Wednesday, November 26, 2008

Bayer will pay $97.5 million to settle kickback allegations

Bayer HealthCare LLC has agreed to pay the United States $97.5 million to resolve allegations that the company paid kickbacks to diabetic suppliers and caused those suppliers to submit false claims to Medicare.

The settlement resolves allegations that Bayer engaged in a cash-for-patient scheme through which the company paid 11 diabetic suppliers to convert their patients to Bayer’s products from supplies manufactured by its competitors.

RBC Mortgage Co. will settle FCA suit for over $10.71 million

RBC Mortgage Company (RBC) will pay the federal government more than $10.71 million to resolve a False Claims Act suit that alleged the company gave the U.S. government false information about borrowers who took out 219 home loans that ended up in foreclosure.

The government alleged that RBC falsified documentation in support of loan applications, violated due diligence underwriting requirements and improperly submitted loans for endorsement by HUD that were not eligible for FHA insurance.

Rennsylvania hospital settles qui tam suit for $1.9 million

St. Vincent Health System Inc. of Erie, Pennsylvania, will pay $1.9 million to the federal government to settle a whistleblower lawsuit alleging overcharging of Medicare. The overcharges allegedly resulted from inflated reimbusement claims that led to "outlier" payments, payments Medicare makes when the costs of treating a patient greatly exceed the set reimbursement amount.

The suit, brought by whistleblower Anthony Kite, was not joined by the government, a fact that usually precludes success in a False Claims Act suit. Kite, who was represented by attorney Larry Zoglin of Phillips & Cohen, was also successful in an earlier non-intervened suit against St. Joseph Healthcare System.

Thursday, November 20, 2008

Sen. Grassley urges use of FCA to protect bailout funds

Sen. Charles Grassley, one of the authors of the 1986 amendments that strengthened the False Claims Act, is concerned that money authorized through the recently approved $700 billion bailout not be lost to fraud.

Sen. Grassley sent a letter to Treasury Secretary Paulson and Attorney General Mukasey, stressing the need for oversight and reminding them how effective the False Claims Act has been in preventing, deterring and prosecuting fraud.

Sen. Grassley stated that "entities who receive federal funds under the TARP [Troubled Asset Recovery Program] and CPP [Capital Purchase Program] are subject to the provisions of the FCA should they use false or fraudulent submissions in order to obtain federal funds. For instance, any entity that submits false or fraudulent information in an application to Treasury in order to obtain federal funds available through the CPP would be liable to the Government under the FCA."

Tuesday, November 11, 2008

False Claims Act recoveries reach $1.34 billion in FY 2008

The United States Dept. of Justice announced that it has secured $1.34 billion in settlements and judgments under the False Claims Act in fiscal year 2008. This brings the total recoveries to more than $21 billion since the Act was amended in 1986 to strengthen the qui tam provisions. Almost 78 percent of this year’s recoveries are associated with suits initiated by private citizens (known as "relators") under the False Claims Act's qui tam provisions.

"Now, more than ever, it is crucial that taxpayer dollars aren't lost to fraud," said Gregory G. Katsas, Assistant Attorney General for the Department’s Civil Division. "The billion dollars collected this year is only part of the story. By rooting out fraud and vigorously pursuing it, the Department, with the help of concerned citizens who report fraud in hotline calls and in qui tam complaints, undoubtedly saves the country many times that amount in aborted schemes and misconduct."

Health care accounted for $1.12 billion of the 2008 total.

Among the suits highlighted in the press release were several brought by relators represented by Phillips & Cohen. These include a $258 million federal recovery involving Cephalon and a $75 million settlement involving Kyphon.

Pratt & Whitney settles FCA suit

Pratt & Whitney and PCC Airfoils, a division of Precision Castparts, have agreed to pay $52 million to settle False Claims Act allegations that the companies knowingly sold defective turbine blade replacements for jet engines. The defect led to the June 2003 crash of an F-16 jet, according to an article in Defense News.

D.C. sues B of A under FCA

The District of Columbia has filed a $105 million lawsuit against the Bank of America for its role in a a tax scam perpetrated by one of the District's employees. The suit was brought under the District's False Claims Act.

