Archive for November, 2012

Obama To Whistleblowers: I’ve got your back!

Friday, November 30th, 2012

On November 27, 2012, President Obama signed the Whistleblower Protection and Enhancement Act, a bill which supporters had been attempting to get passed for more than a decade.  The statute increases the protections already in place for federal employees who witness waste, fraud or abuse within the federal government.  Among its components, the law:  a) lowers the standard of proof whistleblowers must meet in order to receive protection; b) closes loopholes in the original 1989 Whistleblower Protection Act; c) makes it easier for the Office of Special Counsel, which is the federal agency in charge of protecting whistleblowers, to discipline employers or agencies who retaliate against whistleblowers and d) allows certain whistleblowers who have a successful case to recover compensatory damages. The compensation provided under the Whistleblower Protection and Enhancement Act is different from the monetary awards that can be received by whistleblowers in the private sector. 

Some advocates view the adoption of this law as a change in the Obama administration’s attitude towards whistleblowers.  These advocates had been angered by the administration’s past stance against whistleblowers and its decision to prosecute individuals under the Espionage Act.  The Government Accountability Project has indicated that President Obama restored a large portion of the bill protecting national security whistleblowers. According to the Project’s legal director, Tom Devine, “[m]ost Presidents have offered lip service for whistleblower rights, but President Obama fought to give them more teeth.” 

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Health Care Providers Agree To Pay Over $900,000 To Settle False Claims Allegations

Friday, November 30th, 2012

The United States Department of Justice has announced that Baylor University Medical Center, Baylor Health Care System and HealthTexas Provider Network (collectively referred to as “Baylor”) have agreed to pay $907,355 to revolve charges that they submitted false claims to Medicare, the Civilian Health and Medical Program of the Uniformed Services and the Federal Employees Health Benefit Program.  The government claimed that between 2006 and May 2010, Baylor double billed Medicare for several procedures relating to radiation treatment plans; billed for certain high reimbursement radiation oncology services when a different, less expensive service should have been used; billed for procedures without supporting documentation in the medical record and improperly billed for radiation treatment delivery without corroboration of physician supervision.  Principal Deputy Attorney General for the Justice Department’s Civil Division, Stuart F. Delery, stated, “[p]hysicians who participate in Medicare must bill for their services accurately and honestly” and that “[t]he Department of Justice is committed to ensuring that federal health care funds are spent appropriately.”  The settlement only represented a resolution of the claims which had been brought against Baylor and there was no determination of liability. 

This case was a part of the government’s emphasis on combating health care fraud and involved the Health Care Fraud Prevention and Enforcement Action Team which is a partnership between the United States Department of Justice and the United States Department of Health and Human Services.  The Team focuses on reducing and preventing Medicare and Medicaid financial fraud. 

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Case Involving Alleged Submission Of False Claims For The Provision Of Hospice Care Results In $1.286 Million Settlement

Friday, November 30th, 2012

Hospices provide individuals who decide not to seek a cure for their medical conditions with treatments aimed at reducing the severity of their symptoms.  Medicare beneficiaries are entitled to receive hospice care if they have been diagnosed with six months or less to live.  The United States claimed that South Carolina-based Harmony Care Hospice, Inc. and its owner and CEO, Daniel J. Burton, had knowingly submitted or caused to be submitted claims to Medicare seeking payment for care given to patients who did not have this prognosis.   

Harmony and Mr. Burton have agreed to pay $1,286,999.32 to settle the allegations against them.  Mr. Burton will be required to pay $200,000 of this amount himself.  Two former Harmony employees, Mona Singletary and Lynda Fulton, who filed a whistleblower suit against the company, will receive a total of $244,529.87 as their share of the government’s recovery. 

In addition to the monetary payment, Harmony and Mr. Burton will enter a Corporate Integrity Agreement with the Office of Inspector General, Department of Health and Human Services, to address the allegations which were made in the lawsuit.  Daniel R. Levinson, the Inspector General of the United States Department of Health and Human Services, stated, “[a]s budget pressures increase it is more important than ever to protect Medicare dollars and vigilantly guard against needless health spending” and that Harmony and Mr. Burton “…have agreed to Federal monitoring and reporting requirements designed to avoid such problems in the future.” 

The claims against Harmony and Mr. Burton were settled without a determination of liability. 

