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 Purtell Merritt 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 Southern District of New York has seen a resurgence in government lawsuits over insider trading in 2016 following a 2015 decline that has been attributed by commentators to the Second Circuit’s decision in U.S. v. Newman. The U.S. Attorney’s Office there, led by Preet Bharara, has filed charges against 11 individuals so far this year, a pace that hasn’t happened since 2012, when the office filed cases against 17 people.
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.
Boeing has agreed to pay $18 million to resolve allegations that it knowingly billed the government for employees on extended lunch hours and breaks. The whistleblower lawsuit under the False Claims Act was originally filed by a former employee of the company. His relator share has not yet been determined.
The lawsuit related to a defense contract for maintenance and repair of U.S. Air Force C-17 Globemaster aircraft at a facility in Long Beach. The company was allowed to bill for labor charges on the contract. However, the lawsuit alleged that Boeing billed for time when the mechanics were not working on the contract and were instead on extended breaks or lunch.
This is not the first settlement of a False Claims Act case related to a defense contract by Boeing for this aircraft. Last year, the Justice Department settled a False Claims Act lawsuit brought by present and former Boeing employees regarding a facility in San Antonio, Texas. The company paid $23 million to resolve the allegations and the group of whistleblowers received just over $3.9 million.
The False Claims Act allows individuals to bring lawsuits on behalf of the U.S. Government to recover government funds. If successful, the relator is entitled to between 15 and 30 percent of the funds recovered.
One of the nation’s largest urine drug testing laboratories settled a False Claims Act lawsuit today to resolve allegations that it billed Medicare and Medicaid fraudulently for unnecessary services and referrals influenced by kickbacks. In the settlement, Millennium Health (formerly Millennium Laboratories) agreed to pay $256 million. It appears that the company is going to enter Chapter 11 bankruptcy and shareholders are going to make an initial payment of $50 million toward the settlement.
The company agreed to pay $227 million to resolve allegations under the False Claims Act. The FCA is the government’s leading tool against fighting spending as a result of fraud. It provides for treble damages and has been used in the past few years to recover billions of dollars lost to health care fraud. It rewards whistleblowers with payments of between 15 and 30 percent of the amount recovered by the US Government.
Millennium was accused of misrepresenting the need for expensive testing to doctors by encouraging them to setup custom profiles which in fact became standing orders for additional testing that occurred without regard to individual patient need. Medicare prohibits the billing of services which are not reasonable and medically necessary.
Millenium also offered gifts (test specimen cups) to physicians to boost their testing referrals, according to the U.S. Government. I haven’t looked at the procedural history of the case in the context of the False Claims Act, but the specimen cup issue may have been brought to light by an antitrust lawsuit originally filed by one of its competitors. The Department of Justice weighed in on that case after the start of its investigation to say that the free testing cups were a violation of the Stark Law and Anti-Kickback Statute.
Ten million of the settlement amount covered a separate whistleblower lawsuit brought by a healthcare provider in Florida which reported the company for unnecessary genetic testing performed without regard to patient need.
The San Diego-based company has been under investigation since 2012. The settlement is another example of the Justice Departments ongoing pursuit of diagnostic testing companies. Earlier this year, another laboratory (Health Diagnostics Laboratory) settled allegations that it paid physicians improperly for the referral of blood sample testing. Health Diagnostics claimed that the payments were a reasonable amount for the work performed by the doctor.
An article in the Wall Street Journal in 2014 discussed the explosion of annual Medicare payments for high tech testing of urine for drugs. In 2007, less than $50 million was spent on such tests. In 2013, Medicare spent more than $600 million on the monitoring of patient treatment for pain and substance abuse. With the tremendous explosion of payments in this area, it is no surprise that the U.S. Government is looking into improper payments in this area aggressively.
Novartis has reportedly agreed in principle with the Department of Justice to settle a whistleblower lawsuit brought under the False Claims Act for $390 million. The complaint filed by the DOJ in 2014 alleges that the company paid kickbacks to specialty pharmacies for prescriptions involving Myfortic and Exjade. The whistleblower filed the complaint informing the Justice Department of the potential fraud in early 2012 following the company’s $420 million settlement with the government in 2010.
