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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

 DaVita Rx LLC, a nationwide pharmacy that specializes in serving patients with severe kidney disease, agreed to pay a total of $63.7 million to resolve False Claims Act allegations relating to improper billing practices and unlawful financial inducements to federal healthcare program beneficiaries, the Justice Department announced today.

The settlement resolves allegations that DaVita Rx billed federal healthcare programs for prescription medications that were never shipped, that were shipped but subsequently returned, and that did not comply with requirements for documentation of proof of delivery, refill requests, or patient consent.  In addition, the settlement also resolves allegations that DaVita paid financial inducements to Federal healthcare program beneficiaries in violation of the Anti-Kickback Statute.  Specifically, DaVita Rx allegedly accepted manufacturer copayment discount cards in lieu of collecting copayments from Medicare beneficiaries, routinely wrote off unpaid beneficiary debt, and extended discounts to beneficiaries who paid for their medications by credit card.  These allegations relating to improper billing and unlawful financial inducements were the subject of self-disclosures by DaVita Rx and a subsequently filed whistleblower lawsuit.

DaVita Rx has agreed to pay a total of $63.7 million to resolve the allegations in its self-disclosures and the whistleblower lawsuit.  DaVita Rx repaid approximately $22.2 million to federal healthcare programs following its self-disclosure and will pay an additional $38.3 million to the United States as part of the settlement agreement.  In addition, $3.2 million has been allocated to cover Medicaid program claims by states that elect to participate in the settlement.  The Medicaid program is jointly funded by the federal and state governments.

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 Fraud Investigators Follow the Money to Delaware

 SEC’s fraud investigators are in the midst of uncovering a possible billion-dollar investment scheme.  The trail is taking them to Delaware in search of more than 200 Delaware limited liability companies.  Delaware Online reports it’s the latest turn in a high-profile case that seems to take advantage of the secret nature of LLC’s in their state around the country.  Apparently, dirty money can flow easily through an LLC’s pipeline and fraud investigators want to close that loophole.

LLC Fraud Investigation

The Securities and Exchange Commission charged Provectus  biopharmaceutical company with  failure to properly report as compensation millions of dollars in perks provided to its then-CEO and then-CFO. According to the SEC,  Provectus lacked sufficient controls surrounding the reporting and disclosure of travel and entertainment expenses submitted by its executives.  The order further finds that Provectus’ former CEO, Dr. H. Craig Dees, obtained millions of dollars from the company using limited, fabricated, or non-existent expense documentation, and that these unauthorized perks and benefits were not disclosed to investors.  Provectus’ former CFO, Peter R. Culpepper, also allegedly obtained $199,194 in unauthorized and undisclosed perks and benefits.

The SEC separately charged Dees in federal district court in Knoxville, Tennessee, alleging that, while Dees was Provectus’ CEO, he treated the company “as his personal piggy bank.”  According to the complaint, Dees submitted hundreds of falsified records to Provectus to obtain $3.2 million in cash advances and reimbursements for business travel he never took.  Instead, he concealed the perks and used cash advances to pay for personal expenses such as cosmetic surgery for female friends, restaurant tips, and personal travel.

“Reimbursement of travel and entertainment expenses, and other perks paid to executives, can be material information, and companies must ensure that the perks they pay for executives are properly recorded and disclosed in public filings,” said Stephanie Avakian, Co-Director of the SEC’s Enforcement Division.  “Provectus failed to give its shareholders all of the relevant information about how its top executives were being compensated by the company.”

According to the publication STAT, a Boston Globe publication, three more drug makers have allegedly relied on fraudulent schemes where  which nurses were used to illegally promote its diabetes medicines to physicians. The information comes from three unsealed lawsuits filed by whistleblowers under the False Claims Act.  The lawsuits allege that Gilead Sciences, Amgen , and Bayer Pharmaceuticals hired nurses to promote treatments to doctors and their patients, an arrangement that purportedly violated federal kickback laws.

In each lawsuit, the drug makers allegedly used various means to improperly use nurses to promote their medicines. One allegedly involved using a third party to deploy nurse educators to sell drugs. The companies also provided free nurses and reimbursement support services to save physicians money and to induce them to prescribe their medicines, according to the lawsuits. This service for value is considered a kickback under law. As a result, Medicare and Medicaid were fraudulently billed for  prescriptions say the lawsuits. The lawsuits also named other companies that were engaged to further their goals, including Covance, HealthStar Communications, and AmerisourceBergen.

A similar suit was against Eli Lilly . All three of the lawsuits, which were filed last June in a federal court in Texas and unsealed more recently, were initiated by Health Choice Advocates, a unit of a health care research that describes itself as a whistleblower.

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 The Justice Department announced  that IBERIABANK Corporation, IBERIABANK and IBERIABANK Mortgage Company (collectively, IBERIABANK) have agreed to pay the United States $11,692,149 to resolve allegations that they violated the False Claims Act by falsely certifying they were complying with Federal requirements in order to obtain insurance on mortgage loans from the Federal Housing Administration (FHA), part of the U.S. Department of Housing and Urban Development (HUD).  IBERIABANK Corporation is headquartered in Lafayette, Louisiana, with branches across the Southeast, including Arkansas.

