Whistleblower Law Blog

HHS-DOJ Healthcare Fraud Summit - a step in the right direction

LaBovick Law — Sat, 30 Jan 2010 06:06:50 -0500

This week on January 28, the Department of Healthand Human Services and the Department of Justice held an invitation only Summit on Health Card Fraud. Key Speakers included Secretary Kathleen Sebelius and U.S. Department of Justice Attorney General Eric Holder.

The summit was an unprecedented event on health care fraud where law enforcement and the private and public sectors come together as a part of the Obama Administration’s coordinated effort to fight health care fraud. The seminar covered such topics as

Use of technology to prevent and detect health care fraud and improper payments.
Role of states in preventing health care fraud.
Development of effective prevention policies and methods for insurers, providers and beneficiaries.
Effective law enforcement strategies.
Measuring health care fraud, assessing recoveries and determining resource needs.

Highlights from some of the key speakers include the following:

Secretary Kathleen Sebelius gave a moving introduction of the significance of the summit. She reinforced the Obama Administration's stance on "zero tolerance" for criminals who cheat taxpayers, endanger patients, and jeopardize the future of Medicare. A few highlights from her speach include the following remarks:

"Today, the President has asked us to put these criminals on notic. The problem of health care fraud is bigger than either government, law enforcement or the private industry can handle alone. We will need all of us working together to solve it. In the fight to prevent, find, catch, and prosecute these crooks, we want every good idea we can get.

Health care fraud is a national problem. It affects federal programs like Medicare, state programs like Medicaid, and private insurance companies. We’re all part of a health care system that has been undergoing rapid growth.

Between 1970 and today, America’s annual health care spending has gone from $75 million to over $2.5 billion. That has produced significant benefits for patients. But it’s also created a much bigger target for criminals. And a much bigger challenge for investigators. The difference between catching fraud then and now is the difference between trying to find a penny in a bathtub and trying to find a penny in a swimming pool."

Attorney General Eric Holder stated in his opening remarks that the HHS-DOJ Healthcaree Fraud summit marks a critical step forward in the work being done by HEAT, our Health Care Fraud Prevention and Enforcement Action Team that was established last May. He gave several insightful comments after addressing the fact that we have a serious problem on our hands with healthcare fraud. If the agencies, concerned advocuates and citizens work together, combined forces, more progress will be made.

Comments from Attoney General Holder on the next steps that should be taken in the fight aganst healthcare fraud.

First, we must strengthen HEAT ( We will continue to combine and leverage our agencies’ resources and expertise, including the FBI,the Office of Inspector General at HHS, and the local U.S. Attorneys Offices to pursue both civil and criminal cases.

Second, we’ll continue to support our Medicare Fraud Strike Forces and work to expand these teams to areas of the country where our efforts are most needed. These teams have changed the enforcement landscape.

Third, we will continue to push for the investments necessary to meet our duties and do our jobs. I’m pleased that Congress and the Administration have provided strong support.

Fourth, our agencies will continue to work with Congress to identify and pursue the legislative and regulatory reforms necessary to prevent, deter and prosecute health care fraud."

Incoming Acting Deputy Attorney General Gary Grindler stated the followng in his remarks:

"Every year, hundreds of billions of dollars are spent to provide health care for millions of American seniors, children, and the disabled. And each year billions of these dollars are stolen through fraudulent schemes that cheat taxpayers and contribute to the increasing cost of health care for all Americans.

We are here today because we know we need to do more. Not only does health care fraud harm the stability of public health care programs, it harms everyone - it drives up the cost of health care, insurance premiums, and taxes for all Americans."

We applaud the efforts of the Obama Administration and the agencies that have come together to address this critical issue of fighting healthcare fraud. As Civil Justice Prosecutors, we are vigilant in the prosecution of fighting corruption, especially fraud against the government and taxpayers. The crime and corruption will only stop if the protocols and measures are put in place to uncover the fraud, and prosecutte the criminals that are found guilty. This will only stop, if criminals, including corporations, understand the significance with huge fines and jail time,where appropriate.

