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)

Monday, June 30, 2014

Whistleblower and fraud news summary for week of June 23

“Kudos to the SEC for its very public efforts to protect whistleblowers’ jobs and confidentiality,” says Phillips & Cohen partner Erika Kelton in her most recent article. The SEC has “put teeth” in the Dodd-Frank Act with the $2.2 million settlement with Paradigm Capital Management over alleged employee retaliation, the SEC’s first anti-retaliation action taken under the law. (The SEC Puts Teeth into Dodd-Frank, Takes a Bite for Whistleblowers)

A patient recruiter for the now-defunct Nestor’s Health Services Inc. has pleaded guilty to charges that he received kickbacks and bribes to recruit patients for the home health care company in a $6.5 million scheme to defraud the government. (Patient Recruiter Pleads Guilty for Role in $6.5 Million Health Care Fraud Scheme)

Omnicare Inc. has agreed to pay the federal government $124 million to settle whistleblower and government charges that the pharmaceutical provider submitted false claims under Medicare and Medicaid agreements. (Nation’s Largest Nursing Home Pharmacy Company to Pay $124 Million to Settle Allegations Involving False Billing to Federal Health Care Programs)

The Endo Health Solutions whistleblower is set to receive millions of dollars from the $192 million settlement that resolves allegations of illegal marketing of the drug Lidoderm and filing false Medicare claims. (Whistleblower to Get Millions for Speaking Up)

Friday, June 20, 2014

Whistleblower and fraud news summary for week of June 16

The whistleblower case involving Lance Armstrong will continue, ruled a U.S. federal judge this week. Armstrong was attempting to have the $100 million fraud case, based on violations involving doping, dismissed. (Lance Armstrong Must Face U.S. Doping Lawsuit, Judge Rules)

The Huffington Post published an impressive investigation into the hospice industry this week. More oversight and inspections of the hospice industry are needed. Otherwise, unnecessary pain and suffering for hospice patients as well as higher bills for US taxpayers are likely to continue. Since 2006, the U.S. government has accused nearly every major for-profit hospice company of billing fraud. Yet, according to the HuffPost, the average U.S. hospice has not undergone a full government inspection in more than 4.5 years; 866 hospices haven’t been inspected in more than 6 years. Nursing home inspections, by contrast, are required by federal law at least every 15 months. (How Dying Became a Multibillion-Dollar Industry)

The Securities and Exchange Commission enforced its first anti-retaliation action under the Dodd-Frank whistleblower program this week. Paradigm Capital Management and its owner paid $2.2 million to settle charges that included retaliating against an employee who reported misconduct to the SEC. (SEC Charges Hedge Fund Adviser With Conducting Conflicted Transactions and Retaliating Against Whistleblower)

The Financial Industry Regulatory Authority has ordered Merrill Lynch to pay $32 million for allegedly overcharging small businesses and charities since 2006. (FINRA Fines Merrill Lynch $2.8 Million for Overcharging Customers; $32 Million in Remediation Paid to Affected Customers)

Up to a quarter of all public company stock deals may involve some level of illegal insider trading, claims a study performed by three university professors. “[They] found that the bigger the deal and the more trading volume in the stock of the target company, the more likely there will be insider trading,” says a New York Times article. (Informed Options Trading Prior to M&C Announcements: Insider Trading?)

Friday, June 13, 2014

Whistleblower and fraud news summary for week of June 9

BNP Paribas’ Chief Operating Officer Georges Chodron de Courcel has resigned amid $10 billion settlement talks with the United States over alleged violations of sanctions against Iran, Sudan and other countries. (BNP Executive Leaving Won’t Quell U.S. Penalty Demands)

Shands Health Care System is paying $3.25 million to settle a whistleblower lawsuit that alleged that six of Shands’ Florida hospitals over-charged government healthcare systems including Medicaid, Medicare and TriCare. (Shands to Pay $3.25M in Whistle-Blower Settlement)

The New Jersey Supreme Court is hearing arguments on whistleblower protection laws in the state. The case is looking at which employees are protected under the law, a point of contention in appellate court decisions. (State Supreme Court to Hear Arguments on Whistleblower Protection)

The Securities and Exchange Commission’s Office of the Whistleblower has paid out $16 million in awards since its inception three years ago. The young program is “making pretty good progress,” says whistleblower attorney Eric Havian of Phillips & Cohen. (David Polk Report: A Trickle of Whistleblower Awards)

Government audits are “targeting chronic Medicare Advantage billing errors that federal officials blame for billions of dollars in ‘improper’ payments every year — mainly due to inflated estimates of the health ‘risks’ of the seniors the plans insure,” according to the latest story on Medicare Advantage fraud published by The Center for Public Integrity. Whistleblower attorney Mary A. Inman of Phillips & Cohen noted that the risk scores are a “weak spot,” making the Medicare Advantage plans susceptible to fraud. (New Audits May Recover Missing Millions – Or Not)

Friday, June 06, 2014

Whistleblower and fraud news summary for week of June 2

GlaxoSmithKline’s China-based employees are demanding reimbursement for bribes they were ordered to pay by their supervisors. The employees’ protests come after Chinese and UK bribery investigations last summer. (GlaxoSmithKline’s Chinese Reps Demand to be Repaid for Bribes, FT Reports)

The Securities and Exchange Commission has awarded two whistleblowers $875,000 for their part in helping uncover fraud, and providing assistance throughout the investigation. The identities of the whistleblowers remain anonymous, as allowed under the Dodd-Frank Act and SEC rules. (SEC Awards $875,000 to Two Whistleblowers Who Aided Agency Investigation)

