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 Jersey Appellate Division recently ruled that a Starbucks employee who reported workplace violations was not a whistleblower because it was her job to report and address such violations. The New Jersey Supreme Court has been asked to review this ruling which could have far reaching implications on NJ's whistleblower statute.

The case, White v. Starbucks, involved an employee, Kari White who was a former district manager. White began working for Starbucks in 2006 and was forced to resign in March of 2007. White claimed that she was fired for reporting workplace activities that were in violation of company policy and law. Some of these included complaints of reporting missing store merchandise, unsanitary conditions at one of the branches, employees drinking alcohol while on the job, after hour sex parties, employees e-mailing pornographic images, and complaints about leaving space between tables and chairs for wheelchair accessibility. Starbucks claimed that she was fired for her aggressive managerial style.

White brought suit under New Jerseys's whistleblower statute, Conscientious Employee Protection Act ("CEPA"), which prevents employers from retaliating against an employee for reporting illegal or fraudulent activities. CEPA's intent is to protect and encourage employees to report illegal and unethical workplace activities as well as discourage public and private sector employees from engaging in such conduct.

The Court found that White's job duties as a District Manager required her to "regularly and customarily exercise discretion in managing the overall operation of the stores within her district including overseeing the district's store management workforce, making management staffing decisions, ensuring district-wide customer satisfaction and product quality, and managing safety and security within the district." Since it was White's job to tell her superiors about any violations she observed at the stores in her charge and make sure that they were corrected, the Court held that she could not bring suit under CEPA. In other words, as a district store manager, it was White's job to perform whistleblowing activities.

Considered to be a very broad statute, the NJ Appellate Court's decision here substantially limits CEPA's scope and reach. You are only entitled to file a CEPA claim and have its protection if you are a true whistleblower. If your job duties involve reporting violations of law, you cannot bring a CEPA claim. Although White's job duties involved whistleblowing activities, the problem here is that she reported the improper and illegal conduct and tried to correct. Contrary to CEPA's intent, in the end, she was terminated. The problem with the Court's decision is that it doesn't protect you from retaliation when you are trying to do what is right.

Our experienced Whistleblower Attorneys have helped many employees evaluate and determine the strength of their whistleblower claims. If you have observed illegal or fraudulent activity at your workplace, don't let the Starbucks ruling discourage you from reporting illegal activity. Call our Whistleblower Attorneys at Villanueva & Sanchala at (800) 893-9645 to discuss your possible options and determine if you have a whistleblower claim under CEPA or under the federal False Claims Act.

Continue reading "New Jersey's CEPA Held Inapplicable to Employee Whose Job Involved Whistleblower Activity" »

A group of scientists and doctors filed a lawsuit against the Food and Drug Administration ("FDA") this week alleging that the FDA was secretly monitoring their personal e-mails accessed through FDA computers because of their whistleblower activity. The allegations also charge the FDA with retaliation against the employees for warning Congress and the media that the FDA was approving medical devices that they thought presented unacceptable risks to patients.

Back in 2007, the FDA scientists and doctors, who worked at the agency's Office of Device Evaluation, first complained internally that the agency was approving or was about to approve about a dozen radiological devices which were not yet proven to be effective and that posed risks to millions of patients. When their internal complaints went unheard, the group reported the risks to Congress, the White House and the Health and Human Services inspector general.

The group warned of three devices which risked missing signs of breast cancer, another device which falsely diagnosed osteoporosis, and an ultrasound device which could malfunction while being used to monitor women in labor and risk harm to the fetus. They also complained of several colon cancer screening devices which used excessive doses of radiation and risked causing cancer.

The scientists and doctors allege that the FDA thereafter, for a period of 2 years, began intercepting email they sent to congressional staff using government computers through their private Google and Yahoo e-mails. The lawsuit also charges the FDA with using spyware to capture electronic snapshots of staff computer screens which allowed it to get privately stored whistleblower reports and figure out who was involved in whistleblower activities.

The lawsuit alleges that the FDA used this information to harass, retaliate against and terminate the group of employees. The suit charges the FDA with violating their constititional right to privacy by going through their personal e-mails in order to monitor their activity which they claim was legal.

The FDA computers have a warning which is visible to users logging in which states "You have no reasonable expectation of privacy" with respect to any "communications or data" passing through or stored in the system. It also states that the government "may monitor, intercept, and search and seize any communication or data transiting or stored" on the system.

The important lesson to take away from this is that don't use your company's computer, blackberry, or any other electrical device to communicate personal information. The group of doctors and scientists here used their personal Yahoo and Google e-mails but they used the government's computer to convey the information. The FDA's computers clearly warned them when logging on that they did not and should not have any expectations of privacy.

