Whistleblowers and Qui Tam Lawsuits

June 6, 2016

Government Contract Fraud: Using the False Claims Act to Fight Back Against Companies that Cheat the American People

The government is, in many ways, a large business. Given its size and the breadth of its duties, the government relies on individuals and companies for a wide range of goods and services. However, because of the government’s special position, government contracts often contain clauses unique to agreements between the government and private entities. When contractors knowingly violate these clauses, they commit fraud. Government contract fraud is ultimately a fraud on all taxpayers and a way of stealing from already strained coffers needed for important services like education, health care, and national defense. Our government contract fraud law firm partners with whistleblowers to fight these wrongs.

$11.38 Million Settlement in Case Alleging Government Contract Fraud and Violation of Price Reduction Clause

On May 31, the Department of Justice (“DOJ”) issued a press release announcing that Deloitte Consulting LLP (“Deloitte”) has agreed to pay $11.38 million to settle claims it violated a pricing clause in its federal contracts. According to the government, the General Services Administration (“GSA”) awarded Deloitte a contract in 2000 pursuant to which the consulting company was to provide information technology services. Under the agreement, if Deloitte offered a lower price to specific commercial customers during the term of the contract, it was also required to reduce to price the company charged the government. In a lawsuit filed under the False Claims Act, the government alleged that Deloitte violated the price reduction clause between 2006 and 2012 and charged the government more than comparable commercial clients. It is important to note that the settlement is not an admission of wrongdoing.

May 30, 2016

Understanding the False Claims Act: Whistleblowers’ Law Firm Looks at Government Intervention

by Gregory J. Brod

The False Claims Act is a powerful weapon and, as we’ve talked about on this page numerous times, a large part of that power comes from the fact that ordinary citizens can use it to fight many forms of fraud on the United States government. After the initial filing of a whistleblower fraud claim, the government will eventually decide whether or not to intervene in the case. This is an important part of the process and our whistleblowers’ law firm knows that intervention in False Claims Act cases, such as recently occurred in a health care fraud suit, is often a positive sign. However, it is important to know that claims can be and are successful even absent government intervention.

The FCA and Intervention Generally

The False Claims Act (“FCA” or “the Act”) is a Civil War Era statute that was reenergized by a series of amendments in the 1980s. In short, a company or individual violates the Act when it defrauds the government, typically by overcharging the government or a government agency. Under 31 U.S.C. §3730(b), private citizens are given the power to bring FCA claims on the government’s behalf. These whistleblowers, also known as relators, are crucial since fraud by its nature is secretive and the government could not effectively fight fraud without the assistance of individuals who witness fraudulent acts. After the suit is filed, the government investigates the claim and then the Department of Justice (“DOJ”) decides whether or not it wants to take over the case. The decision to do so is known in legal circles as intervention.

May 23, 2016

Financial Fraud Claims Under the False Claims Act: Combatting Mortgage Fraud and More

by Gregory J. Brod

While it is no longer headline news, the impact of mortgage fraud continues to be felt nationwide. As the fallout continues, so does the fight to make companies and individuals pay for violating the law and contributing to a major financial crisis. The False Claims Act (“FCA”) is one of the most important tools in this fight. Its use in this context is an important reminder of the FCA’s broad coverage, reach that extends far beyond health care fraud to include financial industry fraud that improperly takes money from the government or its agencies. Our government fraud whistleblowers’ law firm works with honest individuals to combat fraud on the government using this important legislation.

Lender Pays $64 Million to Resolve Claims of Mortgage Fraud

On Friday May 13, the Department of Justice (“DOJ”) announced that M&T Bank had agreed to pay $64 million to resolve allegations its mortgage lending practices violated federal guidelines and the FCA. The underlying suit dealt with the Bank’s role as a Direct Endorsement Lender (“DEL”) for the Federal Housing Administration (“FHA”). Under that program, M&T could originate, underwrite, and endorse FHA insured mortgages so that the holder of the loan could submit a claim to the FHA if the lender later defaults. The government relies on DELs to follow program rules, including the use of a quality control program, and does not independently review the loans for compliance. When companies violate this trust, it can lead to the government endorsing unqualified loans and paying out substantial money after lenders default on loans that should never have been approved.

May 16, 2016

Using the False Claims Act to Protect Funds for Cancer Patients

by Gregory J. Brod

Cancer. Rarely can one word strike so much fear. We have come so far in both cancer prevention and cancer treatment; yet we also have so much farther to go before we can truly say we’ve triumphed over this massive beast. One major challenge is the cost of treating cancer. While much of that cost is due to the challenges of medical research, some companies are deliberately over-charging cancer patients and their insurance providers by billing for expensive and unnecessary services. The battle against cancer treatment fraud is yet another example of a front in which the False Claims Act can be a tool for justice and even a tool for health. As a health care fraud law firm, we partner with whistleblowers to fight these wrongs and ensure health care funds are available for true medical needs.

