Archive for October, 2012

New York City Department Of Education Charged With Fraudulently Billing Medicaid In Excess Of $2 Million

Tuesday, October 30th, 2012

A complaint was filed under the Qui Tam Whistleblower Provisions of the Federal False Claims Act alleging that the New York City Department of Education billed Medicaid for Psychological Services given to Special Education students.  The government, specifically the US Attorney for the Eastern District, Loretta E. Lynch, announced that the US Government will intervene in this matter.

The complaint, filed on behalf of the United States government, related to a Medicaid flat fee of $223 for each of the special education students that received a minimum of two psychological counseling sessions per month provided by the Department of Education.  The stipulations of this contract prohibited the Department of Education from receiving funds from Medicaid if an individual student did not receive the minimum of two counseling sessions.

Allegedly, between 2001 and 2004, the Department of Education intentionally billed Medicaid for counseling services which did not meet the session minimum outlined in the contract.  The United States is seeking treble damages, penalties and costs from the Department of Education which are in excess of $2 million.

Weill Cornell Medical College Found To Have Misused Government Funding

Tuesday, October 30th, 2012

On Friday, October 19, after being found guilty by the federal court for misusing government funds intended for HIV/AIDS research granted to the College by the National Institute of Health, Weill Cornell Medical College settled with the government and a whistleblower in the amount of $1.6 million.  A former Cornell research fellow, Dr. Daniel Feldman, brought on allegations in 2003 that the College researchers assigned to the HIV/AIDS research role were in actuality spending less than half of their time studying the topic that they received federal funds for.  Even though the College’s application for the federal grant stated that, “the majority of [the fellows’] clinical work will be with persons with HIV infection,” it turns out that only 3 of the 163 patients that the hospital fellows worked with were HIV-positive.

An appeal was filed by the University in 2010, but was denied in federal appeals court.  The University was then ordered to pay more than $800,000 in damages.  A member of the University made a statement announcing that the University, although displeased with the result, will not appeal the case to the Supreme Court.

Following the case’s 9 long years of litigation, Cornell University paid the government an amount equaling three times the value of the total amount of funds it received.  In addition, the University paid their counsel roughly $740,000.

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Federal False Claims Act Suit Filed Against Bank Of America

Tuesday, October 30th, 2012

A civil suit was filed under the Federal False Claims Act on behalf of the US Government alleging that Bank of America Corporation, the second-biggest United States bank by assets, has burdened the American taxpayers with losses after they tainted the quality of home loans sold to Fannie Mae and Freddie Mac, two of the mortgage-finance firms bailed out by the government in 2008.  The suit was recently filed in a Manhattan federal court seeking a minimum of $1 billion in damages.

This is not the first encounter with the government that Bank of America has recently faced.  Last year alone, the Federal Housing Finance Agency who happens to be the regulator for Fannie Mae and Freddie Mac, sued 18 major banks including Bank of America.  The banks were accused of violating federal securities law and other laws in the sale of residential private-label mortgage-backed securities.

The most recent suit filed against Bank of America alleges that the mortgage company that Bank of America obtained in 2008, Countrywide Financial Corporation, had torn apart the quality control checks put in place to regulate how and when their mortgages were disbursed, sold and insured by Fannie Mae and Freddie Mac.  This in turn, as Mr. Bharara, U.S. attorney for the Southern District of New York, stated, the bank “made disastrously bad loans and stuck taxpayers with the bill…Countrywide and Bank of America systematically removed every check in favor of its own balance—they cast aside underwriters, eliminated quality controls, incentivized unqualified personnel to cut corners, and concealed the resulting defects.”

The recent complaint alleges that in 2007, Countrywide created a new loan origination program called the “Hustle” which eventually forced the default of roughly $1 billion in loans.  The “Hustle” was created to eliminate the quality control checks on loans which then led to the increase in the number of loans issued by Countrywide.  Among other fraudulent actions during this time, Countrywide also ceased the use of mandatory checklists on underwriting directives, removed compliance specialists from the company and redesigned the company’s compensation structure so that it solely benefited the mortgage lenders on loan volume alone.

Along with the False Claims Act, this suit was also brought under a federal statute known as the Financial Institutions Reform, Recovery and Enforcement Act, which was enacted in 1989 following a wave of bank failures triggered by the savings-and-loan crisis.

OIG Targets Part D Coupon Kickbacks, PBM Oversight

Wednesday, October 24th, 2012

Federal officials will investigate this year the safeguards pharmaceutical companies have in place to keep Medicare Part D beneficiaries from using manufacturers’ coupons to pay copayments for their prescriptions, according to a recent report.

The project is one of several new Part D-related initiatives that the Department of Health and Human Service’s Office of Inspector General announced in its fiscal year 2013 Work Plan.  OIG explained that copay coupons encourage beneficiaries to buy more expensive drugs, thus driving up program costs.  The use of such coupons also implicates the federal Anti-Kickback Statute, OIG noted.

The office announced in its Work Plan several other new Part D projects, including one to assess how well plan sponsors are overseeing the work of their Pharmacy Benefits Managers.  Sponsors are responsible for making sure that their PBMs comply with all applicable Part D regulations and policy guidance from the Centers for Medicare & Medicaid Services.

To read more about the OIG’s new Part D projects and the rest of its planned work, please visit:

Marc S. Raspanti Admitted to American College Of Trial Lawyers

Wednesday, October 24th, 2012

RaspantiMMARC S. RASPANTI, partner of Pietragallo Gordon Alfano Bosick & Raspanti, LLP, has become a Fellow of the American College of Trial Lawyers, one of the premier legal associations in America.

