Articles Posted in Whistleblower Cases

 Pfizer, Inc. has agreed to pay $23.85 million to settle charges that it used a foundation as a conduit to pay the copays of Medicare patients taking three Pfizer drugs, in violation of the False Claims Act, the Justice Department announced today.  The government alleged that Pfizer used a foundation as a mechanism to pay the copay obligations of Medicare patients taking three Pfizer drugs:  Sutent and Inlyta, which both treat renal cell carcinoma, and Tikosyn, which treats arrhythmia in patients with atrial flutter.  The government said that to generate revenue, and instead of giving Sutent and Inlyta to Medicare patients who met the financial qualifications of Pfizer’s existing free drug program, Pfizer allowed certain patients to use the foundation to cover the patients’ Medicare copays.  Pfizer allegedly made donations to the foundation to enable it to cover the copays of these patients.

The government’s resolution of this matter illustrates the government’s emphasis on combating health care fraud.  One of the most powerful tools in this effort is the False Claims Act.  The investigation was conducted by the Justice Department’s Civil Division and the U.S. Attorney’s Office for the District of Massachusetts, in conjunction with the Department of Health and Human Services, Office of Inspector General; the Federal Bureau of Investigation: the Department of Veterans Affairs, Office of Inspector General; and the United States Postal Inspection Service.

Jeffrey Newman represents whistleblowers

Bitfinex, one of the largest and most popular exchanges among the crypto investors, has asked customers for personal information, to share it with the authorities in the British Virgin Islands, all in accordance with the local law and due to a fact that Bitfinex is actually based in this specific location. In a notice sent out to clients, Bitfinex said that clients must  send in their tax information so that it will, in turn, give it to the British Virgin Island authorities who will share the same data with relevant tax authorities or governments of its users’ country of residence.

“Under the laws of the British Virgin Islands (which are applicable to entities organized in the British Virgin Islands, including us), we are required to report certain account information to the [British Virgin Island] government,” the notice read, adding “The government of the [British Virgin Island] may then exchange that information with the tax authorities of the customer’s country of residence.” As all customers have agreed to use Bitfinex in accordance with applicable laws and regulations, all asked parties are legally bound to provide the requested information and fill out the forms that were initially provided in the mentioned emails.

If the mentioned customers are to fail in doing so, Bitfinex is then entitled of legally pursuing each customer, as they have broken the agreement of terms of services, which makes this group legally vulnerable in this case. Some customers based in the US were also asked to provide this information by the request. The notice further states that in addition to complying with the British Virgin Islands, the move is also consistent with the U.S Foreign Account Tax Compliance Act and the Organization for Economic Co-operation and Development Common Reporting Standard . As such, all clients, whether individual or corporate bodies, must fill in and submit the FATCA and CRS forms by May 24, 2018.

The former executive of a San Francisco  hospice Novus Health Services, admitted to overdosing patients to “hasten their deaths” so the company could make more money, court records show. Melanie Murphey, 36, admitted in court records that she defrauded Medicare and Medicaid by billing them for patients who did not qualify for hospice services. She also admitted filling out forms as though she were the doctor by using notes taken by a nurse.

Court records show that Murphey also admitted she followed orders for patients’ care from Novus owner Bradley Harris, who has no medical training. Murphey admitted falsifying paperwork, including orders to not resuscitate patients. This was done to avoid paying for ambulance trips to a hospital if a relative called 911The patients did not see a doctor in person before they were admitted. The indictment alleges that from July 2012 to September 2015, Novus billed Medicare and Medicaid more than $60 million for fraudulent hospice services. The government paid Novus more than $35 million.

Murphey, Novus’ director of operations, pleaded guilty to health care fraud and is expected to testify against 15 others in the case, including Harris and his wife, Amy. The other defendants have pleaded not guilty. She said Harris’ directives were intended to drive up profits. Harris ordered that patients who stayed beyond the time they allowed Novus to turn a profit receive higher doses of “whatever narcotic was being used, generally morphine, Dilaudid or Ativan,” records show. He also sent a text to a nurse that said, “You need to make this patient go bye bye” according to an affidavit.

Medicare fraudFederal prosecutors say CityMD, a New York based urgent care, admitted that it overcharged Medicare. They will pay millions for ordering more expensive procedures, and billing for services provided by physicians who were not properly credentialed.

The Whistleblower Lawsuit

The federal government joined a private whistleblower lawsuit. The lawsuit had been filed under seal but made severe allegations that CityMD has now admitted to committing.

The United States has intervened in five lawsuits against Insys Therapeutics Inc., alleging violations of the False Claims Act in marketing of Subsys, an opioid painkiller manufactured and sold by Insys.  Subsys is a sublingual spray form of fentanyl, a powerful, but highly addictive, opioid painkiller.  In 2012, Subsys was approved by the Food and Drug Administration for the treatment of persistent breakthrough pain in adult cancer patients who are already receiving, and tolerant to, around-the-clock opioid therapy. The United States alleges that Insys paid kickbacks to induce physicians and nurse practitioners to prescribe Subsys for their patients.  Many of these kickbacks took the form of speaker program payments for speeches to physicians that were, in fact, shams; jobs for the prescribers’ relatives and friends; and lavish meals and entertainment.  The United States also alleges that Insys improperly encouraged physicians to prescribe Subsys for patients who did not have cancer, and that Insys employees lied to insurers about patients’ diagnoses in order to obtain reimbursement for Subsys prescriptions that had been written for Medicare and TRICARE beneficiaries.