The Wall Street Journal is reporting that internal and government investigations into suspected violations of the Foreign Corrupt Practices Act (FCPA) by Wal-Mart Stores have not turned up the evidence of a massive bribery scheme that many commentators expected. Instead, the FCPA investigation discovered millions of dollars in improper payments to Indian officials to speed goods through customs or secure real estate permits but most of these payments were in small amounts of between $5 and $200.
However, there is still time for additional evidence to be uncovered before government officials make up their mind as to the potential size of any fine for the FCPA violations. One event that might alter the landscape of potential penalties would be if a whistleblower came forward with additional evidence and testimony concerning. The SEC whistleblower program incentivizes individuals with the promise of rewards of between 10 and 30 percent of monetary sanctions over $1 million that result from the information provided.
This series of events happened during the Government’s investigation into Countrywide. One of the mortgage whistleblowers in the case came forward with information about the Hustle loan program after the government investigation did not reveal the major misconduct.
The Government investigation of Walmart started in 2012 following public revelations by the New York Times and involved two dozen attorneys, investigators and agents at the DOJ, SEC, FBI and IRS. The results of the federal investigation reportedly match the results of the company’s own investigation.
Wal-Mart has spent more than $650 million as part of its investigation and efforts to bolster compliance. Initially starting in Mexico, it expanded to include, at a minimum, China, India and Brazil. Siemens AG, which paid $800 million to settle the investigations by the DOJ and SEC into its own bribery charges, reportedly spent more than $1 billion on its investigation and global remediation.
The article predicts that the potential government fine of WalMart will be well below previous estimates. In 2012, a Business Insider article calculated how the penalty imposed on the world’s largest retailer could reach over $13 billion. Instead, the Wall Street Journal surmised that because most of the bribery occurred in India and the company earned little profits in the country, there would be a relatively limited fine.
The WSJ story also suggests that there may not be any criminal charges against executives of Wal-Mart. Following the New York Times story concerning the potential cover up of millions of dollars of bribery in Mexico, this seemed unlikely. A grand jury was convened in the case but the status of it was not revealed by the article.
If you have evidence of bribery by a publicly traded corporation, contact one of our FCPA whistleblower attorneys for assistance reporting it to the U.S. Government. An attorney can be reached via our contact form or by calling 1-800-590-4116.
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.”
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.
We are pleased to announce that our client, Todd Mihajlovic, exposed the concealment of the origin of goods imported into the United States by ECL Solutions Limited, Inc., a British company doing business with the U.S. military as Ban-Air Storage Systems (“ECL”). Yesterday, the U.S. Department of Justice announced that ECL pleaded guilty to conspiring to smuggle goods into the United States and was ordered to pay a forfeiture money judgment of $1,066,132.10 in the criminal prosecution in the U.S. District Court for the Eastern District of Pennsylvania. The Government’s press release announcing the success in the criminal matter can be found on the DOJ’s EDPA website here.
We represented Mr. Mihajlovic, who filed a civil qui tam lawsuit under the False Claims Act in the U.S. District Court for the District of Delaware in 2012. Mr. Mihajlovic’s complaint alleged that ECL violated the False Claims Act because of false representations made by the company that products it sold to the United States complied with the Buy American Act (BAA) and the Trade Agreements Act (TAA). According to the Complaint, ECL obscured the fact that its steel racking systems sold to the U.S. military were actually imported from China.
Mr. Mihajlovic has our profound gratitude for bringing the company’s scheme to the attention of the U.S. Government. Here at McEldrew Young Purtell Merritt, Attorney Brandon Lauria took the lead on the case and spent countless hours on the case to see it to a successful resolution. We were assisted by United Kingdom Solicitor-Advocate Howard S. Brown, who is associated with Shepherd, Finkelman, Miller & Shah, LLP.
This case is an example of the rise of international whistleblowing, as our client is located outside the United States. Fortunately, the whistleblower laws incentivize reporting by individuals regardless of their location and citizenship. The False Claims Act, as well as the SEC, CFTC, and IRS whistleblower programs, do not restrict the U.S. Government from rewarding international whistleblowers. Otherwise, in the era of transnational commerce, fraud might go unchecked simply because the evidence of the corporate wrongdoing is located in a foreign country.
If you are a whistleblower, located here in the United States or abroad, interested in reporting customs fraud in America or the bribery of customs officials abroad, contact our office for a free initial legal consultation concerning your case.