Articles Posted in Whistleblower law

The Swiss drug manufacturer Novartis has been accused by the U.S. government of a kickback scheme involving paying doctors millions in kickbacks to promote and prescribe their drugs.The drugs involved in this case including Lotrel and Valturna, which treat hypertension, as well as Starlix for diabetes. The kickbacks to the docs also included what was considered a speaking fee, where doctors would be paid to discuss the drugs at educational events and even within their own office. The doctors were also treated to meals that can be considered lavish at the price point of $9,750 for three dinners at a Japanese restaurant.

Unlike a straightforward bribe, kickbacks involve an action being completed after negotiated bribery in the form of a commission or rebate. It is generally viewed as illegal since it gives many companies an unfair advantage in the industry they work for. The False Claims Act is what pushes liability for such actions onto those who attempt to defraud governmental programs such as health insurance.

The Novartis case started in 2011, when a former sale representative, Oswald Bilotta, filed a whistleblower lawsuit under the federal False Claims Act. This type of action allows individuals who have discovered criminal action or intent to come forward on behalf of the government. When a case such as this is filed, the government does hold the right to get involved whenever they deem necessary. In the case of Novartis, Bilotta made the principal claim in 2011 followed by the U.S. government and state of New York intervening in 2013.

New information, some from former Russian spies in America who are now cooperating with us, reveals an increasing and pervasive use of social media by Russian members of an elite intelligence unit in Russia, to influence broad groups of U.S. citizens in significant ways. It is considered a new and insidious kind of warfare. US intelligence agencies and social media companies are struggling to find ways to prevent Russians operatives from making phony accounts  to spread their messages as well as circulate misinformation without removing the freedom U.S citizen’s treasure. Many relate freedom to the core of the U.S., making this the ideal form of attack. Russia is well aware of the limitations the U.S. has when it comes to big social media companies, and they plan to use that in their favor.

report (pdf) released late in 2018 by Oxford University’s Computational Propaganda Research Project is the most detailed analysis yet of the scope and effect of Russia’s Internet Research Agency (IRA) social media campaign and its impact on America’s elections.The analysis found that the main goal of the interference was to polarize the American public, in three main ways: by feeding political extremism (particularly for the far right), by spreading incendiary fake news, and by exploiting and exacerbating existing divisions—in particular those of a racial nature.The IRA’s social media activities campaigned “for African American voters to boycott elections or follow the wrong voting procedures in 2016, and more recently for Mexican American and Hispanic voters to distrust US institutions,” the report found.

African Americans were the majority of users targeted by the IRA (other minorities were engaged significantly only after the election). Of a total of 2,855 ads purchased by the IRA, nearly 1,000—which reached over 13 million users—were about African-American politics or culture. Those messages were much cheaper than ones on other topics, averaging 905 rubles, or $14, per ad, compared with nearly 6,200 rubles, or $93, for ads about conservative politics. Accounts opened in connection with the website Black Matters (they are now deactivated) helped spread the messages, which misled readers about the voter registration process, encouraged them to boycott the election, and attempted to sow mistrust in established democratic procedures.

Fresenius Medical Care AG & Co. KGaA (Fresenius), provider of medical products and services, has agreed to pay $231 million to end investigations by the Department of Justice and the Securities and Exchange Commission (SEC) into violations of the Foreign Corrupt Practices Act (FCPA) in connection with Fresenius’s participation in various corrupt schemes to obtain business in multiple foreign countries. According to Fresenius’s admissions in connection with the resolution, between 2007 and 2016, Fresenius paid bribes to publicly employed health and/or government officials to obtain or retain business in Angola and Saudi Arabia.  In Angola and Saudi Arabia, as well as in Morocco, Spain, Turkey and countries in West Africa, Fresenius knowingly and willfully failed to implement reasonable internal accounting controls over financial transactions and failed to maintain books and records that accurately and fairly reflected the transactions, the company admitted.

“Fresenius doled out millions of dollars in bribes across the globe to gain a competitive advantage in the medical services industry, profiting to the tune of over $140 million,” said Assistant Attorney General Benczkowski.  “Today’s resolution, under which Fresenius has agreed to retain an independent compliance monitor for at least two years, reflects the Department’s firm commitment to both rooting out bribery and promoting the kind of effective corporate compliance programs that will prevent misconduct going forward.”

“This case shows the FBI will hold accountable those who treat corruption as the cost of doing business,” said FBI Special Agent in Charge Bonavolonta.  “Fresenius’s admissions are incredibly concerning because no company should break the law by paying-off international partners to obtain or retain business.  We will continue to work with our law enforcement partners to root out corrupt schemes and ensure they do not become common practice at the expense of other hard-working businesses.”

Duke University has agreed to pay $112.5 million to settle claims that it knowingly included fake data in applications for federal grants that brought more than $200 million into that school and other nearby universities. The suit, brought by a former employee, alleged that the university was aware that a University biologist  included fraudulent data in a number of grant applications and reports, including for some work done with Duke pulmonary researcher William Michael Foster, who was named as a defendant in the civil lawsuit.

Former Duke biologist Joseph Thomas sued Duke in May 2013 under a federal whistleblower law. Under the False Claims Act, Duke could have been on the hook for up to three times the amount of any ill-gotten funds. Mr. Thomas will receive 30% of the settlement payout. Whistleblower Thomas was represented by John Thomas Jr. his brother with the firm Healy Hafemann Magee.