Company Pays Nearly $34.7 Million to Settle Allegations of Overbilling for Cancer Treatment

Earlier this Spring, the Department of Justice (“DOJ”) announced that 21^st Century Oncology agreed to pay nearly $34.7 million to settle a False Claims Act lawsuit alleging they performed and billed federal health care agencies (e.g., Medicare, Tricare, Medicaid) for procedures that were not medically necessary. The underlying suit involved a procedure called the Gamma function which measures the exit dose radiating from an individual after radiation treatments. The government alleged that the company performed and billed for this procedure when it was not needed for any medically appropriate purpose. Additionally, the suit alleged that 21^st Century billed for Gamma function treatments in cases where no physician reviewed the results in a timely manner and in cases where technical equipment failures meant no results could be obtained. The suit was originally brought by a former physicist with a Florida oncology company who filed the claims under the whistleblower or qui tam provisions of the False Claims Act and who will receive over $7 million for his role in the case.

May 9, 2016

The False Claims Act: What it Does and How Private Whistleblowers Can Use It

by Gregory J. Brod

We talk a lot about the False Claims Act (“FCA” or “the Act”)) on this blog. We do that because it is a powerful tool that allows ordinary Americans to take a stand and fight fraud. The frauds it fights are frauds perpetrated against the government and government programs, frauds that are ultimately crimes against the American people. Our posts often look at specific cases involving alleged violations of the FCA, but from time to time our whistleblowers’ law firm likes to take a step back and look at the FCA more generally to help our readers understand exactly what kind of wrongs the FCA tackles.

“A False or Fraudulent Claim”

The FCA is actually several sections of the United States Code, with 31 U.S.C. §3729 containing the basic description of what actions violate the Act. Although it is only one of a number of subsections that describe these actions, §3729(1)(a) explains the basic wrong the Act tackles “a false or fraudulent claim for payment or approval.” Essentially, this means that a person or entity is liable under the Act if they ask the government to pay an obligation that is not actually due or ask for more money than they are actually due.

May 2, 2016

Another Major Settlement in a Pharmaceutical Industry Health Care Fraud Case

by Gregory J. Brod

We can tell you that the False Claims Act is a powerful tool for fighting the growing epidemic of health care fraud in the United States. We prefer, however, to show you by citing some of the biggest verdicts and settlements in the field. This week, we highlight a settlement involving allegations of Medicaid fraud in the pharmaceutical industry. As a Medicare and Medicaid fraud whistleblowers’ law firm, we help honest witnesses bring lawsuits in cases like this one to fight back against pharmaceutical company fraud and other cases of fraud against government health care programs.

Drug Company to Pay $784.6 Million to Settle Claims It Failed to Report Accurate Pricing Data and Underpaid Medicaid Drug Rebates

On April 27, the Department of Justice (“DOJ”) issued a press release announcing that Wyeth and Pfizer (Pfizer acquired Wyeth after the alleged conduct ended; defendants referred to collectively as “Wyeth”) have agreed to pay $784.6 million to settle a False Claims Act suit alleging Wyeth committed Medicaid fraud by reporting false prices on two of its medications. The complaint alleged that Wyeth gave thousands of hospitals deep discounts on two protein pump inhibitor drugs but failed to report these lower prices to the government. Allegedly, Wyeth used a bundled sales agreement to induce hospitals to purchase two of its drugs and place them on hospital formularies. The government believes Wyeth sought to control the hospital market in part because patients often stay on the drugs for a long time after discharge and payers, including Medicaid, would then end up paying nearly full price for the medications.

April 25, 2016

Spotlight on FHA Mortgage Fraud: The Threat and How Private Citizens Can Fight Back with the Help of Our Mortgage Fraud Law Firm

by Gregory J. Brod

In addition to health care fraud and government contracts fraud, the False Claims Act is also essential in the fight against mortgage fraud. While it is a phrase that few of us knew 15 years ago, mortgage fraud exploded in the first decade of the new millennium and it continues to be a major threat to our nation’s economy. Individual whistleblowers, people who see fraud and speak up, are the key to fighting back and our mortgage fraud lawyer is proud to partner with them in this important battle.

