Monday, April 20, 2009

Quest Diagnostics will pay $302 million to resolve whistleblower suit

Quest Diagnostics has agreed to pay $302 million to resolve allegations brought by a whistleblower that its subsidiary manufactured and sold faulty blood test kits.

The tests were used to determine the concentration of a parathyroid hormone in dialysis patients. Doctors determined the treatment of dialysis patients based on the test results, so accurate results were essential. Innaccurate results can lead to unnecessary surgery to remove the parathyroid or administration of unnecessary treatment that can cause a painful, deadly disease.

The whistleblower in the case, Thomas Cantor, had tried to alert the medical community to the faulty tests since 2000. In 2004 he filed a suit under the False Claims Act. He was represented by the law firm of Phillips & Cohen LLP.

The Dept. of Justice press release said that the subsidiary, Nichols Institute Diagnostic, would also plead guilty to felony charges.

Alta Colleges settle student aid FCA suit

Alta Colleges Inc. and its Texas schools will pay the United States $7 million to resolve False Claims Act allegations of submitting false claims for federal student aid funds.

A college must meet state licensing requirements in order to qualify to receive federal student aid. The government claimed that Alta’s Texas colleges obtained their state licenses by misrepresenting that they complied with state job-placement reporting requirements and that their interior design programs complied with requirements for a professional license.

Amendments to California FCA proposed

California Assembly Bill 1196 has been introduced to amend the state's False Claims Act.

According to the Legislative Counsel's Digest the bill would specify that "claim" as used in the Act includes "any record or statement used to conceal, avoid, or decrease anobligation to pay or transmit money or property to the state or anypolitical subdivision, and to require the imposition of a civil penalty on a person found liable for a violation." The bill would require the written consent of the Attorney General or local prosecuting authority to dismiss an action filed by a qui tam plaintiff, and would prohibit the waiver or release of specified claims except as part of a settlement of a civil action.

A hearing by the Judiciary Committee is scheduled for April 21st.

NetApp settles FCA case alleging GSA contract fraud

NetApp, a computer storage and data management solutions company, will pay the federal government $128 million to settle a False Claims Act suit.

NetApp, which supplied hardware, software and storage solutions to government clients through the General Service Administration's Multiple Award Schedule, was required to report discounts it gave to its commercial clients. This allows the government to negotiate its best price and protect its most favored customer status.

The Justice Department announced the settlement, originally brought by a whistleblower, on April 15th.

GAO says there's fraud in Small Business Administration program

The Small Business Administration's (SBA) Historically Underutilized Business Zone (HUBZone) program provides federal contracting assistance to small firms located in economically distressed areas. In a June 2008 study the Government Accountability Office (GAO) said that the HUBZone program was vulnerable to fraud and abuse.

Now, in a March 2009 report, the GAO says that it has discovered fraud in the HUBZone programs in Dallas, Texas; Huntsville, Alabama; San Antonio, Texas; and San Diego, California.

The report says that HUBZone awards have been made to firms that did not qualify. Some firms are not in economically disadvantaged areas; some HUBZone awardees have subcontracted large portions of HUBZone work to non-HUBZone firms, thereby failing to meet the program requirement that at least 50 percent of the personnel costs of a contract be expended on its own employees.

The June 2008 report said that in fiscal year 2007 federal agencies awarded contracts valued at about $8 billion to HUBZone firms. There are more than 14,000 HUBZone areas, and, as of February 2008, almost 13,000 firms participated in the program. Congress has set a goal for federal agencies to award 3 percent of their annual contracting dollars to qualifying firms located in HUBZones.

Monday, April 06, 2009

Northrop Grumman settles qui tam suit for $325 million

In the largest qui tam settlement ever paid by a defense contractor, Northrop Grumman has agreed to pay $325 million to resolve allegations that its predecessor TRW Inc. violated the federal False Claims Act.

The suit, originally filed by whistleblower Robert Ferro, alleged that the company provided and billed the government for defective parts that were integrated into satellites used by the National Reconnaisance Office.

The qui tam lawsuit said that a government satellite "experienced critical failures" while in orbit in 2001, but at that time the government didn't know that TRW had long been aware that failures of its components were likely.

Mr. Ferro was represented by Eric Havian of the law firm of Phillips & Cohen LLP.

Sikorsky Aircraft settles failure-to-test FCA suit involving Black Hawk helicopters

Sikorsky Aircraft Company will pay $2.9 million to resolve allegations that it violated the False Claims Act by failing to test armor plated inserts used in Black Hawk helicopters manufactured for the U.S. Army.

The U.S. Attorney's Office for the District of Connecticut said that from 1992 until 2006, the ballistic panels were not tested to ensure that they had been manufactured according to government requirements.

CVS Caremark settles whistleblower suit for $36.7 million

CVS Caremark Corp. will pay $36.7 million to settle claims that it improperly switched patients from the tablet version of Zantac to a more expensive capsule version in order to increase Medicaid reimbursement, the U.S. Dept. of Justice announced.

The suit was originally brought as a whistleblower suit by Bernard Lisitza.

The federal share of the settlement is approximately $21.1 million. Twenty-three states and the District of Columbia will share $15.6 million pursuant to separate settlement agreements.