Skip to Main Content



Happy New Year! While this blog was quiet at year's end, the world of whistleblower news was not – important court orders were issued, and significant settlements were reached. Below is a summary of the most newsworthy events that took place during the holiday season:

Monday, December 17, 2012: The Department of Justice announced that Japan-based Toyo Ink, a leading supplier of printing inks, and its subsidiaries in New Jersey and Illinois, have agreed to pay $45 million to settle False Claims Act allegations that they failed to pay antidumping and countervailing duties. According to the DOJ press release, "the Department of Commerce assesses antidumping and countervailing duties to protect United States businesses by offsetting unfair foreign pricing and government subsidies. . . . Import duties may vary depending on a product’s country of origin, which is identified by determining the last country in which the product underwent a substantial transformation. The government alleged that Toyo Ink knowingly misrepresented, or caused to be misrepresented, the country of origin on documents presented to U.S. Customs and Border Protection to avoid paying duties, particularly antidumping and countervailing duties . . ." The False Claims Act case was brought by a competing American businessman, and the settlement serves as a reminder that the False Claims Act can be a valuable tool in protecting American business and U.S. fair trade policies.

Tuesday, December 18, 2012:  The Treasury Department issued new proposed IRS Whistleblower regulations.

Wednesday, December 19, 2012:  Swiss Bank UBS agreed to pay $1.5 billion dollars, the second largest penalty ever levied against a bank, and admitted to criminal fraud in connection with charges that the bank participated in LIBOR interest rate manipulation. The penalty is substantially more than the $450 million Britain's Barclays agreed to pay in June to resolve similar allegations. Given the number of organizations allegedly involved in LIBOR manipulation, it is likely that there are more settlements to come.

Also, Amgen, Inc. pled guilty to charges that it engaged in an off-label marketing scheme and other schemes, including marketing-the-spread, all designed to promote Aransep and other of its drugs. In connection with the plea, Amgen agreed to pay $762 million. This significant settlement of off-label marketing allegations, in the wake of the Second Circuit's recent opinion in United States v. Caronia, shows that the government is continuing to aggressively pursue False Claims Act liability for off-label marketing schemes. The New York Times and the Corporate Crime Reporter published interesting stories regarding the whistleblowers' critical role in prosecuting this matter.

Finally, the Department of Justice announced $109 million settlement with Sanofi-Aventis to resolve allegations that the company violated the Anti-Kickback Statute, and therefore the False Claims Act, by providing free product to physicians in order to induce them to proscribe more of the company's drugs. Government officials reiterated the importance of enforcing the Anti-Kickback statute laws: “Patients expect their health providers to be concerned solely with their best medical interests” said Daniel R. Levinson, Inspector General for the U.S. Department of Health. “Kickbacks undermine that all-important patient trust, and taxpayers’ expectation that government health dollars be put only to the wisest of uses.” The whistleblower will receive $18.5 million for bringing this case to light.

Thursday, December 20, 2012: The owners of The Princeton Review settled False Claims Act allegations that they submitted falsified student attendance records to the government in connection with the Supplemental Educational Services program.

Friday, December 21, 2012: In one of the most important False Claims Act opinions released in 2012, Judge Buckwalter, sitting in the Eastern District of Pennsylvania, held that claims submitted to Medicare's Part D program are subject to the False Claims Act. Medicare's Part D program, which began to cover prescription drugs in 2006, is administered by intermediaries which are paid a capitated rate by the government for providing drugs covered by the program. In other words, the government does not pay directly for any particular prescription. Accordingly, Caremark argued that claims it submitted for payment to Part D intermediaries were not "claims" submitted to the government and, therefore, not actionable claims under the False Claims Act.  Judge Buckwalter is the first judge to directly address such an argument, and his rejection of Caremark's position, in a well-reasoned, 98-page order, is an important precedent confirming that False Claims Act liability extends to those who submit false claims for payment to the Part D program. The whistleblower in this case was represented by Pietragallo Gordon Alfano Bosick & Raspanti, LLP, who have written an excellent summary of the opinion.

Wednesday, December 26, 2012:  W.W. Grainger Inc.,  a national hardware distributor headquartered in Lake Forest, Illinois, agreed to pay $70 million to resolve allegations that it submitted false claims under contracts with the General Services Administration and the U.S. Postal Service. Grainger allegedly failed to honor best price obligations in its government contract. Click here to see the Department of Justice press release regarding the agreement.

Thursday, December 27, 2012: The Justice Department announced that Victory Pharma Inc., a specialty pharmaceutical company headquartered in San Diego, agreed to pay $11,420,743 to resolve federal civil and criminal liability arising from its marketing of the pharmaceutical products Naprelan, Xodol, Fexmid and Dolgic. The government alleged that Victory paid kickbacks to doctors to induce them to prescribe Victory's products. The kickbacks included tickets to professional and collegiate sporting events; tickets to concerts and plays; spa outings; golf and ski outings; dinners at expensive restaurants; and numerous other out-of-office events. Victory also encouraged its sales representatives to schedule paid “preceptorships,” which involved sales representatives “shadowing” doctors in their offices. These kickback schemes continue to be the subject of False Claims Act litigations and settlements.

Also today, the New York Institute of Technology and Cardean Learning Group, LLC, private education companies, agreed to pay $4 million to resolve allegations that they violated the "incentive compensation ban" that prohibits educational institutions from providing incentive payments to recruiters for securing student enrollments. The incentive compensation ban continues to receive significant government attention.

Thursday, January 3, 2013: Florida-based American Sleep Medicine LLC has agreed to pay $15,301,341 to resolve allegations that it billed federal healthcare insurers for diagnostic testing services on patients suffering from sleep disorders that were performed by technicians who lacked the required credentials or certifications. The Department of Justice press release can be found here. The whistleblower will receive $2,601,228 for bringing the case forward.