Articles Posted in Whistleblower law

The Center for Disease Control has said that consumers should throw away any romaine lettuce and that restaurants should not service it as no romaine lettuce is safe to eat no matter where it is grown.

All romaine is suspect.  32 people in 11 states have become sick from eating contaminated romaine the CDC says.  13 have been hospitalized, with one patient suffering from a form of kidney failure. The Public Health Agency of Canada has reported that 18 people have been infected with the same strain of E. coli. in Ontario and Quebec.

“Consumers who have any type of romaine lettuce in their home should not eat it and should throw it away, even if some of it was eaten and no one has gotten sick,” the CDC said in the Food Safety Alert issued shortly before 3 p.m. “This advice includes all types or uses of romaine lettuce, such as whole heads of romaine, hearts of romaine, and bags and boxes of precut lettuce and salad mixes that contain romaine, including baby romaine, spring mix, and Caesar salad,” the CDC said. “If you do not know if the lettuce is romaine or whether a salad mix contains romaine, do not eat it and throw it away.”

Three Companies Agree to Plead Guilty and Pay a Total of $236 Million in Criminal Fines and Civil DamagesS outh Korea-based companies SK Energy Co. Ltd., GS Caltex Corporation, and Hanjin Transportation Co. Ltd. have agreed to plead guilty to criminal charges and pay criminal and civil fines for their involvement in a decade-long bid-rigging conspiracy that targeted contracts to supply fuel to United States Army, Navy, Marine Corps, and Air Force bases in South Korea, the Department of Justice announced today.  South Korean petroleum and refinery companies and their agents, including the defendants and their co-conspirators, participated in a combination and conspiracy to suppress and eliminate competition during the bidding process for these fuel supply contracts.  SK Energy, GS Caltex, and Hanjin have agreed to cooperate with the department’s ongoing criminal investigation.  The plea agreements are subject to court approval.
In separate civil resolutions, SK Energy, GS Caltex, and Hanjin have agreed to pay a total of approximately $154 million to the United States for civil antitrust and False Claims Act violations related to the bid-rigging conspiracy.  These settlements reflect the important role of both Section 4A of the Clayton Act and the False Claims Act to ensure that the United States is fully compensated when it is the victim of anticompetitive conduct.

The Criminal Case:

Offshore art purchaser Porsal Equities Ltd. will pay $10.75 Million for tax fraud in connection with over $50 million of artwork and other goods purchased in New York from prominent art institutions. The settlement is the latest in the Attorney General’s continuing investigation into the abuse of resale certificates in the purchase and sale of artwork.

From 2010 through 2015, Porsal Equities Ltd., a company based in the British Virgin Islands, certified it was exempt from paying sales tax on the basis that the art was purchased for resale. In reality, Porsal Equities purchased the artwork for personal use, including for display at New York City apartments belonging to the company’s sole director. Porsal Equities also failed to pay use tax on artwork purchased outside New York and shipped into New York for display at the same apartments.

New York law requires sellers of goods to charge sales tax on sales of goods. A purchaser may claim an exemption where it is also a seller that is purchasing retail property exclusively for resale. In such cases, the purchaser may submit a document known as a resale certificate to certify its intent to purchase for resale. If, after purchase, the purchaser ends up using the goods it initially bought exclusively for resale, then it must pay a compensating use tax at the same aggregate rate as the sales tax. Use tax may also be due where state sales tax was not collected at the time of purchase because property was delivered outside the state, but the property was subsequently used within the state.

In August of this year, former defense contractor from Tennessee was setenced 41 months in federal prison for selling Chinese boots to the military withfraudulent “Made in the USA” labels. Vincent Lee Ferguson, the former president of Wellco Enterprises, pleaded guilty to his part in the fraud conspiracy, according to a U.S. Department of Justice news release. Wellco’s former Senior Vice President of Sales, Matthew Lee Ferguson, 41, of Geneva, Illinois, and former Director of Marketing and Communications, Kerry Joseph Ferguson, 36, of Houston, Texas, were sentenced in June 2018 to each serve six months in federal prison for the same crime.Wellco was a major manufacturer and supplier of military footwear to the U.S. Department of Defense (DoD) and to civilian customers. Over several years, the Department of Defense paid over $138 million to Wellco for the supply of combat boots.   According to the indictment, Wellco deceptively sold sell those boots to DoD, government contractors, and the general public as “Made in the USA” and as compliant with the Berry Amendment and the Trade Agreements Act (TAA).

