Tuesday, August 21, 2007

Connecticut AG urges adoption of state False Claims Act

Connecticut Attorney General Richard Blumenthal said that new state contracting regulations wouldn't be sufficient to clean up the corruption and construction lapses he said turned a highway improvement project into a multi-million-dollar debacle, the Hartford Courant reported on August 15, 2007. The new procedures were announced by Gov. M. Jodi Rell's office and include certification by contractors that their work meets contract requirements.

Blumenthal has been promoting tough state contracting reforms for years and said that he would continue to push for the enactment of a state False Claims Act allowing treble damages and other remedies against crooked contractors.

In an editorial, the Hartford Courant urged the governor to support the reforms sought by Blumenthal, including a False Claims Act.

ConocoPhillips unit will pay $97.5 million to settle royalty suit

Burlington Resources, a subsidiary of ConocoPhillips, has agreed to pay $97.5 million to settle a whistleblower's claims that it underpaid royalties owed for natural gas produced on federal and Indian lands over a 17-year period.

The settlement resolves allegations under the False Claims Act that Burlington systematically under-reported the value of natural gas that it produced and paid less royalties than it owed to the United States and various Indian tribes.

The settlement with Burlington arose from a lawsuit filed by a private whistleblower under the False Claims Act, which alleged that a number of companies systematically underpaid royalties due for their federal and Indian natural gas production. The Justice Department partially intervened against several defendants in the lawsuit, and previously settled with Shell Oil Co. for $56 million and Dominion Exploration and Production Co. for $2 million. The Department is continuing to pursue claims against Exxon-Mobil Corp.

A Dept. of Justice press release was issued on August 15, 2007.

IBM, PriceWaterhouseCoopers settle FCA suit

IBM and PricewaterhouseCoopers have agreed to pay nearly $5.3 million combined to settle allegations that they made improper payments on government technology contracts, the Justice Department said Thursday.

The False Claims Act suit, which was originally brought by a whistleblower under the qui tam provisions of the Act, alleged that the companies solicited, paid money or provided other benefits to several companies, in violation of federal regulations.

The settlement is part of a larger, ongoing federal investigation of three technology companies - Hewlett-Packard, Sun Microsystems and Accenture - that also have been accused of providing kickbacks to federal consultants to get government tech contracts.

The Dept. of Justice issued a press release on the settlement on August 16, 2007.

Additional information is available in our posting of April 19, 2007.

Marine component manufacturer pays $7.5 million to settle qui tam suit

The Crane Company, a manufacturer of valves and marine components, has agreed to pay the United States $7.5 million to resolve False Claims Act allegations. The suit, which originated as a whistleblower complaint filed under the False Claims Act, alleged that the company failed to comply with U.S. Defense Department inspection requirements and violated the Buy America Act. The Pentagon is required to give preference in procurement to domestically produced, manufactured or homegrown products.

Crane's valves were delivered to government prime contractors for use on Navy vessels and the U.S. Coast Guard’s new National Security Cutters.

The Dept. of Justice issued a press release on August 15, 2007.

FCA suit against Univ. of Phoenix will proceed to trial

A federal judge in Sacramento has rejected an attempt by the University of Phoenix to have a False Claims Act suit dismissed. The school had claimed that $9.8 million it paid the U.S. Dept. of Education to resolve similar allegations should have ended the suit.

The suit was originally filed in 2003 by two former instructors under the qui tam provisions of the FCA. They allege that the school violated the FCA by paying recruiters based on how many students they enrolled.

The suit has had a complicated history, having been dismissed twice by the district court, reinstated by the Ninth Circuit, denied a rehearing by the Ninth Circuit, and denied certiorari by the Supreme Court.

Plaintiffs argued, and the judge agreed, that the prior settlement could not be seen as an alternative remedy because the Justice Department must sign off on all False Claims Act resolutions, and the attorney general had played no role in the Education Department’s settlement with Phoenix.

We've blogged about this case on June 27, 2007, April 26, 2007 and September 8, 2006.

The most recent developments were reported in the August 21, 2007 issues of the Los Angeles Times and Inside Higher Ed.

Tuesday, August 14, 2007

New York hospital settles FCA suit

Parkway Hospital of Forest Hills, New York, has agreed to pay $1.075 million to resolve allegations that it defrauded the Medicare program.

