New York Employment Lawyer Blog

Dava Pharmaceuticals ("Dava"), a global pharmaceutical company, agreed this week to pay the U.S. government $11 million to settle allegations that it violated the False Claims Act. The government had charged Dava with violating its obligations under the Medicaid Prescription Drug Rebate Program ("Rebate Program"). A whistleblower brought the alleged fraud to the governments attention.

Pharmaceutical companies must enter into the Rebate Program if they want their products to be available to Medicaid beneficiaries under the Medicaid program. Under the Rebate Program, if you are a participating drug company, you must pay quarterly rebates to the state Medicaid programs, which are based in part on whether a drug is a "generic" or "branded" product and the difference between what the health care program paid for the drug and what other purchasers paid for it.

The settlement involves alleged conduct that occurred between October 2005 and September 2009. The government alleged that Dava, in order to lower its Medicaid rebate payments, incorrectly labeled its version of the drugs, cefdinir, clarithromycin, and methotrexate as "generic" drugs instead of accurately calling them "branded" products, which in effect lowered its overall percentage rebate that it owed to Medicaid. Dava also incorrectly figured out the average manufacturer prices for its versions of these drugs and thereby further reducing its Medicaid rebate obligation. In effect, Dava did not pay the full amount due to the Medicaid program and overcharged certain public health services for these products.

Of the $11 million settlement, the federal government will receive about $5 to $7 millions while the Medicaid participating states will receive over $5 million. Dava will pay about $200,000 to certain public health services entities who overpaid for the drugs at issue.

Tony West, the Assistant Attorney General for the Civil Division of the Department of Justice, stated that "Pharmaceutical companies that participate in Medicaid must accurately report drug prices and pay their fair share of rebates to the federal and state governments." He added that "Settlements like this one help maintain important programs on which so many depend for needed health care."

The qui tam whistleblower statute is probably one the governments' most important weapons in combating fraud against the government. It allows private citizens with knowledge of fraud being committed against the government to bring an action on behalf of the government. Under these statutes, government can recover three times the amount it was defrauded as well as charge civil penalties of $5,500 to $11,000 per false claim. Depending on whether the government intervenes in the action or not, a whistleblower can receive between 15% to 30% of the government's recovery. Jim Conrad, the whistleblower in this case, will receive 15% of the government's recovery as his share for bringing Dava's fraud to the government's attentions.

Committing fraud against the government is the same as stealing from taxpayers. If the whistleblower in this case had not brought this action, Dava's fraud would probably have gone undetected, costing taxpayers million. If you know of fraud being committed against the government at your workplace, call our qui tam Whistleblower Attorneys at Villanueva & Sanchala at (800) 893-9645 to help you determine if you have an action under the False Claims Act..

Continue reading "False Claims Act: Whistleblower Gets Huge Payoff by Exposing Medicaid Fraud" »

Fourteen hospitals settled allegations this week of violating the False Claims Act by agreeing to pay over $12 million to the U.S. government. All the hospitals, located in New York, Mississippi, North Carolina, Washington, Indiana, Missouri and Florida had submitted false claims to Medicare. Among the New York hospitals, North Shore Syosset Hospital will pay $192,735 while Plainview Hospital has settled for $2,307,265.

This lawsuit was brought by two qui tam whistleblowers, Craig Patrick and Charles Bates, under the False Claims Act. The Act allows individuals with knowledge of fraud being committed against the government to bring an action on behalf of the government and to receive a percentage of the recovery. Patrick was employed as a reimbursement manager at Kyphon and Bates was employed as a regional sales manager for Kyphon. For bringing the lawsuit on behalf of the government, the two individuals will receive a total of about $2.1 million of the recovery.

The lawsuit alleged the hospitals with overcharging Medicare between 2000 and 2008 when kyphoplastys were performed. Kyphoplasty is a procedure performed to treat certain spinal fractures caused by osteoporosis. It is minimally invasive and can be done as an out-patient safely and at a much reduced cost. The government alleged that these hospitals performed the procedure on an inpatient basis to increase their Medicare billings.

The allegations in these settlements all case stem from the government's settlement with Medtronic Spine LLC, the corporate successor to Kyphon, Inc., in 2008. The $75 million settlement resolved allegations that Medtronic committed Medicare fraud by counseling hospital providers to admit patients for inpatient hospital stay to perform kyphoplasty procedures in order to increase their Medicare reimbursement although the procedure could have been done on an outpatient basis in many cases. Thereafter, the government aggressively began going after health care providers who billed for inpatient stays following a kyphoplasty. The government's initiative has resulted in settlements with over 40 hospitals with a recovery of over $39 million.

If you're a healthcare provider, make sure you have not over billed Medicare. In light of the government's crack down on Medicare fraud, it is not unwise to conduct an internal audit of your Medicare billing and reimbursements to ensure that you're not submitting any false claims. If you have received any over payments, you must pay it back within 60 days. Failure to do so could result in triple damages and penalties of $5,500 to $11,000 per claim. Our attorneys have helped many healthcare providers examine their billing as well as referral relationships to ensure that they are not violating the False Claims Act.

