Articles Posted in Whistleblower Cases

A skilled nursing facility and its administrator have agreed to pay $1.5 million to settle a False Claims Act case alleging illegal kickbacks and a referral scheme for Medicare and Tricare patients. The United States alleged that these financial arrangements violated the physician self-referral law, commonly known as the “Stark Law,” and the Anti-Kickback Statute, giving rise to liability under the False Claims Act. Pursuant to two separately executed settlement agreements, Dr. Krumins has agreed to pay $500,000, and Conway Lakes, Clear Choice, Cleveland, Fraser, and File have agreed collectively to pay $1 million to the United States.Conway Lakes NC, LLC; its former Administrator, Matthew File; its management company, Clear Choice Health Care, LLC; Clear Choice’s part-owner and President, Jeffrey Cleveland; Clear Choice’s part-owner and Senior Vice President, Geoffrey Fraser; and an Orlando-area orthopedic surgeon, Dr. Kenneth Krumins, agreed to pay $1.5 million to resolve allegations that they engaged in a kickback scheme related to the referral of Medicare and TRICARE patients.

The settlements announced today resolve allegations that Conway Lakes, through File, Cleveland, Fraser, and Clear Choice, conspired to pay Dr. Krumins under a sham “medical director” agreement to induce him to illegally refer Medicare and TRICARE patients to Conway Lakes for rehabilitation services that were billed to the United States. Dr. Krumins’s settlement agreement also resolves allegations that he engaged in a similar kickback scheme with a related home health agency.

The allegations resolved by the settlement agreements were originally brought in a lawsuit filed by a former employee of Conway Lakes, Jonathan Montes de Oca, under the qui tam, or whistleblower, provisions of the False Claims Act.  The Act permits private citizens with knowledge of fraud against the government to bring an action on behalf of the United States and to share in any recovery.  Mr. Montes de Oca will receive $267,000 of the proceeds from the settlements. He is represented by Morgan and Morgan.

elder-financial-abuse-300x200Elder financial abuse is on the rise with thousands falling victim each year and millions more vulnerable. According to an in-depth report by the Wall Street Journal, U.S. banks reported a record 24,454 suspected cases of elder financial abuse to the Treasury Department in 2018. That’s more than double the cases reported just five years ago.

Elder Financial Abuse on The Rise

It’s little wonder that elder financial abuse is on the rise, according to the American Bankers Association, people over 50 represent only one-third of the population but account for well over half of the bank accounts and 70% of bank deposits. Recently federal and state laws have been requiring banks to keep better tabs on elder financial abuse, but the chance for abuse is only growing:

Two Chinese hackers  Zhu Hua (朱华), aka Afwar, aka CVNX, aka Alayos, aka Godkiller; and Zhang Shilong (张士龙), aka Baobeilong, aka Zhang Jianguo, aka Atreexp, both nationals of the People’s Republic of China (China), were charged with conspiracy to commit computer intrusions, conspiracy to commit wire fraud, and aggravated identity theft according to the U.S Department of Justice. Zhu and Zhang were members of a hacking group operating in China known within the cyber security community as Advanced Persistent Threat 10 (the APT10 Group).  The defendants worked for a company in China called Huaying Haitai Science and Technology Development Company (Huaying Haitai) and acted in association with the Chinese Ministry of State Security’s Tianjin State Security Bureau.
Through their involvement with the APT10 Group, from at least in or about 2006 up to and including in or about 2018, Zhu and Zhang conducted global campaigns of computer intrusions targeting, among other data, intellectual property and confidential business and technological information at managed service providers (MSPs), which are companies that remotely manage the information technology infrastructure of businesses and governments around the world, more than 45 technology companies in at least a dozen U.S. states, and U.S. government agencies.  The APT10 Group targeted a diverse array of commercial activity, industries and technologies, including aviation, satellite and maritime technology, industrial factory automation, automotive supplies, laboratory instruments, banking and finance, telecommunications and consumer electronics, computer processor technology, information technology services, packaging, consulting, medical equipment, healthcare, biotechnology, pharmaceutical manufacturing, mining, and oil and gas exploration and production.  Among other things, Zhu and Zhang registered IT infrastructure that the APT10 Group used for its intrusions and engaged in illegal hacking operations.

