Tuesday, March 27, 2007

Supreme Court rules against Rocky Flats whistleblower

The United States Supreme Court ruled on March 27 that the whistleblower who exposed fraud at a former nuclear weapons plant is not entitled to a relator's share.

James Stone stood to collect $1 million under the qui tam provisions of the False Claims Act, but Justice Scalia, writing for the court, said that Stone "lacked and independent knowledge of the information upon which his allegations were based.'' Rockwell International, the defendant in the FCA suit, still must pay $4.2 million for false claims it submitted in connection with the environmental cleanup at Rocky Flats, but Stone will not get a portion of that recovery.

Sen. Charles Grassley, one of the authors of the False Claims Act, said lawmakers should consider amendments to the law to make sure people are rewarded when they uncover wrongdoing. ''The Supreme Court has made it even more difficult to get to the bottom of waste, fraud and abuse of taxpayer money,'' Grassley said.

The New York Times (subscription required) ran a March 27, 2007 article on the Supreme Court opinion.


Monday, March 19, 2007

HealthSouth and physicians pay $1 million+ to resolve FCA suit

HealthSouth Corp. and three physicians who were partners in Seacoast Trust have agreed to pay more that $1 million to resolve claims that they violated the False Claims Act. The government had alleged that they submitted claims to Medicare based on referrals that were tainted by an improper financial relationship.

According to the allegations, HealthSouth paid Seacoast Trust above-market rent in order to induce referrals to HealthSouth's sports medicine and rehabilitation center, which was housed in a building owned by Seacoast Trust.

The suit originated as a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act.

The United States Attorney's Office for the District of New Hampshire issued a March 7, 2007 press release on the settlement.

Alameda County seeks to dismiss whistleblower suit

Alameda County has moved to dismiss a lawsuit, brought under the qui tam provisions of the California state False Claims Act, that alleges fraud, conspiracy and financial misconduct at the county's public hospital system.

The case, Alameda County, State of California et al. v. Cambio Health Solutions et al, is seeking unspecified damages on behalf of taxpayers for alleged fraudulent acts committed by administrators, trustees, consultants, physicians and others at the Alameda County Medical Center.

The county hired a law firm to review the allegations and decided that some of the allegations were not true and that others referred to policy issues not actionable under the False Claims Act. The county also contends that the qui tam plaintiff is not an original source.

Inside Bay Area reported on the suit on March 17, 2007.

Michigan construction companies settle FCA claims for $11.75 million

Ajax Paving Industries, Inc. and Dan's Excavating Inc. have agreed to pay the federal government $11.75 million to resolve Flase Claims Act and administrative claims against them.

The government alleged that the two Michigan companies knowingly violated Disadvantaged Business Enterprise (DBE) contracting requirements for federally funded construction projects at Detroit Wayne County Metropolitan Airport.

The Dept. of Justice's March 15, 2007 press release provides additional details.

New Mexico governor signs "Fraud Against Taxpayers Act"

New Mexico Governor Bill Richardson signed a "Fraud Against Taxpayers Act" on March 15. The act, whose effective date is July 1, 2007, allows the attorney general to file a civil lawsuit on behalf of the state against anybody who makes a false claim for payment or conspires to defraud the state or its agents. It also provides protections and incentives for whistleblowers who report fraud.

The governor noted that 11 others states, the District of Columbia and the federal government already have similar laws. The "qui tam" provisions give the person initially bringing the action a part of the penalty recovered, with the balance going to the state.

The Farmington, New Mexico, Daily Times ran a March 16, 2007 story on the new law, the text of which can be found at the New Mexico Legislature's website.

Thursday, March 15, 2007

New Jersey hospital will pay $7.5 million to settle qui tam suits

Raritan Bay Medical Center has entered into a civil settlement agreement with the federal government to allegations filed in three separate federal lawsuits brought by whistleblowers under the federal False Claims Act.

The suits alleged that the Medical Center took advantage of Medicare's supplemental reimbursement program by purposefully inflating charges for inpatient and outpatient care to make these cases appear more costly than they actually were. As part of the $7.5 million settlement, the hospital entered into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services.