The induction ceremony at which Mr. Raspanti became a Fellow took place recently before an audience of approximately 1,070 persons during the recent 2012 Annual Meeting of the College at the Waldorf Astoria Hotel in New York, New York.

Founded in 1950, the College is composed of the best of the trial bar from the United States and Canada. Fellowship in the College is extended by invitation only and only after careful investigation, to those experienced trial lawyers who have mastered the art of advocacy and whose professional careers have been marked by the highest standards of ethical conduct, professionalism, civility and collegiality. Lawyers must have a minimum of fifteen years trial experience before they can be considered for Fellowship.

Membership in the College cannot exceed one percent of the total lawyer population of any state or province. There are currently approximately 5,838 members in the United States and Canada, including active Fellows, Emeritus Fellows, Judicial Fellows (those who ascended to the bench after their induction) and Honorary Fellows. The College strives to improve and elevate the standards of trial practice, the administration of justice and the ethics of the trial profession. Qualified lawyers are called to Fellowship in the College from all branches of trial practice. They are carefully selected from among those who customarily represent plaintiffs in civil cases and those who customarily represent defendants, those who prosecute accused of crime and those who defend them. The College is thus able to speak with a balanced voice on important issues affecting the legal profession and the administration of justice.

Mr. Raspanti has been practicing civil and criminal law in Philadelphia for over 28 years. The newly inducted Fellow is an alumnus of Temple University School of Law.

USDOJ Sues Jacintoport International Alleging False Claims Act Violations

Tuesday, October 23rd, 2012

On October 19, 2012, the United States Department of Justice filed a complaint under the False Claims Act against Jacintoport International LLC in connection with a government contract.  Jacintoport is a cargo handling and stevedoring firm headquartered in Houston, TX.  Jacintoport entered into a contract with the U.S. Agency for International Development (USAID) in 2007 for the storage and redelivery of humanitarian food aid.  The contract placed precise caps on the rates Jacintoport could charge to load humanitarian food aid onto ships which would then be delivered to areas of crisis around the world.

The complaint alleges that for most of 2008 and 2009, Jacintoport regularly surpassed the caps negotiated in the signed contract, resulting in inflated charges to the United States.  In total, it is believed that roughly more than 50 thousand tons of humanitarian food aid is connected to the complaint.

The United States’ complaint was filed in a lawsuit initiated under the qui tam or whisteblower provisions of the False Claims Act by John Raggio, who allegedly received an invoice from Jacintoport that contained the excessive stevedoring charge. The Justice Department’s Civil Division and the U.S. Attorney’s Office for the District of Columbia, with help from the USAID Office of the Inspector General oversaw the investigation of this matter.

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3K in Tips for SEC Whistleblower Office

Monday, October 22nd, 2012

The new Securities and Exchange Commission whistleblower office received almost 3,000 tips in its first year, MarketWatch reported on Thursday.

SEC Commissioner Luis Aguilar told enforcement officials gathered for an event that the whistleblower office, which opened in August 2011, receives an average of eight tips a day, for a total of 2,820 as of Aug. 8, 2012.  The tips have come from the U.S. and 45 foreign countries.

Aguilar also noted the improvement in the quality of information the agency received after implementing a Dodd-Frank program that gives whistleblowers a 10-to-30-percent share of enforcement cases that net a penalty of $1 million or more.

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SEC Targets Informant Retaliation

Thursday, October 18th, 2012

Companies that retaliate against whistleblowers may have to answer to the Securities and Exchange Commission.

Sean McKessy, chief of the SEC’s Whistleblower Office said last week that his office is “actively on the lookout…for some of the more aggressive” treatment of whistleblowers, according to BNA.  McKessy said the SEC is “paying a lot of attention to” employment and severance agreements that might discourage whistleblowers from coming forward.

The agency has legal authority to bring anti-retaliation cases.

Part D Settlement Nets U.S. $5.25M

Thursday, October 18th, 2012

A sponsor of a Medicare prescription-drug plan has agreed to pay the U.S. government $5.25 million to settle claims that it gave the government false information about drug pricing to lure consumers into signing up for its plan.

The settlement, announced this week in New York, is among the first involving claims brought under the False Claims Act for alleged fraud in the Medicare Part D program.

In the underlying case, the government contended that plan sponsor RxAmerica L.L.C. gave the government one list of prices for use in an online tool where participants could compare plans. But when the participants actually signed up with RxAmerica, the government alleged, the company charged them higher prices.  This, the government asserted, pushed beneficiaries more quickly into the so-called “donut hole” and “catastrophic coverage” phases of Part D coverage, causing a loss to both the beneficiaries and Medicare.

RxAmerica admitted no wrongdoing.

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Ex-ICC Prosecutor Targets Foreign Fraud

Wednesday, October 17th, 2012

The former chief prosecutor of the International Criminal Court is teaming with a New York law firm to build a global whistle-blower practice, Reuters reported this week.

Luis Moreno-Ocampo, 60, who left the ICC in June after nine years, will be working with Getnick & Getnick to bring whistle-blower cases that originate in foreign countries.  A provision of the Dodd-Frank Act allows such actions to be tried in U.S. courts so long as there is a basis for jurisdiction.

“I don’t think there will be a global court for (attacking fraud),” Moreno-Ocampo told Reuters.  “That is why the idea to use this law could be a global approach using U.S. judges.”

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