Thursday, August 21, 2008

General Dynamics resolves defective military equipment suit

General Dynamics will pay $4 million to resolve claims that a subsidiary of the company fraudulently billed the government for parts used in Navy and Air Force aircraft and submarines.

The U. S. Attorney for the Eastern District of New York had alleged that the General Dynamics Armament and Technical Products subsidiary defectively manufactured or failed to test parts used in various military aircraft and submarines.

Former employees of the subsidiary originally brought the suit under the qui tam provisions of the False Claims Act.

Government's use of contractors increases risk of conflict of interest

Following the recent jury verdict against Science Applications Iinternational Company, the Washington Post has published an article on how the government's increased reliance on contractors as consultants can allow those companies to gain insider knowledge and to help draft rules that could benefit their own bottom lines.

SAIC both served as an advisor to the Nuclear Regulatory Commission on recycling of radioactive materials and worked as a contractor on just such a project. A jury concluded that the company concealed business interests in violation of the False Claims Act.

Amerigroup will pay $225 million to settle FCA suit

Amerigroup Corp., a Virginia insurance company, has agreed to end a pending appeal and pay $225 million to resolve claims that it defrauded the Illinois Medicaid program.

A federal jury had found that the company systematically avoided enrolling pregnant women and other high-risk patients in their managed care program in Illinois. That judgment required the company to pay $334 million, but the settlement replaces that judgment.

The U.S. Attorney's Office for the Northern District of Illinois also announced that the whistleblower in the suit will receive $56.25 million.

Tuesday, August 12, 2008

BlueCross BlueShield of Tennessee will settle FCA suit

BlueCross BlueShield of Tennessee has agreed to pay the United States $2.1 million to settle charges that it violated the False Claims Act. According to the Justice Department press release, the settlement will resolve allegations that the company failed to adjust hospitals’ cost-to-charge ratios in a timely manner in its role as the Medicare Part A fiscal intermediary for the state of New Jersey, resulting in overpayments.

False Claims Act amendments pending in Congress

The National Law Journal reports that proposed amendments to the federal False Claims Act are sharpening the divide between supporters and opponents.

The House and Senate have similar bills awaiting final action. They would make the most substantive changes in the law since 1986.

Supporters say the amendments are intended to correct court decisions that have weakened the law. Opponents claim the bills are designed to strengthen the hands of qui tam plaintiffs and their lawyers, even at the expense of the government.

But both sides agree that the FCA has been an effective tool at combatting government contractor fraud, returning $20 billion to the federal Treasury since 1986.

District of Columbia hospital settles FCA suit

The District of Columbia has agreed to settle charges that its psychiatric hospital, St. Elizabeths, submitted fales Medicare billings.

The District will relinquish claims to more than $11 million in billings, according to a Dept. of Justice press release. The federal government had alleged that the hospital violated the False Claims Act by failing to properly document billed outpatient services.

Southern California hospitals accused of using homeless to defraud Medicare

Three Southern California hospitals, Los Angeles Metropolitan Medical Center, Tustin Hospital and Medical Center, and City of Angels Medical Center, are alleged to have used the homeless to defraud Medicare and Medi-Cal.

According to the Los Angeles Times, the facilities recruited homless patients for expensive and unnecessary medical procedures. The scheme used thousands of indigent patients over the last four years. Federal and state authorities expressed outrage over a fraudulent plan that endangered people's health and cost taxpayers tens of millions of dollars.

Second whistle-blower suit filed against Kaplan Higher Education

The Chronicle of Higher Education reports that another former Kaplan employee has filed a False Claims Act suit against the company.

Kaplan Higher Education is accused of unlawfully compensating admissions recruiters, in violation of federal rules barring incentives.

The Justice Department declined intervention in the earlier suit, which alleged that Kaplan fraudulently obtained federal student aid funds, but opposed Kaplan's motion to dismiss the suit.

Thursday, August 07, 2008

Jury finds Science Applications International Corp. violated FCA

A federal jury found that Science Applications International Corp. (SAIC) violated the False Claims Act and ordered the company to pay the government $6 million in damages. The Federal Times reported that the jury concluded that SAIC failed to disclose conflicts of interest that could have biased its work with the Nucelar Regulatory Commission.

SAIC must also pay fines for each of the 77 claims submitted, adding between $385,000 and $770,000 to the penalty.

HHS Inspector General posts 10 state FCA reviews

The Deficit Reduction Act of 2005 provided a financial incentive for states to to establish false claims acts that met certain requirements. If the Health & Human Services Inspector General determines that the state law meets those requirements, the state is entitled to an increase of 10 percent of its share of any amounts recovered.

The OIG has recently posted 10 State False Claims Act review letters and two audits to the website. New OIG review letters have been posted for Rhode Island, Georgia, New Hampshire, Oklahoma, and New Mexico. Modified review letters have been posted for California, Indiana, Louisiana, Florida, and Michigan.

The California, Indiana, Rhode Island, and Georgia laws were found to meet the DRA requirements, but Louisiana, Florida, and Michigan, New Hampshire, Oklahoma, and New Mexico failed to meet them. The total number of states that meet the DRA requirements is now 12 (California, Georgia, Hawaii, Illinois, Indiana, Massachusetts, Nevada, New York, Tennessee, Texas, and Virginia).

Pratt & Whitney and subcontractor pay $52 million to settle FCA suit alleging sale of defective engine parts

Pratt & Whitney and PCC Airfoils will pay the United States $52.3 million to resolve False Claims Act allegations that the two companies knowingly sold defective turbine blade replacements for jet engines used in military aircraft. According to the Dept. of Justice press release, the government alleged that replacement turbine blades designed by Pratt & Whitney and cast by PCC failed to meet a critical design dimension. This defect caused the crash of an F-16 fighter aircraft in Arizona on June 10, 2003; the pilot ejected safely.

The case was pursued as part of a National Procurement Fraud initiative, which was designed to promote the early detection, identification, prevention and prosecution of procurement fraud.

Michigan dermatologist charged in FCA suit

Robert Stokes, a Grand Rapids dermatoligist, has been charged with violating the federal Fasle Claims Act. Stokes is charged with upcoding procedures to make it seem that he had performed a more difficult procedure on patients than he actually did, thus receiving higher reimbursement from federal health care plans. He has already been convicted on related criminal charges.

The Grand Rapids Press reports that the government is seeking $2.48 million under the FCA's treble damage provision.