Articles Posted in whistleblower

The Justice Department recovered $2.3 billion from whistleblower cases alleging healthcare fraud schemes in fiscal 2014.

It was the fifth consecutive year the Justice Department recovered more than $2 billion from cases alleging fraud against Medicare,Medicaid and Tricare. 9. Whistle-blowers, are allowed to file lawsuits on behalf of the government. The government can later decide whether to intervene. In successful lawsuits, whistle-blowers are entitled to a percentage of the money recovered, leading to large rewards in some cases. In fiscal 2014, more than 700 whistle-blowers filed cases in healthcare and other areas, and reaped $435 million.

Much of the moneys recovered this year was from the pharmaceutical industry.Johnson & Johnson agreed to pay $1.1 billion in November 2013 to settle allegations that Johnson & Johnson promoted the drugs Risperdal, Invega and Natrecor for uses not approved by the FDA, causing providers to submit hundreds of millions of dollars in false claims to federal healthcare programs.

The Justice Department collected $24.7 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2014. The more than $24 billion in collections in FY 2014 represents nearly eight and a half times the appropriated $2.91 billion budget for the 94 U.S. Attorneys’ offices and the main litigating divisions of the Justice Department combined in that same period.

The amount is more than three times the $8 billion collected in FY 2013.  The largest civil collections were from affirmative civil enforcement cases, many of which were brought under the whistleblower provisions of the False Claims Act, in which the United States recovered government money lost to fraud or other misconduct or collected from  individuals and/or corporations for violations of federal health, safety, civil rights, tax, or environmental laws.  In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.

The total includes all monies collected as a result of Justice Department-led enforcement actions and negotiated civil settlements.  It includes approximately $13.7 billion in payments made directly to the Justice Department, and $11 billion in indirect payments made to other federal agencies, states and other designated recipients.

The largest single source of collections came from civil penalties paid by financial institutions to resolve financial fraud claims stemming from the 2008 financial crisis, including significant amounts paid by JPMorgan and Citigroup Inc, to resolve federal and state civil claims related to the packaging, marketing, sale and issuance of residential mortgage-backed securities (RMBS).  Both resolutions include record penalties under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) and in addition, also provide billions of dollars of relief to struggling homeowners.

Department collections also included hundreds of millions in fines from an ongoing   investigation into institutions involved in the manipulation of the London Interbank Offered Rate (LIBOR), including UBS Securities Japan Co. Ltd., and RBS Securities Japan Ltd., a wholly owned subsidiary of The Royal Bank of Scotland plc (RBS).  Hundreds of millions in additional collections resulted from the department’s ongoing investigation into international price-fixing and bid rigging in the auto parts industry.  For instance, Bridgestone Corp., a company based in Tokyo, Japan, agreed to plead guilty and to pay a criminal fine for its role in a conspiracy to fix prices of automotive anti-vibration rubber parts installed in cars sold in the United States and elsewhere.

The department also collected millions in criminal penalties after resolving investigations into violations of the Foreign Corrupt Practices Act (FCPA). For instance, Diebold Inc., an Ohio-based provider of integrated self-service delivery and security systems, pleaded guilty to violating the FCPA by bribing government officials in China and Indonesia and falsifying records in Russia in order to obtain and retain contracts to provide ATMs to state-owned and private banks in those countries.

Jeffrey Newman represents whistleblowers

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Kobi Kastiel, co-editor of the Harvard Law School Forum on Corporate Governance and Financial Regulation has come up with strong recommendations for corporations seeking to avoid SEC whistleblower cases: create an internal corporate fraud program to identify fraud issues.

Under the SEC Whistle-blower Program, eligible whistle-blowers can recover 10 percent –30 percent of the amount of any money sanctions collected that exceed $1 million in actions brought by the SEC . A successful corporate whistle-blowing program requires protections for the whistleblowers as many are afraid to report internally says Kastiel.

Jeffrey Newman represents whistleblowers

Bostwick Laboratories, Inc., an anatomic and pathology lab based in Uniondale, New York, has agreed to pay the United States$6,048,000 to resolve allegations regarding violations of the False Claims Act.

The qui tam complaint was filed in May 2008. It alleges that Bostwick Laboratories improperly billed Medicare and Medicaid for tests and services referred in violation of the Anti-Kickback Statute and for tests performed without a doctor’s order or consent. The Justice Department decided in June 2011 not to intervene in the case. In 2012, Senior District Judge S. Arthur Spiegel issued a well- reasoned order denying the defendants’ motions to dismiss. U.S. ex rel. Daugherty v. Bostwick Laboratories, et al., 2012 U.S. Dist. LEXIS 178641 (S.D. Ohio Dec. 18, 2012).

