the SEC about possible securities law violations, she said.

This past year the SEC took its first enforcement action against a company that attempted to use confidentiality agreements to prevent a whistleblower from communicating with Office of the Whistleblower staff. Responsible companies should embrace – not fear – potential whistleblowers. More than 80 percent of SEC whistleblowers first raised their concerns internally before reporting to the SEC, White says, whistleblowers need to know they won’t face job retaliation. The SEC has paid out more than $50 million to whistleblowers since 2011, with the biggest SEC reward – more than $30 million – going to a Phillips & Cohen client last September.

Wednesday, April 22, 2015

Texas hospital's $21M settlement shows government's commitment to anti-kickback enforcement

Citizens Medical Center's $21.75 million settlement with the government this week provides further evidence that the government’s stepped-up enforcement of the Stark Law and Anti-Kickback Statute is producing results with the help of whistleblowers.

Three physicians alleged in a "qui tam" lawsuit that Citizens, a hospital in Victoria, Texas, paid doctors in a variety of specialties to send their patients to Citizens’ facilities for care. For example, they alleged that Citizens induced its emergency room physicians to send patients needing cardiac care to Citizen’s “Chest Pain Center” by paying these ER physicians bonuses based on the revenue of the Chest Pain Center.

Similarly, the whistleblowers alleged that Citizens improperly incentivized its cardiologists to send their patients to Citizen’s facilities, particularly the medical center’s exclusive cardiac surgeon, by providing them with financial benefits such as above fair-market-value compensation and below-market rental space.

The Anti-Kickback Statute and Stark Law make it illegal for a medical provider, such as a hospital, to pay physicians in order to obtain referrals of their business. When a medical provider knowingly submits bills to Medicare and Medicaid for services obtained in violation of these laws, the provider is liable for fraud against the federal government under the federal False Claims Act. The whistleblowers in this case will receive a total of $5.9 million as a reward under the qui tam provisions of the False Claims Act.

Friday, April 03, 2015

Whistleblower and fraud news summary for week of March 30

The Securities and Exchange Commission took enforcement action against KBR Inc. for requiring employees to sign a confidentiality agreement that threatened termination if an employee disclosed company wrongdoing to outside officials. This is the first instance where the SEC has taken a stand against “pre-taliation.” Phillips & Cohen partner Erika Kelton writes in a article that she expects the KBR case to “be the first of many” brought by the SEC against companies for trying to intimidate employees to prevent them from blowing the whistle. (SEC Hits Back at KBR and Other Corporate Bullies Who Threaten Whistleblowers)

Medtronic Inc. has agreed to pay the government $4.41 million to settle a whistleblower lawsuit that alleged that the medical device company falsely certified where certain products it sold to the Veterans Administration and Department of Defense were made. The Trade Agreements Act of 1979 requires companies to sell to the US only products that were made in the US or other designated countries. The Justice Department alleged that Medtronic’s products were manufactured in China and Malaysia, which are prohibited countries under the trade law. (Medtronic to Pay $4.41 Million to Resolve Allegations that it Unlawfully Sold Medical Devices Manufactured Overseas)

Twenty-three people in the New York metro area, including nine doctors, have been charged with running a $7 million Medicare and Medicaid fraud scheme. These individuals picked up Medicaid cardholders at local homeless shelters, promising free sneakers and shoes, and instead brought them to clinics to perform unnecessary medical tests, which were then billed to Medicaid and Medicare programs. Let’s hope, at least, that the shoes fit. (23 People Charged in ‘Sneaker Case’)

Robinson Health System Inc., based in Portage County, Ohio, has agreed to pay $10 million to the government to settle allegations that the health care company violated the Anti-Kickback Statute and the Stark Statute with payments Robinson made to two physicians groups. The Justice Department said the physician groups failed to provide sufficient bona fide management services to justify the payments made under management agreements. (Ohio-Based Health System Pays United States $10 Million to Settle False Claims Act Allegations)

Friday, March 27, 2015

Whistleblower and fraud news summary for week of March 23

The Department of Justice and Health and Human Services announced that over $27.8 billion has been returned to the Medicare Trust Fund since the inception of the Health Care Fraud and Abuse Control Program in 1997. In 2014 $2.3 billion of the settlements were brought under the False Claims Act, many of which were initiated by invaluable whistleblowers. For every dollar spent on health care-related fraud and abuse investigations in the last three years, the administration recovered $7.70. (Department of Justice and Health and Human Services Announce Over $27.8 Billion in Returns from Joint Efforts to Combat Health Care Fraud)

Bank of New York Mellon Corp. has agreed to pay the government $714 million to settle allegations that the bank fraudulently overcharged customers on currency trades for more than a decade. The case began in 2009 after a financial specialist turned whistleblower, responsible for alerting authorities about the Bernie Madoff scheme, filed a complaint. (Mellon Settles Suits on Currency Transactions for $714 Million)