Tony West, Assistant Attorney General for the Justice Department, stated that "Patients want reassurance that their health care provider is making treatment decisions based on the patient's best interests, not an interest in maximizing profits." When healthcare providers submit false claims to increase their Medicare reimbursement, it not only takes a toll on the country's cost of health care, health care is compromised.

If you know of fraud being committed against the government, call our Whistleblower Attorneys at Villanueva & Sanchala at (800) 893-9645 to discuss if you have a possible cause of action under the False Claims Act.

Continue reading "Qui Tam Whistleblowers Expose Medicare Fraud and Obtain Big Payoff" »

The New York State Attorney General's Office recently settled a qui tam whistleblower case with Cayuga Medical Center ("Cayuga") for $3,576,056. The allegations charged Cayuga with violating the federal Stark Act and the state's False Claims Act by entering into illegal physician recruitment agreements with various medical practices.

In 2007, Dr. Daniel Jorgenson, a plastic surgeon with admitting privileges at Cayuga, filed this whistleblower lawsuit. Jorgenson alleged that Cayuga recruited physicians into the local area under a recruitment agreement and paid for expenses, which violated federal law. Cayuga then submitted claims for payment under Medicaid and Medicare, which were not in compliance with federal law.

Cayuga used to offer loans to new physicians to help them start their private practice and to recruit them into the Ithaca area. However, a regulatory change in 2004 made it so that these loans to the physicians joining an existing practice could no longer include any portion of that practice's overhead, unless new staff or space was added. All contracts entered into before 2004 had to be changed, as the regulation did not "grandfather" prior recruitment contracts. In 2007, Cayuga discovered that 4 recruitment contracts signed prior to 2004 had not been corrected due to oversight and reported this to the Office of the Inspector General. During the investigation, Dr. Jorgenson filed his whistleblower lawsuit alleging that 2 additional contracts were in violation of the Stark Act. Although Cayuga disagreed that these 2 contracts were in violation, it settled the matter to avoid the high cost of lengthy litigation.

Of the settlement amount, New York State will receive over $426,000 and $3.1 million will go the federal health care programs. As the whistleblower for reporting the fraud and for cooperating with the investigation, Dr. Jorgenson will receive 18% of the settlement which is $567,000.

The Stark Act makes it illegal for a doctor to refer patients to a hospital or other provider of health care with which it has a financial relationship. It also prohibits hospitals from billing Medicaid for a referral if that referral was in violation of the law. The Stark Act is one of the most important laws affecting the compensation relationship between hospitals and its employed physicians. What makes it difficult to accept is that it is a strict liability statute so that your intent does not matter. In other words, even if you didn't intend or mean to violate the law, you will still be held liable. There was no finding of fraud or abuse by Cayuga but just plain old administrative oversight which has now cost it millions.

If you are a physician or a health care provider, make sure you are in compliance with all state and federal laws regarding physician compensation. The Stark Act is easily implicated if you are using referrals with some type of financial compensation unless you fall under an exception. If you're in doubt, call our Physician Employment Agreement Attorneys at Villanueva & Sanchala at (800) 893-9645 to help review your system and policy of referrals to ensure that you are not violating any state or federal laws.

Continue reading "Health Care Providers: Watch out for Illegal Physician Employment Agreements" »

The government recently settled a claim with The Boeing Company ("Boeing") for violating the False Claims Act by allegedly engaging in improper billing practices pertaining to Army contracts to make and modify Chinook helicopters. Boeing is the world's leading aerospace company and the largest manufacturer of commercial jetliners and military aircraft. It provides major services to NASA as well as numerous military services.

Beginning in 2003, the U.S. Department of Defense awarded Boeing contracts to manufacture and modify Chinook helicopters to enable the Army to modernize its fleet of heavy lift helicopters. The Chinook helicopters, which date back to the Vietnam era, are used today for combat operations and civil and humanitarian missions around the world. The government ordered over 100 helicopters and Boeing had agreed to "remanufacture" several hundred older Chinook helicopters by overhauling their airframes and putting in upgrades.

According to the contracts, the government had paid for most of the remanufacturing work with a pre-negotiated price. However, its investigation revealed that several Boeing managers had told their mechanics who were working on the Chinook program to perform other, nonbillable work while separately billing the government for their time. This resulted in the government being charged for work that it had already paid for.

The settlement provides for Boeing to pay the U.S. about $4.4 million and also requires it to implement several measures to ensure that this does not occur again. This includes training its employees and improving the software it uses to track billing. Boeing will also, over the next few years, implement a new labor tracking computer system for its defense manufacturing facilities across the country to make sure that the same problem that occurred at its Ridley plant does not happen at its other facilities.

This case was brought to light by a whistleblower, Vincent A. DiMezza Jr., a production manager at Boeing's plant in Ridley. DiMezza, a former U.S. Marine, filed the lawsuit in February 2010 in conjunction with the government. For his part, DiMezza will receive between 15 to 25 percent of the government's recovery.