The Center for Public Integrity has published an investigative series on Medicare fraud in Medicare Advantage plans and the manipulation of Medicare “risk scores” to defraud the government, and taxpayers, of billions of dollars. (The Medicare Advantage Money Grab: Billing Errors Cost Taxpayers Billions)

Friday, May 30, 2014

Whistleblower and fraud news summary for week of May 26

The Department of Justice is pushing BNP Paribas SA for a $10 billion settlement to resolve allegations of evading U.S. sanctions against Iran and other countries. If BNP pays the $10 billion, it would make the settlement one of the largest penalties ever paid by a bank. (U.S. seeks $10 billion penalty from BNP over sanctions probe)

Phillips & Cohen partner Erika Kelton writes in her column about Wall Street’s “money at all costs” mentality, noting the recent video from Deutsche Bank executive Colin Fan warning employees there will be “serious consequences" for any who are “boastful, indiscreet and vulgar.” (Loose Fingertips Sink Wall Street Ships: Traders’ Online Conversations Have Deutsche Bank Worried)

U.S. Department of Health and Human Services report found that Medicare spent over $6 billion too much for office visits and patient evaluations in 2010 often because physicians billed too much for services. (Medicare Overpays Billions for Office Visits, Patient Evaluations)

King’s Daughters Medical Center pays $41 million to settle allegations of falsely billing federal and state Medicare programs for unnecessary medical procedures and physician kickbacks. (King’s Daughters Medical Center to Pay Nearly $41 Million to Resolve Allegations of False Billing for Unnecessary Cardiac Procedures and Kickbacks)

Phillips & Cohen partners Mary Inman and Timothy McCormack warn in a Healthcare Business Monthly article that electronic health records have the potential to help facilitate fraud. (EHRs: Computer Functions Facilitate Fraud)

Friday, May 23, 2014

Whistleblower and fraud news summary for week of May 19

The federal government is ending more contracts with companies who have acted unethically or performed poorly, says a Government Accountability Office report “Agencies Have Taken Steps to Improve Suspension and Debarment Programs.” Suspension and debarment actions more than doubled in the past year in an effort to curtail wasteful spending. For more info, see “GAO Says U.S. Government is Suspending Risky Contractors More Often.”

The Commodity Futures Trading Commission issued its first whistleblower reward under the Dodd-Frank program on Tuesday, a huge step for whistleblowers and whistleblower supporters (“CFTC Issues First Whistleblower Reward”). Phillips & Cohen partner Erika Kelton discusses whistleblowers and CFTC enforcement in her article, “CFTC Will Flex Dodd-Frank Muscle in 2014.”

A former WellCare Chief Executive Officer was sentenced Monday to serve 36 months in prison for defrauding the Florida Medicaid program after allegations of submitting inflated expenditure information. (“Former Wellcare Chief Executive Sentenced for Health Care Fraud”)

Wednesday, May 14, 2014

Whistleblower and fraud news summary for week of May 12

Sprint Communications Inc. fired back at a complaint filed in March alleging that the telecommunications company marked up the government’s bill by 58 percent. (The Recorder)

Texas brothers Samuel Wyly and the estate of Charles Wyly, who died in 2011, were found guilty in a Manhattan federal court of siphoning $550 million in illegal trading profits to offshore trusts, after a complaint was filed by the Securities and Exchange Commission. (New York Times)

Friday, May 09, 2014

Whistleblower and fraud news summary for week of May 5

The United States filed a complaint against Stevens-Henager, which operates for-profit colleges in Idaho and Utah, for allegedly illegally compensating recruiters. Congress enacted the prohibition on such incentive compensation to curtail the enrollment of unqualified students, high student loan default rates, and the waste of student loans and grant funds. (Department of Justice)

St. Jude Medical Inc., based in Minnesota, is under investigation by the Department of Justice for alleged inducements paid to doctors for implanting St. Jude’s heart devices. (Business Journal)

The federal government settled with Baptist Health System Inc. for $2.5 million. The Jacksonville, Florida medical provider allegedly submitting claims to federal health care programs for unnecessary services and drugs. (Department of Justice)

The Pennsylvania hospital operator Select Medical Holdings Corp. is under investigation for allegedly manipulating length of stays to maximize reimbursement, unnecessary medical procedures, and upcoding. (Central Penn Business Journal)

Duke University Hospital is going to repay the government for 72 claims of Medicare overpayments totaling $626,133. Previously, Duke University Health System agreed to pay $1 million to settle a qui tam lawsuit by a former employee that alleged Duke made false claims to federal healthcare programs. (The Herald-Sun)

Thursday, March 13, 2014

First federal fraud investigation into PODs

For apparently the first time, federal enforcement officials are investigating a medical device firm known as a physician-owned distributorship (POD), according to Modern Healthcare magazine.

The investigation stems from a False Claims Act case against Dr. Aria Sabit, a neurosurgeon who has practiced in California and Michigan. The civil lawsuit alleges Sabit concealed profits he made as an investor of a POD for a spinal implant device and performed unnecessary spinal surgeries to increase sales.

PODs are medical device firms where physicians are the owners or investors.

“The hospital where those doctors have staff privileges buys equipment from the POD and provides it to the doctors to perform procedures,” Modern Healthcare said in the article. “The government's concern is that this creates a financial incentive for physician owners of PODs to perform more procedures.

Last year, the Office of the Inspector General for the Department of Health and Human Services issued a “national alert” warning doctors and hospitals about the potential dangers to patient safety and the fraud risks of buying surgical products from PODs.”

PODs accounted for 15 percent of the U.S. spinal device market in 2012. The spinal devices provided by these distributorships are supposed to lower the cost to Medicare. However, the OIG alert said hospitals that bought devices from PODs had increased rates of spinal surgeries compared to hospitals that did not buy from PODs, increasing the cost to Medicare over time.