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Recent Qui Tam Cases Part 3: Governments Behaving Badly


Are you a state or local government employee? Keep a close eye on your employer–they may be ripping off taxpayers and the federal government– and setting themselves up for a qui tam suit. Furthermore, guess who ends up footing the bill for all those hours the state or municipality spends on formulating a defense?  Some recent cases illustrate that states and other local governments are not immune from greed when the federal government is doling out the cash.

New York State and New York City recently entered into a record-breaking settlement with the federal government to resolve claims that they submitted false claims for reimbursement for school-based health care services and transportation for Medicaid-eligible kids between 1990 and 2001. In July 2009, the city and state agreed to pay $540 million to settle the fraud allegations. All you New Yorkers out there already being skewered by New York’s relentless tax impalements, get ready to help out with the settlement!

Since the 1990s, the federal government has paid billions in reimbursements to New York State and City through the Centers for Medicare and Medicaid Services, a component of the Department of Health and Human Services. New York received these matching funds for services provided to the poor and disabled in the state. According to the allegations, New York State failed to provide proper guidance to the agencies receiving the funds, and later passed on claims for services that the state knew were not covered or properly documented. New York City allegedly submitted false claims to the state for speech therapy reimbursement, which the state submitted to the federal government along with the rest of the mess. The qui tam relator in this case was an astute speech therapist in upstate New York, who will walk away with $10 million as her share of the settlement.

In May 2009, the Maine Department of Education agreed to pay the U.S. $1.5 million to settle allegations that the department submitted false information to the U.S. Department of Education regarding the Maine Department of Education’s eligibility to receive federal funds under the Migrant Education Fund. The Migrant Education Fund provides federal financial assistance for the special educational needs of migrant children, but states must follow specific criteria in identifying these children. The Maine Department of Education and other defendants allegedly falsely represented the number of eligible migrant children living in the state over a three year period, thereby defrauding the government.

Finally in March 2009, San Mateo, California, jumped on the Medicare/Medicaid fraud bandwagon when it paid the government $6.8 million to resolve False Claims Act allegations. The allegations were originally filed by a qui tam whistleblower who was also a county employee. According to the government’s suit, the San Mateo Medical Center inflated its bed count in order to fraudulently receive higher Medicare payments. In addition, San Mateo County allegedly improperly obtained federal funds under Medicaid for services that were actually ineligible and were supposed to be reported to the California Department of Mental Health as such.

For a free initial consultation concerning cases involving a government employee or state sovereign immunity, please contact one of our False Claims Act whistleblower attorneys.

Protecting Animals with the FCA


A fascinating False Claims Act case that began back in 2001 has met another procedural roadblock, although it may not be over yet. The case highlights the fact that the FCA covers seemingly limitless subjects due to the sheer variety of things on which the government spends our money.

The case,United States ex rel. Patricia Haight, et al., v. Catholic Healthcare West, et al., 2010 U.S. App. LEXIS 2381 (9th Cir. 2010), stems from a very touchy and controversial subject: brain tumor research…on beagle puppies. Dr. Michael Berens was a research scientist attempting to replicate brain tumors by injecting cancer cells into beagle pups in utero. To top that off, he euthanized healthy dogs which did not develop tumors, drawing a great deal of criticism. Dr. Berens received federal funding for his work from the National Institutes of Health, and this is where the False Claims Act comes in.

According to the plaintiffs in the case, Dr. Berens submitted inaccurate information to obtain grants, thereby defrauding the government. The plaintiffs, Dr. Patricia Haight, an animal rights activist and experimental psychologist with animal research experience, and In Defense of Animals, a California-based organization, claimed that Dr. Berens made his research out to be far more fruitful than it actually was in order to obtain over $700,000 in grant money.

Unfortunately for the plaintiffs in this case, the government decided not to intervene. The relators forged ahead with their case, but after many tortuous procedural twists and turns, the U.S. Court of Appeals for the Ninth Circuit ultimately dismissed the case based on the plaintiffs’ failure to file a notice of appeal within a specified time period.  Haight v. Catholic Healthcare West, 2010 U.S. App. LEXIS 2381 (9th Cir. 2010). The court stated that “We sympathize with Plaintiffs, who complied with our precedent in filing their notice of appeal 51 days after the entry of judgment.” Id. at *14. This surely came as cold comfort to the plaintiffs, who had been involved in  a decade of litigation over what seems to be an ingenious–and valid–application of the FCA.

