Whistleblower Law Blog

Beazer Homes settles False Claims Act violations for Mortgage Fraud

Juliet@LaBovick.com (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

Juliet@LaBovick.com (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

Juliet@LaBovick.com (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

Juliet@LaBovick.com (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.

US Files qui tam suit against Capmark Finance in California

Juliet@LaBovick.com (LaBovick Law) — Sun, 14 Jun 2009 06:32:16 -0500

Capmark Finance Inc., a California-based mortgage lender, is the target of a qui tam suit filed by the Department of Justice. In this suit, the Justice Department alleges that the company has committed mortgage fraud and is seeking reparations under the False Claims Act.

The suit against Capmark Finance stems from what the Department of Justice claims as fraudulent statements by the company on applications for federal mortgage insurance for two residential nursing home facilities. The facilities, Canoga Care Center, located in Canoga Park, California, and Hudson Valley Care Center, based in Ghent, New York, were both covered by the U.S. Department of Housing and Urban Development (HUD) under a federal program that guarantees mortgages that are used to purchase healthcare facilities. Both of these residential care institutions have both defaulted on these guaranteed loans and HUD has since had to pay approximately $26 million under the terms of the mortgage insurance agreement.

The False Claims Act, sometimes referred to as the Lincoln Law, provides for liability against entities that make false claims in order to gain government funding. An entity can be charged as much as three times the amount fraudulently taken from the government along with other civil penalties, under what is commonly known as a qui tam suit.

If a qui tam suit, is brought by a whistleblower also known as a "relator", the whistleblower may be entitled to 15-30% of the government's total recovery. This 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 note, that the whistleblower must have complied with statutory requirements if they are to receive a portion of the whistleblower reward.

Since the Department of Justice alleges that Capmark Finance falsified information on paperwork in order to receive protection from the Department of Housing and Urban Development, the False Claims Act covers this case of suspected mortgage fraud. The United States is also seeking the highest possible dollar amount from Capmark in its suit.

According to Tony West, Assistant Attorney General for the Justice Department's civil division:

"Mortgage fraud is a top priority for this administration, especially when public dollars are at stake. This complaint sends a clear message that we will aggressively pursue allegations of fraud on federal mortgage insurance programs, which are so vitally important to this economy."

Capmark Finace had its early beginnings in 1994, when the company operated under General Motors ownership as GMAC Commercial Mortgage Corporation. In 2006, GM sold its majority interest in GMAC Commercial to a consortium including Five Mile Capital Partners, Kohlberg, Kravis Roberts & Co., and Goldman Sachs. The company was then renamed as Capmark Financial Group. Capmark now bills itself as a diversified company that offers a variety of financial services in the commercial real estate industry. Capmark’s three areas of focus include investments and funds management, mortgage banking and lending, and servicing

Qui tam suit against Healthways settled for $40,000,000

Juliet@LaBovick.com (LaBovick Law) — Fri, 12 Jun 2009 21:49:23 -0500

Another successful case in the win column for whistleblowers (relators) bringing qui tam suits, In this most recent instance, whistleblower, Steve Pogue, and his legal team can breathe a sigh of relief, because the litigation against Healthways that took 15 years has finally settled for $40,000,000.

It started back in 1994 when Mr. Pogue was fired from his job as a marketing representative for a company called Diabetes Treatment Centers of America, (owned by parent company Healthways).. The hard work and tireless efforts for bringing justice on behalf of the United States for the Diabetes Treatment Centers for stealing millions of dollars in taxpayer money through Medicare fraud and illegal kickbacks, paid off inthe recent settlement.

Since the government decided not to intervene, whistleblower, Steve Pogue will collect 25% - 30% of the settlement as a reward. That comes out to $10,000,000 - $12,000,000 for him stepping forward and bringing forth the qui tam claim. Hopefully settlements like these will encourage more whistleblowers to report fraud against their employers that are stealing from the government.

