Tuesday, August 29, 2006

Schering-Plough will pay $435 million to settle civil and criminal charges

Schering-Plough and a subsidiary have agreed to pay a total of $435,000,000 to resolve civil and criminal charges related to illegal sales and marketing programs for its
drugs Temodar and Intron A, and for Medicaid fraud involving its drugs Claritin RediTabs, an antihistamine, and K-Dur, used in treating stomach conditions.

The U.S. Attorney's Office for the District of Massachusetts, the Food and Drug Administration, and the Health and Human Services Inspector General announced the settlement, saying that it ensures that the Medicaid programs which paid for prescriptions of Claritin RediTabs and K-Dur will obtain the benefit of the best price offered by Schering to commercial purchasers, and will ensure that Schering pays appropriate damages for improperly promoting its drugs for uses not approved by the FDA and from offering or paying kickbacks to physicians to prescribe those drugs.

The U.S. Attorney's press release was issued on August 29, 2006.

Bill to provide access to government contract info is victim of "secret hold"

Legislation that would increase the public's access to government contract information has been blocked by a secret hold placed on it by an unidentified senator.

S. 2590, the Federal Funding Accountability and Transparency Act, was introduced by Sens. Tom Coburn, R-Okla., and Barack Obama, D-Ill. It would create a searchable database of government contracts, grants, insurance, loans and financial assistance, worth $2.5 trillion last year. The website would be managed by the Office of Management and Budget, which would list all organizations receiving Federal funds from 2007 onward, providing breakdowns based on the agency allocating the funds, the dollar amount given and the purpose of the grant or contract. The information on the website would need to be updated within 30 days after the award.

The measure had been passed unanimously in a voice vote last month by the Senate Homeland Security and Governmental Affairs Committee. It was on the fast track for floor action before Congress recessed Aug. 4 when someone put a hold on the measure. Under Senate rules, unless the senator who placed the hold decides to lift it, the bill will not be brought up for a vote.

Information on the bill and the secret hold can be found at the Free Congress Foundation website and in an August 23, 2006 article from the Cox News Service.

Friday, August 25, 2006

New report: "Waste, Fraud, and Abuse in Hurricane Katrina Contracts"

The Minority Office of the House Committee on Government Reform has issued a report, "Waste, Fraud and Abuse in Hurricane Katrina Contracts."

The Minority Office's website says, " In the aftermath of Hurricane Katrina, the Bush Administration turned to private contractors to provide relief and recovery services worth billions of dollars. Now, one year later, it is apparent that taxpayers and the residents of the Gulf Coast are paying a steep price for the failure to stop waste, fraud, and abuse in federal contracting.

"At the request of Reps. Waxman, Cardoza, Obey, Tanner, Norton, and Tierney, this report examines procurement spending in response to Hurricane Katrina. The report identifies 19 Katrina contracts, collectively worth $8.75 billion, that have experienced significant overcharges, wasteful spending, or mismanagement."

The full text of the report is available.

Thursday, August 24, 2006

Feds issue guidelines for state false claims acts

The Office of the Inspector general of the U.S. Dept. of Health and Human Services has issued guidelines for evaluating state false claims acts.

The guidelines, published in the August 21, 2006 issue of the Federal Register (71 Fed. Reg. 48552), were issued pursuant to provisions of the Deficit Reduction Act of 2005. That law provided financial incentives for states to enact legislation that established liability for persons or organizations that defraud the state Medicaid program. States that enact laws that meet certain requirements would receive 10 percent more from any recovery from a state action brought under the state law, with the federal share being decreased by 10 percent.

Among the requirements are that the state law contain provisions that are at least as effective in rewarding and facilitating qui tam actions as are those in the federal False Claims Act.

Monday, August 21, 2006

Beverly Enterprises settles suit involving former subsidiary

Beverly Enterprises Inc. has agreed to pay $20 million to the federal government and the state of California to resolve allegations that its former subsidiary, MK Medical, submitted false claims to Medicare and Medi-Cal.

The government alleged that MK Medical billed the programs for durable medical equipment without obtaining the required medical documentation.

U.S. Newswire reported on the settlement on August 18, 2006.

Custer Battles verdict thrown out

A federal judge has thrown out a jury verdict against Iraq defense contractor Custer Battles, saying that the False Claims Act did not apply.

In March 2006 a jury had found that the company and two of its principals had defrauded the federal government on Iraq contracts.

But Judge T.S. Ellis ruled that Custer Battles' contracts with the Coalition Provisional Authority did not implicate the False Claims Act because the CPA, although controlled and funded by the U.S., was not part of the U.S. government.

The Corporate Crime Reporter ran a story on the judge's ruling on August 18, 2006. The International Herald Tribune reprinted the New York Times report of August 18, 2006.

Louisiana hospital settles False Claims Act suit

Our Lady of Lourdes Regional Medical Center, of Lafayette, Louisiana, has agreed to pay $3.8 million to settle allegations that a cardiologist charged the government for unnecessary procedures.

The suit originated as a whistleblower action brought by another cardiologist who reported allegedly unnecessary angiograms, angioplasties and stents.