It will be interesting to see what moves the plaintiffs make next. Hopefully they won’t go without a fight. It takes a lot of courage and perseverance to pursue litigation for this long, but the plaintiffs obviously believe deeply in their cause.

Recent Qui Tam Cases Part 1: Medicare and Medicaid


A good way to understand what may qualify as a qui tam case is to consider some recent examples. Qui tam encompasses many, many areas (think about how many things the government pays individuals and companies to “git ‘r done”). We’ll try to focus on the hot areas that are seeing the most action right now.

First in this series is the white-hot area of Medicare and Medicaid fraud. There is big money at stake in this area, and it seems that some companies just can’t stop themselves from illicitly taking a huge helping of taxpayer dollars. Here are some recent cases.

McAllen Hospitals L.P., d/b/a/ South Texas Health System, a subsidiary of Universal Health Services Inc., announced in October 2009 that it would pay $27.5 million to settle a qui tam case. The qui tam whistleblower alleged that the hospital group illegally paid kickbacks to doctors in McAllen, Texas, to get the docs to refer patients to the group’s hospitals. These payments were disguised through a variety of sham contracts. Under the federal Stark Law, physicians are prohibited from referring Medicare/Medicaid patients to an entity with which the physician has a financial relationship (subject to a few exceptions).

Also in October 2009, four pharmaceutical companies agreed to pay $124 million to settle a qui tam suit alleging Medicare fraud. The companies, including Mylan Pharmaceuticals, UDL Laboratories, AstraZeneca Pharmaceuticals, and Ortho McNeil Pharmaceutical, were accused by a whistleblower of failing to pay rebates to state Medicaid programs. According to the Medicaid Drug Rebate Program, drugmakers must enter into a national rebate agreement with the Department of Health and Human Services in order for states to get federal funding for drugs (obviously drugmakers are eager to have their products dispensed in every state, so they agree to pay these rebates). The four drugmakin’ defendants failed to honor the rebates they were required to pay to the states, and this constituted fraud.

In November 2009, the DOJ intervened in a qui tam case against Virginia Medicaid providers. The suit alleged that the providers, Universal Health Services Inc., Keystone Marion LLC, and Keystone Education and Youth Services LLC committed Medicaid fraud while they were running a mental health treatment facility for young boys. Specifically, the providers were alleged to have provided substandard care in violation of state and federal Medicaid requirements, falsified records, and filed bogus Medicaid claims.

Also in November, the largest nursing home pharmacy in the country, Omnicare Inc., of Covington, Kentucky, and a drug company, IVAX Pharmaceuticals, agreed to pay a collective $112 million to settle claims that they were involved in kickback schemes to bilk Medicare in violation of the Anti-Kickback Statute. This qui tam suit alleged that the pharmacy solicited and received kickbacks from Johnson & Johnson in return for recommending to physicians that they prescribe J & J’s now-notorious anti-psychotic drug Risperdal to nursing home patients. The suit also alleged that the pharmacy got millions in kickbacks in exchange for agreeing to buy $50 million worth of drugs from IVAX.

Unfortunately for Johnson & Johnson, its kickback scheme with Omnicare has also led to a qui tam suit being filed against J & J itself. In January 2010, the government announced that it was joining the qui tam suit against J & J for paying kickbacks to Omnicare to push Risperdal and other drugs. That case is raising some other qui tam issues, mostly about which whistleblower was the first to file (each of the two whistleblowers who filed separate claims are maintaining that they filed first).

Finally, a dental management company that runs “Small Smiles Centers” across the country is probably not smiling after it agreed to pay $24 million to settle claims that it defrauded Medicaid by performing unnecessary services on children. FORBA Holdings LLC allegedly performed many dental procedures (e.g., root canals) on low-income kids that were either not medically necessary or were performed in a sub-standard manner. FORBA then submitted claims to Medicaid for reimbursement, hence the False Claims Act violation.

For additional information about about whistleblower law or a free case evaluation, please contact one of our False Claims Act lawyers.

Proving Damages in Traumatic Brain Injury Litigation


Traumatic brain injury occurs under a wide variety of circumstances and at various levels of severity. In recent years, the medical problems and premature deaths suffered by a number of high-profile athletes with a history of concussion have focused attention on the physical, cognitive and emotional challenges faced by people whose documented brain injuries were previously thought to be minor.

Any blunt force blow to the head accompanied by loss of consciousness for any period of time, even a few seconds, should be regarded as a serious injury, even if overlooked in emergency treatment following a car crash or if no symptoms are apparent in the immediate aftermath of the accident. The mild or moderate range of traumatic brain injuries can have continuing consequences for the people who suffered them, and the problems are not always immediately apparent.