For more information on the fight against Healthcare visit the following sites:

DOJ website on reporting fraud

Stop Medicare Fraud - Government site

"Defund the Crooks Act" introduced to Congress

LaBovick Law — Thu, 28 Jan 2010 10:56:50 -0500

Upon returning from holiday recess, the 111^th Congress of the United States introduced bill H.R. 4444, better known as the Defund the Crooks Act, in early January 2010. First introduced by Congressman Alan Grayson (D-FL), the Defund the Crooks Act prohibits the Federal Government from awarding Federal funds, contracts, or grants to covered organizations. The Act also prohibits the Federal Government from promoting certain organizations or from entering into other agreements with these organizations.

Based in part on the Defund ACORN Act of 2009, Congressman Grayson’s bill effectively broadens the scope of regulation while not basing the regulation on the acts of one organization. The purpose of the bill is essentially to ensure that Federal funds – taxpayer dollars – do not end up in the hands of organizations that fail to meet certain requirements.

According to the bill, “covered organizations” refers to several of the following examples:

Any organization previously convicted of a Federal or State law violation
Any organization that failed to comply with Federal or State laws leading to its corporate charter being revoked
Any organization that has filed, transmitted, or submitted a fraudulent claim to any Federal or State agency
Any organization that knowingly employs, contracts, or relegates authority to any individual who has been convicted of a Federal or State law violation

The Defund the Crooks Act states that no Federal funds, regardless of form, may be provided to organizations that do not meet the aforementioned requirements set out in the bill. It is important to note that the Act does not apply to organizations that received Federal funds prior to the enactment of the bill. However, if organizations that are now deemed unfit to receive Federal funds, grants, endorsements, etc. have a contract extending past the date of the bill’s enactment, they will be terminated.

Click on the following link to view the proposed bill H.R. 4444 introduced to Congress.

Click on the following to learn more on Congressman Grayson and the Defund the Crooks Act (H.R. 4444).

US intervenes in qui tam suit against Johnson & Johnson for Kickbacks to Pharmacy for Nursing Homes

LaBovick Law — Mon, 25 Jan 2010 23:42:58 -0500

The United States filed a qui tam or False Claims Act complaint against Johnson & Johnson (J&J) and its subsidiary companies Johnson & Johnson Health Care Systems Inc. and Ortho-McNeil-Janssen Pharmaceuticals Inc. According to the complaint, Omnicare Inc., the U.S.’s largest dispenser of pharmaceuticals to patients in nursing homes, was receiving millions of dollars in kickbacks from the companies. This complaint comes after Omnicare entered into a $98 million settlement with the federal government and multiple states in November of last year, an action that supposedly resolved Omnicare’s liability for taking previous kickbacks from Johnson & Johnson.

Allegedly, Omnicare accepted financial kickbacks in return for the company’s purchase and recommendation of Johnson & Johnson and its subsidiaries’ pharmaceutical products to nursing home patients. Doctors accepted the recommendations of Omnicare’s pharmacists more than 80 percent of the time, and allegedly Johnson & Johnson viewed Omnicare pharmacists as “an extension of its sales force.”

Kickbacks were delivered in several ways, including:

1) Offering Omnicare rebates when programs to increase the sale of Johnson & Johnson’s prescription drugs to nursing home patients were implemented.

2) Paying Omnicare millions of dollars for “data”; the complaint alleges that these payments were false and used only to coerce the recommendation of Johnson & Johnson drugs from Omnicare pharmacists.

3) Johnson & Johnson also made multiple “educational funding” and “grant” payments to Omnicare, with intent only to receive a recommendation from its pharmacists.

Assistant Attorney General for the Civil Division of the Department of Justice had this to say about the situation,

"We will pursue those who break the law to take advantage of the elderly and the poor. He went on to say that, “Kickbacks such as those alleged here distort the judgments of health care professionals and put profits ahead of sound medical treatment."

Forba Holdings, LLC, settles Medicaid fraud allegations for $24 Million

LaBovick Law — Sun, 24 Jan 2010 08:44:02 -0500

FORBA Holdings LLC, a dental management company, settled a qui tam claim for allegedly performing medically unnecessary dental services on children. FORBA Holdings LLC provides administrative services to "Small Smiles Center, a nationwide operation of 69 dental centers. The settlement calls for FORBA to pay $24 million, plus interest to the United States and participating states, for suspected medically unnecessary dental services for children on Medicaid insurance. In addition, FORBA will implement several new remedial measures, designed to prevent this type of conduct in the future.