“Mortgage lenders must follow FHA program rules designed to avoid putting federal funds at risk and increasing the chances that borrowers may lose their homes,” said Principal Deputy Assistant Attorney General Chad A. Readler, head of the Justice Department’s Civil Division.  “The Department will continue to hold accountable lenders that knowingly violate material program requirements that cause the government to guarantee ineligible loans.”

During the time period covered by the settlement, IBERIABANK participated as a direct endorsement (DE) lender in the FHA insurance program.  A DE lender has the authority to originate, underwrite and endorse mortgages for FHA insurance.  If a DE lender approves a mortgage loan for FHA insurance and the loan later defaults, the holder of the loan may submit an insurance claim to HUD, FHA’s parent agency, for the losses resulting from the defaulted loan.  Under the DE program, the FHA does not review a loan for compliance with FHA requirements before it is endorsed for FHA insurance.  DE lenders are, therefore, required to follow program rules designed to ensure that they are properly underwriting and certifying mortgages for FHA insurance, to maintain a quality control program that can prevent and correct deficiencies in their underwriting practices, and to self-report any deficient loans identified by their quality control program.  FHA rules also prohibit the payment of commissions to lender underwriting staff in order to avoid improper incentives.  DE lenders such as IBERIABANK certify compliance with material FHA requirements.

briberyFCPA is Being Encouraged to Fight Foreign Bribery

The US Justice Department is apparently bulking up its anti-foreign bribery program.  According to HETQ, the US plans to expand benefits for companies who report on any acts of foreign bribery their employees may have committed.  Deputy Attorney General Rod Rosenstein announced the new policy at the 34th International Conference on the FCPA in Maryland.

The FCPA

SECChanges to the CFTC Whistleblower Program Could Encourage More People to Come Forward

 Don’t kick yourself for not realizing The Commodity Futures Trading Commission even had its own whistleblower program.  As a new write-up in Forbes points out, the CFTC program has been a bit slow to take off, compared to the SEC whistleblower program, but that could all be changing soon. The Dodd-Frank Wall Street Reform and Protection Act, created the SEC whistleblower reward program and the CFTC whistleblower reward program in 2010.  After the financial crisis of 2007-2008 the CFTC has been transitioning to bring more transparency and stricter regulation to the multi-trillion dollar swaps market.  Now the final rules for its whistleblower program have been issued.

The Changes

opioid fraudOn November 29, 2017 Charles J. Gartland, D.O., age 59 of Cochranville, PA was indicted by a federal grand jury on charges of opioid diversion and health care fraud.

United States Attorney David J. Freed said the charges of the indictment were handed down based on the belief that Gartland headed up a plan to defraud two health care benefit programs, Wellspan Health of York, PA and Medicare, by writing 221 prescriptions written in the names of three of his family members between the dates of September 2014 and August 2017.  The prescriptions were for the opiates Hydrocodone, Oxycodone, Fentanyl, Morphine and other controlled substances. The majority of the prescriptions were written for Hydrocodone-Ibuprofen.

The indictment notes that the prescriptions were not written for treatment of the family members but rather for the personal use of Dr. Gartland. Because of this, the prescriptions were not written in the realm of professional medical practice and were not used for a medical reason.

addictionMost people are aware that there is a serious Opioid crisis in America. But how many people know that the company who makes OxyContin, the highly addictive painkiller, is owned by a single family who has reaped billions of dollars of profits?

To say that the Sackler family has an impressive roster of monuments to their wealth would be an understatement. The Sackler family has had entire museums, wings, labs, stairways, and courtyards erected in their name.

From buildings and monuments to philanthropy, the Sackler name is everywhere, but the family itself is hardly ever seen.  In 2015 Forbes magazine added the family to the list of America’s richest families.  The billionaire family is descended from Mortimer and Raymond Sackler, two psychiatrist brothers from Brooklyn. Consisting of about 20 members, Forbes cited their wealth at a low-ball of 14 billion dollars. The family never comments publicly on the source of all that wealth – and that’s not a surprise. Most of their wealth came from sales of the narcotic painkiller, OxyContin. Since 1966 when the drug began being sold by the American branch of the Sackler’s pharmaceutical empire, Purdue Pharma, more than 200,000 people have died from overdoses on OxyContin and other painkillers.

The Securities and Exchange Commission today charged Oyster Bay, New York, and its former top elected official with defrauding investors in the town’s municipal securities offerings by hiding the existence and potential financial impact of side deals with a businessman who owned and operated restaurants and concession stands at several town facilities.

According to the SEC’s complaint filed in U.S. District Court for the Eastern District of New York, Oyster Bay agreed several years ago to indirectly guarantee four separate private loans to the vendor totaling more than $20 million.  The agreement to indirectly guarantee the debts allegedly stemmed from the concessionaire’s longstanding close relationship with then-town supervisor John Venditto and other officials that involved gifts, bribes, kickbacks, and political support.

The SEC’s complaint alleges that Oyster Bay and Venditto deliberately concealed the indirect loan guarantees when they should have been disclosed in connection with the town’s 26 securities offerings from August 2010 to December 2015.  According to the complaint, this information was material to current and prospective investors due to the potential impact on the town’s finances.  For example, in one scenario outlined in the SEC’s complaint, the town could have been required to make a termination payment of approximately $16 million (approximately 16 percent of the town’s operating budget) within 60 days had the vendor defaulted on the loans.