Under the qui tam provision of the False Claims Act, if you have knowledge of fraud being committed against the government, you may bring an action on behalf of the government. Depending on whether or not the government intervenes and takes over your lawsuit, you may recover anywhere from 15% to 30% of the government's recovery.

It's important to remember that if you do observe fraud being committed against the government, it is your taxpayer dollars that are being stolen. Although, Boeing cooperated with the government's investigation, this fraudulent billing practice would have continued had DiMezza not blown the whistle. If you observe fraud being committed against the government, don't just stand by and watch. Although the False Claims Act is a complicated statute with strict requirements, your monetary recovery and knowing that you are stopping fraud can be worth the effort. Do the right thing and call our experienced qui tam Whistleblower Attorneys at Villanueva & Sanchala at (800) 893-9645 to help you determine if you have a case under the False Claims Act.

Continue reading "Former Marine Whistleblower Uses False Claims Act to Expose Fraudulent Billing Against U.S. Department of Defense " »

The Justice Department just announced that the government is intervening in a whistleblower lawsuit against AseraCare Hospice ("AseraCare") for violating the False Claims Act by misspending millions of dollars which was intended for Medicare recipients with less than 6 months to live, and using it on patients who were not terminally ill. AseraCare is a for profit business with about 65 hospice providers in 19 states.

For-profit companies like AseraCare, who care for hospice patients, receive money from Medicare only for Medicare recipients who are terminally ill. In other words, when AseraCare admits a Medicare patient for hospice care, that patient is not longer able to receive medical service that would help treat or cure his or her illness. The purpose of hospice care it to provide palliative care which is intended to relieve pain, symptoms or stress of terminal illness, which includes medical, social, psychological, emotional and spiritual services.

The government has charged AseraCare with knowingly submitting false claims to Medicare for patients receiving hospice care who were not terminally ill. Joyce White Vance, the U.S. Attorney for the Northern District of Alabama, stated that "Medicare benefits, including hospice benefits, are intended only for those individuals who are appropriately qualified."

Two whistleblowers, Dawn Richardson, and Marsha Brown, who are former employees of AseraCare, originally filed this qui tam lawsuit under the False Claims Act. Since the government has intervened and taken over the lawsuit, the whistleblowers may by entitled to recover anywhere from 15% to 25% of the government's recovery. Whether you are a patient, a former or current employee, or a competitor, you can bring an action on behalf of the government if you have knowledge of fraud being committed against the government.

Under the False Claim Act, a healthcare provider will be liable if he or she knowingly files a false or fraudulent claim for payment or approval to Medicare or any other governmental healthcare program or knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by a healthcare program. If AseraCare is found to be guilty, the government may recover treble damages as well as impose monetary penalties ranging from $5,500 to $11,000 per violation.

Medicare and Medicaid fraud are serious and costly violations of federal law which can also result in exclusion from participating in Medicare and Medicaid. If you think your healthcare company or medical practice has violated the False Claims Act, you must act quickly. Once you discover that you have been overpaid, you must notify the government as to why the overpayment occurred and return the overpayment within 60 days of your discovering it. Our attorneys have helped many health care providers resolve costly mistakes and avoid potential litigation. If you think you might have received an overpyamnet from Medicare or Medicaid, call our False Claims Attorneys at Villanueva & Sanchala at (800) 893-9645 to help you remedy any fraud before the government or a whistleblower brings an action against you.

Continue reading "False Claims Act: Before Careful of Committing Fraud When You Submit Claims Under Medicare and Medicaid " »

The Department of Justice recently settled allegations with pharmaceutical giant GE Healthcare Inc. that a company that it had acquired in 2004, Amersham Health, Inc. ("Amersham"), violated the False Claims Act by overcharging Medicare for a drug used to detect heart disease. GE Healthcare paid $30 million plus interest to resolve the qui tam whistleblower lawsuit. The whistleblower, James Wagel, will get $5.1 million from the government's recovery.

The government had charged that Amersham had caused Medicare to overpay for Myoview, a radiopharmaceutical drug used in certain medical procedures to detect heart disease. Myoview, which comes in multi dose vials of powder, is mixed with radioactive agents to make individual doses which are then injected into patients for cardiac imaging procedures. Medicare payment rates for Myoview were partly based on the number of doses per vial of Myoview. The Department of Justice claimed that Amersham gave Medicare false information as to how many doses were available in each vial which caused Medicare to overpay.

The fraud against the government in this case would have continued if James Wagel, the whistleblower, had not brought it to the government's attention. Wagel, who sold Cardiolite, which is a competing drug to Myoview, repeatedly heard from clients that they were purchasing Myoview because they were able to maximize the number of times each vial was used. Not only was this against the U.S. Food and Drug Administration guidelines but it also resulted in health care providers billing Medicare multiple times for the same product. Additionally, health care was being compromised as the drug was being diluted to get more use out of it.

