Tuesday, July 31, 2007

Oakland City University settles False Claims Act suit

Oakland City University will pay a $5.3 million to settle allegations that it paid incentives to admissions recruiters and failed to report those payments to the federal government. Those payments violated the False Claims Act.

The suit originated as a whistleblower suit under the qui tam provisions of the act. The complaint was filed by the school's former director of admissions, who discovered that the university’s policy of paying incentives was in direct contradiction to guidelines in agreements the university filed with the federal government.

Additional information on the settlement can be found in the July 30, 2007 article published in the Evansville, IN, Courier & Press.

Thursday, July 26, 2007

Maximus will pay $30.5 million and enters into deferred prosecution agreement

The federal government announced that it has reached a deferred prosecution agreement with Maximus Inc. that requires the company to pay $30.5 million. Maximus has also agreed to enter into a corporate integrity agreement with the Dept. of Health and Human Services.

The payment and agreements resolve an investigation of Maximus’ activities under a contract with the District of Columbia’s Child and Family Services Agency (CFSA). Maximus helped CFSA submit claims to Medicaid for services provided by the District to children in its foster care program. A whistleblower suit, filed under the qui tam provisions of the federal False Claims Act, alleged that the company's employees caused CFSA to submit claims to the Medicaid program for services for each child who had been placed in the care of CFSA whether or not services had in fact been provided to those children.

The U.S. government had previously recovered $12.15 million from CFSA, bringing the total collected to $42.65 million.

The whistleblower, a former division manager at Maximus, will receive $4.93 million as his share of the settlement.

The Justice Department's press release on the settlement is dated July 23, 2007.

Map of area

Map showing area

Monday, July 23, 2007

U.S. joins qui tam suit against Renal Care

The United States has intervened in a whistleblower suit accusing Renal Care Group Inc. (RCG) and Renal Care Group Supply Company (RCGSC) of fraudulently billing Medicare for supplies and equipment provided to patients receiving home dialysis.

The lawsuit also named the companies' parent, Fresenius Medical Care Holdings Inc.

The suit alleges that the claims the companies submitted for reimbursement were false because the defendants were prohibited from billing Medicare for these home dialysis patients. Medicare requires that companies that provide dialysis supplies to dialysis patients be truly independent from dialysis facilities, which was not the case here. The companies also interfered with patients' choice of supply options.

The suit originated in a whistleblower complaint filed under the qui tam provisions of the False Claims Act by two former RCG employees.

The U.S. Dept. of Justice issued a July 17, 2007 press release on the intervention.

Tuesday, July 17, 2007

Whistleblower suit against Hewlett-Packard reinstated

A California state appeals court has reinstated a whistleblower suit that claimed Hewlett-Packard sold defective medical monitoring devices through its spin-off company, Agilent Technologies. A trial court had ruled that the relator, Robert Hindin, waited too long to file his suit. The appeals court reversed, saying the clock begain running when Hindin notified the state of the fraud, not when he discovered it.

Hewlett-Packard and Agilent agreed to pay $7 million to the U.S. to settle similar claims in 2002. That whistleblower suit was also initiated by Hindin and eventually pursued by the U.S. government.

Bloomberg News ran a story on the court decision on July 13, 2007.

Monday, July 16, 2007

Security firm pays $18 million to settle FCA suit

Akal Security Inc. will pay the United States $18 million to resolve allegations that it violated the terms of its contract to provide trained civilian guards at eight U.S. Army bases. Some of the guards supplied by the contractor allegedly failed to satisfy weapons qualification requirements and receive other training, and the contractor allegedly failed to satisfy contractual man-hour requirements.

The settlement is the result of a whistleblower suit filed under the qui tam provisions of the False Claims Act. The three company employees who filed the suit will receive a portion of the recovery.

The U.S. Dept. of Justice issued a press release describing the settlement on July 13, 2007.

Drug company pleads guilty in illegal marketing case

In a suit that grew out of a whistleblower complaint, Orphan Medical Inc. pleaded guilty in federal court to charges that it illegally promoted Xyrem, commonly known as a "date rape" drug.

Orphan, a subsidiary of Jazz Pharmaceuticals, promoted the drug to doctors for a wide range of illnesses it was not approved to treat. Xyrem had been approved to treat symptoms of narcolepsy, but Orphan admitted in its plea that it promoted the drug to physicians for off-label uses, including fatigue, insomnia, chronic pain, weight loss, depression, bipolar disorders and movement disorders such as Parkinson's disease.

A former Orphan sales representative, Shelley Lauterbach, filed a whistleblower lawsuit in 2005 that reported the company's behavior, according to her lawyers, the firm of Phillips & Cohen.

Orphan will pay $12.2 million in criminal restitution to public and private health insurers, as well as a criminal fine of $5 million, and $3.75 million to resolve civil charges.

An Associated Press story on the settlement ran in the July 14, 2007 issue of Newsday.

Thursday, July 12, 2007

Settlement in military flag-patch case

Moritz Embroidery Works has agreed to pay $500,000 to settle a False Claims Act suit that alleged violations of the Buy American Act.

The company won a contract to supply the Dept. of Defense with U.S. flag patches for use on military uniforms. As part of the contract specifications, Moritz agreed to comply with statutes requiring that the patches be produced in the United States.

The False Claims Act suit against Moritz was brought Action Embroidery Corp. under the qui tam provisions of the law, which allow private relators to bring suits on behalf of the government. Action learned that the patches were in fact being produced in Thailand.

The U.S. Attorney's Office for the Middle District of Pennsylvania issued a July 10, 2007 press release on the settlement.