Archive for July, 2012

J&J May Pay Criminal Fine As Part Of Risperdal Marketing Settlement

Monday, July 30th, 2012

The Wall Street Journal reports that pharmaceutical giant, Johnson & Johnson, may pay up to $2.2 billion to settle claims for its Risperdal marketing practices, and the settlement may include a criminal fine of approximately $400 million.  The settlement would allow Johnson & Johnson to continue to sell its products to government programs.  The final sum of the settlement depends on the states that choose to join the settlement.  The claims against Johnson & Johnson stem from its off-label marketing of the anti-psychotic drug.  The deal also settles claims against J&J for other drugs, including Invega, a drug approved for treating mental illness, and its heart failure drug, Natrecor.  The settlement also closes an investigation into kickbacks J&J allegedly made to nursing home [pharmacy operator, Omnicare.

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Dartmouth Hitchcock Clinic Settles Second Investigation In The Last Two Years For Improper Billing Practices

Monday, July 30th, 2012

The Dartmouth Hitchcock Clinic, which serves northern New England residents, has paid over $500,000 to settle claims that six of its neurologists overbilled Medicare and Medicaid.  The investigation started with Dartmouth-Hitchcock’s self-disclosure of billing improprieties related to one physician in 2009.  The Vermont US Attorney commented that the claims, under the False Claims Act, were based on reckless conduct  for submitting the claims to the US government for payment.  Dartmouth-Hitchcock was advised to improve its compliance programs to avoid subsequent claims. 

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Union Welfare Fund Settles Action For False Claims For Charging Higher Insurance Premiums

Monday, July 30th, 2012

The US Attorney for the Southern District of New York settled false claims against the Local 95 Head Start Employees Welfare Fund for charging a Head Start program more for medical insurance than it had paid for the insurance.  The fund administered medical insurance for employees working for agencies that maintain Head Start programs.  The Union fund agreed to pay $5 million to settle the claims and, as part of the settlement, acknowledged that it overbilled the government for the insurance. 

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9th Circuit Says $27M Whistle-Blower Award is Taxed as Ordinary Income

Thursday, July 26th, 2012

James Alderson, a former chief financial officer for a Montana hospital, received a $27 million benefit by blowing the whistle on his former employer’s accounting fraud.

A federal appeals court ruled that the reward, since filing the qui tam suit under the Federal False Claims Act, is taxed as ordinary income and not under the lower capital gains tax rate.

The San Francisco-based 9th U.S. Circuit Court of Appeals held that the bounty Alderson received after he persuaded the feds to intervene in his case against HCA Healthcare and a $631 million settlement resulted, wasn’t a payment for the sale of property, to which capital gains tax typically does apply.

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SEC Has Up To $452 Million To Hand Out To Whistleblowers

Monday, July 9th, 2012

According to a recent report, the Securities and Exchange Commission (SEC) has amassed $452 million to be paid out to whistleblowers across the country.

The cash is part of the SEC’s whistleblower program, which celebrated its first anniversary this week.  The $452 million represents the whistleblowers’ share, which can range from 10% – 30% of what the government recovers.

Payments to whistleblowers have yet to be made under the SEC Whistleblower Program.

Please see our previous post regarding when the first payments are expected to be made:

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NextCare Inc. To Pay $10 Million To Resolve False Claims Act Allegations

Monday, July 9th, 2012

An Arizona-based company, NextCare Inc., has agreed to pay the United States $10 million to settle federal and state allegations that it submitted false claims.  NextCare is an owner of a chain of urgent care facilities with locations in Arizona, Colorado, Texas, North Carolina, Ohio, and Virginia.

NextCare Inc. submitted false claims to Medicare, TRICARE, and the Federal Employees Health Benefits Program, as well as the Medicaid programs of Colorado, Virginia, Texas, North Carolina, and Arizona, by billing for unnecessary allergy, H1N1 virus, and respiratory panel testing.  It was also alleged that the company inflated billings for urgent care medical services in the years under review, a practice known as upcoding.

Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina, noted that, “Today’s $10 million settlement with NextCare demonstrates our commitment to putting a stop to improper billings practices that exploit Medicare and drain vital resources from our health care system.  NextCare’s upcoding and unnecessary medical testing wasted taxpayers’ dollars.  This is a strong message to companies and individuals who engage in such conduct.  We are here, we are watching, and we will use all of our resources to safeguard the integrity of important public programs and protect consumers across the nation.”

The allegations resolved by the settlement were initially raised in a lawsuit filed against NextCare by former NextCare employee Lorin Cohen.  Ms. Cohen will receive $1.614 million as her share of the recovery.

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For more information on the North Carolina False Claims Act, please see:

For more information on the Federal and State False Claims Act, please see:

The Tar Heel State Steps Up Its Fight Against Fraud

Monday, July 9th, 2012

Pietragallo Gordon Alfano Bosick & Raspanti, LLP attorneys, Marc S. Raspanti and Pamela C. Brecht had their article “The Tar Heel State Steps Up Its Fight Against Fraud,” published in The Legal Intelligencer on June 26 and June 27, 2012. 

The article discusses the North Carolina False Claims Act and the powerful weapon that North Carolinians have to combat fraud against their tax dollars.

To see the article, please visit:
Part I –

Part II –

To find out more about the Federal and State False Claims Acts, please visit:

The FY 2011 IRS Whistleblower Office Report Is Out

Monday, July 9th, 2012

The FY 2011 IRS Whistleblower Office report is out and can be read here:

GlaxoSmithKline To Pay $3 Billion In Largest U.S. Healthcare Fraud Settlement

Thursday, July 5th, 2012

PILLSThe Justice Department announced on Monday, July 2, 2012 that GlaxoSmithKline has agreed to pay $3 billion in settlements and to plead guilty to criminal charges related to its branding, safety disclosures and price reporting of several drugs.  This is the largest fraud settlement in U.S. history to date.

GlaxoSmithKline will pay $1.8 billion to resolve criminal and civil liabilities for off-label marketing, including $757 million in criminal fines for misbranding antidepressants Paxil and Wellbutrin, and more than $1 billion for alleged False Claims Act violations related to payments of kickbacks for those and other drugs.

The company will also pay a $243 million fine for failing to report safety data to the Food and Drug Administration regarding the diabetes drug Avandia.  In addition, the company will pay $657 million to resolve allegations about statements it made regarding Avandia safety and efficacy and $300 million for allegedly failing to report its best prices for certain drugs to Medicaid, according to Stuart Delery, acting assistant attorney general.

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New Jersey Hospital Owes $8,999,999

Thursday, July 5th, 2012

The Department of Justice announced that the United States Government will receive $8,999,999 from AHS Hospital Corp., Atlantic Health System Inc., and Overlook Hospital, located in New Jersey to resolve False Claims Act allegations.  The hospital falsely overbilled Medicare for patients that were considered outpatient or observation patients.  The case was filed by former employees of Overlook Hospital and the settlement of $8,999,999, only partially resolves the FCA case, U.S. ex rel. Doe et al. v. AHS Hospital Corp., et al., Civ. No. 08-2042 (D.N.J.).

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