Three whistleblowers are credited for the government’s investigation into these allegations. The whistleblowers filed lawsuits under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private citizens to sue on behalf of the United States and share in any recovery. The whistleblowers will receive payments over $2.4 million from the federal share of the settlement.

According to the Department of Justice, FORBA allegedly falsely submitted claims for dental services performed on low-income children. Many of these services performed did not meet professionally recognized standards of care or were not medically necessary. Tony West, “Assistant Attorney General for the Civil Division of the Department of Justice stated the following:

"We have zero tolerance for those who break the law to exploit needy children. Illegal conduct like this endangers a child’s well-being, distorts the judgments of health care professionals, and puts corporate profits ahead of patient safety."

To resolve the allegations against it, FORBA will pay $24 million, plus interest. The federal share of the civil settlement is $14,285,645, and the Medicaid share for 21 states is $9,714,355.25. This settlement sends a clear message that the government will not tolerate fraud. U.S. Attorney for the Western District of Virgini, Timothy J. Heaphy, is correct in the following statement:

"FORBA put greed and profits before the well-being of children. It endangered the health and safety of innocent children and defrauded the taxpayer of millions of dollars. Today’s settlement addresses these egregious acts and sends a clear message that Medicaid fraud will be expeditiously addressed by this Department."

The False Claims Act is a powerful tool that has helped the government recover approximately $2.2 billion since January 2009 in cases involving fraud against federal health care programs and over $3 billion in False Claims Act total cases overall.

Qui tam suit charges stent device makers of off-label use

LaBovick Law — Tue, 19 Jan 2010 06:14:05 -0500

A qui tam law suit that accuses Boston Scientific Corp. (NYSE:BSX), Johnson & Johnson (NYSE:JNJ) and its Cordis Corp. subsidiary and Abbott (NYSE:ABT) of promoting the off-label use of biliary stents to treat cardiovascular disease in hundreds of thousands of patients has been unsealed.

The Whistleblower, Kevin Colquitt, filed the qui tam lawsuit under 31 U.S.C. 3729 (False Claims Act) and other State False Claims Act Statutes for violations against Medicare, Medicaid, CHAMPUS and TRICARE. The lawsuit allegesthat the companies involved, committed Medicare Fraud and filed fraudulent clearance applications with the FDA.

According to the New York Times, the Justice Department and two of those states, Florida and Tennessee, said in court filings that they were declining for the moment to do so, but added that they were continuing to investigate.

Click on the following link: to view the Colquitt Whistleblower Court Documents

Click on the following links to learn more on this qui tam lawsuit,

Mass Device
The New York Times

Happy Martin Luther King, Jr. Day 2010

LaBovick Law — Mon, 18 Jan 2010 18:54:53 -0500

Today, January 18th, we celebrate the life and legacy of Dr. Martin Luther King, Jr., a man that sacrificed his life to ending inequality, and spreading a message of peace to the world. As one of the most prominent figures in the Civil Rights struggle of the mid-20^th Century, Dr. King proved to everyday that change is possible, through peaceful and lawful means. We can all do something to make the world a better place.

As many valiant whistleblowers understand that it takes courage to stand up for something that is right and to make a difference. As a firm that fights for the rights of our client's we are passionate about justice and fighting for the rights of others.

Our firm's culture and philosophy, includes being committed to making a difference in our community. Many of our attorneys and staff members are actively involved in charitable organizations such as The Literacy Coalition for Palm Beach County, The Junior League of the Palm Beaches, Pace Center for Girls, The Quantum House, The Dori Slosberg Foundation, and many others. It is the collective goal of our team at LaBovick & LaBovick, P.A. to give back to the community while likewise furthering the development of our society in general.

We also pride ourselves on the diversity of our team. At the core of our corporate culture is the understanding that diversity not only adds well-rounded knowledge, it adds cultural depth to the company that increases everyone’s level of acceptance. We are happy to say that our team reflects LaBovick & LaBovick, P.A.’s commitment to diversity, and we are blessed to have a multitude of talented professionals from various backgrounds.

As we celebrate the life and accomplishments of Dr. King today, let’s all take a moment to reflect on the impact his mission had on our society, its effect on the world in general. In so doing, we should also reflect upon our own lives and ask the question, how can we help make a difference in community? How can we can make a positive difference in the life of our neighbors? It only takes a dream to change the world, as Dr. King's vision has shown us all.