Legal Blogger, from Getnick & Getnick on QuitamHelp.com, made a valid point in the blog post "Healthways pays $40 million to settle 15 year qui tam suit, when they shared the following statement:

"This case “demonstrates the wisdom of Congress in deciding that the government’s decision not to participate does not mean that a case has no merit.”

Although it took 15 years, the reward was great, Unfortunately, it is not always like this and sometimes the whistleblower doesn't win such a large amount of money. Wen working with whistleblowers around the country, most step forth and bring fraud to their employer's attention, because they want to do what is right for the company and the government. Unfortunately, most companies fire the messenger or make their lives miserable,. The whistleblower is forced is forced to seek legal counsel and bring the company's fraudulent behavior to the authorities..

Hopefully, the proposed False Claims Act Amendment will give protections to more whistleblowers so that we can prevent taxpayer fraud. We all lose, when someone defrauds the government. Let's all be watchful of how companies bill the government and spend government funds. If the public doesn't keep a watchful eye out for the government, who else will? Definitely not the companies stealing and overcharging the government.

To learn more on this qui tam settlement from Healthways, read Medical News Today

Whistleblower Protection Act hearing taking place today

Juliet@LaBovick.com (LaBovick Law) — Thu, 11 Jun 2009 11:34:11 -0500

Today there is an important hearing on the Whistleblower Protection Act being held in Washington, D.C. at 2:30pm (EST). If you can't attend the hearing, please make an effort to call Senators Daniel Akaka (202) 224-6361 and Susan Collins (202) 224-2523, indicating your support of Whistleblower protection for all.

The purpose of the hearing is to examine problems with the current system of protections for federal employee whistleblowers and the pending Whistleblower Protection Enhancement Act of 2009 (S. 372). The hearing will also address differences between S. 372 and the House companion bill (H.R. 1507).

Watch the Whistleblower Protection Act hearing live

As an Action Member with the National Whistleblowers Center, the President, Mr. Stephen Kohn sent the following message to share with our Readers.

Message from the - National Whistleblowers Center:

The Senate is holding a hearing on the Whistleblower Protection Enhancement Act today. The public hearing will be held in the Dirksen Senate Office Building, Room 342 at 2:30 PM.

Now is the time to make your voice heard! If you have not sent an email to Congress send it now! Call Senators Daniel Akaka (202) 224-6361 and Susan Collins (202) 224-2523, the Chairman and Ranking Member of the Senate Committee on Homeland Security and Government Affairs, and tell them that all federal employees, including those who report misconduct in national security and defense, must have whistleblower protection with full court access.

During the campaign, President Obama pledged to support effective legislation that would protect all federal employees with a guaranteed right to federal court access. Please urge the Senate to back up this promise.

Federal Government Joins 16 States in Wyeth Whistleblower Lawsuit

Juliet@LaBovick.com (LaBovick Law) — Tue, 09 Jun 2009 11:54:38 -0500

New Jersey-based Wyeth, one of the nation's largest drug manufacturing companies recently had two qui tam lawsuits filed against them in federal court in Massachusetts. Pharma giant, Wyeth - poised to be bought out by large pharmaceutical company Pfizer, Inc. later this year - is being accused of overcharging state Medicaid programs by failing to offer them the best price possible for the stomach acid drug Protonix. Sixteen states - as well as the Justice Department - have joined in on the lawsuits, which could result in millions of dollars in repayments to Medicaid, as well as settlements for the two whistleblowers.

The lawsuits allege that between the years 2000 and 2006, Wyeth offered very high discounts to hospitals around the country for Protonix, which is available in oral and injected forms. While these hospitals were able to take advantage of the deal for the brand name drug, the same deal was not offered to state Medicaid programs. Federal law mandates that the manufacturers of brand name prescription drugs must offer the same deal - or the "best price" - of the drugs they make to Medicaid programs and private hospitals alike.