Wellco required the Chinese manufacturer acility to include “USA” on labels of boot uppers. Two shipments of these deceptively marked boots were seized by the U.S. Department of Homeland Security’s Customs and Border Protection.

These activities violated the federal Berry Amendment, which bars the Defense Department from buying foreign-made clothing.  The Berry Amendment states that the Department of Defense may not purchase any food, clothing and materials used to make clothing, tents and other goods that were not produced in the United States. Representing foreign made goods as American made qualifies as a False Claims Act violation as the vendor certifies that the products conform with all contract provisions.

The Food and Drug Administration has come under harsh criticism for approving a painkiller called Dsuvia which is 1,000 times stronger than morphine.  FDA commissioner Scott Gottlieb, MD, addressed the timing in a statement released late last week. “The crisis of opioid addiction is an issue of great concern for our nation,” he said. “Addressing it is a public health priority for the FDA. The agency is taking new steps to more actively confront this crisis while also paying careful attention to the needs of patients and physicians managing pain.”

Critics cite the fact that the opioid epidemic is still rising and has resulted in the deaths of over 72,000 people in the U.S.

Dsuvia is taken under the tongue and is a synthetic opioid that is delivered through a disposable, pre-filled, single-dose applicator, the FDA says. It is restricted to being used in certified medically supervised healthcare settings like hospitals, surgical centers, and emergency departments. Dsuvia works like  morphine and other opioids do by binding to opioid receptors in the body to block pain . However, it is 1,000 times stronger.

The Justice Department announced today that Northrop Grumman Systems Corporation (NGSC) has agreed to settle civil allegations that it violated the False Claims Act (FCA), 31 U.S.C. §3729, by overstating the number of hours its employees worked on two battlefield communications contracts with the United States Air Force.  Under the settlement, NGSC, headquartered in Falls Church, Virginia, will make a payment of $25.8 million, which, combined with earlier repayments, will result in a civil recovery of approximately $27.45 million.

The Air Force entered into two contracts with NGSC for battlefield communications services: the Battlefield Airborne Communications Node contract and the Dynamic Re-tasking Capability contract.  Today’s settlement resolves allegations that NGSC billed the Air Force for labor hours purportedly incurred between July 1, 2010, and December 31, 2013, by individuals stationed in the Middle East who had not actually worked the hours claimed.  NGSC also entered into a separate agreement with the Criminal Division of the U.S. Attorney’s Office for the Southern District of California related to these contracts under which it has agreed to forfeit an additional $4.2 million.

The civil settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Southern District of California, the Defense Contract Audit Agency, the Air Force Office of Special Investigations, the Defense Criminal Investigative Service, and the Air Force Materiel Command Law Office Fraud Division.

A federal agency, the National Toxicology Program has released the results of the largest experiments to date and it has found evidence that radio waves from some type of cellphones could raise the risk of development of brain cancer. The study was performed on rats but some researchers point out that the implications are significant as billions of people are using cell phones. findings of the study — 384 pages devoted to rats, 260 to mice — had been conveyed to the Federal Communications Commission and the Food and Drug Administration, which regulate cellphones and gauge any risks to human health. Dr. Bucher declined repeatedly to assess the hazard. “We believe that the link between radio-frequency radiation and tumors in male rats is real,” John Bucher, a senior scientist at the National Toxicology Program, said in a statement.

Rats in the studies were exposed to radiation nine hours a day for two years — far longer even than heavy users of cell phones. The exposures started before birth and continued until they were about 2 years old.  2 to 3 percent of the male rats exposed to the radiation developed malignant gliomas, a deadly brain cancer, compared to none in a control group that received no radiation. Many epidemiologists see no overall rise in the incidence of gliomas in the human population. The study also found that about 5 to 7 percent of the male rats exposed to the highest level of radiation developed certain heart tumors, called malignant schwannomas, compared to none in the control group. Malignant schwannomas are similar to acoustic neuromas, benign tumors that can develop in people, in the nerve that connects the ear to the brain. The rats were exposed to radiation at a frequency of 900 megahertz — typical of the second generation of cellphones that prevailed in the 1990s, when the study was first conceived.

Current cellphones represent a fourth generation, known as 4G, and 5G phones are expected to debut around 2020. They employ much higher frequencies, and these radio waves are far less successful at penetrating the bodies of humans and rats. See the article in the New York Times on the study .

