Archive for October, 2011

California Device Manufacturer Settles Anti-Kickback Claims

Monday, October 31st, 2011

DFine, a California provider of vertebral augmentation devices, agreed to resolve Justice Department allegations of false claims for $2.9 million.  The government charged DFine with using customer surveys as vehicles to pay participating physicians kickbacks to induce them to use DFine devices.  The government alleged that DFine paid $500 to a physician who provided product information, which was coupled with the sale of a new device to the physician’s patient.  All of the payments were alleged to be in violation of the federal Anti-kickback statute.  The government claims were based on the complaint of a whistleblower who received $250,000 for reporting the alleged conduct.  As part of the settlement, DFine will enter into a corporate integrity agreement with the government to avoid similar conduct in the future. 

For more information see:  

http://7thspace.com/headlines/398026/usdoj_california_based_dfine_inc_to_pay_us_more_than_
23_million_to_settle_claims_that_company_paid_kickbacks_to_physicians.html

Georgia-based Diagnostic Imaging Provider Hit for $11 million in damages and penalties for FCA violations

Monday, October 31st, 2011

A judgment was entered against Medquest Associates for over $11 million in a false claims act lawsuit pending in Tennessee.  The judgment included $713,000 in treble damages and nearly $9 million in civil penalties.  The case against Medquest was based upon its practice at certain locations of submitting test results by physicians who were neither Medicare-approved nor qualified to certify the testing.  Medquest also used a predecessor’s Medicare provider number (rather than its own) to pay for tests.  Although Medquest appealed the fines imposed as excessive, the court rejected the appeal; noting that Medquest was a sophisticated operation that operated in reckless disregard for CMS rules. 

For more information see:  http://www.bizjournals.com/nashville/news/2011/10/25/medquest-assoicates-order-to-pay-11.html

FIRREA Provides Another Outlet for Whistleblowers

Monday, October 31st, 2011

The Financial Institutions Reform, Recovery and Enforcement Act of 1989 has a little known provision that allows a whistleblower to report instances of bank and financial institution fraud.  The law allows private individuals to submit confidential claims to the Department of Justice.  The department can then investigate and use its enforcement powers to recover penalties or damages, or the department can refer the case to private cause to pursue the claim on behalf of the government.  Private citizens initiating such claims receive a bounty payment on any recovery.  The types of violations that may be reported under the FIRREA include false statements in connection with a credit or loan application, misrepresenting status to obtain a loan, or making false entries in the books of a financial institution. 

See article here:  http://www.acba.org/ACBA/pdf/TLJ/TLJv13-21-102111.pdf

Citigroup Agrees to Pay $285 million to settle SEC Enforcement Action on Mortgage-Related Securities but the Judge is Unhappy

Monday, October 31st, 2011

Citigroup agreed to resolve securities fraud charges in relation to its sale of mortgage-backed securities for a whopping payment of $285 million.  Goldman Sachs and JP Morgan Chase & Co. settled similar claims with the SEC last year.   At the time of sale, those securities produced $126 million in profit for Citigroup’s brokerage subsidiary and $34 million in fees.  Citigroup will disgorge these funds plus $95 million in fines. Despite the hefty settlement, the assigned judge, Judge Jed Rackoff, assigned to the case, has called the settlement into question.  As part of the proceedings to approve the settlement, he has questioned whether the settlement is sufficient, why no individuals were held individually responsible, and why there was no demand for admission of wrongdoing.    

For more information see:  http://www.nytimes.com/2011/10/20/business/citigroup-to-pay-285-million-to-settle-sec-charges.html?hp

http://www.reuters.com/article/2011/10/27/us-citigroup-sec-idUSTRE79Q5XD20111027

Ding-Dong, the SEC is investigating the Avon Lady

Monday, October 31st, 2011

Ding-Dong, the SEC is investigating the Avon Lady

Avon Products, Inc., the legendary maker of women’s cosmetics sold door-to-door, announced that the SEC is investigating whether the company violated the Foreign Corrupt Practices Act (FCPA), which prohibits companies from bribing foreign public officials.  The bribery investigation began in 2008 and, while initially focused on China, has since expanded to other countries.  The SEC investigation comes on top of another pending SEC investigation into contacts Avon had with financial analysts.  