This case is an outgrowth of the government’s emphasis on combating health care fraud and part of the Health Care Fraud Prevention and Enforcement Action Team.  This team represents a partnership between the United States Departments of Justice and Health and Human Services and focuses on reducing and preventing Medicare and Medicaid financial fraud through enhanced cooperation between the agencies.  Since January of 2009, the Justice Department has recovered $10.1 billion under the False Claims Act in cases involving fraud against federal health care programs.

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Allegations Made That For Profit Education Company Inflated Job Placement Rates

Friday, November 30th, 2012

Jason Sobek, a former admissions supervisor at Education Management Corporation (“EDMC”), the country’s second-largest operator of for-profit colleges, has filed a lawsuit charging that EDMC’s marketing materials deceived prospective students by falsely inflating job placement statistics.  In an interview with ABC News, Mr. Sobek stated that in developing these statistics, EDMC included students working in jobs which did not require the degree that they had obtained from the educational institution.  According to Mr. Sobek, information he obtained from the company prior to his departure, demonstrates a pattern of counting students as landing great jobs to create a false impression for future students.  For instance, he contends that EDMC claimed that a fashion marketing graduate, an accounting major and a business graduate were placed in jobs related to their degrees while the company’s data showed that these individuals were, respectively, selling shoes, a cashier at a fast food restaurant and a janitor. 

Sarah Fisher, a graduate of EDMC’s business management program at Brown Mackie College in South Bend, Indiana, stated that she believes the company made false promises to her when she was told that she would be earning $35,000 to $40,000 per year.  Brown Mackie also apparently claimed that Ms. Fisher’s job at Walmart was related to her business management degree even though she obtained that position before she graduated.  According to Ms. Fisher, she, not Brown Mackie, placed herself in that job.  Ms. Fisher stated that prospective employers do not take her degree seriously and that the school had no right to claim to prospective students that her employment at Walmart was a placement success. She also stated that she is in debt for a degree she can’t use.   

EDMC has stated that it believes Mr. Sobek’s claims to be wholly without merit and that Mr. Sobek was not employed in a career services role while with the company.  EDMC also stated that for more than 40 years, its schools have adhered to the highest ethical standards. 

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IRS Says No Reward For Publicly Available Information

Friday, November 30th, 2012

Recent changes to the IRS Whistleblower program are intended to encourage taxpayers to expose tax fraud.   The ruling in a recent case, however, revealed the intent of both the IRS and the TAX Court to adhere to existing law.  In the matter of Cohen v. Commissioner of Internal Revenue  139 T.C. No. 12 , a CPA  alleged that a public corporation routinely held the proceeds from un-cashed stock dividend checks and unredeemed bonds issued by the corporation.  Plaintiff further alleged that these unclaimed assets represented unreported income for federal income tax purposes and that the corporation was required to transfer these assets to the state.  The CPA asserted that pleadings from a civil proceeding against the corporation corroborated his allegations.  

The IRS Whistleblower Office decided that since the CPA’s claims were based on publicly available information and no proceeds were collected, plaintiff was not entitled to an award.  The Tax Court confirmed the IRS’ decision.  In its opinion, the Tax Court stated that “… Congress has charged the Commissioner with resolving these claims and has not provided any remedies until after an administrative or judicial action and the collection of proceeds.

Pfizer To Plead Guilty In Rapamune Settlement

Tuesday, November 27th, 2012

Pfizer Inc.’s Wyeth Unit plans to plead guilty to a misdemeanor “misbranding” offense under federal law as part of a $491 million settlement of a government investigation of the company’s promotion of the organ-transplant drug Rapamune.  The DOJ has been investigating allegation that Wyeth promoted Rapmune for unauthorized uses and paid kickbacks to doctors.  Under the agreement-in-principle with the DOJ, Pfizer will pay $257 million to resolve the civil allegations and $234 million to resolve the criminal allegations regarding Rapamune.

Pfizer also disclosed that in August 2012, its Wyeth unit agreed to settle a separate government investigation surrounding the promotional practices for its heartburn drug, Protonix.  Wyeth will pay $55 million, plus interest,  in civil disgorgement to the U.S. Federal Food, Drug and Cosmetic Act, but will not admit to any wrongdoing.

