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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.
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Showing 18 posts in Other Government Fraud.
Old Fraud Claims May Be Actionable Under Limitations Act
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.
Government Role in Qui Tam Whistleblower Protection Cases
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.”
Justice Department Announce Record False Claim Recovery Year
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.
False Claims Acts: Not Just the Federal Government Anymore
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.
FCA Suit Against Deutsche Bank and Its Mortgage Subsidiary
In what may be a sign of future whistleblower-driven litigation facing the mortgage industry, the federal government brought a False Claims Act suit on May 3 against Deutsche Bank and a subsidiary it acquired in 2007, MortgageIT, Inc., alleging that they “repeatedly lied to be included in a government program to select mortgages for insurance by the government. Once in that program, they recklessly selected mortgages that violated program rules in blatant disregard of whether borrowers could make mortgage payments.”
The government’s complaint alleges false certifications made to the Department of Housing and Urban Development (HUD) in connection with MortgageIT’s mortgage origination and sponsorship practices. The FHA has paid insurance claims on more than 3,100 mortgages, totaling $386 million, for mortgages endorsed by MortgageIT.
New Government Numbers for False Claims Act Filings
Recent government tallies reveal a surge in False Claims Act filings. By fall of last year, there were 1,246 qui tam cases under seal at the Department of Justice (DOJ) (i.e., pending investigation into whether the government will intervene). That number has grown by almost 100 cases as of last month. This growing caseload is reflected in the raw number of 2010 qui tam filings—over 500—which represents a dramatic 51 percent jump from the number of whistleblower cases filed just two years earlier.
Bounties for Whistleblowers | Hodgson Russ
The recent regulatory reform package known as the Dodd-Frank Wall Street Reform and Consumer Protection Act authorizes the Securities and Exchange Commission to pay bounties to whistleblowers whose information results in a monetary recovery. In cases involving valuable information concerning securities fraud, the whistleblower payment can be as high as 30 percent of the total recovery. There is good reason to believe that these bounty provisions will extend to cases involving violations of the Foreign Corrupt Practices Act of 1977 (FCPA), which broadly prohibits the payment of bribes to foreign officials for the purpose of obtaining government contracts; securities fraud occurs because the bribes are seldom, if ever, properly accounted for on a company’s books. Recent FCPA cases have resulted in recoveries in the tens of millions of dollars.
Whistleblower Lawsuit on “False Marking” Theory of Liability
The National Law Journal recently published an article about the increase in whistleblower lawsuits that are based on a “false marking” theory of liability in the wake of the recent appellate court decision in The Forest Group Inc. v. Bon Tool Co. The “false marking” theory of liability encompasses labeling products or packaging with an expired patent or one that doesn’t cover the product’s technology. This decision is bad news for companies with patents.