Minnesota Hospital to Pay U.S. nearly $1 Million to Resolve Qui tam Allegations Admissions

LaBovick Law — Mon, 04 Jan 2010 18:31:09 -0500

The year is starting off on the right tone with qui tam settlements for Medicare fraud. The Minnesota case United States ex rel. Steven Radjenovich v. Stanley Gallagher, et al., Case No.: 04-4538 (D. Minn.) was settled for $846,461 today.

According to the Department of Justice, Wheaton Community Hospital knowingly made false claims to Medicare for unreasonable and unnecessary hospital admissions. These false claims were made from 1998 to 2004. The hospital billed Medicare for acute patient care that was not medically necessary.

Tony West, Assistant Attorney General for the Justice Department’s Civil Division stated the following:

"Hospitals and doctors have a responsibility to provide patients with reasonable and necessary care. When they neglect those obligations, patients and taxpayers suffer."

The whistleblower in this case will be awarded $203,150, as his share of the settlement with Wheaton Community Hospital. In a qui tam case, the whistleblower's reward or relator's award can be anywhere from 15% to 30%, depending upon the level of the government's involvement in the case.

If you are a whistleblower and have pertinent information on Medicare, Medicaid fraud or any other false claims act violations from a company, protect your rights and contact a qualified qui tam attorney to discuss how to protect your rights.

Happy New Year 2010 - Justice prevails

LaBovick Law — Fri, 01 Jan 2010 22:38:55 -0500

Happy New Year 2010!! Today is the first day of the New Year. Last year marked a milestone in record breaking settlements relating to qui tam and false claims act violations.

The year ended with a qui tam settlement from Genesys Health System in the amount of $669,413. The lawsuit brought by the Justice Department alleged that the health care provider violated the False Claims Act by submitting false claims to Medicare.

Genesys, a Grand Blanc, Mich.-based Company, provides health care services through a network of medical facilities located in Michigan. The government alleged that between 2001 and 2007, Genesys violated the False Claims Act by billing Medicare for higher levels of service than were actually rendered to patients. Specifically, the government alleged that Genesys overbilled for evaluation and management services provided to cardiology patients.

Assistant Attorney General of the Justice Department’s Civil Division, Tony West stated:

"We are committed to vigorously pursuing those who defraud Medicare. Taxpayer dollars should be spent on health care services for patients, not wasted on fraud and abuse."

This case was a success due to the coordinated efforts of the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Eastern District of Michigan, and the Office of Investigations for the Department of Health and Human Services’ Office of Inspector General and Office of Counsel to the Inspector General.

Governor Crist comes to SFL to talk about Israel... a personal perspective

Brian F. LaBovick, Esq. — Sun, 06 Dec 2009 23:35:47 -0500

From time to time, I come across issues that are not directly related to my Blog topic, but due to my own sense of priority I feel compelled to share these experiences with our readers. In this instance, the subject is meaningful to me. The subject is Israel.

This past Friday, Governor Crist, visited Temple Beth Am in Jupiter. It was always my feeling that Governor Crist was a committed supporter of Israel. On Friday he told our congregation a story about his experience in Israel. While visiting the Western Wall in 2007, he prayed for the protection of Florida from hurricanes. Believe it or not, this is a true story. While on the trip, a friend encouraged him to visit the Western Wall, aka Wailing Wall, and to insert a written prayer into the wall. Governor Crist did just that. In his prayer, he asked the Lord to protect Florida from storms that year. It is important to point out that thereafter Florida was hurricane free in 2007. When one of the Governor’s friends told him he was going to Israel in 2008, the Governor gave him a similar note to put in the wall. For a second year in a row, our beautiful state was hurricane free. This year another friend went to Israel. The Governor contacted him and requested another prayer be placed into the wall. The 2009 hurricane season is over and wallah! No storms. I hope that when Governor Crist moves onto the national stage, most likely as a Senator, he will continue to send his prayers for Florida's safety to the Western Wall.

On a more serious note, the Governor's visit was a rousing success. Although the crowd wanted to hear about the recent international reports on Israel and Palestinian relations, the Governor wisely chose to be more general and positive in his discussion about the significance of the relationship between Florida and Israel. He acknowledged the 800,000 Jewish voices in Florida who want assurance that the US will not abandon Israel. He reiterated that he will continue to fight to keep our relationship with Israel strong.

