Thursday, December 28, 2006

L.A. construction company found guilty of violating California FCA

Jurors found Los Angeles construction company Tutor-Saliba and two co-defendants guilty of violating the California False Claims Act by overbilling L.A.'s Metropolitan Transit Authority. They were ordered to pay $450,000 in penalties, according to a story in the December 19, 2006 edition of the San Jose Mercury-News.

Whistleblower says pharmaceutical company defrauded Texas

A whistle-blower law suit claims that the state of Texas was duped by Johnson & Johnson into spending millions of dollars on the antipsychotic drug Risperdal. The suit, which has been joined by the Texas attorney general's office, alleges that the company and its subsidiaries misled state officials about the benefits of the drug and promoted it for uses that had not been approved by the FDA.

Additional details are available in the December 20, 2006 issue of the Dallas-Ft Worth Star-Telegram.

Univ. of Miami resolves civil fraud investigation of improper Medicare claims

The United States Attorney's Office for the Southern District of Florida issued a press release on December 21, 2006 to announce a $2.2 million settlement with the University of Miami.

The settlement resolves allegations that the University's teaching hospital billed for services as though they had been personally and identifiably provided by faculty when there was not sufficient documentation to satisfy Medicare requirements and charged for procedures at a higher level than was justified.

New law requires health care industry to train employees to detect fraud

A federal law that takes effect in January 2007 will require hospitals and nursing homes to teach their employees to detect fraud and to report it to the government.

The law, designed to encourage health care industry employees to become fraud whistleblowers, is apparently not yet well known to health care providers.

According to an article in the December 24, 2006 issue of the New York Times, companies that do at least $5 million a year in Medicaid business must educate all employees and officers on how to detect fraud, waste and abuse. Moreover, health care providers must tell employees that if they report fraud, they will be protected against retaliation and may be entitled to a share of money recovered by the government.

Tuesday, December 26, 2006

Dept. of Defense recovered $1.9 billion between April and September 2006

Stars and Stripes for December 26, 2006 reported on the latest report of the Dept. of Defense Inspector General which details a record-setting year of recoveries through investigations conducted by the Defense Criminal Investigative Service. The report covers the period from April 1 through September 30, 2006. The total of $1.9 billion includes a number of recoveries that originated as whistleblowers suits filed under the federal False Claims Act.

Stars and Stripes notes that the IG’s report to Congress is only one of several government reports investigating the military and that the Government Accountability Office recently released a report detailing poor oversight for military contractors in Iraq.

Bristol-Myers Squibb will pay $499 million in settlement of illegal ales and marketing practices

Bristol-Myers Squibb has agreed to pay the federal government $499 million to settle a federal investigation into illegal sales and marketing activities from the late 1990s through 2005.

The United States Attorney’s Office in Boston would not confirm the settlement, but a press release was posted on the company's website.

The New York Times reported on the settlement on December 22, 2006 and described it as "the latest in a string of large payments the Justice Department has extracted from drug makers."

Cook County, Illinois settles FCA lawsuit

Cook County, Illinois, has agreed to pay the federal government $5 million to settle a lawsuit that alleged the county mismanaged a federally funded study involving pregnant drug addicts.

The lawsuit originated as a whistleblower suit brought under the qui tam provisions of the federal False Claims Act by a former project director Janet Chandler.

The suit alleged that the conty was slow to obtain participants for the study and later steered women into the program, violating study guidelines of randomization, in order to keep it running and not lose the federal funding.

Additional details can be found in the December 20, 2006 issue of the Chicago Tribune.

Thursday, December 21, 2006

Tax whistleblower law signed by President

President Bush signed a new law that will allow whistleblowers who turn in tax cheats to share up to 30 percent of the recovery.

Public Radio's Marketplace ran a story on the new law on December 21, 2006. One of the attorneys interviewed was Erika Kelton of Phillips & Cohen LLP, who expects that revenues from tax evasion will increase into the billions over 10 years.

The December 20, 2006 issue of the Wall Street Journal (subscription required) reported on the new legislation, saying that lawmakers hope this and other incentives in the legislation will encourage more people to step forward with valuable tips. Congress would like to reduce the nation's "tax gap," the difference between what the IRS collects each year and what it thinks it should collect. That gap has been estimated at about $290 billion.