YLG Files Employee Class Action Suit Against Best Buy2


Employees Subjected to Off-the-Clock Security Searches & Missed Breaks

PHILADELPHIA – Oct. 17, 2007 – Eric L. Young, Esq., filed a lawsuit in the Philadelphia Court of Common Pleas on behalf of a class of current and former Best Buy employees alleging violations of Pennsylvania state labor laws. The lawsuit contends, among other things, that Pennsylvania employees at 25 Pennsylvania Bets Buy stores are subjected to off-the-clock security checks at the end of each shift which can take up to 15 minutes. It also accuses the Richfield, Minnesota-based company of forcing employees to work through meal and rest breaks without compensation.

The suit filed by Eric L. Young, Esq. and its co-counsel, Lowey, Dannenberg, Bemporad, Selinger & Cohen, alleges that after clocking out, employees are required to wait in line at a security checkpoint along with customers and submit to a search. Employees who work the closing shift are subjected to the longest waits since store policy dictates that all employees gather at the front of the store before beginning security checks.

“Workers are not being paid for mandatory searches which frequently add up to a half hour or more a week per employee,” said Eric L. Young.

The suit also maintains that employees are routinely required to work during paid meal and/or rest breaks.

For more information about the lawsuit contact Eric L. Young at 215-367-5151.

Whistleblower Client Rewarded Maximum Recovery for Reporting Oil Spill Cover-up


As a result of a Whistleblower complaint filed by James Legg of Anchorage, Alaska, on October 23, 2007, Polar Tankers, Inc., a subsidiary of ConocoPhillips, pled guilty to failure to maintain an oil record book aboard the T/V Polar Discovery, an 895 foot crude oil tanker in violation of 33 U.S.C. §1908(a) of the Act to Prevent Pollution from Ships. The statute requires all ships to record all transfers of oil and oily waste occurring on the vessel, including emergency and accidental discharges of oily waste.

As detailed in Mr. Legg’s whistleblower complaint, on January 16, 2004, the crew aboard the T/V Polar Discovery was transferring the oily sludge from the engine room tanks through piping to a holding tank on deck. An open valve caused sludge to spill onto the deck and through the scuppers – holes in the ship that allow water and other liquids to drain off the deck. Instead of reporting the spill, the captain slowed the vessel and turned it away from the wind so that the crew could clean off the oil left on the side of the ship where it had drained through the scuppers. The captain then falsified the bridge logbook by reporting the change of course as a man overboard drill.

The ConocoPhillips’ tanker company has agreed to pay a government fine in the amount of $500,000 as well as make a $2,000,000 contribution to the National Fish and Wildlife Foundation. The Court also awarded the whistleblower, James Legg, the maximum reward of 50% of the fine or $250,000 for his efforts in the case.
Mr. Legg, an Engineer aboard the T/V Polar Discovery at the time of the spill, was represented by co-counsel, Brandon J. Lauria.

“Mr. Legg is a courageous and conscientious citizen who reported Polar Tankers’ wrongdoing because it was in the public interest. The Court’s decision to award Mr. Legg with the maximum statutory reward for his efforts is significant because it recognizes the vital role played by whistleblowers in combating acts harmful to our environment,” said Mr. Lauria.

YLG Files 2nd Employee Class Action Against Best Buy2


New York Employees Subjected to Off-the-Clock Security Searches & Missed Breaks

NEW YORK – Jan. 24, 2008 – Eric L. Young, Esq. has filed a 2nd Class Action Complaint against Best Buy in the Supreme Court of New York on behalf of a class of current and former Best Buy employees alleging violations of New York state labor laws. The lawsuit contends that employees at 33 New York Best Buy stores are subjected to off-the-clock security checks at the end of each shift which can take up to 15 minutes. It also accuses the Richfield, Minnesota-based company of forcing employees to work through meal and rest breaks without compensation.

The suit alleges that after clocking out, employees are required to wait in line at a security checkpoint along with customers and submit to a search. Employees who work the closing shift are subjected to the longest waits since store policy dictates that all employees gather at the front of the store before beginning security checks.

“Workers are not being paid for mandatory searches which frequently add up to a half hour or more a week per employee,” said Eric L. Young, Esquire.

The suit also maintains that employees are routinely required to work during paid meal and/or rest breaks.

