Archive for February, 2012

Vocal Critic of Insider Trading Prosecutions is Arrested for … Insider Trading

Monday, February 20th, 2012

John Kinnucan, a research analyst who has recently been critical of government insider trading laws and prosecutions has been arrested for insider trading.  The Department of Justice and the SEC have charged Kinnucan with paying insider sources with gifts including vacations and meals for tips that he passed along to two hedge funds. The government contends that Kinnucan hid behind his company, Broadband Research, claiming to be a research analyst.  The government also alleges that the hedge funds paid Kinnucan $30,000 quarterly for the information he provided.  Federal authorities approached Kinnucan in 2010 asking him to cooperate into an investigation of his clients.  He declined to do so and then went public, criticizing the investigation. 

More information and commentary can be found here:  https://twitter.com/#!/amyjgreer/status/170878962665390082

Energy Developers Settle Antitrust and False Claims Act Claims

Monday, February 20th, 2012

Gunnison Energy Corporation and SG Interests settled a series of claims under the federal antitrust statutes and the false claims act related to their agreement not to compete in bidding for natural gas leases that the US Department of the Interior’s Bureau of Land Management sold at auction.  The lawsuits and settlement resulted from a whistleblower who filed a qui tam action under the False Claims Act.  The government charged the two companies with entering into a written agreement whereby only one would bid for government-auctioned leases and would then assign rights to the other.  This allowed the companies to pay less than they would have had they engaged in competitive bidding.  The False Claims Act violations were based on false information provided to the government as a result of the bidding process.  This matter was the first government lawsuit to challenge an anticompetitive bidding agreement for the Bureau of Land Management. 

The press release for this action may be found here:  http://www.justice.gov/opa/pr/2012/February/12-at-219.html

India Seeks to Enact Its Own False Claims Act

Monday, February 20th, 2012

India is seeking to fight corruption by passing its own false claims act modeled on the United States’ version of the act.  It would allow whistleblowers to bring claims against contractors and to receive a cut of the proceeds received from such claims.  Indian government officials are considering the legislation to counter routine fraud in the infrastructure sector in which poor quality work is rampant. 

For more information see:  http://www.dailymail.co.uk/indiahome/indianews/article-2099575/U-S-type-law-pipeline-curb-graft-government-projects.html?ito=feeds-newsxml

Kentucky Legislator Introduces False Claims Act Legislation

Monday, February 20th, 2012

Kentucky’s Speaker of its House of Representatives, Greg Stumbo, announced that he was introducing false claims act legislation to give whistleblowers strong tools and incentives to expose misuse of state dollars.  Stumbo supported his legislation by pointing to other states, such as California and Texas, that have successfully prosecuted cases under their own false claims acts.  Recently, Kentucky was denied the right to intervene in a false claims act case pending in Pittsburgh because Kentucky did not have its own false claims act pursuant to which the state could recover. 

For more information see:  http://surfky.com/index.php/paducah/235-statewide-kentucky-news/10755-stumbo-files-false-claims-act-to-target-fraud-across-state-government

http://mobile.bloomberg.com/news/2011-10-24/recruiting-suit-against-education-management-can-t-be-joined-by-kentucky

Keystone State Lender Nabbed for Falsifying Loan Documents Insured by HUD

Monday, February 20th, 2012

The United States settled claims against Pennsylvania-based Capmark Finance LLP for making false statements in connection with loans insured by the Department of Housing and Urban Development (HUD). The government claimed that Capmark falsified information relating to the creditworthiness of two nursing homes that subsequently defaulted on the loans. Capmark (which filed for bankruptcy) agreed to pay the government $3.9 million to settle the claims. The investigation involved the interagency Financial Fraud Enforcement Task Force.

The press release may be found at this link: http://www.justice.gov/opa/pr/2012/February/12-civ-198.html

Urine Drug Test Scam Results in $6 Million Payout to U.S. Government

Monday, February 13th, 2012

Accela Medical LLC, Coventry Diagnostics LLC and Western Slope Laboratory LLC, three Troy laboratory companies, were fined $6 million to resolve False Claims Act violations against the government.  Accela was improperly billing for urine drug testing and Coventry and Western Slope were performing the tests.  The scheme was set up by Thomas McCormick of Troy and Charles Reinhardt of Accela.  The pair were billing Medicare for approximately $900 worth of urine drug tests for almost every patient referred to Accela by a physician.  Accela also falsely billed for 18 separate procedures for each patient to evaluate urine levels of opiates. The fraud was discovered by analyzing data to flag billing anomalies.

For more information see: http://www.dailytribune.com/articles/2012/02/07/news/doc4f3188711af85206997226.txt?viewmode=fullstory

Orthofix International Progresses in Resolution of Legal Matters with U.S. Government

Monday, February 13th, 2012

Orthofix International, a global medical device company, has issued a statement regarding its substantial progress in the resolution of several U.S. Government legal matters.  The statement discussed the company’s improvements to its compliance practices, personnel, financial standings, and a stronger focus on the Company’s operations, including investments in R&D.  Three legal matters Orthofix reportedly has made progress on are: reaching an agreement to resolve matters related to the investigation of the Company’s subsidiary, Blackstone Medical, Inc.; reaching an agreement in principle with the DOJ to settle criminal violations of the False Claims Act; and finalizing definitive agreements for bone growth stimulation matters.

Fourteen Hospitals Charged More Than $12 Million in Overcharging Medicare for Kyphoplasty

Monday, February 13th, 2012

Between 2000 and 2008, fourteen hospitals located in New York, Mississippi, North Carolina, Washington, Indiana, Missouri and Florida were overcharging Medicare when performing kyphoplasty, a procedure that is used to treat certain spinal fractures.  The hospitals agreed to pay the government over $12 million to settle the allegations.  To date, the Justice Department has reached settlements with over 40 hospitals totaling over $39 million to resolve false claims act allegations related to kyphoplasty claims submitted to Medicare.

For more information see: http://www.justice.gov/opa/pr/2012/February/12-civ-173.html

TriWest Healthcare Alliance to Pay $10M Fine

Monday, February 13th, 2012

TriWest Healthcare Alliance, one of the Pentagon’s major health care contractors, was fined $10M for claims the company defrauded the government by failing to pass on savings to the military.  TriWest Healthcare Alliance is one of three main contractors for Tricare, the Pentagon’s health program.  Four former TriWest employees filed the claim stating that TriWest “systematically defrauded” TriCare by keeping savings it brought in while working on the contract.  The whistleblowers received $1.7 million from the lawsuit. 

For more information see: http://www.usatoday.com/news/washington/story/2012-01-27/triwest-military-health-care-fraud/529080332\1

Representative Berman Commemorates the 25th Anniversary of the False Claims Act Amendments of 1986

Monday, February 13th, 2012

Influential in Securing House passage of the False Claims Act Amendments of 1986, Representative Howard Berman joins in the commemoration of its 25th anniversary. Since the False Claims Act was amended, the government has recovered over $30 billion in settlements and judgments in civil cases involving fraud against the government. Berman also noted that whistleblowers have filed nearly 8,000 actions with a record high of 638 in this year alone. Also in attendance at the celebration were Attorney General Eric Holder, Senator Patrick Leahy, and Assistant Attorney General for the Civil Division Tony West.

For more information see: http://encino.patch.com/articles/berman-highlights-30-billion-in-savings-due-to-false-claims-act