It is also important to consider the FDA's actions and their chilling effect on whistleblower activities. After all, the FDA employees' activities were based on their concern of the health risk posed by the dozen or so devices which were about to be approved by the FDA. The whistleblower statute is one of the government's most powerful and effective tools to fight fraud, abuse and corruption.

If you have any questions about your rights to privacy at the workplace, call our Employment Law Attorneys at Villanueva & Sanchala at (800) 893-9645 to help you protect your workplace rights.

Continue reading "Workplace Update: Be Careful of Using Your Company's Computer or Blackberry for Personal E-mails" »

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 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 U.S. Department of Justice ("DOJ") recently settled allegations with Medronic, Inc., the world's larges maker of heart rhythm devices, who agreed to pay $23.5 million for violating the False Claims Act. The DOJ had charged the device maker with paying kickbacks to physicians who implanted its pacemakers and defibrillators in patients.

The lawsuits were commenced by whistleblowers under the qui tam provision of the False Claims Act. The whistleblowers will receive over $3.96 million from the government's recovery. If you have evidence of fraud being committed against the government, our attorneys can help you determine the strength of your claim.

Two lawsuits were filed against Medronic in federal court, one in California and one in Minnesota. The suits charged that the company paid physicians $1,000 to $2,000 for each patient who it implanted with one of the company's devices, in clear violation of the False Claims Act. Medtronic paid these doctors per implant for participating in studies of these devices, which were already on the market. The device maker then submitted false claims to Medicare and Medicaid using the post market studies and two device registries as a means to pay the physicians who were involved in the kickback scheme.

Tony West, the assistant attorney general for the DOJ's Civil Division, stated that "Patients who rely on their health-care providers to implant vital medical devices expect that those decisions will be made with the patients' best interests in mind." He added that "Kickbacks, like those alleged here, distort sound medical judgments with financial incentives paid for by the taxpayers."

The qui tam provision of the False Claims Act is probably one of the most important laws to help fight fraud against the government as well as taxpayers. If you have evidence of fraud being committed against the government, you may bring an action on behalf of the government under the False Claims Act. Depending on whether the government takes over your lawsuit, you may be entitled to 15% to 30% of the government's recovery. Most importantly, you must be the first person to bring the evidence of fraud to the government's attention.

The fraud committed here was not just about the money but also about whether unbiased medical judgment was used in healthcare. It is unnerving to think that your doctor may have persuaded you to undergo major surgery to implant a device or recommended a certain brand of device because he was receiving a kickback, and not because it was the best medical decision for you. Medicaid and Medicare fraud is a huge problem in the healthcare industry which the government can't fight and detect on its own. The False Claims statute is very complicated with strict requirements including a detailed process for filing, but the payoff and the satisfaction of exposing fraud can be enormous. If you know of fraud being committed against the government, call our experienced Whistleblower Attorneys at Villanueva & Sanchala at (800) 893-9645 to help you figure out if you have a claim under the False Claims Act.

Continue reading "Whistleblowers Use False Claims Act to Expose Medicaid and Medicare Fraud And Recover Huge Payoff" »

The Department of Justice recently announced a resolution with pharmaceutical giant Merck, Sharp & Dohme ("Merck") to pay $950 million to settle criminal and civil claims for its illegal promotion and marketing of its painkiller drug, Vioxx. As part of the deal, Merck has also agreed to enter into an expansive corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services to monitor its conduct.

Using its False Claims Act for the first time, New York State had joined in on bringing charges against Merck back in 2007 for Medicaid fraud. The State had alleged that Merck was risking the lives of thousands by inappropriately pushing Vioxx on physicians and patients. Pursuant to its False Claims Act, the State sought damages for the amount spent on Medicaid and other state health care programs to pay for drugs prescribed under false claims. Merck has settled the lawsuit with New York as well as several other states.

The FDA approved Vioxx in 1999 and by 2003, it had become the third largest selling drug, yielding $2.5 billion in sales. After a study found that it cause an increased risk of heart attacks and strokes, it was taken off the market in 2004.

Merck plead guilty to violating the Food Drug and Cosmetic Act ("FDCA") for placing Vioxx into interstate commerce and for its illegal promotional activity of Vioxx. The criminal pleas relates to Merck's off label promotion of Vioxx for treating rheumatoid arthritis ("RA") from 1999 to 2002, before it was approved by the Food and Drug Administration for that use. According to FDCA provisions, a company must specify the intended uses of a product in its new drug application to the FDA. The FDA only approved Vioxx for three uses in May 1999 and did not approve use of it for RA until April 2002. The government charged that Merck was promoting Vioxx for RA for almost three years and was even issued an FDA warning letter in September 2001.

