Government Contracts Fraud

February 2, 2015

Spotlight on Government Contracting Fraud: Violation of Price Reduction Clause in GSA Contracts

Government contracting is, to put it in an overly simplified manner, a complex arena. This complexity is one reason government contract fraud often goes undetected and why it often requires an inside whistleblower stepping forward to uncover and ultimately put an end to these frauds. Procurement fraud, including fraud involving General Services Administration (“GSA”) contracts, can take a range of forms including over-charging the government or providing inferior products. All forms of procurement fraud steal money from strained government budgets and in doing so impact every American taxpayer. This post focuses on one form of government contract fraud, specifically the violation of price reduction clauses in GSA contracts. Our San Francisco government contracts fraud law firm partners with private whistleblowers to end this all-too-common type of fraud and return money to government coffers.

Settlement In Service Contract Case Including Alleged Price Reduction Clause Violations

In December, the Department of Justice issued a press release detailing a settlement with Iron Mountain Information Management LLC (“Iron Mountain”). The settlement resolves claims filed pursuant to the False Claims Act (“FCA”) involving contracts to provide record storage services to assorted government entities. The contracts date between 2001 and 2014 and were part of the GSA’s Multiple Award Schedule Program, (“MAS”) a streamlined process through which the government procures services and goods that are needed on a repeat basis. According to the allegations, Iron Mountain did not provide accurate information during contract negotiations, provided services that failed to meet specified requirements, and did not comply with the GSA’s price reduction clause. With respect to the price reduction violation, the government alleged that Iron Mountain failed to extend newly lowered prices to government customers.

January 19, 2015

Record Recoveries in False Claims Act Suits in 2014, Whistleblowers’ Firm Looks to Continue Trend in 2015

by Gregory J. Brod

Regular visitors to this blog are familiar with the False Claims Act (“FCA” or “the Act”), a piece of federal law aimed at recovering money wrongfully taken from government coffers. The Act contains detailed provisions that allow ordinary private citizens to bring suit on the government’s behalf through a process known as a qui tam suit. These suits are essential to the FCA’s efficacy, permitting individuals with knowledge about fraud to help ensure wrongfully diverted money is returned to the already strained budgets of programs like Medicare and agencies like the Department of Defense. In this post, our California-based government fraud whistleblowers’ law firm takes a look back at recoveries made via the FCA in 2014 and examines the importance of whistleblowers in False Claims Act litigation at both the federal and state level.

Justice Department Announces $5.69 Billion in FCA Recoveries in 2014, Recognizes Role of Whistleblowers

In late 2014, the U.S. Department of Justice announced that recoveries (settlements and judgments) as a result of civil claims against entities and individuals that allegedly filed false claims and engaged in related fraud on the government hit a record-breaking $5.69 billion in the fiscal year ending September 30. This brings the total amount recovered since January 2009 to $22.75 billion. The recoveries for fiscal year 2014 included $3.1 billion obtained from banks and financial institutions accused of making false statements in the process of filing federally insured mortgages and loans. Additionally, the federal government recovered $2.3 billion in health care fraud recoveries, making 2014 the fifth straight year that FCA claims involving Medicare, Medicaid, Tricare, and other federal health care programs exceeded $2 billion. These payments came from hospitals, pharmaceutical companies, managed care entities, and other major players in the health care market. Another significant portion of the total recoveries came from cases against federal contractors including IT service providers and companies that supplied products to the military.

January 5, 2015

California Whistleblowers’ Attorney on the Threat of Defense Contractor Fraud

by Gregory J. Brod

When one thinks about fraud and its impact, finances tend to come to the forefront of the mind. However, when the issue is defense contract fraud, there is much more than money at stake. Defense contract fraud not only takes money from already-strained budgets, but it also puts our nation’s finest and bravest at risk. As a San Francisco defense contract fraud law firm, The Brod Law Firm partners with whistleblowers, individuals who have witnessed government contract fraud and come forward to report the information, to fight back, recover stolen funds, and protect our military.

Sentencing in Case Involving Non-Compliant Aircraft Parts

On December 22, the Justice Department released a press report detailing the sentencing of a man who allegedly led a scheme to defraud the Department of Defense. Malcom Robert Markson previously owned Action Machine LLC, a Phoenix-based company that contracted with the Department of Defense from 2009 to 2012 to manufacture wing pins. The pins are a crucial piece of safety-oriented equipment that helps secure the wings of F-15 fighter planes. The contracts required the pins meet detailed design requirements including the use of a specific form of hardened steel and a rigorous inspection process. Action supplied 212 wing pins to the military and certified that the equipment met all contractually mandated design specifications.