New York’s Attorney General has filed a major lawsuit against Harris Jewelry for engaging in false and deceptive practices and illegal lending in the financing of jewelry sales to active duty servicemembers.  The company has retail stores near and on military bases around the country and the AG says they marked up jewelry between 600 and 1,000% over wholesale and then added 14.99% interest. As we allege, Harris Jewelry used servicemembers as pawns in a predatory scheme,” said Attorney General Underwood. “My office will not tolerate companies that seek to take advantage of New Yorkers in order to line their own pockets.”

The lawsuit also alleges that It is alleged that Harris Jewelry targets and then entices local servicemembers into the stores with “Operation Teddy Bear”— a purported charitable program in which Harris Jewelry sells teddy bears in military uniforms with promises of charitable donations. In fact, the complaint alleges that this is nothing more than a marketing ploy to dupe servicemembers into high-priced, illegal in-house financing contracts for vastly overpriced jewelry.

Making matters worse, Harris sells lines of military-themed jewelry and other commemorative items, such as the “Mother’s Medal of Honor,” “Token of Pride Coin,” and “Forever as One Dog Tag Necklace,” on credit it provides under the name Consumer Adjustment Corp. USA.  However, the Consumer Adjustment Corp. is merely the alter ego of Harris Originals of NY, Inc., which, the AG says was never clearly disclosed to the consumer and is used to finance more than 90% of its sales. The complaint further alleges that Harris Jewelry tells servicemembers it can provide them with an opportunity to build or improve their credit score through “The Harris Program”— the company’s own financing. Only after the servicemember agrees to participate in this “credit-improving program” does Harris Jewelry begin to discuss jewelry or its other products with the servicemember in an effort to max out the credit limit.

According to an article in STAT, a Minnesota hospital tested powerful antipsychotics and  potent anesthetic on emergency room patients without their knowledge or consent. This is a violation of law say federal inspectors have determined.

According to FDA inspectors, the hospital’s Institutional Review Board contended that  researchers did not need consent to make patients part of a clinical trial in which they were given antipsychotic drugs that they might not receive as part of usual care. A public citizen group responded that the hospital IRB, “appears to lack even a basic understanding of federal regulations for the protection of human subjects and is clearly incapable of fulfilling its obligation” to do so.

In August, FDA sent inspectors to the hospital. The FDA report, says STAT, examined additional clinical trials beyond those initially flagged. It found that in four, the hospital IRB “did not determine that informed consent would be sought from each prospective subject” as required by law, while in another five, the IRB granted fast-track review to studies that didn’t qualify for it.

Pharmaceutical companies Abbott Laboratories and AbbVie Inc. (“Abbott”) will pay $25 million to settle federal allegations that it paid kickbacks and unlawfully marketed and promoted the drug TriCor® for: (1) use in treating, preventing, or reducing cardiovascular events and other cardiac health risk; (2) use in combination with statin drugs, and (3) use as a first-line treatment of diabetic patients, including treatment to prevent or reduce cardiac health risks in diabetic patients.  These uses were not FDA-approved and were not covered by federal healthcare programs. The only FDA-approval  for TriCor® during this time period were for use, in conjunction with diet, to treat patients with hypertriglyceridemia, mixed dyslipidemia, or hypertriglyceridemia.

The settlement resolves allegations that, between 2006 and 2008, Abbott knowingly paid kickbacks to physicians in order to induce TriCor® prescriptions. Abbott, through its sales representatives, allegedly provided physicians with improper gift baskets, gift cards, and other items to induce prescriptions of TriCor®. Abbott also engaged health care providers for consulting services and speaking engagements, where one purpose of the remuneration for the programs was to induce or reward physicians for TriCor® prescriptions. As a result of the $25 million settlement, the federal government will receive $23.2 million, and state Medicaid programs will receive $1.8 million.

This settlement resolves allegations in a lawsuit filed in the Eastern District of Pennsylvania by Amy Bergman, a former Abbott sales representative, under the qui tam, or whistleblower, provisions of the False Claims Act.  The qui tam provisions permit private parties to sue for false claims on behalf of the government and to receive a share of any recovery.  Ms. Bergman will receive $6.5 million as her share of the recovery in the case. Attorneys Marc Raspanti, Pam Brecht, Mike Morse and Bob Nicholson of Pennsylvania represented Ms. Bergman.