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An experienced whistleblower attorney, successful trial attorney, former criminal prosecutor, and former reporter Representing whistleblowers reporting fraud on the Federal State Governments

The Bank of New York Mellon will pay more than $54 million to settle charges of improper handling of “pre-released” American Depositary Receipts (ADRs). ADRs  are U.S. securities that represent foreign shares of a foreign company and these require a corresponding number of foreign shares to be held in custody at a depositary bank.  The practice of “pre-release” allows ADRs to be issued without the deposit of foreign shares provided brokers receiving them have an agreement with a depositary bank and the broker or its customer owns the number of foreign shares that corresponds to the number of shares the ADR represents.

The Securities & Exchange Commission found that BNY Mellon improperly provided ADRs to brokers in thousands of pre-release transactions when neither the broker nor its customers had the foreign shares needed to support those new ADRs.  The inflated the total number of a foreign issuer’s tradeable securities,  resulting in abusive practices like inappropriate short selling and dividend arbitrage that should not have been occurring.

This is the seventh action against a bank or broker and third action against a depositary bank resulting from the SEC’s ongoing investigation into abusive ADR pre-release practices.  “Our ongoing industry-wide investigation into Wall Street misconduct marches on,” said Sanjay Wadhwa, Senior Associate Director of the SEC’s New York Regional Office.  “BNY Mellon is the seventh bank or broker being held accountable for improper practices that allowed banks and brokerage firms to profit handsomely while market participants were unaware of how the market was being abused.”

An appeals court has  upheld a  ruling ordering the release of previously records revealingPurdue Pharma’s marketing schemes for the potently addictive prescription opioid OxyContin. This drug is claimed to have ignited the opioid addiction epidemic which has lead to so many deaths. The records include a deposition ofRichard Sackler , a former president of Purdue and a member of the family that founded and controls the privately held Connecticut company. Others  include marketing strategies and internal emails about them; internal analyses of clinical trials; settlement communications from an earlier criminal case regarding the marketing of OxyContin; and information regarding how sales representatives marketed the drug.

The Boston Globe publication STAT filed a motion   two years ago to unseal the records — which were stored in a courthouse in a rural county in Kentucky. STAT won a lower court order  in May 2016 to release the documents, but after Purdue appealed, the judge stayed that order.

The company has 30 days to appeal the decision to the state Supreme Court.

 New York states’ Attorney General has filed  lawsuit against Target Corporation, Walmart Inc., and importer LaRose Industries, for allegedly committing thousands of violations of multiple New York laws governing the safety of children’s toys sold in the state. The action stems from testing conducted by the Attorney General’s office that found “Cra-Z-Jewelz” jewelry-making kits that were imported by LaRose, and sold by the retailers Target and Walmart in New York, contained parts with lead levels up to 10-times higher than the federal limit of 100 parts per million (ppm). The findings of the Attorney General’s investigation previously resulted in a nationwide recall of the toys.

The lawsuit alleges that Target, Walmart, and LaRose violated multiple New York State laws – including those related to selling hazardous toys, as well as deceptive acts and false advertising – by importing, distributing, selling, or holding for sale thousands of Cra-Z-Jewelz kits in New York between 2015 and 2016. The suit seeks civil penalties from the retailers and LaRose for the alleged violations, and a court order to require the companies to implement additional measures to ensure they do not again sell children’s toys containing high levels of lead in New York.

In 2015 and 2016, the Attorney General’s office purchased a number of Cra-Z-Jewelz jewelry-making kits from stores in New York City, Long Island, and the Syracuse and Buffalo areas. Tests revealed that the wristbands associated with several kits sold at Target and supplied by LaRose contained lead at levels of 120 to 980 parts per million (ppm) – levels that exceeded the 100 ppm limit established under the federal Consumer Product Safety Act for children’s products. The Attorney General’s office determined that the same kits supplied by LaRose were offered for sale by Walmart stores in New York.

Target Corp. will pay  $3 million to settle  allegations that it violated federal and state law by improperly billing and receiving payments from the state’s Medicaid program (MassHealth), Attorney General Maura Healey announced today.

Under the terms of the settlement, Target Corp. will pay $3 million to resolve allegations that from August 2009 through July 2015, the company operated an unauthorized automatic refill program at their Massachusetts locations.