November 24, 2014

Giving Thanks to Those Who Didn’t Stay Silent

by Gregory J. Brod

At the Brod Law Firm, we’re proud to be part of the fight against healthcare and government contracts fraud in San Francisco and across the state. We are also humbled to work with the people who witness fraud or other wrongdoing and decide to speak up against it. While we are committed to protecting these whistleblowers, we will never deny that their decision is a brave one that shows a commitment to community, country, and basic values. As we look forward to Thanksgiving, we wanted to take a moment to look at a few examples of whistleblowers who have helped fight fraud and other wrongs and, in doing so, have helped protect us all.

Peter Buxtun

John Michael Gravitt – In 1984, Gravitt used a then-obscure False Claims Act statute to charge General Electric with fraud for altering thousands of timecards to allegedly cheat the Pentagon out of $7 million. The amount of the eventual settlement was not disclosed but rumored to be around $4.7 million. Gravitt’s testimony helped lead Congress to amend the False Claims Act, providing greater protections to whistleblowers and expanding their power which has led to more than $1 billion in recoveries.

November 10, 2014

Protecting Those Who Protect Us: Pursuing Scammers Posing as Veteran-Owned Businesses

by Gregory J. Brod

As Veterans’ Day approaches, our firm would like to take a moment to thank the men and women of the armed forces who fight for our freedom and our safety, individuals who risk their lives for the American dream. We owe a debt of gratitude to each of you and to your families. It is in recognition of this debt that the government helps veterans in their post-service careers, including those who open and operate small businesses. We support these efforts and angered when scammers take unfair advantage of these programs, committing what amounts to veteran-owned business fraud. Partnering with whistleblowers as a California-based government contracts fraud law firm allows to show our gratitude and help protect the rights of those who protect us all.

Government Programs for Businesses Owned & Operated by Veterans

The federal government recognizes the importance of veterans by assisting them in building their own businesses after their service. Last week, the Small Business Association (“SBA”) held the first-ever National Veterans Small Business Week to celebrate the nearly one in ten small businesses owned by veterans. The federal government, including the Department of Homeland Security, also sets aside certain contracting opportunities for service-disabled veteran-owned small businesses (“SDVOSB”).

October 20, 2014

The False Claims Act: From Shoddy Civil War Uniforms to Costly Defense Contracts in 2014

by Gregory J. Brod

As readers of this blog know, the False Claims Act (“the Act”) is an important tool for combatting health care fraud. The Act allows our Northern California whistleblowers’ law firm to partner with private whistleblowers to fight back against schemes that divert tens of billions of dollars from Medicare, Medicaid, and other health care programs annually. This is a critically important battle, but the Act goes well beyond health care and defense contract fraud is one important example. A recently filed case illustrates the Act’s role in fighting the costly problem of fraud in military contracting. Further, the Act’s history serves as a reminder of the threat to our military personnel when companies try to cheat the government.

Government Joins Suit Alleging Defense Contract Fraud

On Thursday October 16, the Department of Justice (“DOJ”) issued a press release announcing that the government was joining a whistleblower complaint against Sikorsky Aircraft Corporation(“Sikorsky”), a subsidiary of United Technologies Corporation, and two Sikorsky subsidiaries. Originally, the case was filed under the Act’s qui tam provisions by a former employee of the subcontractor. A representative of the DOJ’s Civil Division explains the decision to intervene: “Today’s complaint demonstrates, once again, that the Department of Justice will not tolerate contractors who engage in schemes to defraud the armed forces or any other agency of the United States.”

September 29, 2014

Workers’ Compensation Fraud: Unexpected Culprits, Costs, and Links to Health Care Fraud

by Gregory J. Brod

Picture a case of workers’ compensation fraud. Chances are if you are like most Americans, the image in your head is a worker who claims to be injured and unable to work, but then goes trail running, competes in weight lifting competitions, and single-handedly builds his own house. Contrary to this popular image, the world of workers’ compensation fraud goes far beyond worker/claimant fraud and the most costly schemes are those involving employers and/or healthcare entities. In addition to being a concern in its own right, these complex workers’ comp fraud schemes often also involve fraud on a state or federal health care program and our Northern California government fraud attorney is committed to stamping out all forms of fraud on our government programs.