The case against Bostwick Laboratories settled after the company entered into settlement discussions with Mr. Daugherty and the United States based on its inability to pay the full value of the damages sought in the qui tam action.

A whistleblower has filed suit on behalf of the United States of America charging Dongwon Industries, South Korea’s largest fishing company and owner of Starkist Tuna, of defrauding the U.S.

The Complaint alleges that a former Dongwon exec used his daughters’ acquired U.S. citizenship to create paper companies in the state of Delaware to obtain U.S. vessel documentation for Korean owned ships. This allowed the company to obtain fishing licenses reserved only to US registered vessels. US taxpayers pay $18 million per year for these licenses.

The lawsuit also charges that Dongwon failed to report oil discharge and dumping at sea.

A Florida psychiatrist and CEO of the Hollywood Pavilion psychiatric facility was sentenced to 25 years in prison for submitting false Medicare claims for $67 million. A jury also found that Medicare was tricked into paying $40 million to Hollywood Pavilion and that the CEO,  Karen Kallen-Zury covered up the fraud scheme by falsifying the records of ineligible patients and fabricating marketing contracts with patient recruiters who were paid significant sums of money per patient.

According to a Department of Justice Ms. Kallen-Zury is the first executive from a licensed state hospital to be prosecuted by the Medicare Fraud Strike force for committing Medicare fraud.

The DOJ also said that the hospital deliberately targeted disabled substance abusers by conning them to spend weeks locked down in a psychiatric hospital. The defendants paid illegal bribes and kickbacks to patient brokers to obtain Medicare beneficiaries as patients, at Hollywood Pavilion but they did not qualify for psychiatric treatment.

British bank HSBC one of the largest banks and money service organizations in the world is continuing to launder significant sums of money for terrorist groups, despite having paid a $1.9 billion penalty in 2012 over money laundering allegations involving Mexican drug dealers. So says a former Anti-Money Laundering Officer Everett Stern who says he unearthed evidence about continued money laundering by the bank.

Stern found a Saudi fruit company was sending millions to a high level figure in the Yemeni wing of the Muslim Brotherhood and that HSBC was letting millions to be transferred from the Karaiba Supermarkets in Africa to Tajco, a company which the US Treasury says are major financiers of the Lebanese Shiite Group Hezbollah. When the bank ignored his concerns, Sterns took the information to the FBI.

In July of last year, the Senate Permanent Subcommittee on investigations released a study showing that HSBC’s key U.S. affiliate HSBC Bank USA N.A. known as HBUS provided U.S. dollars and banking services to several banks in Saudi Arabia and Bangladesh with links to terrorist financing.

The pharmaceutical services firm PharMerica illegally dispensed controlled substances by dispensing drugs to nursing homes and facilities without physician authorized prescriptions, according to a complaint filed by the Department of Justice and whistleblower pharmacist Jennifer Denk.

Ms. Denk revealed the wrongdoing after she observed prescriptions including those for addictive drugs like fentanyl and oxycodone were being filled with no doctor’s signature.

According to the complaint, PharMerica served 300,000 residents, filled 40 million prescriptions annully and generated 45 percent of its revenue from prescription drugs paid for by Medicare.

Tenant Healthcare and Health Management Associates paid hundreds of thousands of dollars to clinics to steer undocumented pregnant Hispanic women to their hospitals, then filed fraudulent Medicare claims for their care , according to an unsealed federal whistleblower complaint.

The suit was originally filed by Ralph D. Williams, former Chief Financial Officer (CFO) at HEalth Management Associates. He says that in a scheme dating back to 1999, the clinics involved recruited pregnant undocumented Hispanic women to its prenatal clinics with the well publicized slogans “we care about your health, not your immigration status.”

He then says that the clinics direct this population of patients , who will be MEdicaid and MEdicare beneficiaries when they deliver their babies, to HMA and Tenet hospitals, who pay for referrals. Undocumented aliens are not eligible for regular Medicaid coverage.

Drugmakers  have found a way to make more money by defrauding Medicare by marketing the off label uses of drugs to nursing home patients. This large group of helpless, hapless people can do nothing to stop being used as guinea pigs.

One example is Par Pharmaceuticals which paid $45 million this year to settle federal charges that it promoted Megace ES, a drug treatment approved for appetite loss in AIDS patients. Instead, PAR pushed the produce for nursing home and hospice residents. In court documents the government said that the Par reps and management knew that they called on very few facilities with AIDS patients. They sold it instead to the old people.

In addition, the use of antipsychotic drugs in nursing homes is rampant–all billed to Medicare.Nationwide, 25 percent of nursing home patients are on antipsychotics, according to a study by the federal Centers for Medicare & Medicaid Services. It is even more widespread in North Jersey, where facilities report up to 37 percent of their patients have been given the drugs.