In closing, Governor Crist addressed the tragic shootings in Jupiter which took place on Thanksgiving. He asked for prayer and healing for the families. His attention to this issue showed how concerned he is about local community events as well as national events. Overall, the Governor’s speech was moving and sincere. I am honored that I had the pleasure of sitting with him; praying with him and hearing him speak about a subject that is near to my heart.

Brian

DOJ enlists help from Congress to fight healthcare fraud

LaBovick Law — Fri, 30 Oct 2009 03:30:10 -0500

The DOJ's Assistant Attorney General Tony West realizes that healthcare fraud is a serious issue that can't be fought alone. Since 2009, he has led DOJ's Civil Division and is requesting help from Congress to combat healthcare fraud. We applaud Assistant Attorney General Tony West for his efforts in admitting that the DOJ needs help. This is a first step in making progress.

Earlier this week, Senator's Ted Kaufman (D-Del.) and Arlen Specter (D-Pa.) and Senator Patrick Leahy (D-Vt.) introduced the Healthcare Fraud Enforcement Act to Congress. This bill outlines enforcement issues and calls for increasing rewards for whistleblowers. It is estimated that an additional $20 million is needed in federal funding to increase Medicare fraud investigations and prosecutions.

Fighting healthcare fraud is a bi-partisan effort. Senator's Chuck Grassly (R-Iowa) and John Cornyn (R-Texas) are also concerned about how the DOJ plans on fighting healthcare fraud. According to Sen, Chuck Grassley, there are over 1,040 pending qui tam lawsuits in the DOJ, some over 36 months. A strong plan of action needs to be in place to bring qui tam lawsuits to trial and swift justice for those found guilty.

Whistleblowers should be encouraged with this week's progress in the fight against healthcare fraud. Qui tam lawsuits will increase next year if Congress and the DOJ make a concerted effort to fund and staff the teams charged with handling this task.

We recommend that whistleblowers remain steadfast. Enlist legal help of a private attorney on qui tam claims. This can ease some of the burdens, when bringing a qui tam lawsuit. Also, this can help ensure that the whistleblower's rights are protected.

Pfizer agrees to pay $2.3 billion to settle qui tam and criminal charges

LaBovick Law — Thu, 03 Sep 2009 06:29:06 -0500

Pfizer Inc has agreed to pay a record settlement of $2.3 billion to resolve a qui tam case and to settle federal and criminal probes. According to the DOJ and several published reports, this involves the alleged Medicare/Medicaid fraud, and the illegal use off-label marketing of multiple drugs.

The fines in this case are $1.3 billion, which are the largest settlement ever paid for a health care fraud claim and a criminal case. In addition to Pfizer, Pharmacia & Upjohn Co, a Pfizer subsidiary was also involved with misbranding a pharmaceutical.

The settlement involves the marketing drugs not included in the label approved by the FDA. Two drugs included in this probe are antibiotic Zyvox and antipsychotic Geodon.

Pfizer has agreed to pay $400 million to settle whistleblower claims involving Zyvox and Geodon drugs. They will pay an additional $33 million for improper marketing with 42 states and the District of Columbia.

The whistleblowers involved in this case will receive over $100 million for their roles in bringing this fraud to light.

Whistleblower and former UBS Banker sentenced to 40 months in prison for role in tax scam

LaBovick Law — Wed, 26 Aug 2009 04:34:42 -0500

Former UBS Banker, Bradley C. Birkenfeld was recently sentenced to 3 years and 4 months in prison for assisting a client at UBS to evade taxes. However, due to Mr. Birkenfield's assistance, the government was successful in reaching the February settlement of UBS agreeing to pay $780 million in fines, penalties, and restitution relating to tax fraud.

In response to the sentencing of Bradley Birkenfeld, Qui tam Attorney Brian F. LaBovick, Esq. stateted the following:

"This is a major issue within the Qui Tam paradigm. I recognize that Mr. Birkenfeld was likely a bad actor and that the government had a good reason to hold him accountable for his part in the fraud. But in the context of how terrible whistleblowers are treated post service of process; this is another good reason why people "in the know" may fail to come forward to report fraud. Without bad actors looking for a "pay day" literally billions of dollars will be lost to the intricate fraudulent schemes created in the wake of big government contracts with dishonest vendors and service suppliers.

