The United States Department of Justice and numerous state governments have intervened in numerous qui tam whistleblower suits, including one brought by Philadelphia based law firm McEldrew Young against INSYS Therapeutics, Inc. . The suit alleges, among other things, that INSYS engaged in a nationwide illegal scheme to increase profits from Subsys, a fentanyl sublingual spray and schedule II controlled substance.
The Department of Justice recovered more then $3.7 billion in settlements and judgments in Fiscal Year 2017 from the False Claims Act according to the press release issued last week. The majority of the funds recovered were in lawsuits initiated by whistleblowers. Qui tam lawsuits led to $3.4 billion of the $3.7 billion in settlements and judgments.
The United States has concluded its third-largest FCPA enforcement action with a settlement of $965 million in total penalties (including Dutch and Swedish penalties) by Telia Company AB and its subsidiary, Coscom. The Acting U.S. Attorney of the Southern District of New York called it “one of the largest criminal corporate bribery and corruption resolutions ever.”
Disaster-relief fraud and Initial Coin Offering (ICO) fraud are two areas that have been making headlines recently. Based on communications reported in the media from government agencies, both areas will be the subject of government scrutiny in the next few years. With regard to disaster fraud, the Justice Department recently notified its personnel to improve efforts to fight it. The SEC has also created a Cyber Unit to improve its ability to address electronic and online violations of the federal securities laws, including ICO fraud.
At the end of July, the U.S. Securities and Exchange Commission announced a $29.2 million settlement against Halliburton for payments made to a local Angola company in the course of winning lucrative oilfield services contracts. The corporate settlement was the first under the Foreign Corrupt Practices Act (FCPA) since President Trump’s inauguration, although there have been two declinations with disgorgement reached by the DOJ.
Attorney General Jeff Sessions reaffirmed the Justice Department’s commitment to enforce the Foreign Corrupt Practices Act (FCPA) spoke last Monday in a speech at the Ethics and Compliance Initiative Annual Conference. Statements by President Trump before running for office ridiculing the anti-bribery law had put the administration’s enthusiasm for enforcing the law into doubt.
The Justice Department is reportedly investigating efforts by Barclays CEO Jes Staley to unmask a whistleblower who sent two anonymous letters to the bank’s board of directors complaining about the hiring of a mid-level executive. Barclays reportedly asked the U.S. Postal Service for assistance in tracking down the sender of the letters, though it claims that it never learned the identity of the individual. It is now being investigated for possible criminal charges and/or violations of the Dodd-Frank Act. The New York State Department of Financial Services is also investigating.
The United States has joined a lawsuit brought by whistleblowers under the False Claims Act accusing UnitedHealth Group of bilking Medicare by fraudulently boosting payments through the inflation of plan members’ risk scores under Medicare Advantage. In other words, UnitedHealth told the United States that patients were sicker than they were and collected more money from the government as a result. This is the first major government enforcement action unsealed under Attorney General Jeff Sessions and the New York Times called it a case of fraud that likely implicated “billions” of dollars in Medicare payments.
The end of the Obama Administration was one of the busiest in the resolution of government investigations ever. The SEC and DOJ wrapped up nine Foreign Corrupt Practice Act investigations in the course of two months.
It was an interesting week on government enforcement as the Obama Administration is closing out its term with fines against auto industry manufacturers VW ($4.3 billion) and Takata (expected to be up to $1 billion). After the inauguration, these enforcement decisions will be in the hands of the Trump Administration.