Tony West, the Assistant Attorney General for the Justice Department's Civil Division, stated that it's "important for drug manufacturers to provide accurate pricing information to Medicare so that taxpayers aren't overcharged for medicines purchased with their dollars."

The qui tam provision of the False Claims Act allows an individual with knowledge of fraud being committed against the government to bring an action on behalf of the government. However, you must be represented by an attorney and you must be the first person to bring evidence of the fraud to the government's attention. In other words, you cannot reveal your story on Eyewitness News and then expect to bring an action. You may be entitled to anywhere from 15% to 30% of the government's recovery depending on whether the government intervenes and takes over your lawsuit.

Medicaid and Medicare fraud is a national problem affecting not just the government but also every taxpayer in this country. The qui tam whistleblower provision of the False Claims Act is a great tool to fight fraud against the government. Although it is a complex statute with strict requirements, the recovery can be quite substantial and worth the effort. However, it only works if you observe fraud and do something about it. If you have observed fraud being committed against the government at your workplace, call our experienced qui tam Whistleblower Attorneys at Villanueva & Sanchala at (800) 893-9645 to figure out if you have a case under the False Claims Act.

Continue reading "Whistleblower Exposes Medicaid Fraud Using False Claims Act and Makes Huge Recovery" »

The New Milford Hospital, which is a part of the Western Connecticut Health Network, settled allegations this week with the government that it had violated the federal False Claims Act by over billing Medicare. The Hospital has agreed to pay $471,933 to settle the charges.

The government's allegations relate to Medicare billing for the drug Lupron or Lupron Depot which is an injectible medication used to treat prostate cancer in men as well as endometriosis and fibroids in women. However, different doses are used to treat male and female patients and the billing code for treating women has a higher reimbursement rate than that for men. While conducting an internal audit, the government discovered that the hospital regularly submitted charges for the male patients as if they were for females. The government's news release stated that in effect, the hospital received "substantially higher reimbursement from Medicare than it should have received," in violation of the False Claims Act. Although the Hospital discovered that it was using the wrong billing code and conducted and internal audit to figure out how much it was overpaid, it did not report the error or make any attempts to return the money.

The False Claims Act, as amended by Congress in 2009 and 2010, provides that health care providers who learn that Medicare has overpaid them must notify officials and return any overpayments within 60 days or be subject to liability. Although New Milford did not pay triple damages here, the government can recover triple damages and civil penalties. If you have know of any physicians or hospitals engaged in Medicaid, Medicare, or any type of billing fraud against the government, or attorneys can help you bring a qui tam whistleblower lawsuit to expose the fraud and provide you with a monetary reward.

Spending on healthcare is a huge government expense in this country. Millions of Americans rely on state or federal funds for health insurance coverage. In fact, Medicare and Medicaid are the largest government sponsored healthcare plans and provide coverage for over 95 million Americans. In addition, other government plans also provide coverage for millions of federal and state government employees. Since these plans are funded with taxpayer monies, healthcare fraud in violation of the False Claims Act costs the government and taxpayers millions every year.

Given the voluminous number of healthcare claims submitted by American across the country, the government can not possible detect every instance of fraud. The qui tam whistleblower statute is a great tool that any individual with knowledge of fraud can use to help the government detect and expose healthcare fraud. Under the qui tam provisions of the False Claims Act, you can bring an action on behalf of the government if you have evidence of fraud being committed against the government. Depending on whether the government takes over you lawsuit or not, you may be entitled to recover anywhere from 15% to 30% of the government's recovery.

Fraud in the healthcare industry is a national problem occurring in many hospitals and private practices throughout the country. In fact, two other Connecticut hospitals also settled similar cases. If you have knowledge or evidence of healthcare fraud being committed against the government, call our Whistleblower Attorneys at Villanueva & Sanchala at (800) 893-9645 to help you figure out how to proceed.

Continue reading "Hospitals, Medicare, and Medicaid Providers: Make Sure Your Billing Practices Don't Violate The False Claims Act" »

The U.S. government has reached a tentative settlement with Abbott Laboratories for at least $1.3 billion for allegations that Abbott had marketed its epilepsy drug, Depakote illegally. This would be the third largest illegal pharmaceutical marketing settlement ever. To date, Pzifer has paid the biggest settlement amounting to $2.3 billion in 2009 for illegally marketing its painkiller Bextra and other drugs.

The lawsuit against Abbott was brought to light by whistleblowers who alleged that Abbot was marketing Depakote for agitation and aggression in patients with dementia, autism, sexual compulsion and other disorders not approved by the U.S. Food and Drug Administration ("FDA"). Depakote is only FDA approved to treat epilepsy, bipolar mania and migraine prevention. According to federal regulations, a physician can only prescribe medication that has been licensed and found to safe and effective by the FDA. Federal law makes it illegal to market a drug for uses other than those approved by the FDA. In other words, a pharmaceutical company cannot market an epilepsy drug as a cure for heart disease. If you know of any fraudulent activity being committed against the government at your workplace, our attorneys can help you determine if you have a qui tam whistleblower lawsuit under the False Claims Act. Our attorneys have helped many clients evaluate their evidence to determine if they have a strong claim.