“The indictment alleges that the defendants were part of a group that hacked computers in at least a dozen countries and gave China’s intelligence service access to sensitive business information,” said Deputy Attorney General Rosenstein.  “This is outright cheating and theft, and it gives China an unfair advantage at the expense of law-abiding businesses and countries that follow the international rules in return for the privilege of participating in the global economic system.”

    The Food and Drug Administration regulators may  enact a ban on electronic cigarettes, if manufacturers do not stop marketing the products to teens and take significant steps tostop the teen vaping epidemic in the United States.  At a public hearing on teen vaping , FDA Commissioner Scott Gottlieb said that a full ban on electronic nicotine delivery systems  may be necessary to protect the nations youth.  E-cigarette use spiked to 78% among high school students and 48% among middle school students over the last year, making it the most popular form of tobacco use among the nation’s teens.

    Recently the Surgeon General issued a warning the public about the long-term health risks and addiction teens face by taking up the habit. Studies have also shown recently that teen use of e-cigarettes quadruples their risk of smoking traditional tobacco cigarettes later in life. Teenagers also face other health risks related to toxic chemical exposure  and respiratory side effects.

    More than 1.5 million teens began vaping from 2017 to 2018; a statistic that is startling for many regulators. For several months the agency has warned that if e-cigarette companies don’t end advertising campaigns aimed at underage users, the agency could enact a full ban on all e-cigarette and vaping products.

     A British national Nick Stride, who rendered information to an American journalist in 2-14, exposing Igor Shuvalov’s story may soon be deported along with his family from Australia according to SBS news. Stride was a glazing expert hired as a contractor by Shuvalov, to work on a palace near Moscow in 2006. He is married to Russian Ludmila Kovaleva. The person who hired him was Russia’s former Deputy Prime Minister Igor Shuvalov and has been living in Perth with his family since 2012. Mr   Stride was the source behind 2014 expose in the Foreign Policy magazine on Mr Shuvalov’s unexplained wealth.
    In that article, published in Foreign Policy (    ) it is alleged that Shuvalov, then Vladimir Putin’s economic aid and now Russia’s first deputy prime minister, used offshore companies to buy close to $2 million in building materials from a Belgian contractor to build a greenhouse on the estate. It is alleged that Mr Shuvalov, who was Deputy Prime Minister at the time, had amassed a wealth of at least $220 million through questionable business practices.Mr. Stride and his family first fled to the United Kingdom in 2010 but feared they were still “within Russian reach” sought political asylum in Australia. Their asylum bid was rejected in 2012.
    Mr Stride and his children face deportation to the United Kingdom, while his wife Ludmila Kovaleva, who is a Russian national also faces being deported. Journalist Michael Weiss, who was the author of the 2014 article, tweeted earlier this week that his source, Mr Stride, was in “immediate danger” and had asked for help.Mr. Weiss said he only revealed his source at Mr Stride’s request because of the urgency of his situation.

    Regulators found that the company had used “defeat” devices to cover up its true emissions figures, even though FCA insisted it had done nothing illegal.

    “Fiat Chrysler tried to evade these standards by installing software to cheat emissions testing,” California Attorney General Xavier Becerra said.

    According to a recent study on electronic espionage vulnerabilities, the U.S. government is significantly at risk to Chinese espionage and cyber attacks as we are so dependent on electronics and software made in China This is an increasing risk as China seeks global technological dominance, according to a study for a congressionally chartered advisory commission.