Once the FDA approves the drug, the pharmaceutical company may not market or promote the drug for "off-label" uses, which refers to any use not specified in its application to the FDA. In other words, a drug company cannot take a drug approved by the FDA for treating migraines and then market it for high blood pressure. It is illegal to market a drug for uses other than those approved by the FDA. If you know of any fraudulent activity being committed against the government at your workplace, call our attorneys to help you determine if you have a qui tam whistleblower lawsuit under the False Claims Act.

The civil settlement pertains to allegations that Merck representatives made inaccurate, unsupported or misleading statements about Vioxx's cardiovascular safety in order to increase the drug's sales. This in turn increased the federal government's payments. The government had also charged that Merck made false statements to state Medicaid agencies regarding Vioxx's cardiovascular safety, which these agencies relied on and caused them to cover the drug. The settlement provides for the participating Medicare states to get a share of the recovery.

Off-label marketing by pharmaceutical companies and Medicaid fraud costs the government and taxpayers millions of dollars every year. If you have evidence about fraud being committed against the government, you can bring an action on behalf of the government. Depending on whether or not the government takes over your suit, you may be entitled to 15% to 30% of the recovery. Because of the statute's complexity and strict requirements, call our Attorneys at Villanueva & Sanchala at (800) 893-9645 to help you determine if you have a strong case under the False Claims Act.

Continue reading "New York State and Others Use False Claims Act to Fight Medicaid Fraud" »

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" »

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.

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In an effort to raise tax monies in these economically difficult times, the United States federal government has devoted greater resources to identify and fight tax fraud. More importantly, the federal government has enhanced whistleblower rights and is seeking your assistance to report tax fraud. It is estimated that over $200 billion dollars each year is lost every year due to tax evasion and tax fraud. Our Tax Fraud and Qui Tam Attorneys have helped clients report tax fraud and collect significant monetary rewards ranging from 15% to 30% of the fraud. If you know of an individual or a business organization that has violated tax laws, contact our Whistleblower Fraud Attorneys to learn your rights and options during a free confidential consultation. Since the IRS receives almost 2,000 potential leads of fraud per year, it is important for your case to be carefully and skillfully presented by an experienced attorney. Our experienced Whistleblower Fraud attorneys know how to build and prosecute a claim of tax evasion or tax fraud.

Some examples of employment-related tax fraud or tax evasion conducted by the IRS may include:

1. Misclassifying employees as independent contractors to avoid paying payroll and other associated employment and income taxes and benefits. This is an
increasingly common violation;

2. Collecting payroll taxes from employees but failing to remit them to the government;

3. Filing false quarterly payroll returns including false Federal Form 941 or NYS-45;

4. Failure to pay overtime pay and earned wages to employees;

5. Filing false income tax returns; and

6. Incorrectly increasing the expenses and showing decreased income figures.

If you believe that your employer or another individual or company is engaging in tax fraud and/or tax evasion, contact our attorneys by telephone (800) 893-9645 for a free confidential telephone consultation. Meet our Lead Whistleblower Attorney.

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.

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Medline Industries ("Medline") recently settled an $85 million whistleblower lawsuit that alleged it was paying fraudulent kickbacks to hospitals and other purchasers that buy medical supplies paid for by Medicare and Medicaid. The whistleblower, Sean Mason who is a former Medline employee, will receive $23.4 million of the settlement. This settlement represents one of the largest alleged violations of the False Claims Act in which the government did not intervene.

Mason worked at Medline from 1998 to 2005 as a distribution service manager and director of account implementation. His position gave him personal knowledge of the company's fraudulent activities. In his complaint, Mason alleged that Medline offered kickbacks to win new business and falsely labeled the kickbacks as "rebates." Medline also offered expensive gifts and made charitable donations to gain business.

Medline Industries is the nation's largest privately held manufacturer of healthcare products. It manufactures and distributes over 100,000 products to hospitals, extended care facilities, surgery centers, home care dealers and agencies. Medline has claimed that there were "no allegations that Medline caused financial harm to [its] customers or that any government program paid more for [its] products."

It is always a shame when businesses try to profit at the expense of taxpayers. Although Medline thinks it didn't financially harm any of its customers, clearly someone had to pay for the "rebates" and expensive gifts it was giving away to induce more business. By inducing purchasers with kickbacks to contract with Medline, Medline took away their choice to negotiate and obtain the best products at the best prices. Since Medicare and Medicaid monies were involved in reimbursement, this amounted to fraud against all taxpayers. Medline's "rebates" and kickbacks did not provide the government with the choice to obtain the best possible products or prices pursuant to Medicaid and Medicare guidelines.

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