A former director of finance at Parkway filed a whistleblower suit under the qui tam provisions of the False Claims Act, which led to the government investigation. The investigation, conducted by the U.S. Attorney's Office and the Inspector General of Health and Human Services, established that Parkway included unallowable items in its Medicare cost reports,
including costs associated with clinics owned by Parkway’s physician owners and operated by Queens Medical Management, Inc.

The U.S. Attorney's Office for the Eastern District of New York issued an August 13, 2007 press release describing the settlement.

Monday, August 13, 2007

Whistleblower suit against Iasis Healthcare unsealed

A former Iasis Heathcare executive has alleged in a qui tam suit that the hospital chain performed unnecessary medical procedures and illegally compensated doctors for patient referrals . The whistleblower suit, filed under the False Claims Act, claims that Iasis paid doctors for referrals in various hidden ways, including entering into contracts for sham medical directorships, giving doctors below-market rent for office and lab space, and leasing equipment from doctors at above fair-market rates.

The suit was unsealed by the federal District Court in Phoenix, AZ, after the government filed a notice that it was unable to meet a court-imposed deadline for a decision on whether it would intervene in the case.

The whistleblower, Jerre Frazier, a former vice president for ethics and compliance for Iasis Healthcare, is represented by Phillips & Cohen LLP.

Insurance NewsNet carried the story on August 13, 2007.

NCR division is investigated by DOJ

NCR revealed in SEC filings that Teradata, a software division that the company intends to spin off, is being investigated by the US Justice Department over certain federal government contracts. The investigation is related to a civil False Claims Act against several technology companies, including NCR. The complaints are under seal, according to the company.

NCR said the DOJ investigation is "regarding the propriety" of Teradata's "arrangements or understandings with others in connection with certain federal contracts."

NCR plans to spin off Teradata into a separate company later this year.

An article on the investigation appeared in the August 9, 2007 issue of the Dayton Business Journal.

San Diego sues law firm for violations of False Claims Act

San Diego has sued Willkie Farr & Gallagher for $29.3 million, alleging fraud, negligence and violations of the California state False Claims Act. The city attorney's office claims that
Willkie Farr attorneys duplicated much of the investigation work already conducted by Kroll Inc. into the underfunding of the city's pension fund, submitted inadequate bills to disguise that, and went beyond the scope of its agreement

The National Law Journal ran an August 13, 2007 story on the suit and the San Diego Union-Tribune ran one on August 9, 2007.

Concrete supplier settles Big Dig suit

Aggregate Industries NE Inc., has pleaded guilty to fraud for supplying substandard concrete on the Big Dig and will pay $50 million to settle the case. $42 million will go to settle a civil investigation and $8 million will be paid in criminal fines.

The company will be allowed to bid on future state and federal contracts, a major factor in reaching the settlement.

Whistleblower suits were filed in both state and federal court against Aggregate.

The Boston Globe reported on the settlement on July 28, 2007; the Massachusetts Lawyers Weekly ran a story on August 6, 2007.

Whistleblower suit alleges flood insurance fraud

A whistleblower suit alleging that insurance companies, adjusters and engineering firms defrauded the federal government has been unsealed. The suit was brought by two adjusters who claim the companies charged the National Flood Insurance program for claims the insurance companies should have paid.

Named as defendants are State Farm, Nationwide, Allstate and USAA insurance companies, plus engineering firms that examined property damage after Hurricane Katrina and an independent adjusting firm.

The federal government has not intervened in the suit, which was discussed in the August 6, 2007 issue of the Sun Herald.

Education fraud suit against Chapman University may go to trial

A whistleblower suit against Chapman University is scheduled to go to trial this November. The suit alleges that the school, which received federal and state aid, misrepresented the number of hours students attended classes, making it ineligible to receive that aid.

The suit was brought by three former Chapman professors under the qui tam provisions of the False Claims Act. Chapman unsuccessfully tried to have the lawsuit dismissed twice in 2006 and is expected to move for dismissal again.

Chapman has 6,000 students at its 26 satellite campuses, known as “University College,” according to its website. The Orange-based university has scaled back in the past 15 years by closing more than 30 additional campuses, most of which were located on military bases.

These developments were reported in the August 2, 2007 issue of OC Weekly.

We had posted an item about the suit on May 31, 2006.