According to to the DOJ, Tony West, Assistant Attorney General for the Justice Department's Civil Division stated,

“Our complaint charges that Wyeth created the Protonix bundle so they could increase their market share at the expense of the Medicaid program -- a program to provide the least advantaged Americans with necessary medical care and services. “By offering massive discounts to hospitals, but then hiding that information from the Medicaid program, we believe Wyeth caused Medicaid programs throughout the country to pay much more for these drugs than they should have.”

By failing to offer Medicaid programs the best price for Protonix, it is alleged that Wyeth avoided paying hundreds of millions of dollars in rebates. The presence of two whistleblowers in the two lawsuits suggests that people with insider knowledge into the goings-on at Wyeth have evidence that will be presented in court during these suits. As with other past whistleblower cases, these individuals have likely already disclosed a great deal of damaging information to the government regarding Wyeth's alleged practices.

Additionally, the lawsuits against Wyeth allege that the drug manufacturer bundled oral and intravenous versions of Protonix together in the hopes of making additional profits through outpatient sales. When combined with the rebate allegations being leveraged against the pharmaceutical company, these additional accusations of underhanded marketing tactics make this a case that is sure to be followed with great interest by watchdog groups around the country.

As expected, representatives for Wyeth have defended their methods. Spokesperson Doug Petkus issued a statement saying that Wyeth stands behind its pricing. However, if Wyeth is found guilty of defrauding Medicaid - a state program that aids poor citizens in their medical coverage - it could face steep fines as well as be held responsible for restitution. On top of that, Wyeth would likely have to pay damages to the two whistleblowers involved in the suits.

In addition to the Justice Department, 16 states have joined in the two lawsuits filed in Massachusetts. The states are: Florida, Delaware, California, Indiana, Illinois, New York, Massachusetts, Louisiana, Michigan, New Hampshire, Nevada, Tennessee, Virginia, Wisconsin, Texas and Washington, DC.

Supreme Court rules on appeal time limits for qui tam cases

Juliet@LaBovick.com (LaBovick Law) — Mon, 08 Jun 2009 14:39:47 -0500

Today, Justice Thomas delivered the opinion in the much anticipated case United States, ex rel. Irwin Eisenstein, Petitioner, v. City of New York, et, al.. Unfortunately, the opinion, was a fatal blow for the Relator, Irwin Eisenstein, since the lower court's decision was affirmed that there is only a 30 day time limit for appeal on qui tam cases where the government decides not to intervene.

In his opinion, Supreme Court Justice Thomas wrote:

"The question presented is whether the 30-day time limit to file a notice of appeal in Federal Rule of Appellate Procedure 4(a)(1)(A) or the 60-day time limit in Rule 4(a)(1)(B) applies when the United States declines to formally intervene in a qui tam action brought under the False Claims Act (FCA), 31 U. S. C. §3729. The United States Court of Appeals for the Second Circuit held that the 30-day limit applies. We affirm."

Petitioner filed a notice of appeal 54 days later. While the appeal was pending, the Court of Appeals sua sponte ordered the parties to brief the issue whether the notice of appeal had been timely filed. Federal Rule of Appellate Procedure 4(a)(1)(A)–(B) and 28 U. S. C. §§2107(a)–(b) generally require that a notice of appeal be filed within 30 days of the entry of judgment but extend the period to 60 days when “the United States or an officer or agency thereof is a party,” §2107(b). Petitioner argued that his appeal was timely filed under the 60-day limit because the United States is a “party” to every FCA suit. Respondents countered that the appeal was untimely under the 30-day limit because the United States is not a party to an FCA action absent formal intervention or other meaningful participation.

The Court of Appeals agreed with respondents that the 30-day limit applied and dismissed the appeal as untimely. See 540 F. 3d 94 (CA2 2008). We granted certiorari, 555 U. S. ___ (2009), to resolve division in the courts of appeals on the question,1 and now affirm."

One question at the forefront of everyone's mind is, why shouldn't all cases have 60 days to appeal? Relators without government intervention in the qui tam case have only 30 days to appeal. However, when the government decides to intervene in the case, there is a 60 day time limit for an appeal. Since the government is the beneficiary of successful qui tam litigation, doesn't it make sense to give more time to bring an appeal, whether or not the government intervenes?