Current regulations prohibit pharmacies in Massachusetts from automatically refilling prescriptions that were not explicitly requested by a MassHealth patient or caregiver at the time of each filling event. The AG’s Office alleges that Target automatically refilled prescriptions and billed MassHealth inappropriately for them

The United States has intervened in a complaint against Sutter Health LLC, a California-based healthcare services provider, and an affiliated entity, Palo Alto Medical Foundation, (collectively “Sutter”) that alleges that Sutter violated the False Claims Act by submitting inaccurate information about the health status of beneficiaries enrolled in Medicare Advantage Plans, the Justice Department announced today.    The lawsuit alleges that Sutter Health and Palo Alto Medical Foundation knowingly submitted unsupported diagnosis codes for certain patient encounters for beneficiaries under their care.  These unsupported diagnosis scores allegedly inflated the risk scores of these beneficiaries, resulting in inflated payments to Sutter.   The lawsuit further alleges that once the Sutter entities became aware of these unsupported diagnosis codes, they failed to take sufficient corrective action to identify and delete additional potentially unsupported diagnosis codes.

Under Medicare Advantage, also known as the Medicare Part C program, Medicare beneficiaries have the option of enrolling in managed healthcare insurance plans called Medicare Advantage Plans (MA Plans) that are owned and operated by private Medicare Advantage Organizations (MAOs).  MA Plans are paid a capitated, or per-person, amount to provide Medicare-covered benefits to beneficiaries who enroll in one of their plans.  The Centers for Medicare and Medicaid Services (CMS), which oversees the Medicare program, adjusts the payments to MA Plans based on demographic information and the health status of each plan beneficiary.  The adjustments are commonly referred to as “risk scores.”  In general, a beneficiary with more severe diagnoses will have a higher risk score, and CMS will make a larger risk-adjusted payment to the MA Plan for that beneficiary.

Sutter submitted diagnoses to the MAOs for the MA Plan enrollees that they treated.  The MAOs, in turn, submitted the diagnosis codes to CMS from the beneficiaries’ medical encounters, such as office visits and hospital stays, and these diagnosis codes were used by CMS to calculate a risk score for each beneficiary.

Three employees of home health care companies, Travis Moriarty, 37, Tiffhany Covington, 41, and Brenda Lowry Horton, 48, all of Pittsburgh, Pennsylvania, pleaded guilty conspiracy to defraud the Pennsylvania Medicaid program. The companies Moriarty Consultants, Inc. (MCI), Activity Daily Living Services, Inc. (ADL), Coordination Care, Inc. (CCI), and Everyday People Staffing, Inc. (EPS). MCI, ADL, and CCI were approved under the Pennsylvania Medicaid program to offer certain services to qualifying Medicaid recipients (“consumers”), including personal assistance services (PAS)  collectively, received more than $87,000,000 in Medicaid payments based on claims submitted for these services, with PAS payments accounting for more than $80,000,000 of the total amount.

The defendants admitted that co-conspirators fabricated timesheets to show in-home PAS care they provided to consumers but that, in fact, never occurred. In addition, at Arlinda Moriarty’s direction, certain co-conspirators stopped using their own names as the attendant on timesheets and instead used the names of “ghost” attendants, some of whom permitted their names to be used in exchange for a kickback of resulting fraudulent salary payments. The defendants also admitted that certain co-conspirators submitted false timesheets for PAS care they never provided during times when they were actually working at other jobs or living out of the area. In some cases, as the defendants acknowledged, Medicaid claims were submitted for PAS care that purportedly occurred while consumers were hospitalized, incarcerated, or deceased, and in other instances, co-conspirators paid kickbacks to consumers in exchange for the consumers’ agreement to participate in the submission of fraudulent timesheets in support of Medicaid claims.

The defendants also admitted that Arlinda Moriarty directed co-conspirators to bill the maximum allowable PAS and service coordination hours for consumers to maximize profits and to ensure that the state did not require MCI, ADL, and CCI to forfeit underutilized consumer hours. Many consumers had no knowledge that their personally identifiable information was being used to bill Medicaid for benefits that the consumers had not exhausted. Moreover, the Court was further advised during the plea hearings that, as part of the conspiracy, Arlinda Moriarty directed employees to fabricate documentation during the course of state audits.

Pharmaceutical manufacturer Actelion Pharmaceuticals US, Inc. (Actelion), will pay $360 million to settle claims that it illegally used a foundation as a conduit to pay the copays of thousands of Medicare patients taking Actelion’s pulmonary arterial hypertension drugs, in violation of the False Claims Act. The government says that Actelion used a foundation, which claims 501(c)(3) status for tax purposes, as an illegal conduit to pay the copay obligations of thousands of Medicare patients taking the certain Drugs and to induce those patients to purchase them, because it knew that the prices Actelion set for the Subject Drugs could otherwise pose a barrier to those purchases. Actelion’s pulmonary arterial hypertension drugs are Tracleer, Ventavis, Veletri, and Opsumit.

