Wednesday, February 27, 2008

Supreme Court to hear arguments in whistleblower lawsuit

The U.S. Supreme Court heard oral arguments in a federal whistleblower lawsuit on Feburary 26. The case, Allison Engine Co. Inc. v. United States, centers on the question of whether the False Claims Act applies to government subcontractors who file claims against a government contractor and not the government itself.

The Dayton Daily News has additional information on the suit.

Tuesday, February 12, 2008

Louisiana qui tam bill introduced

HB 69, a bill to create a State Government Integrity Act, has been introduced in Louisiana. The state already has a Medical Assistance Programs Integrity Law, which allows qui tam suits by private citizens who discover fraud in state-run healthcare programs. The new bill would allow whistleblower suits when the fraud involves other state programs.

The bill was introduced by Representative Jim Tucker on February 10, 2008.

Monday, February 11, 2008

Whistleblower lawsuit alleges overcharging by Grainger Inc.

A whistleblower lawsuit accuses W.W. Grainger Inc., an international distributor of maintenance products and hand tools, of repeatedly overcharging the U.S. government. Details of the suit were set out in an Associated Press report printed in the February 11, 2007 Houston Chronicle.

The suit, filed by a former employee under the qui tam provisions of the federal False Claims Act, also alleges that the company illegally relabeled materials made in restricted countries before selling those materials to federal agencies. This violated provisions of the Buy American Act.

The company's contract with the government specified that products would be supplied at
cost plus a fixed markup of 26 percent. The company exceeded that markup, adding 50 percent to a laser marking machine sold to the Air Force. Products sold to the Postal Service had markups ranging from 30 percent to 60 percent.

Thursday, February 07, 2008

Merck will pay $650 million+ to settle qui tam suit

Merck and Co. has agreed to pay more than $650 million to settle claims that it overcharged Medicaid programs for four drugs, including Vioxx and Zocor, and to resolve allegations of improper marketing to doctors, according to a February 7, 2008 press release from the U.S. Dept. of Justice.

Two separate whistleblower suits were involved. The suits alleged that Merck violated the Medicaid Rebate Statute in marketing several of its drugs by offering deep discounts if hospitals used large quantities of those drugs in place of competitors’ brands. Merck didn't include these prices in its calculation of "best price" as supplied to Medicare. The pharmaceutical company was also accused of paying improper kickbacks to doctors.

The federal government will receive more than $360 million, and forty-nine states and the District of Columbia over $290 million.

Helmet manufacturer settles whistleblower suit

Sioux Manufacturing of Fort Totten, North Dakota, will pay $2 million to settle a suit alleging that the helmets it supplied to the military were inadequate.

The suit, originally brought under the whistleblower provisions of the False Claims Act, alleged that the Kevlar woven at Sioux failed to meet the government’s minimum standard of 35 by 35 threads a square inch. When properly woven, Kevlar is stronger than steel and able to deflect shrapnel and some bullets.

According to a February 6, 2008 story in the New York Times, the company has upgraded its looms and received a new contract worth up to $74 million just twelve days before the settlement was announced.

Tuesday, February 05, 2008

Buyer of New Jersey hospital will settle qui tam suit

The buyer of Bayonne Medical Center will pay $2.5 million to settle allegations of Medicare fraud, the U.S. Dept. of Justice announced on February 4, 2008

The hospital is currently in bankruptcy and its buyer, IJKG, LLC, entered into the settlement.

The False Claims Act suit, which originated as a whistleblower action, alleged that the hospital improperly increased charges to Medicare in order to receive supplemental reimbursement, called outlier payments. These enhanced payments are available to providers in cases where the cost of care is unusually high.