According to the President of the National Whistleblowers Center, Stephen Kohn:

"The Supreme Court in Eisenstein has once again chipped away at the ability of whistleblowers to challenge corrupt contracting practices under the False Claims Act. The ruling demonstrates a fundamental misconception of the purposes behind the False Claims Act, the most important anti-fraud law in the United States. The Court ruled that FCA cases pursued by whistleblowers are similar to private lawsuits. This is wrong. Whistleblowers under the FCA have a powerful right to file cases on behalf of the United States, and the vast majority of any recovery in these cases is paid to the U.S. Treasury -- not the whistleblower. Taxpayers are the main beneficiaries of these cases -- the rules concerning filing deadlines should reflect the intent of the law, and should also reflect the fact that the United States, recovers no less then 70% of all monies obtained in an FCA case. In today's environment, the Supreme Court should be strengthening anti-fraud laws, not continuously chipping away at the ability of whistleblowers to present their cases."

Time will tell if this decision will affect other qui tam litigation pending appeal. Maybe we should seek relief from the legisature to help increase the time limit in bringing a False Claims Act Appeal for Relators. As a nation, we can't afford to allow the guilty to get away with fraud and use loop holes in the court to escape justice. Let's hope that this case will help raise awareness that we need to continue to strengthen our False Claims Act, not "Chip away at it".

Earth Day 2009 - Doing your part in the work place

Juliet@LaBovick.com (LaBovick Law) — Wed, 22 Apr 2009 09:03:59 -0500

Today is Earth Day, celebrated in the United States officially, since 1970. It was founded by U.S. Senator Gaylord Nelson. Earth Day is about being environmentally friendly. This includes includes work, home and play.

Since our Readers are mostly reading the WhistleBlower Law Blog from work, we are sharing a few Simple Steps that can be implemented in the work place.

Use a Laptop at work - Laptops use 50 percent of the energy used by a typical desktop PC when plugged in and just 1 percent of the energy when running on batteries.
Use Double Sided Printing - Use Double Sided printing whenever possible to save on paper. This cuts down on the finished size of a multi-page document.
Recycle Cartridges - Recycle empty printer, copier and fax cartridges. Empty laser and inkjet cartridges can be refilled or remanufactured several times.
Turn Off Lights in Unoccupied Rooms - Lights should be turned off in unoccupied conference rooms and offices. If you walk by an empty conference room, switch the light off. Use Disposable Cups - Provide mugs and glasses in the office to eliminate the need to use disposable cups for beverages.
Use Flash Drive, PDF's and Save Paper - Save on paper, use Flash Drives, Disks and PDF's to save and share your computer files.
Use teleconferencing and Webinars - Use Teleconferences and Webinars where possible to save on traffic and commute time for meetings and seminars.

Celebrate Earth Day 2009 and do your part in being more environmentally friendly at work. Check out the following book: Easy Being Green by Crissy Trask for more tips on Being Green

Happy Earth Day!

P.S. At LaBovick & LaBovick, we are doing our part, we implement these simple steps every day in our offices. In fact, our new headquarters is equipped with light sensors that automatically turn off lights if there is no activity or movement in a room after 10 minutes. We also recycle print, ink cartridges, cans, bottles, and paper (when possible). We hope that more businesses and individuals join us in making a difference today on Earth Day and every day of the year.

Congressman Bruce Braley discusses whistleblower legislation with Brian LaBovick

Juliet@LaBovick.com (LaBovick Law) — Tue, 14 Apr 2009 15:22:54 -0500

Managing Partner, Brian LaBovick, Esq., discusses whistleblower legislation with Congressman Bruce Braley in the Podcast series, "From the Courtroom".

whistleblower.labovick.com/uploads/file/Podcast WhistleBlower_leg_Congressman_Bruce Braley _final cut.mp3

Defense contractor, Northrop Grumman pays $325 million to settle qui tam suit

Juliet@LaBovick.com (LaBovick Law) — Mon, 06 Apr 2009 22:36:25 -0500

Defense Contractor Northrop Grumman Corp., has agreed to settle False Claims Act allegations for $325 million, according to the Department of Justice. Allegedly, Northrop provided and billed the National Reconnaissance Office (NRO) for defective microelectronic parts, known as Heterojunction Bipolar Transistors (HBTs).