I am deeply troubled by this prosecution. Had this occurred in a criminal context, the results would have been different. Seldomly are we able to combat and bring down organized crime rings without the help of the criminals who are given an immunity deal from the government."

The case, U.S. v. Birkenfeld, 08-cr-60099, U.S. District Court, Southern District of Florida, occured in Fort Lauderdale, Florida. Sadly enough, the support from U.S. Senator Carl Levin of Michigan, representatives of the Securities and Exchange Commission and IRS, did not help to give Mr. Birkenfeld leniency in his sentencing. One can only hope, that this will not deter other whistleblowers from coming forward and working with the government to report fraud against the government.

Click on the following to learn more on the UBS Tax Fraud sentencing of Whistleblower Birkenfield or the DOJ's release on the former UBS Banker being sentenced to prison.

Sotomayor confirmed for Supreme Court by Senate

LaBovick Law — Fri, 07 Aug 2009 07:01:31 -0500

Yesterday, the Senate confirmed Judge Sonia Sotomayor to become our Nation's first Hispanic U.S. Supreme Court Justice. The Senate vote was approved, 68-31, primarily with Democrats and some Republicans voting in favor of the confirmation. Judge Sotomayor will be sworn in on Saturday.

President Obama delighted about the Senate Confirmation stated the following:

They're ideals she's fought for throughout her career, and the ideals the Senate has upheld today in breaking yet another barrier and moving us yet another step closer to a more perfect union,".

Judge Sotomayor will replace Justice David Souter who retired in June 2009, after serving on the Court since 1990.

The appointment and Senate confirmation of Judge Sonia Sotomayor is a tremendous step of progress in our Nation's history.

We congratulate Judge Sotomayor on becoming the nation's 111th Supreme Court Justice.

From the Courtroom Podcast Interview with Robert M. Morgenthau on Judge Sonia Sotomayor

LaBovick Law — Thu, 30 Jul 2009 12:41:28 -0500

In this edition of our Podcast Series "From the Courtroom", Esther Uria LaBovick, Esq. has the pleasure of speaking with New York District Attorney Robert M. Morgenthau.

The honorable Robert M. Morgenthau discusses Judge Sonia Sotomayor, her Senate confirmation hearings, and her life as a Prosecutor in the New York District Attorney's Office. He highlights a few significant cases of Judge Sotomayor while at the New York County District Attorney's office and other significant achievements in her career that all support her nomination as a Supreme Court Justice.

S. 372 - Whistleblower Protection Enhancement Act of 2009 - show your support for federal employees

LaBovick Law — Tue, 28 Jul 2009 10:05:59 -0500

On Wednesday, July 29, 2009, the Senate will be marking up its version of the Whistleblower Protection Enhancement Act of 2009 (S. 372). We encourage you to contact your Senators and President Obama and ask them to support adding jury trials for all federal employees, including national security employees.

You can participate by contacting President Obama and your Senator with an email through the Action Alert program from the Whistleblower Center. It is easy, quick and can make a difference. Don't hesitate, Act Now.

National Whistleblower Center Action Alert Link

New York State and NYC sets record for qui tam settlement of $540 million

LaBovick Law — Tue, 21 Jul 2009 23:02:45 -0500

Everyone knows there is no place like New York and New York City. However, this does not mean that New York and NYC can defraud the government. The Department of Justice announced today that a settlement was reached by New York and NYC to pay a record sum in the amount of $540 million to settle allegations for knowingly submitting, or causing to be submitted, false claims for reimbursement for school-based health care services, primarily speech therapy and transportation, provided to Medicaid eligible children from 1990 to 2001. Unfortunately, you did not misread this information that New York state workers, knowingly submitted false charges to the Medicaid program. This is appalling information.

According to the News Release from the Department of Justice:

The government’s allegations arose from two lawsuits filed under the qui tam or whistleblower provisions of the False Claims Act, which allow private persons, known as “relators,” to file actions on behalf of the United States and share in any recovery. The relator in these cases, a speech therapist who provided services to preschool children in upstate New York, alleged that New York State and its school districts submitted false claims for speech services that did not qualify for Medicaid reimbursement. The relator will receive $10 million from the settlement.

