For more information see:  http://online.wsj.com/article/SB10001424052702303936704576398100826124240.html

The Lees join a group of almost 60 contractors and military officers to face criminal charges related to misconduct in obtaining a variety of government contracts in the early part of the Iraq war.  Their involvement in the Iraqi contracting scandal has been known for some time, as their company, Lee Dynamics International, has been barred from doing business with the federal government since July 2007.

Documents filed in the criminal proceeding against George and Justin Lee allege that the Lees provided $225,000 in bribes to one unnamed Army Major (identified as “Person One”) in exchange for the officer directing over $14 million in contracts to Lee Dynamics.  The description of “Person One” in the indictment closely matches that of Maj. Gloria D. Davis, who shot and killed herself in Baghdad in December 2006 after admitting to investigators that she had taken the $225,000 in bribes from the Lees’ company.

The indictment also ties the Lees to another corrupt Army officer, Maj. John Cockerham, who was recently sentenced to 17 years in prison for taking over $9.6 million in bribes while working at a contracting office in Kuwait.  The government has charged George and Justin Lee with providing at least $1 million to Major Cockerham in exchange for being funneled contracts to provide American troops with bottled water, bunk beds, and mattresses.

For more information see:  http://www.nytimes.com/2011/05/31/world/middleeast/31iraq.html?_r=1

Areté, which filed for bankruptcy in January 2011, agreed that the $650,000 settlement will be paid out of the sale of its assets under the supervision of the bankruptcy court.  Relator Amanda Drews, who blew the whistle on Areté’s fraud, will receive $107,250 as her share of the settlement for her efforts in uncovering the false claims to Medicare.

For more information see: USDOJ: Arete

 The suit, which was brought by two former employees, alleges that EMC illegally paid admissions employees based upon the number of students they recruited.  The Higher Education Act prohibits colleges and universities that participate in the federal financial aid program from paying commissions, bonuses or other incentive payments to recruiters based directly or indirectly on their success in securing enrollments.  According to the lawsuit, most of the public funding received by EMC was fraudulently obtained, meaning that a significant amount could be at stake.  The Complaint against EMC alleges that, in 2010 alone, the company received $2.2 billion in federal financial aid alone.

The revelation regarding California’s intention to intervene in the case comes on the heels of the United States Department of Justice’s announcement at the beginning of May that it, too, would be intervening in the case.  The federal government’s Complaint in intervention is due to be filed June 2, 2011.  The state of Illinois had previously intervened in the case.

For more information see: http://californiawatch.org/dailyreport/state-joins-suit-against-profit-education-company-10426

At issue in U.S. ex rel. Ryan v. Staten Island University Hospital, et al. was the motion of Regency Alliance Services, Inc. (“Regency”) and Physicians Medical Group (“PMG”) to dismiss the Third Party Complaint filed by Dr. Gilbert Lederman, and his professional corporation, Gilbert Lederman, M.D., P.C.  The Government’s underlying Compliant alleged that Dr. Lederman and Lederman P.C. (the Lederman Parties), among others, submitted hundreds of false and fraudulent claims to Medicare for stereotactic radiosurgery treatments that were not legitimately covered by the Medicare program.  Based on this allegedly fraudulent activity, the Government alleged claims under the False Claims Act, as well as the claims for unjust enrichment and payment by mistake. 

The Lederman Parties’ Third Party Complaint alleged that Regency and PMG, who the Lederman Parties claimed served as medical billing and coding experts for Lederman P.C., were liable under theories of both contribution and indemnification for any damages suffered by the Government as a result of the false claims submitted to Medicare.

Judge Gleeson disagreed, and granted Regency’s and PMG’s motions to dismiss.  With respect to the contribution claim, Judge Gleeson conducted an exhaustive review of New York law and concluded that the right of contribution, which is governed by N.Y. CPLR § 1401, does not exist unless the underlying claim sounds in tort law, and where both the third party plaintiff and third party defendant owed a duty to the injured party.  Judge Gleeson reasoned that, because claims for unjust enrichment and payment by mistake are not tort claims, but rather equitable claims that do not require the breach of a preexisting duty, no right of contribution exists.

The Lederman Parties’ claim for indemnification was also dismissed, based on similar reasoning.  Indemnity exists to prevent unjust enrichment through the inequitable allocation of the burden for making a plaintiff whole for a given loss.  Given the equitable nature of the Government’s claims, however, no such burden would be apportioned to Dr. Lederman or to Lederman P.C. without the Court first determining that it was equitable to do so.  Accordingly, the Lederman Parties’ claim for indemnity was wholly redundant of one of their defenses to the Government’s claim.  Stated somewhat differently, if the Lederman Parties were held liable for unjust enrichment or payment by mistake, any subsequent claim for indemnification would necessarily fail, because the Court would have already determined that it was equitable and just to impose the burden for the loss on the Lederman Parties. 

This holding, if followed in other jurisdictions, should benefit relators and the Government by streamlining qui tam cases involving state law equitable and quasi-contract claims such as unjust enrichment, money had and received, and payment by mistake.

The qui tam whistleblowers were represented by Marc S. Raspanti, Kevin E. Raphael, and Michael A. Morse, of the national whistleblower law firm of Pietragallo Gordon Alfano Bosick & Raspanti, LLP.

The “qui tam” whistleblower lawsuit alleged that during the period from January 1997 to February 2003 CCHS violated the Federal False Claims Act, Federal Anti-Kickback Statute, Federal Stark Law, the Delaware Anti-Kickback Statute, and the Delaware False Claims act by certifying, in claims submitted to Medicare and Medicaid, that CCHS was in compliance with all laws and regulations, when in fact CCHS knew, deliberately ignored, or recklessly disregarded the fact that: 

 (a) CCHS was paying fees to the physicians’ practice under an “evergreen” contract that was executed in 1989, which fees, in some cases, were multiples of what Medicare or Medicaid paid CCHS as reimbursement for those services, in order, as alleged, to illegally induce the physicians’ practice to make referrals to CCHS; and/or 

(b) Claims that CCHS submitted to Medicare and Medicaid were not reimbursable because CCHS and the physicians’ practice had an impermissible “financial relationship” as defined in the Stark Statute.