For more information see:  http://online.wsj.com/article/APee962d215f9b4dfca8f0f3fd31e67298.html?KEYWORDS=avon

SEC charges Denver Hedge Fund Managers with Insider Trading

Monday, October 31st, 2011

The SEC recently charged a Denver hedge fund manager with insider trading of Mariner Energy, Inc.   The complaint alleges that Mariner Energy board member H. Clayton Peterson gave his son, Drew, confidential information about an upcoming acquisition of Mariner.  The complaint alleges that Drew Peterson used the information to purchase Mariner stock for himself and others and passed along the information to friends to use.  An amended complaint named two friends of Drew Peterson who also traded on the information.  

For more information see:  http://www.sec.gov/news/press/2011/2011-218.htm

BNY Mellon Informant is Local Joe

Monday, October 31st, 2011

The whistleblower responsible for numerous lawsuits against custodial powerhouse BNY Mellon is Grant Wilson, a former currency trader in the bank’s Pittsburgh operation. The lawsuits stem from alleged charges that BNY Mellon provided its clients with least favorable currency rates, which allowed the bank to pocket additional exchange fees. Mr. Wilson maintained his anonymity as a whistleblower despite efforts by BNY Mellon to learn his identity and despite the suspicions of his colleagues.

For more information see:  http://online.wsj.com/article/SB10001424052970203499704576623210606537564.html?mod=djemalertNEWS

“FCA 101: A Practitioner’s Guide to the False Claims Act”

Thursday, October 27th, 2011

An article authored by Douglas K. Rosenblum, Esquire and John A. Schwab, Esquire published in the American Bar Association Criminal Justice Magazine, Fall 2011 edition. 

To read the article see:  http://www.falseclaimsact.com/library/files/fca_article.pdf

Medical Equipment Provider to Pay $600,000 for False Claims Act Violations

Wednesday, October 26th, 2011

The U.S. Attorney for the Southern District of Indiana announced on October 19, 2011, that Premier Home Care, a durable medical equipment provider in Southern Indiana, had agreed to pay $600,000 to the United States and to the State of Indiana for violations of the False Claims Act.  This qui tam suit was filed in 2008 by a former Premier employee who alleged that the company violated the False Claims Act by falsely certifying its compliance with state licensing requirements when it used unlicensed personnel to set up respiratory ventilation machines for patients. 

Premier will pay $578,820 to the United States and $21,180 to the State of Indiana, both of which are more than twice the estimated damages resulting from the False Claims Act violations.  The announcement also noted that the whistleblower is entitled to between 15 and 25% of the government’s recovery under the False Claims Act. 

For more information see:  http://www.justice.gov/usao/ins/press_releases/Pressrelease11/Premier.20111019.pdf

Abbott Laboratories Reported to Pay $1.3 Billion Due to Off-Label Promotion of Depakote

Wednesday, October 26th, 2011

On October 21, 2011, Bloomberg News reported that Abbott Laboratories, an American pharmaceutical manufacturer, would at least $1.3 billion to settle claims that the company illegally marketed its epilepsy drug, Depakote.  This announcement followed one similar from Abbott on October 19, where it disclosed that it recorded a $1.5 billion charge for the third quarter to cover a potential settlement based on government investigations of allegations that it promoted its Depakote anti-seizure drug for unauthorized uses.  The U.S. Department of Justice and 24 states alleged that Abbott illegally marketed Depakote to treat agitation and aggression in the elderly, as well as other uses not approved by the Food and Drug Administration.  Depakote, only approved to treat epilepsy and bipolar disorder and to prevent migraines, and resulted in $1.6 billion in sales in 2007. 

 For more information see:  http://articles.chicagotribune.com/2011-10-21/business/chi-report-abbott-to-pay-13b-to-resolve-depakote-suits-20111021_1_epilepsy-drug-abbott-laboratories-chief-executive-miles-white