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IRS Whistleblower Program Takes Downturn

April 10th, 2014 by Qui Tam

The IRS today released to the U.S. Senate its annual update on its whistleblower program, which was characterized by numerous attorneys quoted in Sunday’s Pittsburgh Post-Gazette as a failure. According to the IRS report, the number of tips received by the IRS Whistleblower Office rose slightly in the 2013 fiscal year compared to the prior year, but the payments by the program and taxes recovered declined. The IRS used those tips to collect $367 million in taxes, which ranked third among the years since the program was revamped, but was far behind the $592 million in collections through the program in 2012.

The report indicates that the office would like Congress to add a provision to the law that would protect tax whistleblowers from retaliation. The IRS whistleblower program, revamped by Congress in 2006 to mandate payments to tipsters who help the agency collect at least $2 million, came under fire from attorneys who said it was too slow and sometimes took information but provided no reward.

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SEC Announces Additional $150,000 Payment To Recipient Of First Whistleblower Award

April 10th, 2014 by Qui Tam

The Securities and Exchange Commission today announced that the whistleblower who received the first award under the agency’s new whistleblower program will receive an additional $150,000 payout after the SEC collected additional funds in the case. The whistleblower…has now been awarded a total of nearly $200,000 since the award was announced on Aug. 21, 2012.

The award recipient helped the SEC stop a multi-million dollar fraud by providing documents and other significant information that allowed its investigation to move at an accelerated pace and prevent the fraud from ensnaring additional victims. The additional payout comes after the SEC collected an additional $500,000 from one of the defendants in the case. The SEC expects to collect additional money from defendants in this case as some are making payments under a periodic payment schedule ordered by the court.

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Mortgage Boss Still On Hook For False Claims

April 10th, 2014 by Qui Tam

Golden First Mortgage and its owner must face claims that their lies about regulatory compliance cost taxpayers $12 million, a federal judge ruled. The United States alleged in a 2013 complaint that Golden First and owner David Movtady “systematically violated their underwriting and quality control obligations” in loans endorsed by the Federal Housing Administration, “costing the United States millions of dollars on defaulted loans.” Golden First and Movtady tried to dismiss the lawsuit by arguing that the False Claims Act violation, as alleged, did not apply, was untimely and lacked specificity. U.S. District Judge Jesse Furman nevertheless upheld the False Claims Act claim on Monday.

More than 60 percent of Golden First loans have defaulted, and at least three-quarters of those defaults occurred in 2008. In that year, more than 30 percent of its mortgages defaulted within six months, the United States said. FHA operates the Direct Endorsement Lender mortgage-insurance program under the oversight, or lack of oversight, of the Department of Housing and Urban Development.

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Whistleblower Paid $63.9 For J.P. Morgan Concealment Of Bad Mortgages

March 25th, 2014 by Qui Tam

Whistleblower, Keith Edwards, will recover $63.9 million for his false claims act lawsuit in which he revealed that J.P. Morgan Chase had submitted thousands of mortgages for governmental insurance through the Federal Housing Authority and Veterans Administration that did not qualify for those government guarantees. The government ultimately had to cover for these loans when they defaulted.

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Pittsburgh Post Gazette Exposé On Local Whistleblowers

March 25th, 2014 by Qui Tam

The Pittsburgh Post-Gazette recently published an in-depth article on the growth of local false claims act cases and the whistleblowers behind them. The article focused on efforts of Dave Hickton, U.S. Attorney for the Western District of Pennsylvania, who has diverted more of his office’s resources to false claims act cases. The cases include:

  • U.S. ex rel. Lyttle v. AT&T, which alleged that that AT&T was reaping huge profits permitting a scan for relaying calls of deaf individuals;
  • U.S. ex rel. Washington v. Education Management Corporation, for compensating recruiters based on the number of students they enrolled in for-profit schools even if the students were not appropriate for the education. The case alleges that the corporation reaped $11 billion in federal student aid for ineligible students.

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Big Pharma Takes A Big Hit

March 25th, 2014 by Qui Tam

Endo Health and its subsidiary Endo Pharmaceuticals will pay $192 million to settle false claims act after whistleblower uncovered off-label marketing of Lidoderm. The FDA only approved Lidoderm for treatment of a complication of shingles. The company required its sales staff to market the drug for unapproved ailments including low-back pain and carpal tunnel syndrome. The improper marketing caused physicians to write prescriptions covered by Medicare and Medicaid.

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Referrals Get Ohio Hospital Into Hot Water

March 25th, 2014 by Qui Tam

Memorial Hospital of Ohio recently settled government claims related to improper referrals under the Anti-kickback and Stark statutes. These statutes restrict the financial incentives that health care providers can provide to other health care providers. The allegations concerned Memorial Hospital’s financial arrangement with a joint venture it had with a pain management physician and a relationship with an ophthalmologist who sold intraocular lenses at inflated prices through the hospital. The violations were self-reported. Memorial Hospital will pay $8.5 million to settle the violations.

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Hospice Caught Submitting False Reimbursement Claims

March 25th, 2014 by Qui Tam

Hospice Compassus settle false claims allegations for $3.92 million, $700,000 of which will be shared by two whistleblowers. The whistleblowers filed suit under the false claims act alleging that the hospice company sought reimbursement under Medicare for hospice care for ineligible patients.

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Federal Government Announces Record Healthcare Fraud Recoveries

February 28th, 2014 by Qui Tam

For the fifth year in a row, federal fraud prevention efforts have seen an increase in the amount of money which has been recovered from individuals and companies who attempted to defraud federal health programs serving seniors or who sought to obtain payments to which they were not entitled.  A record $4.3 billion dollars was recovered this past fiscal year.  This was an increase from the $4.2 billion which obtained in fiscal year 2012.  Over the last five years, a total of $19.2 billion has been returned to the taxpayers, more than double the $9.4 billion which was received in the prior five year period.

In addition to monetary recoveries, investigations have led to significant prison sentences for those who have been convicted of engaging in unlawful activity.  In fiscal year 2013, the average prison term was 52 months.

An annual report issued by the Health Care Fraud and Abuse Control Program showed that the government recovers $8.10 for every dollar spent on health-care related fraud and abuse investigations.

A key player in uncovering fraudulent activity is the Health Care Fraud Prevention and Enforcement Team (“HEAT”).  This organization was created in 2009 and focuses on preventing fraud, waste and abuse in the Medicare and Medicaid programs.  It has also allowed the Justice Department and Department of Health and Human Services to improve their coordination.  HEAT is now operating Medicare Fraud Strike force teams in fraud hot spots throughout the country.  Advanced data analysis techniques are used to identify high-billing levels and allow investigators to target emerging schemes, schemes which are shifting locations and chronic fraud by those who are pretending to be healthcare providers or suppliers.

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JP Morgan Pays $614 Million In Mortgage Fraud Case

February 28th, 2014 by Qui Tam

JP Morgan is the most recent Wall Street firm to write a check, a whopping $614 million,  to the government to settle allegations that it violated the False Claims Act by knowingly underwriting non-compliant mortgages that received federal insurance coverage from the Department of Housing and Urban Development (HUD), the Department of Veterans Affairs (VA) and the Federal Housing Administration (FHA).   The resolution involved  an admission that for more than a decade they had violated the federal FCA.  Improper mortgage lending both undermines the housing market and threatens vital programs that provide millions of Americans the opportunity to own a home. This is the most recent action by the government to aggressively combat improper mortgage fraud.

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