This is such a travesty since New York is a state that took such much pride in coming out with a state False Claims Act to go after those defrauding the government. How unsettling to see that their own workers were committing such fraudulent acts to get funds their state did not deserve. Shame, Shame, Shame on you New York. We are grateful to the speech therapist that came forward to bring such light against this fraud. We can't stress it enough, if you are aware of your company defrauding the government and have proof, find out the necessary steps to report the fraud. There is a whistleblowers reward to those that help uncover the fraud. It is not easy and we can attest that many who try to go it alone don't always get the reward they deserve. Seek out legal counsel, find out your rights and discuss the facts with legal counsel that you trust. In some cases, such as this one, there is great reward. Thankfully in this instance, New York did the right thing and settled the case for $540 million and the relator/whistleblower will receive $10 million for their valiant efforts.

To learn more on the New York False Claims settlement of $540 million, click on the following links:

Department of Justice
Dow Jones

Beazer Homes settles False Claims Act violations for Mortgage Fraud

LaBovick Law — Fri, 03 Jul 2009 12:02:06 -0500

The Atlanta based home builder, Beazer Homes USA Inc. settled a qui tam suit involving mortgage fraud with Federally insured mortgages. Beazer Homes USA has agreed to pay $50,000,0000 to the United States to be shared with victimized private homeowners, to resolve the False Claims Act allegations.

According to published reports by the DOJ, the Builder's mortgage company made Federal Housing Administration (FHA) insured mortgage loans for the purchase of homes built by the Builder and both companies fraudulently and improperly:

1) required purchasers to pay "interest discount points" at closing, but then kept the cash and failed to reduce interest rates;
2) provided cash "gifts" to home purchasers through certain charities, so purchasers could come up with minimum required down payments, with assurances the "gifts" would not have to be repaid, and then increased home purchase prices to offset the amount of the gifts;
3) obscured which of its branches made defaulting mortgage loans to avoid FHA detection of excessive default rates, and;
4) ignored "stated income" requirements in making loans to unqualified purchasers.

The Attorney General's Office is serious about fighting mortgage fraud. The US Attorneys Office along with the Department of HUD are working together to crack down on fraudulent mortgage practices by firms. Assistant Attorney General Tony West, who heads the Civil Division stated recently:

"We will aggressively pursue fraud claims against federal mortgage insurance programs, which are so vitally important to this economy."

This is further echoed in a DOJ press statement by HUD Secretary Shaun Donovan, that the lenders will be held accountable for their actions if they are involved with mortgage fraud:

"This action shows that the Administration is serious about making the housing market safe from mortgage fraud and will crackdown on those who violate the trust of American homebuyers."

Beazer has agreed to provide appropriate restitution to buyers and have established a national restitution fund. The Chief Executive Officer and Chief Operating Officer are voluntarily contributing funds from their 2008 year end bonuses to the restitution fund. This was a smart move on their part. However, they should have thought about the repercussions of the company's actions beforehand.

It is interesting that we covered Beazer Homes on our Law Planet Blog recently regarding the SEC charging Chief Accounting Office, Michael Rand of misleading investors by inflating earnings. This was the first time that a firm made The Whistleblower Law Blog and The Law Planet Blog both in the same week.

Note to all firms committing mortgage fraud: "if you are actively engaging in fraudulent behavior that can be construed as mortgage fraud, you will be caught and prosecuted by your actions. Whistleblowers are bring educated on "what is qui tam" and the False Claims Act and are stepping forward with information on mortgage fraud. Based on the nature of their information, they may get a Whistleblower reward, which can be 15% - 30% of what the US recovers based on their information. Be advised... Your secrets will come out and you will be caught and brought to justice. Thanks to a Whistleblower stepping forward and bringing this information to light with a qui tam attorney.

To learn more on qui tam and the rights of Whistleblowers, click on the following for more information on qui tam and the False Claims Act.

United States Settles False Claims Act violations against Beazer Homes USA

LaBovick Law — Fri, 03 Jul 2009 05:08:52 -0500

1) required purchasers to pay "interest discount points" at closing, but then kept the cash and failed to reduce interest rates;
2) provided cash "gifts" to home purchasers through certain charities, so purchasers could come up with minimum required down payments, with assurances the "gifts" would not have to be repaid, and then increased home purchase prices to offset the amount of the gifts;
3) obscured which of its branches made defaulting mortgage loans to avoid FHA detection of excessive default rates, and;
4) ignored "stated income" requirements in making loans to unqualified purchasers.