Meredith McCoyd ("McCoyd"), a former Abbott sales representative, filed the lawsuit in 2007 under the False Claims Act. She filed suit on behalf of the federal government, 24 states and the District of Columbia. Shortly after, the government and the states joined her suit. Her lawsuit was consolidated with three other suits also alleging off-label marketing.

McCoyd alleged in her whistleblower complaint that Abbot was marketing Depakote to elderly patients with Alzheimer's and dementia in 1998 although Abbott knew that it "was unapproved for the treatment of Alzheimer's, did not work to treat the disease and was actually dangerous for use by the elderly." The drug was especially pushed in healthcare settings such assisted living facilities and long term care facilities throughout the U.S. Her complaint also alleged that Depakote sales "rocketed to over $1.4 billion per year" and "compensation for senior executives soared as well" because of the illegal marketing.

The whistleblower statute plays a crucial role in helping the government to stop illegal activity which it may otherwise never have known of. This is extremely important when pharmaceutical companies who are endangering the public's health are involved in the fraud. It is atrocious that Abbott executives were financially benefiting at the expense of the public's health.

Because both the federal government and the states are involved, this would be a global settlement. Pursuant to the False Claims Act, the whistleblowers would get at least 15% of the federal civil amount recovered in the settlement as well as some of the money paid to the states. Under the qui tam provision of the False Claims Act, you may bring an action on behalf of the government if you have evidence of fraud being committed against the government. Depending on whether or not the government takes over your lawsuit, you may be entitled to 15% to 30% of the recovery. Because it's a complicated statute with strict requirements, it is best to consult an attorney if you have information about fraud being committed against the government. Call our qui tam Whistleblower Attorneys at Villanueva & Sanchala at (800) 893-9645 to help you decide if you have a case under the False Claims Act.

Continue reading "Qui Tam Whistleblower Update: Exposing Fraud Under False Claims Act Can Lead to Huge Payoff" »

Although doing business with the U.S. government can be quite lucrative, any unlawful or fraudulent practices by your company can cost you heavily. The Justice Department just entered into a settlement with Oracle Corp. and Oracle America Inc. ("Oracle"), who have agreed to pay $199.5 million plus interest for violating the False Claims Act. This is the largest settlement ever obtained by the General Services Administration under this Act.

The lawsuit alleges that Oracle committed fraud in its dealings with the General Services Administrations ("GSA") regarding the sale of its software licenses and technical support. Oracle had entered into a contract with GSA through its Multiple Award Schedule (MAS) program which gave Oracle the benefit of selling its products to multiple government agencies. According to the MAS, Oracle had to agree to disclose its commercial pricing practices. PaulFrascella, a contract specialist working at Oracle at the time, discovered that Oracle was not disclosing its current and accurate information about its commercial sales practices and discounts it was offering to other clients.

The government also alleged because Oracle did not disclose higher discounts it offered to its commercial clients, the government was paying more than it should have. The lawsuit alleges that GSA purchased $1.08 billion in software from Oracle between 1998 and 2006. GSA received discounts ranging from 25 to 40 percent while Oracle gave other companies discounts ranging up to 92 percent.

In May 2007, Frascella filed the lawsuit on behalf of the government who joined the lawsuit last year. Pursuant to the False Claims Act, Frascella will get $40 million as his share of the recovery.

Tony West, Assistant Attorney General for the DOJ's Civil Division, stated that "Companies that engage in unlawful or fraudulent practices to secure government business undermine the integrity of the procurement process and create an unfair advantage against the majority of companies that are playing by the rules." He also stated that the government is committed to "ensure taxpayers are not overpaying for the products and services they receive."

Oracle has denied any wrongdoing and claims that it "had strong controls in place to insure that the government agencies who purchased from the GSA schedule received fair pricing." Oracle has claimed that it decided to settle because the events took place a long time ago and many witnesses are either unavailable or do not remember what happened.

This lawsuit sends a clear message to all businesses that if you do business with the government, make sure you comply with all contractual obligations and regulations. It is difficult to believe that a company as big as Oracle does not have records of its business transactions. With the help of whistleblowers, the government has been cracking down on violations of the False Claims Act. In fact, the Department of Justice has recovered over $7.8 billion since January 2009 for such violations. If you are doing business with the government, call our False Claims Act Attorneys at Villanueva & Sanchala at (800) 893-9645 to ensure that your company is in compliance with its government contracts.

Disclaimer: 

Thank you for visiting our Blog. This blog provides general information and thoughts about various employment law issues primarily in the New York Tri-State area and occasionally in other areas. You are welcome to read the posts. However, do not construe any content on this blog as legal advice or the creation of an attorney-client relationship. Again, we provide the content only for informational purposes. You should not make decisions based information on our blog since the application of the law depends on the facts and each situation may be different. In addition, the law in most jurisdictions is different and changes constantly and we make no representations that any information on our blog has been updated. The Blog should not be used as a substitute for competent legal advice from an experienced employment law attorney in your state or jurisdiction.