A Brief Overview of Mortgage Fraud

Before diving into a recent case, some readers may find a brief definition of mortgage fraud helpful. In its Mortgage Fraud Overview, the Federal Bureau of Investigations (“FBI”) explains: “Mortgage fraud is a crime characterized by some type of material misstatement, misrepresentation, or omission on a loan which is then relied upon by a lender.” The FBI goes on to note that there are two broad categories of mortgage fraud: 1) Fraud for housing which is typically perpetrated by a borrower looking to acquire property and 2) Fraud for profit which is typically perpetrated by financial institutions and industry leaders. Our focus in this post is on the latter, also the type of fraud blamed for the subprime mortgage crisis.

April 18, 2016

Using the False Claims Act and State Equivalents to Protect Privacy and American Jobs

by Gregory J. Brod

Readers of this blog know that the False Claims Act and its state equivalents are powerful tools for fighting fraud on the government and, in turn, on taxpayers. One of the reasons these laws are so powerful is that they cover a wide-range of frauds. Although health care fraud is likely the most well-known wrong addressed through whistleblower litigation under the Acts, they cover a myriad of different subject matters as demonstrated by a recently settled case out of New York. While the case is largely about government contracting fraud, it touches on issues two of the most important business issues of recent decades: the outsourcing of American jobs and data privacy. Our False Claims Act law firm is encouraged to continue to see the power these laws give to ordinary people to tackle extraordinary issues (and, often, win!).

Settlement Filed in Case Against Government Contractor Who Sent Data and Jobs Overseas

Last month, the New York State Attorney General’s Office issued a press release announcing a $3.1 million settlement in a case accusing Focused Technology Imaging Services, LLC (“FTIS”) and two of its leaders of unlawfully outsourcing government-funded work to India. FTIS, a business located near Albany, entered into a $3.45 million agreement flag2 to digitize and index some 22 million fingerprint cards. FTIS also agreed to create a searchable database of the print cards for the New York State Division of Criminal Justice Services (“DCJS”) and the non-profit New York State Industries for the Disabled (“NYSID”) in the 2008-2009 timeframe. The fingerprint cards were used by a range of individuals from state employees to prisoners and arrestees and contained information including Social Security number, the reason for taking the fingerprint, the fingerprint itself, and other important personal information.

April 11, 2016

Health Care Fraud Spotlight: Medicaid Fraud in the Dental Field

by Gregory J. Brod

Health care fraud touches almost every part of the American health care system and dental care is no exception. While dental services are typically not covered by Medicare, Medicaid requires states to include dental care for covered children and states can elect whether or not to cover dental care for Medicaid-covered adults. When dental fraud targets Medicaid dollars (or other government programs such as Tricare), children and adults can be deprived of an important aspect of overall health and taxpayer money is diverted from its intended purpose. Our dental fraud law firm works with whistleblowers using both state and federal False Claims Acts to bring the perpetrators to justice.

Two Examples of Medicaid Fraud Allegations Involving Dental Services

In February, according to a press release from the Department of Justice, a Missouri dentist entered a guilty plea to allegations he conspired to commit Medicaid fraud and to collect over $167,000 in connection with claims for orthodontic devices purchased for child patients in his dental clinics. In his plea, the dentist admitted he and his co-conspirators billed Medicaid claiming the devices were intended as a form of speech aid prosthesis when they were actually a method of straightening teeth without the use of braces. Although the Medicaid code used meant the claims were pre-certified, they should have been filed under a different code which would have required pre-authorization. In his plea, the dentist admitted the patients had not received and did not qualify for orthodontic treatment so Medicaid would not have covered the claims. The defendant further admitted that the co-conspirators paid around $50 per device, but billed Medicaid for approximately $695 per device (the maximum allowed for a speech prosthesis).

April 4, 2016

An Abuse of Trust: Colleges and Universities Committing Federal Grant Fraud

by Gregory J. Brod

Recently, our firm reported on the problem of institutions of higher learning abusing the public’s trust and breaking the law in connection with federal student loans and federal laws on student recruitment. Sadly, those are not the ways colleges and universities abuse and misuse federal taxpayer funds. Our education fraud attorney is closely monitoring developments involving federal education grant fraud. These frauds are a form of theft from the American taxpayers and they also divert money from important education and research programs.

School Agrees to Pay $4 Million to Settle Education Grant Fraud Claims

In March, a federal court sitting in Sacramento announced that Bard College agreed to pay $4 million to resolve claims initially raised by two former students who attended a Master of Arts program at Paramount Bard Academy in California via the False Claims Act’s (“FCA”) qui tam provisions. The government later intervened in the case. classroom The lawsuit alleged that Bard, a nonprofit school based in New York state, received funds from the Department of Education’s Teacher Quality Partnership Grant Program but failed to comply with the grant’s conditions. Additionally, the suit claimed that Bard abused Title IV student loan money by applying funds to campuses that had not yet received necessary accreditation. Although Bard agreed to pay to settle the case, it is important to note the school did not admit to the allegations in the complaint.