Whistleblowers play a critical role in protecting the government and the public from fraud in a number of industries, including health care, insurance, and investment industries. In fact, the Securities and Exchange Commission (SEC) often relies on whistleblowers to enforce various securities laws and regulations and protect investors from fraud, and the SEC is publicly reassuring whistleblowers that it will continue to support their role in the investigation and prosecution of fraud.
Sean McKessy, director of the SEC’s Whistleblower Office, recently said in a Wall Street Journal interview that “[w]e are likely to see more awards at a faster pace now that the [Dodd-Frank Act whistleblower] program has been up and running and the tips we have gotten are leading to successful cases.”
So far, both of the awards paid by the SEC Whistleblower Office this year have been relatively small since the defendants had little or no ability to pay. The first payout awarded the whistleblower $50,000 and the second awarded the whistleblower $150,000. According to McKessy, the frequency and amount of awards could soon change.
A Washington oncologist has agreed to pay $3.1 million to resolve claims that he and his wife defrauded federal healthcare programs by “significantly and repeatedly overbilling for cancer treatment medications.” According to a Department of Justice press release, Dr. Alfred H. Chan and his wife Judy Chan intentionally inflated claims submitted to Medicare, TRICARE and other federal healthcare programs from April 2006 through April 2009 by overcharging for medications administered to patients, overstating chemotherapy infusion times, and double billing for medications.
With an estimated loss to the government at over $1 million, the settlement represents a recovery of almost three times the estimated loss to federal health care programs. The whistleblower in this case – Ruth Ruckman, a former employee of Dr. Chan – will receive $620,000 of the $3.1 million settlement pursuant to the False Claims Act.
General Electric Aviation Systems (GEAS) has agreed to pay $6.58 million to settle allegations that it submitted false claims in connection with multiple Department of Defense contracts. According to the government, GEAS knowingly failed to comply with contract specifications and failed to undertake proper quality control procedures in connection with various external fuel tanks that it provided to the Navy between June 2005 and February 2008. The settlement also resolves allegations that, between June 2010 and June 2011, GEAS knowingly made false representations to another government contractor that GEAS had performed a complete inspection of 228 drag beams to be used on Army UH-60 Blackhawk helicopters.
The president and six employees of Biodiagnostic Laboratory Services LLC (BLS), a New Jersey pharmaceutical company, recently admitted to making millions of dollars worth of bribes to doctors over the past several years. The defendants – BLS president Nicholl David Parsippany and employees Scott Nicoll, Cliff Antell, Luke Chicco, Doug Hurley, Kevin Kerekes, and Craig Nordman – all pleaded guilty to money laundering and engaging in a conspiracy that involved bribing doctors in exchange for blood sample referrals worth more than $100 million to the company.
Sentencing for all seven defendants is scheduled for September 11, 2013, and each of them faces a maximum potential penalty of five years in prison and a $250,000 fine on the bribery conspiracy charge, and 20 years in prison and a $500,000 fine on the money laundering charge, or twice the gross gain or loss from the offense. Defendants David and Scott Nicoll have already agreed to forfeit $50 million and $25 million to the United States, respectively. The other defendants will each forfeit amounts ranging between $800,000 and $1.3 million.
Texas Governor Rick Perry has signed a series of bills into law that modify that state’s Medicaid statutes and programs. One of the primary purposes of the laws is to bring the Texas Medicaid Fraud Prevention Act (TMFPA) into compliance with the federal requirement that the state statute be “at least as effective” as the federal False Claims Act in rewarding and facilitating qui tam actions. Accordingly, Texas will continue to qualify for the 10-percentage-point increase in its share of recovery of civil Medicaid false claims judgments and settlements.
Among some of the new laws’ provisions – which will take effect on September 1, 2013 – is the extension of false claims liability for conspiracy to violate the TMFPA or the failure to comply with obligations to repay funds to Medicaid. The bill also makes procedural changes to the state civil false claims statute of limitations and public disclosure provisions so that they more closely align with corresponding federal provisions.
Please contact us at (312) 863-7222 if you would like to learn more about any of the aforementioned whistleblower news updates or would like to schedule a free, confidential appointment with one of our nationally recognized whistleblower attorneys.