A whistleblower lawsuit affecting thousands of American veterans was recently unsealed which alleges 13 banks and mortgage companies cheated veterans of millions of dollars. The whistleblowers have accused companies such as Wells Fargo, Bank of America, GMAC Mortgage, and J.P. Morgan Chase of charging illegal fees to veterans refinancing their home loans which were guaranteed by the Department of Veterans Affairs. The suit alleges that the companies charged illegal fees and hid the charges to obtain government guarantees for the loans. Our firm has proudly represented many veterans in lending, housing and employment discrimination matters.

The lawsuit was brought in the District Court of the Northern District of Georgia by two mortgage brokers and remained sealed till now. The lawsuit alleges that by adding in prohibited charges to the allowed fees, banks collected between $300 to $1,000 in hidden fees per loan. The plaintiffs filed suit on behalf of the U.S. government under the False Claims Act and seek to recover $5,500 to $11,000 in damages for each violation. The plaintiffs are Victor E. Bibby, who is President and chief executive of U.S. Financial Services, a company which provides mortgage services, and Brian J. Donnelly, who is the company's vice president of operations. Donnelly helped veterans fill out their application forms and pick lenders for their loans.

The plaintiffs have stated that they were instructed by lenders not to show attorney's fees on their estimates and were told to add it to the title examination fee. In figuring out the fraud, Donnelly looked at the VA handbook regarding Interest Rate Reduction Refinancing Loans ("IRRRL Loans") which refers to fees that could be charged for transactions. According to the VA rules, veterans can be charged for recording fees and taxes, credit reports and other customary fees, but they cannot be charged for attorney's fees or settlement closing fees. The banks and mortgage companies got around this rule by charging attorneys fees and hiding it under "title examination" or "title search" fees.

The Justice Department has not taken over the case yet but is reserving its right to do so. Sally Quillian Yates, the U.S. attorney for the Northern District of Georgia has stated that she "will continue to evaluate the merits of the case," and "consider intervening. . . if it becomes appropriate to do so." The lawsuit alleges that the government and all taxpayers have clearly been defrauded since tens of thousands of VA loans have resulted in default or foreclosures which will cost the government and all taxpayers hundreds of millions of dollars.

If the government does not intervene, the whistleblowers can collect from 24% to 30% of the recovery. If the government does intervene and takes over the lawsuit, the whistleblowers can still recover 15% to 25% of any recovery. To bring a whistleblower lawsuit, you must be the first person to bring evidence of the fraud to the government's attention.

It is a outrage that such a massive fraud could be committed against veterans. In the past ten years, 1.2. million loans have been refinanced by veterans of which at 90% involved fraud. This fraud is not just a crime against veterans but is also a crime against all taxpayers. Since the U.S. government cannot possibly know of every fraud being committed against itself, the whistleblower statute is a great incentive for anyone who observes fraud being committed against the government. If you have observed fraud being committed against the government, call our experienced Whistleblower Attorneys at Villanueva & Sanchala at (800) 893-9645 to help you determine if you have a qui tam whistleblower case under the False Claims Act.

Continue reading "Discrimination Against Veterans: Mortgage Brokers Blow Whistle Under False Claims Act for Fraud Against Veterans" »

A new whistleblower law, Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, has many corporations worried as it goes into effect August 12, 2011. The new rule increases whistleblower protection for individuals who provide original information about violations of federal securities regulations. The rule allows whistleblowers to collect up to 10-30% of penalties over a million dollars that the SEC fines their company, even if the whistleblower bypasses the company's internal reporting system. The SEC passed this new rule by a vote of 3 to 2. Many corporations, of course, were against this rule.

In order for an individual to receive an award, he or she must submit information which leads to a successful enforcement of an SEC action resulting in monetary sanctions against a company for more than $1 million. Depending on the information provided and various factors, a whistleblower award can range anywhere from 10% to 30% of the sanctions. If you have observed a federal securities violation or any other type of fraud being committed against the government, our firm can help you evaluate your information and bring it to the proper authority.

Pros & Cons Of Bypassing Corporate Controls

One of the hotly debated points of this new rule was that it allows employees who observe violations to directly report them to federal authorities without first exhausting their companies internal complaint mechanisms. Hal Garyn, vice president of North American Services with the Institute of Internal Auditors has stated that "you want to leave corporate governance as much as possible within the organization" and that "many internal whistleblower programs never make the news because they work effectively and quietly." Opponents of the new law have also asserted that the new law in fact encourages whistleblowers to bypass their company's internal reporting procedure which many corporations have implemented carefully and at great expense.

However, the push behind the new rule stems from the reasoning that whistleblowers do need more protection since they will most likely be retaliated against for complaining. In fact, they may be forced to report their allegations of wrongdoing to the very individuals who are committing the violations. The SEC wants and needs people to come forward and persist in their complaints even if there is corporate retaliation. Former Senator Chris Dodd, who co-authored the law, has stated that by having this type of protection, it will "minimize the kind of frauds that will occur from growing so large that by the time we discover them too many people have been hurt." In hindsight, maybe Bernard Madoff's Ponzi scheme could have been stopped or avoided early on if we had whistleblowers determined and persistent enough to follow through with their complaints.

