Archive for July, 2010

Pinnochio Nose for Former Vincent (Chin) Gigante Supporter

Thursday, July 29th, 2010

Wilfred Van Gorp, widely known for his declaration that Oddfather Vincent (Chin) Gigante was truly crazy, a claim later soundly rejected based on recorded telephone conversations, was found by a Manhattan federal jury, along with Cornell University, to have violated the federal False Claims Act.  According to the claims of the suit, brought by a former student of Dr. Van Gorp, he and Cornell misrepresented how many AIDS patients Cornell was treating in order to obtain money from the NIH to fund research fellowships aimed at studying the effects of and treatment for AIDS.  Van Gorp maintained that the grant money, awarded in 1998, was made before he and Cornell were aware of the effectiveness of new drugs that limited the number of AIDS patients Cornell could find and treat.  However, jurors believed that Van Gorp should have updated disclosures to the NIH clarifying the amount of patients the hospital was treating.

 More information can be found at:

Bank of America Sued Over Failing to Process Re-Finance Applications

Wednesday, July 28th, 2010

A former loan officer for Bank of America has sued the company for taking money from borrowers who were seeking to refinance their mortgages and then failing to follow through by actually processing the applications. Linda Langlois, 58, began working for the Bank in August, 2009, and processed several applications for refinances daily, at $399 per borrower. She became suspicious when the potential borrowers starting calling her months later, checking into the status of their applications, when each application should have taken only 60 to 90 days to process. In many cases, nothing had been done on the applications, and the borrowers, already behind when originally seeking to refinance, were no longer qualified when their credit applications had to be run again. Further, according to Langlois, she and other loan officers were denied commissions to which they were entitled based on their business generation. Langlois’ suit alleges unfair and unlawful lending practices by the Bank, and seeks back wages and employee benefits as a result of her termination.

For more information, see:

Special Education School in California Subject to State Whistleblower Complaint

Wednesday, July 28th, 2010

Universal Health Services, one of the nation’s largest healthcare management companies, is embroiled in a suit pending in Sacramento County, California related to allegations brought by private whistleblowers under California’s False Claims Act that the company bilked the state of public money through special education schools the company owns.   According to the allegations, brought by former employees and a student, UHS-owned schools in California, including UHS Keystone-Sacramento and a former Elmira campus in Solano, allegedly falsified records, charged the state for absent students, understaffed classrooms, and employed uncertified teachers while receiving public education funding.  The plaintiffs’ attorney was quoted as saying: “They were warehousing the kids and not providing sufficient education.  They make a lot of money by charging all this money for educational services. I think it’s a nationwide scam.”

Read more:

 For more information, see:

Maryland Uncovers $26 million in Medicaid Fraud

Monday, July 26th, 2010

Maryland Lieutenant Governer, Anthony Brown, presently campaigning with Martin O’Malley for re-election this fall, announced that the state’s health department has uncovered $26 million in fraud and waste within the state’s Medicaid program for fiscal year 2010. The Maryland Department of Health and Mental Hygiene has recovered fraudulently obtained funds of approximately $100 million since FY 2006, and expects the number to increase beginning in October, when the Maryland False Health Claims Act of 2010, for which Brown lobbied, goes into effect. The State Health Department believes that total recoveries for the year, taking into account the new Act, could reach $46.5 million, a 75% increase over the prior year.

For more information, see


Foreign Corrupt Practices Act Implications of Dodd-Frank Wall Street Reform and Consumer Protection Act

Thursday, July 22nd, 2010

On Wednesday, July 21, 2010, President Barack Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act.  The law provides sweeping new consumer protections in the form of ending certain predatory consumer lending and providing stricter regulatory oversight of consumer credit mortgages.  Further, the new law seeks to halt “over the counter” derivatives and limit banks’ trading for profit.

Another more obscure provision of the bill is a whistleblower provision that provides greater cash incentives to whistleblowers who provide the Securities and Exchange Commission with information that leads to the successful prosecution of securities laws violations.  Specifically, the provision authorizes a minimum award by the SEC of 10% and a maximum of 30% of the recovery of any amount over $1,000,000 that is secured as a result of information provided by the whistleblower, even if some of that information is already widely known.