The Washington Post reports that an employee of the District's Office of Tax and Revenue processed $48 million in bogus tax refunds and sent them to family and friends. The District contends that the bank is responsible for the loss because of its wrongful hiring, inadequate training and inadequate supervision. One of the conspirators was a bank employee who facilitated cashing of the fraudulent checks. The suit was brought under

Connecticut care center settles FCA charges it hired nurse with revoked license

Walnut Hill Care Center of New Brtiain, Connecticut, will pay the U.S. government $222,419 to resolve charges it hired a nurse without checking to see her license had been revoked, the New Britain Herald reported.

The fine is based on what Medicare, Medicaid and other federal programs have paid for the services of someone barred from nursing and therefore ineligible for federal pay. A government website,, lists people the U.S. Department of Health and Human Services has excluded from federal health care programs, and skilled nursing facilities are supposed to check that before hiring.

Thursday, November 06, 2008

NY Times reports on FCA suit alleging fraud by ATK

Kendall Dye, an engineer with ATK Thiokol, was astonished when he discovered that the company was knowingly supplying dangerously unsafe flares to the United States military, according to an article by Jonathan Glater in the November 2 New York Times.

According to the whistleblower suit Dye filed under the qui tam provisions of the False Claims Act, ATK cheated taxpayers by selling fragile flares and knowingly put soldiers at risk. The flares are supposed to ignite when dropped from a height of 10 feet or greater, but Dye claims they could ignite if jostled or dropped from a much lower height.

The government has joined Dye's suit. Although ATK contends that the flares have not yet injured anyone, they are so powerful that the accidental ignition of one could set off nearby ordnance, burn a hole in the hull of a warship or melt through the skin of an airplane high in the sky.

Dye is represented by Claire Sylvia and Eric Havian of the law firm of Phillips & Cohen.

Houston company pays to resolve FCA and kickback allegations

EGL Inc. has agreed to pay the federal government $750,000 to resolve allegations that the company violated the False Claims Act by paying kickbacks to employees of KBR, the Justice Department announced.

The company, which had previously paid $4 million for allegedly inflating invoices, had a subcontract with KBR to facilitate shipments of military cargo to Iraq and Kuwait. EGL provided gifts to KBR employees responsible for administering the subcontract.

St. Joseph Healthcare of New Jersey settles FCA suit

St. Joseph Healthcare System Inc. has agreed to pay the federal government $1.75 million to settle a whistleblower lawsuit alleging the hospital defrauded Medicare by improperly inflating its reimbursement claims. The inflation allowed the hospital to receive "outlier" payments, which the Medicare program makes to hospitals when the actual costs for treating a particular patient greatly exceed a predetermined reimbursement amount for that type of treatment.

The whistleblower, Anthony Kite, an independent hospital consultant, was represented by Larry P. Zoglin of Phillips & Cohen.

Cephalon will pay $425 million to settle off-label marketing suit

The U.S. Dept. of Justice announced on September 29 that biopharmaceutical company Cephalon will enter a criminal plea and pay $425 million to resolve claims that it marketed three drugs for uses not approved by the Food and Drug Administration (FDA).

The lawsuits, brought under the whistleblower provisions of the False Claims Act, alleged that Cephalon engaged in a scheme to market Gabitril, Actiq and Provigil for "off-label" uses. Doctors may prescribe drugs for uses not specified in a company's FDA drug application, but drugs may not be marketed or promoted for any use not specified in an application and approved by FDA.
The suits alleged that, as a result of Cephalon’s off-label marketing campaign, false claims for payment were submitted to federal insurance programs such as Medicaid and the Federal Employee Health Benefits Program which did not provide coverage for such off-label uses.

One of the whistleblowers in this case, Bruce Boise, was represented by Peter Chatfield of the lawfirm of Phillips & Cohen.

New Jersey hospital settles FCA suit

Cooper University Hospital in Camden, N.J., has agreed to pay the United States $3.85 million to settle allegations that it defrauded Medicare, the Justice Department announced on September 24, 2008.

The suit was brought by a whistleblower, Anthony Kite, who was represented by Larry P. Zoglin of Phillips & Cohen.

From 2001 to 2003, Mr. Kite said, Cooper Hospital submitted reimbursement claims to Medicare that inflated its actual treatment costs so that the hospital qualified on paper for outlier payments. As a result, the hospital received millions of dollars in outlier payments that it wasn't entitled to receive.