Corporations Need to be on Alert

This new law is wake up call to companies who don't take their internal complaints seriously. Although many corporations have an internal reporting system which they have invested thousands of dollars in, complaints are either brushed to the side and not taken seriously or the complainant is retaliated against. Given the financial consequences to your company, it is imperative that you have an internal reporting system that your employees can trust. If an employee files an internal complaint of wrongdoing, promptly investigate the matter and determine if there is any merit to the employee's charges. Do not "blow off" the employee's complaints and retaliate against him or her. It is imperative that your employees trust your company's internal system so that you have an opportunity to correct any wrongs before the government steps in and hits you with millions in fines and penalties.

Recent Increase in Whistleblower Complaints Reported to SEC

The National Whistleblower Center conducted a study of cases filed under the False Claims Act between 2007 and 2010 and found that about 90% of employees who filed a qui tam case first reported their complaints internally. The SEC has recently reported that the number of frauds being reported has risen since the Dodd-Frank rule passed. Before the law, the SEC used to get about a "couple dozen" high quality tips a year but are now getting "one or two high quality tips a day." If you know of or have observed any fraudulent practices in your workplace, call our experienced Whistleblower Attorneys at Villanueva & Sanchala at (800) 893-9645 to learn how to report a fraud.

Continue reading "Businesses Beware: New SEC Rule Lets Whistleblower Report Violations Directly to SEC " »

Q: I am an H-1B visa holder and work for a computer software company. Lately, I have noticed that my employer has hired several new people to do the same job I do, but they are B-1 visa holders and are being paid much differently than I am. Is this legal?

A: You ask a great question that not only affects all employees but could also be a violation of many state and federal laws. If you work in a company that employs or does business with H-1B or B-1 visa holders, know your company's responsibilities and your rights. Call our experienced Employment-Based Immigration Attorneys to help you determine if your employer is committing visa fraud and tax fraud.

There is a pending lawsuit in the media that will greatly affect your employment situation. Indian software giant Infosys Technologies ("Infosys") is being sued by Jack Palmer, an employee who refused to help the company obtain B-1 visas for temporary workers. Palmer, who is a principal consultant for the company, has alleged that Infosys systematically commits visa fraud and tax fraud to increase profits, and has threatened and retaliated against him for his whistleblowing.

Palmer has alleged that he attended a meeting in Bangalore, India where Infosys management discussed ways to "creatively" get around the H-1B limitations. Palmer was asked to write a letter stating that an "employee was coming to the United States for a meeting rather than to work at a job." When Palmer refused, he was threatened, harassed, and retaliated against.

A B-1 visa applies to temporary business visitors who come to the United States to conduct activities of a commercial or professional nature. For example, these could include consulting with a business associates, negotiating a contract, or attending business conferences. However, if you are here on a B-1 visa, you are not legally allowed to work at a full time job. B-1 visa rules also prohibit a U.S. employer from paying for a worker for obtaining a B-1 visa.

Infosys wanted to obtain B-1 visa workers because B-1 visas are much cheaper, faster and easier to obtain than an H-1B visa. Unlike an H-1B visa, the B-1 visa workers do not have wage requirements and are paid by the foreign entity. A B-1 visa holder also does not have their federal and state income taxes withheld. Given these differences, Palmer also alleged in his lawsuit that customers were overbilled for labor costs for the B-1 workers.

According to a filing with the Securities and Exchange Commission last year, Infosys is a major user and reported that 9,300 of its technology professionals in the U.S. held H-1B visas. Additionally, Infosys applied for 3,800 new H-1B visas last year.

Palmer's lawsuit exposes the visa and tax fraud occurring in many companies that employ H-1B and B-1 visa holders. When an employer uses a B-1 holder to perform an H-1B's job, he is cheating the government of state and federal income taxes. Also, by using low paid B-1 visa holders to perform the higher paid H-1B jobs, employers are committing visa fraud and overcharging clients. Employees who blow the whistle and report tax and visa fraud may be able to collect significant monetary damages. If you have observed tax or visa fraud being committed against the government at your place employment, call our experienced Whistleblower Atttorneys at Villanueva & Sanchala at (800) 893-9645 to help you decide if you have a whistleblower case.

Continue reading "Employee Blows the Whistle on B-1 and H-1B Tax & Visa Fraud at Infosys" »

Bank of New York Mellon Corp. ("BNY Mellon") recently got hit with a qui tam whistleblower lawsuit in New York for improperly charging pension funds for foreign exchange transactions. In order to hide their identity, the whistleblowers are using a shell company named FX Analytics, a Delaware partnership, to bring the lawsuit. The lawsuit is under seal and the specific allegations are not public.