The Times Picayune ran an August 17, 2006 story on the settlement.

University Hospitals Health System Will Pay $14 Million in Whistleblower suit

University Hospitals Health System has agreed to pay approximately $14 million to settle allegations that its doctors made improper referrals involving Medicare cases.

The suit was begun as a whistleblower action under the qui tam provisions of the False Claims Act. The whistleblower, a heart surgeon, claimed that the health system entered into improper financial arrangements with physicians to encourage them to make referrals to other doctors within the system.

The Washington Post reported on the settlement on August 18, 2006.

Thursday, August 17, 2006

Unrepresented whistleblower cannot maintain qui tam suit

A whistleblower who alleged that over $100 million in federal funds were improperly used to support a container terminal at the Port of Los Angeles cannot proceed with his suit.

Stanley Mosley filed his suit under the qui tam provisions of the False Claims Act, which allows private citizens who disclover fraud against the government to file suit on the government's behalf. Mosler, who is not a lawyer but an accountant, has represented himself since February 2005, when his lawyer withdrew from the case. The U.S. Dept of Justice and the California attorney general both declined to join the suit.

District Court Judge S. James Otero ruled that Mosler could not pursue the suit without a lawyer, saying the False Claims Act does not allow a lay person to represent the United States.

Other courts, including the U.S. District Court for the Central District of California, in United States ex rel. Schwartz v. TRW Inc., 118 F. Supp. 2d 991, have also held that a pro per litigant could not represent the United States in a False Claims Act suit.

The Daily Breeze reported on the dismissal on August 16, 2006.

Thursday, August 10, 2006

Ninth Circuit rules on public disclosure issue

The U.S. Court of Appeals for the Ninth Circuit has ruled that a whistleblower need not provide
the government with information pertaining to the fraud allegations prior to the information’s public disclosure.

The ruling will allow relators Roman Zaretsky and Robert Yardley to proceed with their False Claims Act suit against Johnson Controls, Inc. The suit claims that the company rigged bids on government jobs in violation of both the Federal False Claims Act and California False Claims Act.

Johnson Controls had sought dismissal of the suit, contending that an earlier antitrust action filed by the relators constituted a public disclosure that barred the False Claims Act suit and that the relators did not qualify as "original sources," so as to qualify for that exception to the public disclosure bar.

The lower court agreed with Johnson, holding that to qualify as an “original source” under the federal act, a prospective informer must provide the government with the pertinent information prior to the public disclosure, but only if the public disclosure occurs through a private lawsuit brought by the prospective informer.

The Ninth Circuit said that this special rule had no statutory basis and that the only notice requirement for qualifying as an “original source” is that an individual provide information to the government prior to filing suit, not prior to the public disclosure.

The Metropolitan News-Enterprise ran a storyon the opinion on August 10, 2006.

The opinion in Zaretsky v. Johnson Controls, Inc., 04-55536 is available at the court's website.

Thursday, August 03, 2006

Fuel refiner settles False Claims Act suit

Age Refining of San Antonio, Texas, and its former affiliate, Age Transportation, will pay the United States $9 million to settle a False Claims Act lawsuit.

The settlement resolves allegations that Age Refining falsely certified compliance with the provisions of the Historically Underutilized Business Zone program in order to qualify for a price evaluation preference in connection with bidding for JP-8 jet fuel and other contracts with the Department of Defense.

The suit originated as as whistleblower action filed by a former employee under the qui tam provisions of the False Claims Act.

The U.S. Dept. of Justice issued a press release on August 3, 2006.

Wednesday, August 02, 2006

Military cargo shipper pays $4 million to settle False Claims Act charges

EGL Inc., a subcontractor for Kellogg Brown and Root, has agreed to pay $4 million to settle allegations that it inflated invoices for military cargo shipments to Iraq The invoices were for shipments of military goods from Dubai to Iraq from late November 2003 through July 2004.

The company won a war contract in 2002 to fly freight into Baghdad from Dubai. The deal was part of a logistics contract between KBR and the government that has paid out more than $11 billion, according to the Army Field Support Command.

The suit originated as a qui tam suit brought under the whistleblower provisions of the false Claims Act.

More details can be found in the U.S. Dept. of Justice's August 2, 2006 press release and in the AP story at the Forbe's website.

Tuesday, August 01, 2006

Medtronic settlement challenged by excluded whistle-blower

The New York Times (subscription required) reported on August 1, 2006 that an objection to Medtronic's settlement of illegal kickback allegations has been filed by a whistle-blower who was excluded from the deal. The objection claims that the settlement is "woefully inadequate," that the case was not adequately investigated, and that one of the Justice Department lawyers had an undisclosed conflict.

Medtronic had agreed to pay $40 million to settle charges made in lawsuits by two whistle-blowers that the company’s spinal-implant division paid kickbacks to doctors to induce them to use its products. The Justice Department intervened in the first whistleblower suit and is expected to seek dismissal of the second suit, on the grounds that it made the same accusations as the first whistle-blower’s. The two suits covered different time periods.

For additional information see the July 19, 2006 entry at quitam.blogspot.com.