The qui tam provisions of the False Claims Act allow whistleblowers to file lawsuits on behalf of the United States when they believe that a party has submitted false claims for government funds, and to receive a share of any recovery.  The United States has the right to intervene and take over responsibility for litigating these cases.  Here, the United States has intervened in five separate lawsuits that have been consolidated together in the Central District of California.  They are: United States, et al., ex rel. Guzman v. Insys Therapeutics, Inc., et al., 13-cv-5861; United States ex rel. Andersson v. Insys Therapeutics, Inc., 14-cv-9179; United States ex rel. John Doe and ABC, LLC v. Insys Therapeutics, Inc., et al., 14-cv-3488; United States ex rel. Erickson and Lueken v. Insys Therapeutics, Inc., 16-cv-2956; and United States ex rel. Jane Doe, et al. v. Insys Therapeutics, et al., 16-cv-7937.

Jeffrey Newman represents whistleblowers

Jay-Z-to-testify-300x225A federal judge has ordered Jay-Z to testify as part of an SEC investigation. The rapper, whose real name is Shawn Carter, must testify next week relating to the decade old sale of his clothing brand.

Unanswered Subpoenas

Apparently, Jay-Z has failed to respond to two SEC subpoenas. The judge noted the SEC investigation has been delayed for 5 months because of his inaction. The ruling came just days after the SEC filed a request for an order seeking to enforce the subpoenas.

charter-school-fraud-300x214One of Ohio’s largest online charter schools is facing some serious allegations from a former employee. The whistleblower claims, Electronic Classroom for Tomorrow, purposely inflated attendance figures tied to its state funding.

The Investigation

Education regulators are reviewing the allegations. Last year, the former technology employee told the Department of Education that “school officials ordered staff to manipulate student data with software obtained following the state’s demand that it return $60 million in overpayments for the 2015-2016 school year.” This according to WCPO in Cincinnati.

Panasonic Avionics Corporation has agreed to pay a $137.4 million criminal penalty to settle charges arising out of a scheme to retain consultants for improper purposes and conceal payments to third-party sales agents, in violation of the accounting provisions of the Foreign Corrupt Practices Act (FCPA). The company, based in Lake Forest, California, designs and distributes in-flight entertainment systems and global communications services for airlines and airplane manufacturers.  According to court documents, PAC knowingly and willfully caused Panasonic to falsify its books and records with respect to its retention of consultants for improper purposes.  The consultants, which did little or no actual consulting work for PAC, were retained through a third-party service provider and were paid for out of a budget over which a senior PAC executive had complete control and discretion, without meaningful oversight by anyone at PAC or Panasonic.  One such individual was offered the consulting position by PAC at the time that he was employed by a state-owned airline and involved in negotiating a lucrative contract amendment on behalf of the airline with PAC.  According to court documents, that consultant was subsequently paid $875,000 by PAC over a six-year period and PAC earned over $92 million in profits from portions of the contract over which the consultant had some involvement or influence while employed with the airline.  PAC admitted that it mischaracterized these payments as “consultant payments” on its general ledger, which it knew caused Panasonic to incorrectly designate those payments as “selling and general administrative expenses” on Panasonic’s books, records, and accounts.

PAC also admitted that employees in its Asia region concealed PAC’s use of certain sales agents, which did not pass the Company’s internal diligence requirements.  According to admissions and court documents, PAC formally terminated its relationship with these sales agents, as required by its compliance policies, but PAC employees then secretly continued to use the agents by having them rehired as sub-agents of another company, which had passed PAC’s due diligence checks.  Through this process, PAC employees hid more than $7 million in payments to at least 13 sub-agents.By mischaracterizing the payments made to consultants and sales agents and providing false or incomplete representations and Sarbanes-Oxley subcertifications to Panasonic about PAC’s financials and financial controls, PAC caused Panasonic to falsify its books, records, and accounts in violation of the FCPA.PAC entered into a deferred prosecution agreement (DPA) in connection with a criminal information, filed today in the U.S. District Court for the District of Columbia, charging the company with one count of knowingly and willfully causing the falsification of the books, records, and accounts of its parent company Panasonic.  As part of the DPA, PAC will pay a total criminal penalty of $137,403,812.  PAC also agreed to continue to cooperate with the department’s investigation, enhance its compliance program, implement rigorous internal controls and retain an independent corporate compliance monitor for at least two years.

In a related proceeding, the U.S. Securities and Exchange Commission (SEC) filed a cease and desist order against Panasonic, whereby the company agreed to pay approximately $143 million in disgorgement to the SEC, including prejudgment interest.  Thus, the combined total amount of U.S. criminal and regulatory penalties to be paid by Panasonic and PAC is over $280 million.

Canada Drugs, an online Canadian pharmacy is expected to be fined $34 million for importing counterfeit cancer drugs and other unapproved pharmaceuticals into the United States. The company has filled millions of prescriptions. U.S. prosecutors assert Canada Drugs’ business is based on illegally importing unapproved and misbranded drugs not just from Canada, but from all over the world. The company earned about $78 million through illegal imports, including two that were counterfeit versions of the cancer drugs Avastin and Altuzan that had no active ingredient, prosecutors said.

Canada Drugs also will permanently cease the sale of all unapproved, misbranded and counterfeit drugs and will surrender all of the domain names for the myriad websites it used to sell the drugs, under the deal.Federal prosecutors wrote in court documents that the recommended sentence is appropriate.“The United States believes that the above-referenced sentence in an appropriate one reflecting the seriousness of Thorkelson’s conduct, the need for just punishment and adequate deterrence to future criminal conduct,” Assistant U.S. Attorney Chad Spraker and Special Assistant U.S. Attorney Paul Joseph wrote.

The case is being handled in the U.S. state of Montana, where Canada Drugs bought another company for its drug inventory and customer list when it was expanding in 2009. Canada Drugs continued to deposit money into that company’s Montana bank account from doctors’ purchase of the illegally imported drugs before the proceeds were shipped to offshore accounts in the Caribbean, prosecutors said.