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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 Michelle Merola
Partner
mmerola@hodgsonruss.com
518.736.2917
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Michelle is a government-disputes lawyer with extensive experience litigating civil and criminal matters in a variety of federal jurisdictions as well as New York …

Showing 10 posts by Michelle Merola.

Florida Skilled Nursing Facility Agrees to Pay $17 Million to Resolve False Claims Act Allegations

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The U.S. Department of Justice announced last week that it had settled allegations involving violations of the Anti-Kickback Statute by skilled nursing facilities in the United States. Specifically, Hebrew Homes Health Network Inc., its operating subsidiaries and affiliates, and William Zubkoff, the former president and executive director of the network, agreed to pay $17 million to resolve allegations that it violated the False Claims Act by improperly paying doctors for referrals of Medicare patients requiring skilled nursing care. This is the largest FCA settlement to date involving a skilled nursing facility.

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Whistleblowers to Recover $2 Million in 'Worthless Services' FCA Case Against Nursing Home

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On October 10, 2014, the Justice Department and the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) jointly announced that Extendicare Health Services Inc. (Extendicare) and its subsidiary Progressive Step Corporation (ProStep) agreed to pay $38 million to the United States and eight states for False Claims Act liability. Approximately $2 million of the total settlement amount will be awarded to the whistleblowers who revealed the fraudulent conduct at issue by bringing suit under the False Claims Act.

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The New York State False Claims Act Reaches Tax Violations Prior to 2010

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The New York False Claims Act (NY FCA) was amended in August 2010 to expressly apply to knowing violations of the New York State Tax Law. As reported in a previous blog entry, a whistleblower filed an action against Sprint Nextel Corporation alleging that it failed to collect or pay New York State sales taxes on receipts from the sale of certain wireless telephone services. After an investigation, the attorney general for the State of New York, Eric T. Schneiderman, intervened and filed a superseding complaint adopting the FCA claims and alleging additional claims against the mobile telecommunications service provider. Among those claims were claims premised on conduct predating 2010, when the NY FCA was amended to include tax violations.

Topics: Tax Fraud

Whistleblower Teams Up With the State of New York in Groundbreaking Suit Against Sprint-Nextel Corporation

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On April 19, 2012, Attorney General Eric T. Schneiderman filed a groundbreaking lawsuit against Sprint-Nextel Corporation for deliberately under-collecting and underpaying millions of dollars in New York State and local sales taxes. The lawsuit was brought under the New York False Claims Act, which, unlike its federal counterpart, expressly permits cases involving tax fraud.

Topics: Tax Fraud

Shareholder Derivative Suits Premised on False Claims Act Violations

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The government and the whistleblowers who assist the government are not the only parties taking aim at corporate America. Private plaintiffs are finding ways to bring civil actions based in part on alleged False Claims Act violations. Recently there have been a rash of shareholder derivative suits that allege breaches of fiduciary duties and reckless mismanagement by officers and directors. Although shareholder derivative suits are not new, the charge alleged in these suits is—namely, that the failure to manage risk appropriately led to violations of the False Claims Act or other fraud statutes.

SEC Rules Implement Dodd-Frank Whistleblower Program

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After much deliberation, the Securities and Exchange Commission (SEC) issued final rules implementing the whistleblower program mandated by the Dodd-Frank Act. Under the new rules, individuals (referred to as whistleblowers) may claim rewards if they voluntarily provide to the SEC original information about a violation of the federal securities laws, including violations of the Foreign Corrupt Practices Act (see our January 24 blog post on this topic) that leads to a successful enforcement action resulting in monetary sanctions that total more than $1 million.

If an individual meets each of these requirements, the SEC will be required to award the whistleblower between 10 and 30 percent of the monetary penalties recovered, including penalties recovered in related actions by other regulatory agencies.

Proposed Expansion of the IRS Whistleblower Program

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Under Internal Revenue Code Section 7623(a), the IRS shall pay awards to people who provide “specific and credible information” to the IRS if the information results in the collection of taxes, penalties, interest, or other amounts from a noncompliant taxpayer. Guaranteed awards, however, are limited to individuals who provide information about significant tax issues. “Significant” is defined by the IRS as taxes, penalties, and interest owed in excess of $2 million. Thus, to meet the $2 million threshold—including back taxes, interest and penalties—the noncompliant taxpayer should have an annual gross income of more than $200,000. If the IRS successfully obtains a recovery from such a taxpayer, the IRS is required to pay the whistleblower between 15 and 30 percent of the recovery. If the whistleblower is not satisfied with the reward, he or she may appeal to the U.S. Tax Court. In cases involving less than $2 million, payment of an award to the whistleblower is discretionary, with a maximum of 15 percent of the recovery and no right of appeal.

Topics: Tax Fraud

Changes for Whistleblowers Under the Dodd-Frank Act, Including for Foreign Corrupt Practices Act Violations

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The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 brings a new round of sweeping reform to our nation’s financial system. Under the Dodd-Frank Act, a whistleblower who provides “original information” to the U.S. Securities Exchange Commission (SEC) or the U.S. Commodity Futures Trading Commission (CFTC) is eligible to receive a portion of the proceeds recovered by the government as a result of a successful enforcement action.

Major Changes to New York State False Claims Act

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On August 13, 2010, New York State Governor Paterson signed into law Assembly Bill 11568, which includes major changes to New York’s False Claims Act, enacted in 2007. According to legislators, the bill was passed to address several issues that have arisen in the courts since its enactment. It is also designed to assure that the New York law continues to keep pace with federal law. One of the biggest changes, a divergence from the federal False Claims Act, is a provision that allows qui tam plaintiffs to bring actions for tax fraud, but only when the net income or sales of the defendant total $1 million or more and the damages pleaded in the action exceed $350,000. It also strengthens the protections for whistleblowers, both private individuals and government employees, who uncover information concerning the misuse of government funds. These amendments took effect immediately and apply to all false claims, records, and statements made or used prior to, on, or after the April 1, 2007, effective date of the New York False Claims Act.

Topics: Tax Fraud

Our Whistleblower Suit Against DHL Continues

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A recent decision by State Supreme Court Justice John M. Curran allows a New York State False Claims Act lawsuit brought by Kevin Grupp and Robert Moll, the owners of MVP Delivery and Logistics, to proceed. MVP Delivery is an independent trucking company that was subcontracted by DHL. Grupp and Moll are represented by the whistleblower attorneys at Hodgson Russ.

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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.

We are not a "whistleblower mill" that pays little attention to the needs of its clients or the factual nuances of complex cases. Rather, we are a team of highly experienced lawyers that selects only the best cases, affording us the time and focus to become fully immersed in the factual and legal details necessary to bring cases to successful resolution.