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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.

Showing 14 posts in Other Government Fraud.

Supreme Court Finds the “Implied Certification” Theory Viable in Some Circumstances

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On June 16, 2016 the United States Supreme Court issued a unanimous decision in Universal Health Services, Inc. v. United States ex rel. Escobar, 579 U.S. ___, No. 15-7 (June 16, 2016), finding the “implied certification” theory of legal falsity under the False Claims Act (“FCA”) viable in some circumstances.  This controversial theory, under which courts have allowed liability in circumstances where defendants have failed to disclose noncompliance with relevant statutory, regulatory, or contractual requirements, is now still viable, albeit in more limited form.

Topics: Other Government Fraud

Government Asserts Right to Final Say in FCA Settlements

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A recent decision from the U,S. District Court for the District of Columbia illustrates the power of the government to block False Claims Act settlements between relators and defendants. United States ex rel. Landis v. Tailwind Sports Corp., 2015 U.S. Dist. LEXIS 46140 (D.D.C. April 9, 2015) involves former professional cyclist Floyd Landis, who brought FCA violations against Lance Armstrong and other defendants, including Armstrong’s agents and their company, called Capital Sports and Entertainment. The case was based on Landis’s allegations that defendants submitted claims for sponsorship payments to the U.S. Postal Service while knowing that the team had been using performance-enhancing drugs in violation of the sponsorship agreement.  

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Topics: Other Government Fraud, Whistleblower Settlements

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

Topics: Other Government Fraud

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

Topics: Other Government Fraud

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

Topics: Other Government Fraud

Billions of Dollars Lost to Fraud Every Year, Much of It Unreported

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In recent years, elected and appointed members of the federal government and others have estimated that seven percent—or as much as 15 percent or 20 percent—of federal spending is consumed by fraud. With the federal government spending $3.8 trillion a year, even seven percent lost to fraud equates to a quarter of a trillion dollars a year. That’s more than $800 per American, per year lost to fraud. As the government spends more and more each year, the False Claims Act and the qui tam whistleblowers it incentivizes become more and more important. In fact, the Justice Department is recovering record amounts under the False Claims Act—$5 billion alone last year. But as the scale of these recoveries demonstrates, there is still a lot of fraud left every year for whistleblowers to uncover and report.

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

Topics: Other Government Fraud

Old Fraud Claims May Still Be Actionable Under Wartime Suspension of Limitations Act

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Relators who have claims based on frauds that extend farther than the False Claims Act’s statute of limitations are in for good news—a recent decision regarding the Wartime Suspension of Limitations Act may mean that claims that would have been time-barred under the False Claims Act may still be actionable.

Topics: Other Government Fraud

Government Intervention Rights Broadly Interpreted

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A False Claims Act case can be brought by a whistleblower (relator) to recover funds on behalf of the federal government. The government then has the option to “intervene” and proceed with the action. If the government does intervene, it has the primary role in prosecuting the action, although the relator remains entitled to a percentage of any recovery. Even if the government declines to intervene initially, it can later intervene upon a showing of “good cause.”

Topics: Other Government Fraud, Whistleblower Settlements

Justice Department Announces Record Single-Year False Claims Act Recovery

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The Justice Department yesterday reported $4.9 billion in False Claims Act recoveries for fiscal year 2012, which is the largest single-year recovery in history.

The recoveries spanned several sectors of the economy. In the health care arena, the Justice Department reports that, “[e]nforcement actions involving the pharmaceutical and medical device industry were the source of some of the largest recoveries this year.” The department recovered nearly $2 billion in cases alleging false claims for drugs and medical devices under federally insured health programs and, in addition, returned $745 million to state Medicaid programs.” The recoveries from major pharmaceutical companies addressed several drugs allegedly marketed for off-label use. They also addressed cases involving the alleged payment of kickbacks to physicians to prescribe certain drugs. Some of the cases addressed alleged false and misleading statements concerning drug safety and the alleged underpayment of rebates owed under the Medicaid Drug Rebate Program, and they include cases alleging inaccurate, unsupported, or misleading statements about drug safety to increase sales.

State False Claims Acts: It’s Not Just the Federal Government Anymore

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While the federal False Claims Act gets the big headlines and the correspondingly big recoveries, it is important not to forget that a number of states have their own false claims acts under which relators can bring claims that also have the potential for significant monetary recoveries. States with these acts tend to fall into two categories: states with generally applicable false claims acts (like the federal law) and states that limit their acts to health care fraud.

Topics: Other Government Fraud

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