"We will aggressively pursue fraud claims against federal mortgage insurance programs, which are so vitally important to this economy."

This is further echoed in a statement by HUD Secretary Shaun Donovan, that the lenders will be held accountable for their actions if they are involved with mortgage fraud:

"This action shows that the Administration is serious about making the housing market safe from mortgage fraud and will crackdown on those who violate the trust of American homebuyers."

To learn more on qui tam and the rights of Whistleblowers, click on the following links on qui tam and the False Claims Act.

Supreme Court will hear Qui tam lawsuit over public disclosure

LaBovick Law — Tue, 23 Jun 2009 09:56:47 -0500

The whistleblower case, Graham County Soil & Water Conservation District v. United States ex rel. Wilson, 08-304 was granted certiorari by the Supreme Court.

This case has special implications for the business community, especially whistleblower lawsuits against drugmakers, and biotechnology companies. Several organizations such as National League of Cities, Pharmaceutical Research and Manufacturers of America, Chamber of Commerce of the United States of America, and the Washington Legal Foundation, filed amici curiae Briefs

The central players in this case include the Graham County water district from North Carolina and a former secretary at Graham County water district. The main argument in the case is whether the whistleblower can bring a qui tam case against the water district for allegedly fraudulently seeking federal money for storm cleanup, since the allegations are based on information made known in publicly available in state documents.

According to the Supreme Court Docket Report from Appellate.Net of the Mayer Brown Law Firm:

"The decision in Graham County will be especially significant to businesses that are subject to inspections and audits by state and local government agencies, because the results of those inspections and audits are frequently made available to the public, and thus to potential relators and their lawyers."

The Solicitor General, Elena Kagan and the United States asserts the following in the discussion of this case in the May 2009 Amicus Curiae Brief for Graham County Soil & Water Conservation District v. United States ex rel. Wilson, 08-304.

"The court of appeals correctly construed the second clause of the “public disclosure” bar contained in 31 U.S.C. 3730(e)(4)(A). The court’s decision, however,
deepens a pre-existing circuit conflict regarding whether state and local administrative audits and reports fall within the scope of the FCA’s “public disclosure” provision. This Court should grant the petition for a writ of certiorari to resolve the split among the circuits on an important legal issue affecting the federal courts’ jurisdiction over FCA qui tam actions."

To learn more on this case read Bloomberg News, Scotus Blog, The Supreme Court, The US DOJ

Time will tell, which way the court will decide on this opinion. Will Big Business prevail or will the Courts render an opinion that is in favor or whistleblowers and bringing FCA fraudulent activity to light?

All eyes are on the Supreme Court. Stay Tuned....

Kindred Health settles qui tam suit for $1.3 million

LaBovick Law — Mon, 15 Jun 2009 23:29:04 -0500

Today, a qui tam suit that was brought against Kindred Healthcare, Inc. was settled for just over $1.3 million. United States Attorney Russ Dedrick announced today that Kindred Healthcare, Inc. and its successor PharMerica Healthcare Pharmacy, LLC, have agreed to settle claims that Kindred violated state and federal laws regarding over-billing TennCare and the Medicaid program for pharmaceuticals.

The healthcare corporation provides medications to patients in group homes and long-term care facilities throughout Tennessee. It was alleged that between 2003 through 2006, Kindred overbilled for a higher number of drugs than were actually administered. There were instances where the overbilling occured multiple times the proper amount.

Thanks to the valiant efforts of a former billing clerk employee of Kindred, this qui tam lawsuit was filed on behalf of the the United States and Tennessee under the qui tam provisions of the Tennessee Medicaid False Claims Act and the federal False Claims Act.. The whistleblower/ relator in this case will be rewarded over $200,000 for her role in filing the complaint and assisting with the investigation.

As mentioned previously on the Whistleblower Law Blog:

In a qui tam suit, the whistleblower also known as a "relator" may be entitled to
15-30% of the government's total recovery, which includes damages for the false bills, tripled, plus civil penalties of from $5,000 to $10,000 per false claim. However, it is important to mention, that the relator/whistleblower must have complied with the statutory requirements to be eligible for the whistleblower reward.

To learn more on the Kindred settlement, read the DOJ release reqarding the qui tam settlement for Kindred Health.

To learn more on qui tam and the federal false claims act, visit our qui tam section on the LaBovick website.