Investigation into the HBT Action found that that Northrop and TRW failed to properly test and qualify certain HBTs manufactured by TRW from 1992 to 2002. As a result, Northrop and TRW integrated into NRO satellite equipment certain defective HBTs. The investigation further concluded that Northrop and TRW made false misrepresentations and concealed key material facts regarding the reliability of the HBTs.

U.S. Attorney for the Central District of California Thomas O’Brien and Acting Assistant Attorney General for the Civil Division Michael F. Hertz announced the settlement.

According to Acting Assistant Attorney General for the Justice Department’s Civil Division Michael F. Hertz, “The settlement of the HBT case demonstrates that the Department of Justice will investigate even the most complex and challenging allegations. The settlement demonstrates that defense contractors will be held accountable and that the government will aggressively pursue all allegations of misconduct in the procurement process.”

Kudo's to relator and whistleblower Robert Ferro, Ph.D., an employee of The Aerospace Corporation for coming forward with this case. Although, the case was filed filed in US. District Court in the Central District of California in 2002, the government intervened in the lawsuit against Northrop in November 2008. Dr. Ferro will receive $48.75 million as his relator's share of the recovery in the HBT action under the qui tam provisions of the False Claims Act.

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.

Northrop Grumman stock closed today at $47.94. According to published 4Q reports, Northrop Grumman Sales in the 4Q increased by 4 Percent to a Record $9.2 Billion. Overall in 2008, Sales increased 6 Percent to a Record $33.9 Billion. It is easy to see why they finally agreed to end the fight, admit no wrongs and settle the qui tam suit for $325 million. Hopefully, this large fine will deter other Defense Contractors from misrepresentations of products sold to the Government in the future.

Press Conference Today - re: whistleblower protections Bill

Juliet@LaBovick.com (LaBovick Law) — Thu, 12 Mar 2009 11:47:09 -0500

I am thankful for the valiant fight of Congressman, Bruce Braley, (D) Iowa First District, and other members of congress regarding whistleblower protections for workers.

We had the distinct pleasure of speaking with the Congressman regarding this important piece of legislation, that is being proposed today for a stand alone bill. One of the major reasons this is so important now according to Congressman Braley is that "There is a massive amount of money being spent in the current economic recovery bill. We must protect against wasteful and fraudulent use of taxpayers hard earned dollars".

We could not agree more, that protecting the whistleblowers with whistleblower protections, is a necessary step to ensure that the government's dollars are being used appropriately, regardless of where it came from, stimulus bill or just regular government spending.

Stay tuned for more information on this proposed whistleblower legislation. We look forward to hearing more from Congressman Braley on the stand alone whistleblower bill.

Check out CSPAN or CNN for the press conference today at 12:15pm in the Radio TV Gallery of the House in room H321.

We are rooting for your success Congressman Braley. We ask our loyal readers to contact their local congressional person to show support.

EMC comes under fire from DOJ in Qui tam suit

Juliet@LaBovick.com (LaBovick Law) — Tue, 03 Mar 2009 06:53:32 -0500

The Department of Justice has joined the qui tam lawsuit against EMC Corp for failing to disclose its commercial pricing practices during negotiation of its General Services Administration (GSA) contracts. The lawsuit also alleges that EMC provided improper payments and other things of value to Systems Integrators and other Alliance Partners on contracts with government agencies.