Attorney Marc S. Raspanti praised the courageousness of the qui tam whistleblowers in stepping forward and uncovering one of the largest false claims cases ever in the State of Delaware.  Raspanti added that “this is a landmark whistleblower case because it is one of the largest ever in the State of Delaware, and because it sends a strong signal to healthcare providers that kickbacks and lucrative self-referrals violate the law and will not be tolerated.”

Attorney Kevin E. Raphael also credited the successful resolution of the case to the strong partnership between the Relators and the federal and state prosecutors, including: United States Attorney David C. Weiss; Delaware Attorney General Joseph R. Biden, III; Assistant United States Attorneys Shannon T. Hanson and Seth M. Beausang; former Delaware Deputy Attorney General Daniel R. Miller; Lawrence M. Kutys, an auditor in the United States Attorney’s Office; and former Delaware HHS-OIG Special Agents Conrad J. Quarles and Edward J. McCusker.

Attorney Michael A. Morse commented that the goal of the Stark Law, Federal Anti-Kickback Statute and Delaware Anti-Kickback Statute is to ensure that a physician’s professional judgment in referring patients for health care services is not compromised by improper financial arrangements offered to that physician. 

The E-Rate program, which Congress created in the Telecommunications Act of 1996, provides funding for needy schools and libraries to connect to and utilize the Internet. Under the program, which is funded by fees collected from telephone users, schools apply for funds to pay for hardware and monthly connectivity service fees. The FCC oversees the E-Rate program.

The United States contended that the Houston Independent School District provided false information to the E-Rate program and otherwise violated the program’s requirements by engaging in non-competitive bidding practices for E-Rate contracts. The United States further alleged that school district officials received gratuities from technology vendors, including trips, meals and loans.

This settlement resolves a very interesting, novel False Claims Act case involving an FCC Program that has not received much attention prior to this lawsuit.  This settlement could cause additional suits to be filed against other school districts, as the public beomes more aware of schemes in impacting this Program.

The government’s partnership with private citizens in the fight against fraud was cemented in 1986, when Congress amended the False Claims Act, the United States’ primary tool against government fraud. The amendments strengthened the act by, among other things, revising the statute’s qui tam provisions, which were intended to encourage whistleblowers to come forward with allegations of fraud. The 1986 amendments reduced the barriers to citizens suing on behalf of the government and increased the incentives to filing such suits.

Of the $2.4 billion in settlements and judgments obtained in fiscal year 2009, nearly $2 billion was recovered in lawsuits filed under the False Claims Act’s qui tam provisions. These provisions authorize private persons, known as “relators,” to file suit on behalf of the United States against those who have falsely or fraudulently claimed federal funds. Such cases run the gamut of federally funded programs, from Medicare and Medicaid to defense and other government procurement contracts, federally insured mortgage and other federal housing programs, disaster assistance loans, agricultural subsidies and more. Persons who knowingly make false claims for federal funds are liable for three times the government’s loss plus a civil penalty of $5,500 to $11,000 for each claim. Relators recover 15 to 25 percent of the proceeds of a successful suit if the United States intervenes in the qui tam action, and up to 30 percent if the United States declines and the relator pursues the action alone. In fiscal year 2009, relators were awarded $255 million. (This figure does not include relator shares awarded after Sept. 30, 2009.)

The government’s press release can be found at:  http://www.justice.gov/opa/pr/2009/November/09-civ-1253.html

This False Claims Act lawsuit was filed by several former therapists who worked at the Marion residential facility. The suit alleges that defendants provided sub-standard care to adolescents in violation of federal and state Medicaid requirements, falsified records to cover up their serious violations and filed false Medicaid claims. Under the False Claims Act, a health care provider that submits false or fraudulent claims to a federal health care program is liable for three times the government’s damages, plus a civil penalty for each false claim.

For more information:  http://www.justice.gov/opa/pr/2009/November/09-civ-1191.html

The settlement announced today involved allegations that the defendants had entered into financial relationships with several doctors in McAllen in order to induce them to refer patients to the defendants’ hospitals. The government alleged that these payments were disguised through a series of sham contracts, including medical directorships and lease agreements. Under the Stark Statute, Medicare providers are prohibited from billing Medicare for referrals from doctors with whom the providers have a financial relationship, unless that relationship falls within certain exceptions.

The settlement resolves allegations raised against both the parent and the subsidiary in a qui tamor whistleblower lawsuit filed in 2005 by Bruce Moilan, a former employee of the defendants, United States ex rel. Moilan v. McAllen Hospitals, L.P., et al., Case No. M-05-CV-263 (S.D. Tex.).

Violations of the federal Anti-Kickback Statute, 42 U.S.C. Section 1320a-7b(b), have served as the basis for many whistleblower (or “Qui Tam”)  cases under the federal False Claims Act.  The Anti-Kickback Statute, and a number of similar State laws, generally prohibit anyone from offering, paying, soliciting or receiving any remuneration to induce (or reward) a referral of a person for services or items paid for by Medicare, Medicaid, another federal healthcare program.  These improper payments can come in many different forms, including, but not limited to: referral fees; finder’s fees; productivity bonuses; discounted leases; discounted equipment rentals; research grants; speaker’s fees; excessive compensation; and free or discounted travel or entertainment.

For more information: http://www.justice.gov/opa/pr/2009/October/09-civ-1175.html