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The Whistlerblower Blog

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Presented by Hodgson Russ, the Whistleblower Blog is written by a team of lawyers experienced in successfully guiding both whistleblowers and companies accused by whistleblowers of wrongdoing through the False Claims Act process.

Photo of The Whistlerblower Blog John L. Sinatra, Jr.
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John handles complex cases with uncompromising dedication and integrity. He has played a substantial role in the representation of numerous Fortune 500 companies …

Showing 36 posts by John L. Sinatra, Jr..

Boeing Settles False Claims Act Lawsuit for $18 Million

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Jet turbineThe Boeing Company has settled an False Claims Act case originated by a former employee-turned-whistleblower for $18 million. The case alleged that Boeing “submitted false claims for labor charges on maintenance contracts with the U.S. Air Force for the C-17 Globemaster aircraft,” according to a recent Justice Department press release. In the case, Boeing was accused of “improperly charg[ing] labor costs under contracts with the Air Force for the maintenance and repair of C-17 Globemaster aircraft.”  The government alleged that Boeing “knowingly charged the United States for time its mechanics spent on extended breaks and lunch hours, and not on maintenance and repair work properly chargeable to the contracts.”

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IRS Whistleblowers Collect More Than $230 Million Over Three Years

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The IRS Whistleblower Award Program has paid over $230 million in awards over the last three fiscal years, according to its most recent report to Congress. The awards averaged over $650,000 each, and average about 18% of the amount collected in each case. The program received over 14,000 new claims during FY 2014. According to the report, the award program exists to provide whistleblowers with an incentive to report “significant tax noncompliance” to the IRS.

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Adventist to Pay $5 Million to Resolve False Claims Act Allegations

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Radiation oncology provider Adventist Health System Sunbelt Healthcare Corporation has agreed to pay more than $5 million to resolve False Claims Act allegations that it provided “radiation oncology services to Medicare and TRICARE beneficiaries that were not directly supervised by radiation oncologists or similarly qualified persons,” according to a recent Department of Justice press release.

Adventist operates a large network of hospitals in the South and the Midwest. According to the release, “[r]adiation oncology services provided to patients served by Medicare and TRICARE, the Department of Defense’s health care program, must be directly supervised by a radiation oncologist or similarly qualified personnel.” The qui tam FCA case alleged that Adventist “violated this supervision requirement for radiation oncology services provided to federal health care program beneficiaries at several Florida locations, including in Altamonte Springs, Daytona Beach, Deland, Kissimmee, Orange City, Orlando, Palm Coast and Winter Park. These services included radiation simulation, dosimetry, radiation treatment delivery and devices, and intensity-modulated radiation therapy.”

The case had been initiated by a physician who had been employed as a radiation oncologist. The whistleblower will receive $1,082,500 as his relator’s share.

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SEC Encourages Would-Be Whistleblowers to Comply With Internal Reporting Programs First

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The Securities and Exchange Commission whistleblower program, which provides awards to certain whistleblowers who report securities laws violations to the SEC, encourages would-be whistleblowers to comply with internal reporting programs first. 

The SEC’s whistleblower rules do this in at least two ways. First, the SEC weighs the whistleblower’s participation in the firm’s internal compliance program as a factor that may increase the whistleblower’s eventual award. And the SEC considers interference with internal compliance programs to be a factor that may decrease any award. Second, the SEC’s whistleblower rules give the would-be whistleblower the benefit of the earlier date on which the internal compliance report was made, so long as the whistleblower makes his or her SEC filing within 120 days. In that situation, the SEC form requests a copy of the internal reporting. In these ways, the SEC encourages compliance with companies’ internal compliance programs, without sacrificing whistleblower reporting to the SEC.

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John Sinatra is a partner in the Business Litigation
Practice at Hodgson Russ LLP. You can reach him at jsinatra@hodgsonruss.com.

46 States, DC Reach Settlement Agreement With Medtronic for False Claims Act Violations

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According to a recent press release, New York, most other states, and the District of Columbia have settled a False Claims Act case with Medtronic. The whistleblower case alleged that “Medtronic improperly induced physicians to recommend Medtronic devices to treat cardiac rhythmic disease.” The qui tam relator who brought the FCA case will share in the proceeds. In this case, venued in a federal court in California, several states and the federal government cooperated to resolve the matter and reach a favorable outcome. New York’s attorney general thanked the relator for bringing the matter to the government’s attention.

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John Sinatra is a partner in the Business Litigation
Practice at Hodgson Russ LLP. You can reach him at jsinatra@hodgsonruss.com

Research Grant Fraud

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False Claims Act practitioners at recent gatherings seem to agree that research grant fraud will be a growing area of whistleblower activity. As the government spends more on research grants related to health care, frauds are expected to increase as well. Qui tam relators will follow.