A New York-based pharmacist has been sentenced to 36 months in prison and ordered to pay $7 million in restitution for defrauding Medicare, Medicaid and the state-funded AIDS Drug Assistance Program. Purna Chandra Aramalla received more than $10 million in reimbursements for prescription medication he purchased from patients who sold the drugs rather than using them to treat their illnesses. (Pharmacist Sentenced to Manhattan Federal Court to 36 Months in Prison for Multimillion-Dollar Medicare/Medicaid Fraud Scheme)

Friday, March 06, 2015

Whistleblower and fraud news summary for week of March 2

In a case that seems to be a major violation of public trust, a California patient safety consultant has agreed to pay the government $1 million to settle allegations that he secretly solicited and accepted kickbacks to recommend and promote use of a certain company’s product while serving on the Safe Practices Committee of the National Quality Forum. Dr. Charles Denham allegedly received monthly kickbacks from CareFusion Corporation in exchange for recommending and promoting CareFusion's product, ChloraPrep, an antiseptic, and didn’t disclose the payments. (United States Settles False Claims Act Allegations Against Safety Consultant and His Companies)

The owner and operator of Massachusetts-based At Home VNA, a home healthcare company, has been sentenced to over seven years in prison and $7 million in restitution after being found guilty of fraudulently billing and laundering $20 million from Medicare. Michael Galatis convinced seniors to enroll with his company even if the seniors did not qualify for the Medicare benefit and also charged Medicare for services without a doctor examining any of the patients. (Natick man convicted of Medicare fraud sentenced to 7.5 years)

Baptist Health Medical Center-North Little Rock, located in Arkansas, has agreed to pay the government $2.7 million to settle allegations that the medical center improperly charged Medicare for more expensive inpatient stays that were originally scheduled as outpatient stays. (Ark. medical center agrees to $2.7M settlement for Medicare false claims)

Friday, February 20, 2015

Whistleblower and fraud news summary for week of February 16

Compassionate Care Hospice of New York will pay the government $6 million to settle allegations that the for-profit hospice submitted false claims to Medicare and Medicaid programs for services that were never provided. (A.G. Schneiderman Announces $6 Million Settlement with Bronx For-Profit Hospice Provider Following Joint Investigation with U.S. Attorney Bharara)

The owner of Longcare Home Health, a Miami home health care company, pleaded guilty to a $13 million Medicare fraud scheme that involved paying kickbacks and bribes to Medicare beneficiaries, doctors' offices and medical clinics in exchange for patient referrals. (Owner of Miami Home Health Company Pleads Guilty for Lead Role in $13 Million Medicare Fraud Scheme)

The Wall Street Journal did an excellent analysis this week of the timing of discharges of Medicare patients at long-term care facilities, which affects Medicare and Medicaid payments. Phillips & Cohen is representing a whistleblower in a qui tam case against Select Medical that alleges the company manipulated the length of stay for Medicare and Medicaid patients in its long-term, acute-care hospitals as a way to increase the hospitals’ revenues from government healthcare programs. (Hospital Discharges Rise at Lucrative Times)

Friday, February 06, 2015

Whistleblower and fraud news summary for week of February 2

Community Health Systems has agreed to pay the government $75 million to resolve a whistleblower lawsuit brought by Phillips & Cohen client Robert Baker. CHS allegedly donated funds to counties in New Mexico as a way to improperly increase federal payments under a program set up to cover treatment costs for indigent patients. (Whistleblower played key role in case that Community Health Systems hospitals settle for $75 million)

Minnesota-based ev3, a subsidiary of Medtronic, will pay the government $1.25 million to resolve a Phillips & Cohen whistleblower lawsuit that alleged that ev3 advised hospitals to bill Medicare for an outpatient procedure as a more expensive inpatient procedure to encourage use of ev3's products. The whistleblower, Amanda Cashi, was awarded 20 percent of the total settlement. (Medtronic subsidiary ev3 pays $1.25 million to settle Medicare billing fraud case)

In a separate case, Medtronic Inc. has agreed to pay the government $2.8 million to resolve allegations that the medical device company violated the False Claims Act by submitting bills to Medicare for a procedure known as "SubQ stimulation" that was not reimbursable. (Medtronic Inc. to Pay $2.8 Million to Resolve False Claims Act Allegations Related to "SubQ Stimulation" Procedures)

Maryland Attorney General Brian Frosh has said it is his top priority to win passage of state legislation that will encourage whistleblowers to report fraud by private government contractors. The proposed legislation would broaden coverage of the Maryland False Claims Act beyond Medicaid and healthcare-related fraud to include any type of fraud against the government. Whistleblowers who file “qui tam” lawsuits would receive 15 to 25 percent of the amount recovered as a reward. (Attorney General Frosh Urges New Tool to Crack Down on Fraud)