Charges Filed Against “The Godfather” (of Workers’ Compensation Fraud)

Known to some as “The Godfather,” chiropractor Peyman Heidary stands accused of leading an insurance fraud case that, according to a recent article in The Orange County Register, included fraudulent workers’ compensation claims. Heidary also goes by the alias “Number One,” a well-suited title since he is listed as the top person in numerous companies, including entities in the health care and legal fields. The Riverside County District Attorney’s Office has charged with Heidary with masterminding a scheme and leading a criminal group that established medical clinics and a law firm to facilitate the submission of thousands of workers’ compensation claims based on nonexistent or exaggerated medical conditions. Per the charges, the scheme also involved recruiting injured workers for Heidary’s companies followed by the preparation and submission of claims to insurance companies and the state worker’s compensation fund.

September 22, 2014

Public Safety and Other Aims of False Claims Act Litigation

by Gregory J. Brod

In the world of False Claims Act (“FCA”) suits, it is easy to become focused on the money. Media stories often highlight the amount at issue in a pending case, the amount recovered in a settlement or verdict, or (and we’ve done this too) the staggering yearly figures for money diverted by fraud and money recovered by claims and investigations. Since the whistleblower, known in legal circles as “the realtor,” in a successful case shares in government’s recovery and can receive a large sum, many assume these realtors are focused on the money. As a law firm for False Claims Act whistleblowers in California, we know that nothing could be further from the truth. Public safety motivates realtors and is a key aim of many False Claims Act suits.

The Motives of Whistleblowers

When you talk to realtors, it becomes immensely clear that their moral/ethical compass led them to the role. Beyond our first-hand experience, this motive is emphasized in a study in the New England Journal of Medicine titled “Whistle-Blowers’ Experiences in Fraud Litigation against Pharmaceutical Companies.” Researchers spoke to 26 realtors, taking care to preserve confidentiality in order to encourage honest responses. All 26 said the potential financial bounty was had not motivated their participation in the suit. Instead, motives focused on four main themes: Integrity; Altruism/Public Safety; Justice; and Self-Preservation (i.e. reporting out of concern they’d later be linked to the scam).

August 18, 2014

Where Health Care Fraud and Government Contracting Fraud Intersects

by Gregory J. Brod

Readers of this blog know that our firm is actively working to help combat fraud against our government, including health care fraud and government contracting fraud. Sometimes, these two fields overlap. In this post, we look at a case of pharmaceutical fraud that is akin to cases of government contracting fraud and procurement fraud, with some of the fundamental concerns of health care fraud. As with cases of Medicare fraud and military contracting fraud, our San Francisco government fraud whistleblowers’ law firm works with people who see transgressions in the health care contracting area and opt to fight this dangerous misdeed.

Government Settles Vaccine Distribution Case Involving San Francisco Corporation

This month, McKesson Corporation, a San Francisco-headquartered company that distributes pharmaceuticals, agreed to pay $18 million allegations brought by the Centers for Disease Control and Prevention (“CDC”) against the company. Per a Department of Justice press release, vaccine distribution agreements provided that McKesson would distribute government-purchased vaccines to practitioners. According to the government, the contracts required McKesson keep the vaccines at an appropriate temperature during shipping. The government claims McKesson failed to set temperature monitors to the appropriate range between April 2007 and November 2007. The recently settled suit alleged that McKesson knowingly submitted false claims for payment while failing to meet its contractual obligations.

July 28, 2014

Whistleblowers’ Attorney Discusses Guilty Plea in Case Involving Contractor Providing Substandard Parts to Department of Defense

by Gregory J. Brod

Most cases of fraud involve a party attempting to gain money or some form of financial advantage by depriving another of the same. This holds true in the case of military and defense contract fraud, which frequently involves a company or individual providing a product or service below the value of that promised. While similar financially to other frauds, defense contract fraud puts the lives of our nation’s bravest at risk. This is part of the reason our San Francisco defense contract fraud law firm partners with whistleblowers to fight military contract fraud.

Guilty Plea in Case Alleging Military Contracting Fraud Involving Knockoff Parts

Last week, Law360 reported on guilty pleas by Harry Ray Bettencourt Jr., owner of defense contracting firm Kustom Parts Inc. (“KPI”), and his sons to allegations pending in an Oregon federal court. According to the allegations, KPI contracted to provide equipment and services to the Department of Defense (“DoD”) between 2006 and 2010. In some instances, KPI committed fraud when it underbid its rivals by using cheaper knockoff parts obtained from unapproved vendors. The contractor skimped on contracts including for so-called critical application items, products essential to protecting the lives of military personnel or necessary for weapons systems. In total, KPI fraudulently secure 750 DoD contracts that added up to over $10 million.