The NIH last March told Duke that grant recipients from the school would have to undergo additional approval processes related to grant renewals and extensions. Duke said those are in place until the NIH is satisfied the school has addressed “faculty accountability” with NIH regulations.

Franklin Resources will pay $13,850,000 and make other provisions to settle a lawsuit alleging that defendants breached their Employee Retirement Income Security Act (ERISA) fiduciary duties by causing Franklin Templeton’s 401(k) plan to invest in funds offered and managed by Franklin Templeton when better-performing and lower-cost funds were available. The case was settled shortly before trial of the lawsuit.

The company will also select a non-proprietary target-date fund (TDF) for its 401(k) investment lineup and increase the company match contribution rate for three years. According to the settlement agreement in addition to the settlement payment, the fiduciaries to the plan with responsibility for selecting plan investment options will add a nonproprietary target-date fund option (TDF) to the investment lineup, which will be maintained as a plan investment option for the duration of the compliance period in addition to the plan’s qualified default investment alternative (QDIA)—the LifeSmart Target Date Funds. “The choice of TDF will be made by the fiduciaries responsible for selecting Plan investment options in a manner consistent with their fiduciary oversight responsibilities, following a search of nonproprietary TDF options conducted by the Plan’s independent investment consultant, Callan Associates, Inc.,” the settlement agreement says. Franklin is listed on the New York Stock Exchange under In 1973 the company’s headquarters moved from New York to California . As of March 2017, Franklin Templeton Investments had US$740 billion in assets under management (AUM) on behalf of private, professional and institutional investors.

A month before the trial in the case was set to begin, the parties in the lawsuit announced they had reached a settlement but needed 60 days to file a motion for preliminary approval.

Contractors Areva and Chicago Bridge and Iron gave kickbacks in the form of football tickets, hunting rifles, cellphones and NASCAR race tickets to get work on a factory at the Savannah River nuclear storage facility says a lawsuit filed by the U.S. Government.
The cost of those kickbacks was later charged to taxpayers, according the False Claims Act complaint filed by the U.S. Department of Justice.

The contractors were hired to build the plant which  would turn weapons-grade plutonium into fuel for nuclear power plants. The contractors  scheme defrauded hat bilked taxpayers out of $6.4 million according to the Complaint. The suit also concerns over a federal construction effort that was marred by schedule delays, cost overruns and questionable spending.

South CarolinaUniversity, will pay $2.5 million to settle federal claims under the False Claims Act of submitting false claims to the U.S. Department of Education in violation of the federal ban on incentive-based compensation, the Justice Department announced today.   The settlement resolves allegations that between 2014 and 2016, NGU hired Joined Inc., a company partially owned by NGU, to recruit students to NGU and compensated Joined based on the number of students who enrolled in NGU’s programs, in violation of the prohibition on incentive compensation. The allegations resolved by the settlement were brought in a lawsuit filed under the qui tam, or whistleblowerprovisions of the False Claims Act by Maurice Shoe, the co-owner of Joined. Mr. Shoe is represented by the firm of  Guttman, Buschner & Brooks (“GBB”), The Act permits private parties to sue on behalf of the government for false claims and to receive a share of any recovery.  As part of today’s resolution, the whistleblower will receive $375,000.

Title IV of the Higher Education Act (HEA) prohibits any institution of higher education that receives federal student aid from compensating student recruiters with a commission, bonus, or other incentive payment based on the recruiters’ success in securing student enrollment.  The incentive compensation ban protects students against aggressive admissions and recruitment practices that serve the financial interests of the recruiter, rather than the educational needs of the student.

“Offering unlawful financial incentives for recruiting undermines the integrity of our higher education system,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division.  “Prospective students are entitled to make enrollment decisions without the improper influence of recruiting companies who pursue their own financial gain at the expense of the students’ best interests.”“This settlement will help ensure that schools and recruitment services put the educational interests of students and potential enrollees first,” said U.S. Attorney Sherri A. Lydon for the District of South Carolina.  “It should serve as a warning to institutions that would attempt to maximize enrollments to line their own pockets, disregarding the best interests of students in the process.  Through False Claims Act cases like this one, the U.S. Attorney’s Office will continue to help protect federal taxpayer dollars from waste, fraud, and abuse.”

General Electric said this week that it reached a tentative agreement with the Department of Justice that it would  pay a fine of $1.5 billion for the lending activities of its shuttered subprime lending unit, WMC Mortgage. Last year,  the company  booked a reserve of $1.5 billion that may be used as a settlement with the DOJ over the company’s subprime lending from 2005 through 2007. When GE first disclosed that it booked the reserve amount, the company said that settlement would stem from an investigation into WMC’s mortgage business that the DOJ launched in late 2015.

According to GE, the DOJ claimed last year that WMC and GE Capital violated FIRREA rules in connection with the lender’s origination and sale of subprime mortgage loans in 2006 and 2007.

GE said that it was exploring whether an “acceptable settlement” could be reached in this matter and as part of that exploration, GE recorded a $1.5 billion reserve to cover the potential settlement, leading to this proposed settlement.

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.

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.”