U.S. joins whistleblower lawsuit against Renal Care Group


The United States has intervened in a whistleblower suit accusing Renal Care Group (“RCG”) and Renal Care Group Supply Company (“RCGSC”), wholly owned subsidiaries of Fresenius, of fraudulently billing Medicare for supplies and equipment provided to End Stage Renal Disease (ESRD) patients who received dialysis treatments at home. Notice of the United States’ intervention was announced in court documents that were unsealed in the United States District Court for the Eastern District of Missouri on Tuesday.

“RCG’s fraudulent billing practices are yet another example of abuse in the healthcare industry that contributes to skyrocketing medical costs”, said Eric L. Young, a Pennsylvania attorney who is representing the whistleblowers, Julie Williams and John Martinez, M.D. “

Under federal law, the Medicare program pays companies that provide dialysis supplies to ESRD patients only if the companies that provide the supplies are truly independent from dialysis facilities and the ESRD patient chooses to receive supplies from the independent supply company. As detailed in the unsealed complaint, the companies set up a sham supply company, RCGSC, that was not independent from RCG, and that did little more than submit bills to Medicare. It’s further alleged that RCG interfered with ESRD patients’ choice of supply options, requiring patients to “move” to RCGSC. Even after RCG employees raised concerns and industry competitors closed their supply companies, RCG kept RCGSC open because of the illicit revenue it created.

After retaining Eric L. Young, the whistleblowers filed the qui tam lawsuit in federal district court in St. Louis, Missouri, in June 2005. The qui tam case was kept under seal, meaning that it was not known to the public, while the government investigated their allegations.

Eric L. Young, Esq. specializes in representing whistleblowers (“relators”) in qui tam lawsuits brought under the False Claims Act. The False Claims Act allows private individuals to sue companies that are defrauding the federal government and to recover funds on the government’s behalf. Whistleblowers are entitled to 15 percent to 25 percent of the recoveries that result from the qui tam lawsuit.

Case citation: U.S. ex rel. Julie Williams and John Martinez, M.D. v. Renal Care Group, et al., E.D.Miss. 05-CV-00985-DJS.

We Settle Wage & Hour Case For Zinc Production Workers


Young Law Group, P.C., Attorneys-at-Law, is pleased to announce final approval of a $1.2 million dollar settlement with Horsehead Corporation to resolve a collective action lawsuit brought under the Fair Labor Standards Act (“FLSA”) on behalf of over 500 present and former unionized zinc production workers in Monaca, Pennsylvania. (Figas, et. al. v. Horsehead Corporation, 2:06-cv-01344, W.D.Pa.).

Plaintiffs, members of the United Steelworkers of America, Local 8183, asserted that Horsehead violated the FLSA by failing to pay production workers for time spent donning and doffing protective clothing and equipment before and after paid time.  Plaintiffs also sought compensation for the time spent by production workers traveling to and from their respective work locations.

Eric L. Young, lead attorney for the plaintiffs, commented, “Horsehead’s Zinc Production Workers labor tirelessly in a difficult and dangerous work environment — they deserve to be paid for all of the time spent at work.  We are honored to have been successful in obtaining additional wages for these dedicated workers.”

For more information about this settlement, please contact Eric L. Young, Esquire at 215-367-5151 or eyoung@young-lawgroup.com  Young Law Group, a Philadelphia-based law group, is dedicated to representing employees throughout the United States in wage and hour collective and class action litigation.

YLG files Class Action Complaint on Behalf of Sunoco Employees


PHILADELPHIA – Feb. 26, 2010 – EGAN YOUNG filed a class action lawsuit in the Philadelphia County Court of Common Pleas on behalf of current and former Sunoco employees alleging violations of the Pennsylvania Minimum Wage Act of 1968.The case alleges that Sunoco, Inc., a Philadelphia-based company, has failed to pay all wages and overtime owed for approximately 600 of its hourly operations and maintenance employees at the company’s Philadelphia refinery.

Specifically, the complaint alleges that Sunoco fails to compensate hourly refinery employees for work-related activities performed prior to clocking in, and after clocking out.In order to perform the essential duties of their jobs, Plaintiffs are required to; don and doff personal protection equipment; obtain and/or store tools; travel to and from assigned work sites; prepare and clean work equipment; and, engage in required shift change briefings between co-workers.

Plaintiffs’ attorney, Eric L. Young, stated that, “After a thorough investigation, it was evident that Sunoco’s workers were not and presently are not paid for all required pre-operations and post-operations activities that are necessary and integral to their overall employment responsibilities.Through this suit, we intend to make right Sunoco’s wrong.”

For more information about the lawsuit contact Eric L. Young or Brandon J. Lauria at (215) 367-5151.

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