Tuesday, October 25, 2005

Evertec to pay $4.8 million in E-Rate fraud

Evertec Inc., formerly known as GM Group, has agreed to pay $4.8 million to settle allegations that it defrauded the government E-Rate program. The government alleges that the company violated the False Claims Act by submitting claims for goods and services that were ineligible for E-Rate funding. The federal program provides funding to schools and libraries to connect to and use the Internet.

The U.S. Attorney's Office for the Northern District of California brought the suit. Other companies that have settled E-Rate fraud allegations include Inter-Tel Tecnologies, which paid $8.7 million in civil and criminal penalties, and NEC Business Network Solutions, which paid $20.6 million.

The October 13, 2005 press release from the U.S. Attorney's Office can be found at their website.

Monday, October 24, 2005

Auditors say Unisys overbilled Transportation Security Administration

Reporters for the Washington Post say that federal auditors have discovered massive overbilling by Unisys, hired three years ago to create a computer network for the Transportation Security Administration.

The project is costing more than double the projected amount and is nowhere near completed. Auditors found that Unisys charged higher than justified labor rates for employees and may have overcharged the goverment for as many as 171,000 hours of overtime.

The contract is under review for possible False Claims Act violations.

The Washington Post ran an article on the findings on October 23, 2005.

Thursday, October 20, 2005

Staples settles False Claims Act suit for $7.4 million

Staples Contract and Commercial has paid the federal government $7.4 million to settle allegations that it sold office supply products manufactured in countries not permitted by the Trade Agreements Act to United States government agencies.

The suit, filed under the whistleblower provisions of the False Claims Act, claimed that the office products company sold items from countries that do not have reciprocal trade agreements with the U.S., in violation of its contract with the United States General Services Administration.

Earlier this year, the Justice Department reached a $9.8 million settlement with Office Max, Inc. and a $4.75 million settlement with Office Depot, Inc. based on the same allegations.

The Dept. of Justice's October 18, 2005 press release can be found on their website.

Health information technology can prevent fraud, studies say

Two reports from the American Health Information Management Association claim health information technology can address the growing problem of healthcare fraud. AHIMA estimates that the United States could reduce health care fraud by at least $15 billion a year by using automation for medical coding and applying anti-fraud computer analysis of electronic health information.

The reports are the result of a six month project conducted under contract to the Office of the National Coordinator for Health Information Technology (ONC) within the U.S. Department of Health & Human Services (HHS)

Links to the full reports, which were released on October 17, 2005, are available at the AHIMA website.

Tuesday, October 18, 2005

Serono to pay $704 million for illegal marketing of AIDS drug

Serono, a Swiss pharmaceutical company, will pay $704 million to resolve criminal charges and civil allegations involving its promotion and marketing of Serostim, a drug used to treat AIDS wasting.

The suit originated as a qui tam under the False Claims Act. The whistleblowers will share approximately $51.8 million.

The company allegedly conspired with a medical device manufacturer to market a device for calculating body mass., used in diagnosing AIDS wasting disease. The U.S. Attorney in Boston described the testing procedure as "almost voodoolike" and said that he suspected some patients may have also suffered unnecessary side effects as a result of taking the AIDS drug.

U.S. Newswire reported on the settlement on October 17, 2005 and a story ran in the New York Times (subscription required) on October 18, 2005..

ITT Educational Services settles False Claims Act suit

ITT Educational Services Inc. will pay $725,000 to settle a whistleblower lawsuit that charged that the company inflated students’ grade point averages to qualify for more financial aid from the State of California.

The settlement resolves the state's portion of the lawsuit. The company said that the U.S. Dept. of Justice had decided not to intervene in the federal portion of the suit, which can still be pursued by the whistleblowers.

Inside Higher Ed reported on the settlement on October 18, 2005.

Tuesday, October 11, 2005

Michigan House of Representatives passes Medicaid whistleblower act

The Michigan House of Representatives has passed H.H. 4577, the Medicaid Whistleblower Protection Statute, which would amend the state's Medicaid False Claims Act. The new provisions would allow whistleblowers who discover fraud against the health system to bring a civil suit against the violators. It would also provide legal protection to whistleblowers and a financial incentive for bringing the suit.

The state attorney general estimates that Michigan loses from $225 million to $800 million in Medicaid fraud annually.

Insurance Journal reported on the bill's passage on October 6, 2005.

Firms to pay nearly $25 million in Amtrak fraud

A joint venture of engineering and construction companies has agreed to pay the United States $24.75 million to settle allegations that the firms violated the False Claims Act. The government asserted that the companies knowingly submitted inflated claims on Amtrak's project to electrify the rail corridor between New Haven and Boston.

The companies involved include Balfour Beatty Construction, Massachusetts Electric Construction Company, J.F. White Contracting Company and several joint ventures formed by those companies. The inflated claims were paid with federal grant funds received by Amtrak.

The suit originated as a qui tam claim filed by a whistleblower who had been employed by Balfour Beatty. he will receive nearly $4 million as his relator's share.

U.S. Newswire reported on the settlement on October 11, 2005.

Thursday, October 06, 2005

Indiana enacts False Claims Act

Indiana Governor Mitch Daniels signed the False Claims and Whistleblower Protection Act, making Indiana the fifteenth state to allow private citizens to blow the whistle on fraud against the state.

The "qui tam" provisions also provide for a reward to the whistleblower. If the suit is successful, the whistleblower would receive between 15 and 25 percent of the recovery in cases where the state intervenes in the action and between 25 and 30 percent when the state has declined intervention.

The act was part of Public Law 222-2005. The False Claims Act provisions became effective on July 1, 2005.

The text of the new law can be found at the website of Phillips & Cohen.

Saturday, October 01, 2005

Security firm overbilled Miami-Dade County, suit says

A qui tam suit filed by a former Wackenhut employee accuses the firm of billing Miami-Dade County for "phantom" security work that was never performed.

The suit accuses Wackenhut of overcharging the county under contracts to provide security guards for the county's Juvenile Assessment Center and the Miami-Dade Transit Department, costing the city up to $4.5 million a year.

The Miami Herald reported on the suit on September 28, 2005.