Monday, December 18, 2006

Decade-old whistle-blower suit scheduled for trial

A whistle-blower suit originally filed in 1995 is scheduled to go to trial in early 2007. The suit, filed under the qui tam provisions of the Federal False Claims Act, alleges that Bill Harbert International Construction submitted fraudulent bills for construction work in the Middle East that were paid by the U.S. Agency for International Development. The work stemmed from the Camp David Peace Accords.

The company paid $54 million in 2002 to settle similar criminal charges, though without admitting wrongdoing.

The whistle-blower suit says the construction companies conspired to rig bids for the contracts, developing fictitious pre-construction costs and complex arrangements that purported to sell and lease building equipment, but which really hid secret payments that were spread among the conspirators.

Additional details were published in the December 13, 2006 edition of the Birmingham News.

CMS issues guidance on employee FCA education

The Centers for Medicare & Medicaid Services (CMS) has sent a letter to State Medicaid agencies regarding the implementation of Section 6032 of the Deficit Reduction Act of 2005 (P.L. 109-171). This section requires any entity that receives or makes annual Medicaid payments of at least $5 million to provide Federal False Claims Act education to their employees.

CMS sent a State Plan Preprint along with the letter.

Oregon Imaging Center settles Medicare fraud case

Oregon Imaging Center, a Eugene, radiology laboratory, has paid $510,000 to settle claims that it billed Medicare and Medicaid for radiology tests not ordered by treating physicians. This does not appear to have been a False Claims Act suit.

An investigation by the United States Attorney's Office and the Department of Health and Human Services Office of Inspector General revealed the Center billed for CT exams of the abdomen and pelvis, chest CT exams and chest X-rays, and MRAs of the head and neck when the patients' treating physician ordered only one of the exams.

The December 12, 2006 press release is available at the website of the U.S. Attorney for the District of Oregon.

Friday, December 15, 2006

Ninth Circuit says prior state audit is "public disclosure"

The United States Court of Appeals for the Ninth Circuit has ruled that an administrative audit, report or investigation prepared by a state entity qualifies as a public disclosure for purposes of barring a whistleblower suit under the federal False Claims Act.

The court said that a portion of a suit brought by a Los Angeles woman against the California Department of Rehabilitation was based on information that had already been disclosed in a report published by the California State Auditor. Although the FCA's qui tam provisions allow private citizens to file a lawsuit in the name of the U.S. government when a government contractor has committed fraud, if there has been a public disclosure of the information the whistleblower must be an "original source." To qualify as an original source, a person must have direct and independent knowledge of the information on which the fraud allegations are based.

Other circuits have held that state audits are not included in the Act's definition of public disclosure, saying only federal audits were meant.

The Metropolitan News-Enterprise for December 14, 2006 covered the story.

Thursday, December 14, 2006

Supreme Court hears arguments in whistleblower suit against Rockwell

The United States Supreme Court heard arguments on December 5 in a case that pivots on a whistleblower's standing to bring a False Claims Act suit when there has been a public disclosure of the information underlying the suit.

In this instance a jury found that the whistleblower qualified under the "original source" exception, but defendant Rockwell International disputed that. If he is found to be an original source, he's entitled to a third of the $4.2 million awarded against Rockwell for lying to the government about disposal of hazardous waste at a nuclear weapons plant.

An article in the December 6, 2006 issue of the Rocky Mountain News has additional details.

Monday, December 04, 2006

New York Times profiles oil royalty whistleblower

The December 3, 2006 issue of the New York Times includes a profile of Bobby L. Maxwell, the Interior Department auditor who filed a whistleblower suit alleging that Kerr-McGee, a major oil company, cheated on royalty payments.

One week after the unsealing of the lawsuit, filed by Maxwell under the qui tam provisions of the False Claims Act, Maxwell's job was eliminated in a Department reorganization.

The article highlights Maxwell's role at the center of a battle over how the federal government oversees approximately $60 billion worth of oil and gas produced every year on federal property. Congress and the inspector general for the Interior Department are also investigating whether the Department properly collects the money for oil and gas pumped from public land.