Research grant frauds can take many forms, ranging from failure to comply with regulations and grant conditions to false grant applications and fabricated results and data. The FCA bar expects increased whistleblower activity in this area in coming years.

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John Sinatra is a partner in the Business Litigation
Practice at Hodgson Russ LLP. You can reach him at jsinatra@hodgsonruss.com

Medical Devices Offer Fertile Ground for Future Whistleblower Activity

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Recent gatherings of False Claims Act attorneys —who represent whistleblowers, the government, and the defense — revealed a consensus that medical devices offer fertile ground for future whistleblower activity. Medical device fraud can take at least three forms and may arise for durable medical equipment as well.

  • First, defective medical devices, sold in connection with Medicare or Medicaid reimbursement, may lead to FCA liability. On this point, manufacturer quality management systems, supplier controls and monitoring, attention to customer complaints, and corrective measures are all key issues that may impact FCA liability. Medical devices that are not safe, effective, and reliable create FCA risk for their manufacturers.
  • Second, off-label promotion of medical devices brings up issues similar to off-label pharmaceutical promotions. FCA approval of devices should guide marketing. If marketing goes off-label, there may be FCA liability.
  • Third, kickbacks paid to medical professionals in connection with medical device sales would trigger FCA liability.

Federal government spending on health care is ever-growing. The government frauds in this area, along with qui tam activity, are expected to increase as well.

John Sinatra is a partner in the Business Litigation Practice at Hodgson Russ LLP. You can reach him at jsinatra@hodgsonruss.com

IRS Paid $53 Million to 122 Whistleblowers in 2013

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According to the IRS Oversight Board’s recent report to Congress, the IRS paid $53 million last year to 122 whistleblowers. This is an average of nearly $435,000 per whistleblower. The whistleblower awards last year average 14.6 percent of the amounts collected by the IRS. As noted in the report, the law requires the IRS to pay awards if the information provided “substantially contributes to the collection of tax, penalties, interest, and other amounts when the amounts in dispute are more than $2,000,000.” The award ranges are based on “percentages of the collected proceeds.” The law is designed to encourage people “with knowledge of significant tax noncompliance to provide that information to the IRS.” According to the report, the IRS “continues to receive submissions from whistleblowers, many of whom claim to have inside knowledge of the transactions they are reporting. They often provide extensive documentation to support their claims.”

John Sinatra is a partner in the Business Litigation Practice at Hodgson Russ LLP. You can reach him at jsinatra@hodgsonruss.com

JPMorgan Chase to Pay Over $600 Million in Whistleblower Case

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JPMorgan Chase recently agreed to pay over $600 million in its settlement of a case brought by the federal government, including HUD, FHA, and the VA, according to a February 2014 stipulation and order of settlement and dismissal entered by the Southern District of New York. The case, originally brought by a qui tam whistleblower, alleged that JPMorgan Chase Bank, N.A. engaged in misconduct as to mortgage loans with a connection to HUD, FHA, or VA programs. In particular, the government alleged that JPMorgan Chase Bank approved improper loans, submitted false certifications, entered information into its automated system that lacked integrity, and approved ineligible loans, and, as a result of these items, the government paid claims related to defaulted loans. Among other things, the settlement requires defendants to pay the government $614 million. Defendants obtained a False Claims Act release in the settlement agreement, and the agreement recognized that a relator’s share of the government’s recovery would be forthcoming.

John Sinatra is a partner in the Business Litigation Practice at Hodgson Russ LLP. You can reach him at jsinatra@hodgsonruss.com

Second Circuit Vacates Trial Court’s Dismissal in DHL False Claims Case

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The Second Circuit Court of Appeals today allowed a False Claims Act case brought by two whistleblower relators, represented by a team of Hodgson Russ attorneys led by me and my colleague Daniel C. Oliverio, and including Reetuparna Dutta, to proceed against DHL. In this case, the relators allege that DHL violated the FCA by improperly applying jet fuel surcharges to government shipments that it transported solely by ground. DHL’s motion to dismiss had been granted by the trial court on the basis of a 180-day “contest” provision in the transportation law. In vacating that dismissal, the Second Circuit ruled that the False Claims Act’s seal requirements and statute of limitations trump the contest provision, stating that “the 180-day rule cannot apply to a qui tam action under the FCA.” The action, United States ex rel. Grupp and Moll v. DHL Express (USA), Inc., will proceed in the Western District of New York.

My colleagues and I look forward to engaging in discovery to quantify DHL’s false claims and the resulting damages.

John Sinatra is a partner in the Business Litigation Practice at Hodgson Russ LLP. You can reach him at jsinatra@hodgsonruss.com

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Hodgson Russ is one of only a few major law firms that represents both whistleblowers and companies accused by whistleblowers of wrongdoing. This unusual perspective means we are exceptionally well positioned to advise whistleblowers about potential claims.

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