This qui tam suit was originally filed in Arkansas by relators Norman Rille and Neal Roberts. If Mr. Rille and Mr. Roberts allegations against EMC of submitting false claims to the United States for information technology (IT) hardware and services on numerous government contracts from the late 1990’s to the present are true, this could be an expensive qui tam payout. In their defense, According to an article by Jason Miller on Federal News Radio.com, EMC Corporation spokesman, Patrick Cooley states: "The matters at issue in this case are historical in nature; some of the allegations relate to events nearly 10 years old. According to Acting Assistant Attorney General Michael F. Hertz the government joined the suit "as a part of the Department of Justice’s continuing efforts to ensure the integrity of the procurement process." Therefore, one would believe the government wants to crackdown on its procurement process.

This raises the question, Should we give a company a free pass, if it defrauds the government for several years and then discontinues the misleading practices? Should the company not be held responsible for these corrupt practices if they knowingly and deceptively misled the government in the procurement of contracts?

Mr. Cooley goes on to say "We will vigorously defend this case and the many years EMC has spent serving the U.S. Government. And, we will continue to provide mission-critical information infrastructure solutions to numerous branches of the U.S. Government as this matter proceeds."

The EMC shares were down 36 cents yesterday in light of the DOJ lawsuit. Since EMC has not been charged with any wrongdoings and these are only allegations, the DOJ investigations will continue. The public will have to wait and see if EMC overcharged the government with deceptive pricing structures, stemming back from the 1990s. Will investors will keep the faith in EMC? Time will tell.....

Chairman rejects nominee to board with Medicare fraud ties

Juliet@LaBovick.com (LaBovick Law) — Tue, 10 Feb 2009 00:37:05 -0500

Yesterday, the Chairman of Orthofix International, issued a strong statement about a nominee for Orthofix Board, Steven J. Lee. In an open letter, Chairman, James F. Gero, outlined a long history of Mr. Lee's former company's unsavory history with qui tam litigation. Two of which, were Florida Based, Liberty Medical Supply and Liberty Home Pharmacy. Back in 2001, two qui tam, or whistleblower, lawsuits were filed in federal court in Miami and Boston against PolyMedica Corporation and its subsidiaries. These lawsuits alleged, that the subsidiaries violated the False Claims Act by submitting claims to Medicare without proper documentation of medical necessity, resulting in overbilling to federal health care programs.

In 2004, the company, paid $35 million to the United States government to resolve the fraud allegations, as well as to settle administrative sanctions related to the alleged misconduct. This settlement concluded an investigation lasting approximately five years that included on-site searches of PolyMedica’s subsidiary operations by FBI agents in response to federal search warrants, the removal of company documents, and subsequent shareholder lawsuits.

Two thumbs up for the Chairman publicly rejecting a man with a background that could possibly taint the image of his corporation, that he took an oath to uphold and to make better. In the wake of corporate greed and mismanagement, it is good to see that someone in corporate America still believes in integrity and ethics. There is an old saying that goes something like: "association brings assimilation".

Fraud and mismanagement of government funds should not be stood for in this day and age. Whistleblowers are speaking out and bringing the misdeeds of "greedy" corporations that try to squeeze more from the taxpayer and from the government. Good for Mr. Gero for stating that he and his board wanted no part of a man that was at the helm of a company that defrauded the government and had to pay $35 million in fines.

Click here to read more from Orthofix Chairman.

Construction Firm Mercer-Fraser settles qui tam lawsuit for $1.3 million

Juliet@LaBovick.com (LaBovick Law) — Thu, 05 Feb 2009 07:01:35 -0500

Midsized construction firm, Mercer-Fraser agreed to pay $1.3 million to settle fraud allegations involving work under the U.S. Small Business Administration's HUBZone Empowerment Contracting program. According to the claim, Mercer- Fraser used false information to gain business. The Company misrepresented the size of their earnings and their partnerships in their application to the Small Business Administration.

Mercer-Fraser maintains that they did nothing wrong and that the error was that of the Small Business Administration.