    Much of the  U.S. Government’s annual $90 billion spent on information technology is devoted to Chinese products, which creates the opportunity for China to seed U.S. government offices with spyware and electronic backdoors that can be exploited for cyber attacks, said Jennifer Bisceglie, chief executive of Interos Solutions, which conducted a recently released study.

    “They are doing it,” Bisceglie said. “We’re not even making it difficult right now.”

    The Department of Justice collected more than $2.8 billion in settlements and judgments from civil cases involving fraud and false claims against the government in the fiscal year ending Sept. 30, 2018, Principal Deputy Associate Attorney General Jesse Panuccio and Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division announced today.  Recoveries since 1986, when Congress substantially strengthened the civil False Claims Act, now total more than $59 billion.

    Of the $2.8 billion in settlements and judgments recovered by the Department of Justice this past fiscal year, $2.5 billion involved the health care industry, including drug and medical device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories, and physicians.  This is the ninth consecutive year that the Department’s civil health care fraud settlements and judgments have exceeded $2 billion.  The recoveries included in the $2.5 billion reflect only federal losses but, in many of these cases, the Department was instrumental in recovering additional millions of dollars for state Medicaid programs.

    In addition to combatting health care fraud, the False Claims Act serves as the government’s primary civil remedy to redress false claims for federal funds and property involving a multitude of government operations and contracts.  These areas range from defense and national security to import tariffs and small business programs.

    China’s key export companies are pushing to build and expand their factories overseas, in Cambodia and Vietnam, according to Epoch Times and other media sources. One of them, KingClean Electric Co. is a company that creates cleaning appliances and garden tools and it says its overseas business accounted for 67 percent, according to its 2017 annual report. In October, KingClean Electric’s investment plan in constructing a Vietnamese production base was reviewed and approved during a shareholders’ meeting. In November, the project was approved by the Department of Commerce of Jiangsu Province. On Dec. 25, the securities department of KingClean Electric said, “We can’t control the tariff rate because the external environment has great uncertainty. Our company’s export business accounts for a relatively high proportion. So we can only try to find a solution, do our best, and make decisions based on our development.”

    Zhejiang Henglin Chair Industry Co. Ltd. from Anji County, Zhejiang Province, is China’s largest exporter of office chairs. According to media reports, the company will invest $48 million to set up a manufacturing base in Vietnam. Zhejiang Jasan Holding Co. Ltd., a knitwear company based in Hangzhou city, Zhejiang Province, made two announcements in December that it will invest $36.23 million and $29 million to establish two companies in Vietnam.

    The Chinese Communist Party’s (CCP’s) asserts strict control on foreign exchange, companies find it difficult to send funds overseas to start factories because of restrictions on how much can be transferred out of China. However, domestic enterprises can move funds abroad through foreign trade. Foreign-invested companies can legitimately transfer their profits overseas.

    Wells Fargo Bank N.A. (Wells Fargo) will pay over $6 million to Massachusetts to resolve allegations that it violated state consumer protection laws by using various unfair and deceptive practices against customers, Attorney General Maura Healey announced today.

    This settlement, with Massachusetts and attorneys general from 50 states and the District of Columbia, will resolve allegations that Wells Fargo opened millions of unauthorized accounts and enrolled customers into online banking services without their knowledge or consent, improperly referred customers for enrollment in third-party rental and life insurance policies, improperly charged auto loan customers for force-placed and unnecessary collateral protection insurance, failed to ensure that customers received refunds of unearned premiums on certain optional auto finance products, and incorrectly charged customers for mortgage rate lock extension fees. 

    The states alleged that Wells Fargo imposed aggressive and unrealistic sales goals on bank employees and implemented an incentive compensation program where employees could qualify for credit by selling certain products to customers. The states further alleged that Wells Fargo’s sales goals and the incentive compensation program created an impetus for employees to engage in improper sales practices in order to satisfy such sales goals and earn financial rewards. Those sales goals became increasingly harder to achieve over time, the states alleged, and employees who failed to meet them faced potential termination and criticism from their supervisors.