Some believe that this new provision will have significant impact in the context of the Foreign Corrupt Practices Act, which prohibits companies from engaging in certain practices, including bribery, in foreign countries.  Recent settlements by the SEC with international corporations have demonstrated the possibility of FCPA settlements in the hundreds of millions of dollars.  Whistleblowers contemplating the new SEC whistleblower provisions of the Wall Street Reform Act will have a huge new financial incentive to come forward with allegations of wrongdoing, in both domestic markets and abroad.

See the final text of the bill at

News coverage is available at

Teva Pharmaceuticals Settles for $169 Million for Overpricing Pharmaceutical Products

Thursday, July 22nd, 2010

Teva Pharmaceuticals, the Israeli generic pharmaceutical manufacturer, has settled, for $169 million, claims pending against it in Texas, California and Florida related to overpricing of its pharmaceutical products.  Under the scheme, Teva had provided the drugs at issue to private pharmacies including Walgreens and Wal-Mart at steeply discounted rates, but reported higher prices to the states’ Medicaid programs.  When Medicaid recipients were dispensed Teva products from the various pharmacies, the states reimbursed the pharmacies at higher rates than the pharmacies had actually paid, thus costing the taxpayers of those states significant unnecessary extra tax burden.  Under the settlement, Teva does not admit liability.  Texas will receive $51 million and Florida will receive $27 million.  Additionally, the federal government and the State of California will divvy up the remaining $90 million contemplated by the settlement.  Several other defendants remain as defendants to the lawsuits.

For more information, see the Texas Attorney General’s Press Release, available at,

and the Florida Attorney General’s Press Release, available at

Sodexo Agrees to Settle Overcharging New York Food Service Clients for $20 Million

Thursday, July 22nd, 2010

Sodexo, the world’s largest private food purchaser, has agreed to settle claims that it overcharged New York state school districts and the State University of New York from 2004 until 2009.  For $20 million, Sodexo will settle the claims of 21 public school districts and SUNY that Sodexo failed to pass along rebates it received from the suppliers of the food and equipment.  Under the contracts with the various entities and under federal and state laws, Sodexo was required to acknowledge or pass on the rebates. The settlement is the largest under the New York State False Claims Act that does not involve Medicaid Funds.

For more information, see

Elan Pharmaceuticals Agrees to Settle Claims Related to Marketing of Zonegran for $203 Million

Thursday, July 22nd, 2010

Elan Corporation, plc, of Dublin, Ireland has agreed to settle claims related to the marketing of Zonegran, an anti-epileptic drug for which it sold the rights to a Japanese company in 2004. In January of 2006, Elan admitted that the the DOJ and the Department of Health and Human Services were looking into its marketing practices, but has since declined to elaborate. The product was approved for use in the United States in 2000. Under the agreement, reached with the United States Attorney for the District of Massachusetts, Elan will resolve all federal and state-based claims for $203.5 million. Elan Pharmaceuticals, Inc., a U.S.-based subsidiary, will plead guilty to a misdemeanor.

For more information see

President Obama Signs Financial Reform Into Law

Wednesday, July 21st, 2010

Today, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law. This sweeping legislation will impact fraud enforcement and whistleblower cases. We will be posting more information about the new law in the days to come.

See also

National Cardio Labs LLC Pays $3.6 Million Settlement

Wednesday, July 14th, 2010

Orange County, California-based National Cardio Labs LLC has finalized a settlement with the government to pay $3.6 million to resolve allegations that the company knowingly submitted false claims for heart monitoring services. From January 1998 through February 2004, National Cardio allegedly billed Medicare, TRICARE, and the Federal Employee Health Benefits Program for event monitoring services, physician services, 24-hour cardiac attended monitoring, electrocardiograms, and nerve conduction tests that it never performed. The lawsuit also alleged unbundling of services, procedures, and supplies to obtain excessive reimbursement. This whistleblower case was filed not just against National Cardio Labs, but also against its manager, Adrienne Stanman, and her husband, Robert Parsons. Earlier this year, the United States Attorney’s Office settled similar allegations with Robert Parson’s brother, Matthew, and his sister-in-law, Rebecca Eaton Parsons, who operated Cardiac Monitoring Services, LLC and Cardiac Research LLC. As a result of these cases, the government has recovered a total of $6,367,823. Robert and Matthew Parsons both pleaded guilty in 2006 to federal health care fraud and were sentenced to one year in prison.

For more information, see  and