When a Medicare beneficiary obtains a prescription drug covered by Medicare, the beneficiary may be required to make a partial payment, which may take the form of a copayment, coinsurance, or a deductible (collectively “copays”).  These copay obligations may be substantial for expensive medications.  Congress included copay requirements in the Medicare program, in part, to serve as a check on health care costs, including the prices that pharmaceutical manufacturers can demand for their drugs.

Under the Anti-Kickback Statute, a pharmaceutical company is prohibited from offering or paying, directly or indirectly, any remuneration—which includes money or any other thing of value— to induce Medicare patients to purchase the company’s drugs.  This prohibition extends to the payment of patients’ copay obligations.

The Synthetic Turf Council (STC) has learned that U.S. Customs and Border Protection (CBP) is investigating U.S. importers of synthetic turf that may be willfully evading tariffs placed on synthetic or artificial turf.

Based on publicly available information, the STC and industry participants have filed hundreds of e-Allegation violations that question whether the synthetic turf that is being imported into the U.S. is properly coded and subject to tariffs. CBP is using this data and other information in order to conduct its investigation.

According to CBP, e-Allegations provide a means for the public to report to CBP any suspected violations of trade laws or regulations related to the importation of goods into the U.S. These types of violations include misclassification of merchandise, false country of origin markings, health and safety issues, valuation issues and intellectual property rights.

Medical device manufacturer ev3 Inc. has agreed to plead guilty to charges related to its neurovascular medical device, Onyx Liquid Embolic System, and pay $17.9 million, the Department of Justice announced today.  Covidien LP, whose parent acquired ev3, separately paid $13 million to resolve False Claims Act allegations resulting from its alleged payment of kickbacks in connection with another medical device, the Solitaire mechanical thrombectomy device. FDA officials told ev3 executives that a study would be required to gain approval for uses of Onyx outside the brain and to ensure that the benefits of the device outweighed the risks.  Rather than conduct a study to ensure the safety and effectiveness of Onyx for uses outside the brain, ev3’s sales representatives sometimes attended surgical procedures and provided explicit instructions to surgeons regarding how to use Onyx for unapproved surgical procedures outside the brain, including in quantities far larger than what would be used in the brain.  According to the criminal information, ev3’s management also set-up a system of sales quotas and bonuses that incentivized sales representatives to sell Onyx for unapproved uses and trained the sales force how to instruct physicians on unapproved uses of the device.

Pursuant to a criminal information filed today in U.S. District Court for the District of Massachusetts, ev3 will plead guilty to a misdemeanor charge in connection with the company’s distribution of adulterated Onyx, in violation of the Food, Drug and Cosmetic Act.  As part of the criminal resolution, ev3 will pay a criminal fine of $11.9 million and will forfeit $6 million.

According to the plea agreement, Onyx was approved by the U.S. Food and Drug Administration (FDA) as a liquid embolization device that is surgically injected into blood vessels to block blood flow to arteriovenous malformations in the brain.  The FDA has approved Onyx only for use inside the brain.  Despite the FDA’s limited approval of Onyx, from 2005 to 2009, ev3 sales representatives encouraged surgeons to use Onyx in large quantities for unproven and potentially dangerous surgical uses outside the brain.  The company’s sales force continued to tout unapproved and potentially dangerous uses of Onyx even after FDA officials told ev3 executives that they had specific safety concerns regarding uses of Onyx outside the brain at a 2008 meeting.  FDA officials told ev3 executives that a study would be required to gain approval for uses of Onyx outside the brain and to ensure that the benefits of the device outweighed the risks.

Whistleblower Carl Krawitt, a former contractor for Infosys and Apple filed a Complaint in federal Court asserting that the two companies conspired to evade US visa laws relating to H-1B visas. This week, the judge denied Apple’s motion to stop production of documents in the case, setting the lawsuit on course to continue. The lawsuit claims that they conspired to get around the problem of obtaining the costly H-1B visas for two Indian workers. He claims the companies fraudulently acquired B-1 visas, which are intended for temporary business visitors, by telling the U.S. government in “invitation letters” that the Indian nationals were coming for a business meeting when they were actually arriving to train about 75 Apple workers in a six-week program.
“Infosys avoids paying the United States the substantially higher application fee for H-1B visas, and avoids paying Social Security, Medicare and other fees and taxes to the United States,” his amended complaint said. “Apple willingly participated in lnfosys’ scheme by contracting with Infosys for workers on B-1 visas instead of hiring United States citizens and/or green card holders as full-time employees at market rate compensation. Apple did so as a cost-savings measure.” Apple also falsely told federal authorities that it would not be paying Infosys in connection with the two men’s activities in the U.S., the amended lawsuit claimed.

U.S. District Court Judge Lucy Koh dismissed the case last month but allowed Krawitt to submit more evidence in an amended complaint. Krawitt filed the new complaint Nov. 15.