In late 2007, the government decided to get involved with this qui tam claim after whistleblower, Mark Mann, employee of a competitor and supplier of Mercer-Fraser and affiliate Contri Construction Company brought the matter to the Department of Justice's attention through his attorney.

Congratulations to Mr. Mann for following through and stepping forward to report this wrongdoing against the government. Although, this is a small award, it is another step in the right direction for the fight against government fraud.

GAP : Whistleblower Rights and the Stimulus Package

Juliet@LaBovick.com (LaBovick Law) — Wed, 28 Jan 2009 08:55:59 -0500

Good news is possibly in store for Whistleblowers if the Government Accountability Project office gets its way. The organization came with a brilliant idea of tying Whistleblower Protections to the Stimulus Bill that is in the forefront of everyone's mind in Washington, to help promote whistleblower rights. They drafted a letter to President Obama and other Key figures outlining how this can be made possible and the benefits to all sides. Click here to read the letter sent by the Coalition.

Clever strategy. One can only hope that it works and that Washington will look at the bigger picture and see this as a win-win.

The coalition is urging support for an amendment to the stimulus legislation sponsored by Rep. Todd Platts (R-PA) and Chris Van Hollen (D-MD). Click Here to read Russell Platt's Letter.

Stay tuned for more information on this important issue of whistleblower Rights and Protections. Click here if you want to read more on this from the Government Accountability Project Office.

GAP : Whistleblower Rights and the Stimulus Package

Juliet@LaBovick.com (LaBovick Law) — Wed, 28 Jan 2009 08:55:59 -0500

Clever strategy. One can only hope that it works and that Washington will look at the bigger picture and see this as a win-win.

The coalition is urging support for an amendment to the stimulus legislation sponsored by Rep. Todd Platts (R-PA) and Chris Van Hollen (D-MD). Click Here to read Russell Platt's Letter.

Stay tuned for more information on this important issue of whistleblower Rights and Protections. Click here if you want to read more on this from the Government Accountability Project Office.

Eli Lilly agrees to pay $1.4 Billion in Qui tam fraud involving Zyprexa

Juliet@LaBovick.com (LaBovick Law) — Mon, 26 Jan 2009 01:54:03 -0500

Whistleblowers have a lot to celebrate in the wake of the recent $1.4 billion settlement from drug maker, Eli Lilly. The drug giant, Eli Lilly, plead guilty to promoting its drug Zyprexa for uses not approved by the Food and Drug Administration (FDA). Included is a criminal fine of $515 million, the largest ever in a health care case, and the largest criminal fine for an individual corporation ever imposed in a United States criminal prosecution of any kind. Eli Lilly will also pay up to $800 million in a civil settlement with the federal government and the states. Whistleblowers will share in about 20% of the government's share in the $800,000.

This settlement should help more whistleblowers come forward. AM Law Daily gives an insightful summary on how whistleblower cases have increased in the past year. I have to admit, at our firm, over the past year and even more recently, whistleblowers have been contacting us regarding qui tam claims. I think that this can be attributed to the large whistleblower rewards and media attention over the past year. One word of caution, if you are a whistleblower with critical information, talk to an Attorney about your claim and rights before making statements public. This way you have a better way of protecting your claim.

Click here to read more on the $1.4 billion qui tam settlement from Eli Lilly from the Department of Justice.

Let's see how 2009 will treat qui tam and whistleblower claims under the new administration.

Show your Support for the National Whistleblower Law

Juliet@LaBovick.com (LaBovick Law) — Fri, 23 Jan 2009 14:52:58 -0500

Positive Steps are being made in the fight for a national whistleblower law.

The National Whistleblower Center is enlisting the help from every individual that believes we should have a national whistleblower law. They have created a petition for everyone to read and sign. Once you have signed the petition, forward it to a family member or friend.

This is something that we deeply support and believe in at our firm, LaBovick & LaBovick.

Please click on the following link to fill out the petition in support of a national whistleblower law.

" We are on the road to comprehensive whistleblower protections, but lots of work remains to be done. We must ensure Congress hears our voice now."