FX Analytics has already filed similar suits against BNY Mellon in Virginia and Florida, where both state's attorneys general have intervened. The Virginia lawsuit seeks damages of over $150 million. BNY Mellon holds $55 billion in funds for the Virginia Retirement System and other smaller amounts for local government funds. For its services, Virginia pays BNY Mellon an annual fee of $4.5 million. According to FX Analytics, the bank is supposed to use its foreign exchange system to handle purchases and sales of foreign currency for the state, but has "knowingly and intentionally" charged the state "false exchange rates" for purchases and sales of foreign currency. This has resulted in the state paying more for buys and getting less for its sales.

BNY Mellon is one of the nation's largest custody banks by global assets. In other words, it acts as a custodian for investment firms' securities, which includes handling currency trades for institutional investors. For example, it handles foreign currency transactions on international investments that are held by large pension funds. However, instead of taking into its client's best interests, it has been profiting from large revenues from foreign exchange trading.

It is an outrage that BNY Mellon has been profiting from foreign exchange transactions using state pension funds. Since the government does not have enough resources to detect all fraud being committed against it, it is every taxpayer's job to watch out for fraud being committed against the government. Thanks to whistleblower statutes, a private individual or group with knowledge of fraud being committed against the government can bring suit on the government's behalf. A whistleblower can recover up to 15 - 25% of the recovery if the government intervenes and takes over the lawsuit and up to 24% - 30% if the government does not intervene. However, you must be the first person to bring the evidence of fraud to the government's attention.

Continue reading "Bank of New York Mellon Faces Whistleblower Lawsuits for Currency Transactions Involving Pension Funds " »

Generally, yes. If your employer is using federally earmarked funds for personal or other unauthorized uses you could be a whistleblower and entitled to a share of the funds you save the government and taxpayers. For example, if the company may be misusing federal funds that are earmarked for training programs but they are used for salaries and office expenses. In order to be a whistleblower, your claim must meet several criteria. First and perhaps most important, your claim must be based upon an original source. For example, your claim cannot be based on information in the news, publicly available or a previously filed complaint. Yes, in this case, a race to the courthouse is important. First to file is critical. Second, your claim must be substantial. Generally, Qui Tam claims are in excess of one million dollars. Third, you need to be prepared. You should work with an experienced Whistleblower Lawyer to properly gather evidence and build your case. This is critical as an early misstep can prove costly. Our New York Qui Tam and False Claims Lawyers are experienced in building whistleblower cases and can help you in your case.

Continue reading "False Claims & Qui Tam Whistleblower Q&A: Can I blow the whistle if my employer is misusing federally earmarked funds?" »

Recently, Oracle settled a qui tam whistleblower lawsuit for $46 million with the U.S. government regarding allegations under the False Claims Act and the Anti-Kickback Act. The complaint alleged that Sun Microsystems Inc. ("Sun"), which was bought by Oracle in 2009 for about $7.4 billion, knowingly paid kickbacks to consulting companies in exchange for their recommendations to federal agencies to purchase Sun's products.
The qui tam whistleblower lawsuit was originally filed in 2004 by 2 whistleblowers in Arkansas and was subsequently joined by the government in 2007.

The 2 whistleblowers, Norman Rille, a former manager at Accenture, and Neal Roberts, a former partner at PricewaterhouseCoopers ("PwC"), alleged in their qui tam whistleblower lawsuit that dozens of IT vendors and systems integrators had a widespread kickback scheme in trying to obtain government contracts. They also alleged that Sun paid consulting companies every time they influenced a government agency to purchase Sun products. As qui tam whistleblowers, Rille and Roberts will share in 15%- 25% of the government's recovery. If you observe fraud being committed against the government at your place of employment, contact our Whistleblower, False Claims and Qui Tam Lawyers for an immediate confidential consultation at (800) 893-9645. As you can see the case against Sun, and later Oracle, took years to build. It is critical that whistleblowers speak with experienced attorneys before taking any steps that could prove fatal to the case.

The federal government has stated that these kickbacks are "part of a larger, ongoing investigation of government technology vendors that has resulted in settlements to date with six other companies." In fact, several other companies have settled regarding similar allegations under the False Claims Act. IBM agreed to a $3 million settlement, PwC agreed to pay $2.3 million and Computer Sciences agreed to a settlement of $1.4 million.

When companies use undue influence and conspire to obtain lucrative government contracts, the government loses its ability to make an informed decision. It is a crime against all taxpayers when the government is mislead and does not award contracts to the companies with the best prices and products. As evidenced by the flurry of recent lawsuits brought under the False Claims Act, the government is clearly cracking down on fraud and kickbacks with the help of concerned, private individuals. If you observe fraud being committed against the government, at your workplace, help save your tax dollars and call our experienced Whistleblower Attorneys at Villanueva & Sanchala at (800) 893-9645 to help you decide if you have a case under the False Claims Act.

Continue reading "New York Qui Tam Whistleblower Attorneys Update: Software Giant Oracle Agrees to $46 Million Settlement for Allegations Under False Claims Act and Anti-Kickback Act" »