The settlement was reported on March 15, 2007 at the wnbc.com website

Insurance company liable for $334 million in pregnancy discrimination suit

A Federal District Court judge in Chicago has ruled that insurance company Amerigroup Corp. and its affiliate Amerigroup Illinois owe more than $334 million in damages and penalties for discriminating against pregnant women.

Last October a federal jury found both companies liable for systematically defrauding Medicaid and awarded $48 million, which was automatically tripled under the federal False Claims Act and the Illinois Whistleblower Reward and Protection Act to $144 million. Judge Harry D. Leinenweber added to that amount more than $190 million in civil penalties.

The suit originated as a whistleblower case brought under the qui tam provisions of the state and federal acts. The companies, paid to set up a Medicaid managed care program in the state, deliberately and illegally set out to avoid signing up pregnant women and others with expensive health conditions.

The U.S. Attorney's Office for the Northern District of Illinois issued a March 13, 2007 press release. Crain's Chicago Business ran a March 14, 2007 story.

Putnam whistle-blower seeks relator's share

A Massachusetts man, whose information led to charges of trading abuses at Putnam Investments, will appear before a state appeals court next week to try to obtain a portion of the settlement Putnam paid. Peter Scannell brought incriminating eveidence to state and federal regulators, showing that Putnam allowed certain favored investors to make improper, market-timing trades in its mutual funds.

Scannell is seeking a portion of the $194 million settlement under that state's whistle-blower law. The state opposes the request on the grounds that Scannell did not submit a sealed complaint against Putnam to the attorney general's office, as required by the law.

More news on developments can be found in the March 14, 2007 issue of the Patriot Ledger. A November 20, 2003 article in USA Today provides additional details.

Tuesday, March 06, 2007

Georgia hospital pays $475K to settle FCA suit

Colquitt Regional Medical Center (CRMC) of Moultrie, Georgia, has agreed to pay the federal government $475,000 to settle allegations that CRMC overcharged the government for home health services. The suit originated as a whistleblower suit brought under the qui tam provisions of the False Claims Act.

The Moultrie Observer of February 21, 2007 reported on the settlement.

House committee hears about overcharging by drug firms

The House Committee on Oversight and Government Reform held hearings in February where witnesses, including a U.S. associate deputy attorney general, testified that drugmakers have been systematically overcharging Medicaid. The companies are required by law to provide Medicaid with the same discounts they offer to managed-care plans and hospital chains, but they have been disguising those prices, Ronald Tenpas, a U.S. associate deputy attorney general, told the committee.

There are 150 pending federal investigations centering on Medicaid and two other government health-care programs that could find billions of dollars more in pharmaceutical company fraud.


A majority of the investigations against the drugmakers have come through use of a provision of the federal False Claims Act, which allows people who have evidence of fraud involving government programs or contracts to bring suit on behalf of the federal government. The Medicaid cases stemmed from complaints by company employees, sales executives and pharmacies.

Additional details are available in the February 18, 2007 issue of the New Jersey Star-Ledger.

FedEx drivers allege violations of Nevada FCA in class-action suit

A class-action lawsuit brought by FedEx Ground/Home Delivery drivers includes allegations that the company violated the Nevada False Claims Act by making false statements and records in order to conceal, avoid and decrease their obligation to pay state taxes. The suit contends that FedEx intentionally misclassified its employees as independent contractors.

The suit, part of a federal class-action suit being litigated in Indiana, seeks reimbursement to the drivers of business expenses that should have been the responsibility of the company.

PR Newswire ran a February 27, 2007 press release.

Florida assisted living facility owner found liable for Medicaid fraud

The Florida Attorney General's office announced in a February 23, 2007 press release that Vidya Bhoolai, the owner of two assisted living facilities, was found civilly liable for fraudulently billing Medicaid. Bhoolai filed multiple claims for Medicaid recipients who either never resided at her facilities or resided there for fewer days than she reported.

Bhoolai must pay $640,000 and was sentenced to 10 years of probation.