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Michael A. Morse Presented At The Thirteenth Annual Pharmaceutical Regulatory And Compliance Congress And Best Practices Forum

Wednesday, November 7th, 2012

MorseMPHILADELPHIA, PA – Michael A. Morse, a partner in the law firm of Pietragallo Gordon Alfano Bosick and Raspanti, LLP, presented at the Thirteenth Annual Pharmaceutical Regulatory and Compliance Congress and Best Practices Forum in Washington, DC on November 6, 2012.  The Compliance Congress is sponsored by the Pharmaceutical Compliance Forum, a coalition of senior compliance professionals and legal counsel from more than 50 of the largest research-based pharmaceutical manufacturers.

Mr. Morse participated in a plenary panel entitled, “Leading Qui Tam Counsel.”  The panel discussed qui tam whistleblower litigation under the federal False Claims Act and analogous state whistleblower laws.  Mr. Morse discussed emerging trends in whistleblower cases in the pharmaceutical industry, and his experience representing whistleblowers in pharmaceutical fraud cases across the United States.

Mr. Morse is a former prosecutor who has developed a nationwide practice representing whistleblowers under federal and state false claims acts.  Mr. Morse serves as the chair of the Federal and State Whistleblower (Qui Tam) Litigation Practice Group. He has represented whistleblowers in some of the most ground-breaking false claims cases in the country, resulting in hundreds of millions of dollars in recoveries for federal and state taxpayers.  Since 1986, more than $33 Billion has been recovered under the False Claims Act. 

Mr. Morse has been selected as a Pennsylvania Super Lawyers Rising Star for 2005 through 2008 and 2010 through 2012 in the area of White Collar Criminal Defense.  He has also been selected by The Legal Intelligencer as a Lawyer on the Fast Track for 2010.

Mr. Morse received his B.A. from the University of Michigan and his J.D. from Emory University Law School.

Pietragallo Gordon Alfano Bosick & Raspanti, LLP is an 85+ attorney regional business and litigation law firm with a national client base.  In addition to its Pittsburgh and Philadelphia offices, the firm has offices in Sharon, Pennsylvania; Steubenville, Ohio; and Weirton, West Virginia.

Pharmaceutical Giant To Pay Texas $19.9 Million

Tuesday, November 6th, 2012

The Swiss-based pharmaceutical giant Novartis will pay Texas $19.9 million to settle allegations that it violated the False Claims Act.  The whistleblower in this case, Donald Galmines, is a former Novartis marketing representative. Galmines’s suit alleges that the pharmaceutical manufacturer falsely marketed its drug, Elidel, which has been approved by the FDA for use on patients ages two and up who suffer from eczema and who were not seeing results from the “first-line” treatment options. 

The off-label, misleading marketing suspected by Novartis was that they promoted the drug to be used by children younger than two years of age even though this was not proven safe and effective by the FDA.  Novartis was also allegedly paying kickbacks to medical professionals to encourage them to prescribe Elidel.

Galmines originally filed the suit in Pennsylvania, however the DOJ elected not to intervene.  Galmines then decided to proceed with the case on behalf of the United States and five other states.

If a settlement is reached, the whistleblower, Galmines, will be paid between 15 and 25 percent.

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Boehringer Ingelheim Settles False Claims Act Allegations

Tuesday, November 6th, 2012

Boehringer Ingelheim Pharmaceuticals Inc., a Connecticut based pharmaceutical manufacturer, has reached an agreement with the US Government to pay $95 million to resolve allegations relating to the unlawful marketing of three different drugs.

Aggrenox, a stroke-prevention drug, Combivent, a COPD drug and Micardis, a hypertension drug, were all involved in the settlement which alleged that Boehringer improperly marketed these drugs thus causing false claims to be submitted to the government’s health care programs.  According to the allegations, the pharmaceutical manufacturer was marketing or promoting these specific drugs for uses that were not medically accepted and were not approved by the FDA, and were therefore not covered by federal health care programs.

In addition to resolving the allegations that Boehringer deliberately marketed these drugs improperly, it was also found that they promoted the sale and use of the COPD drugs at doses that were well above the amount that would be covered by federal health care programs.  Also, the company was found to have been making unproven claims that its drug, Aggrenox, was superior to Plavix.  Lastly, the company was alleged to have been paying kickbacks to health care professionals so that they would prescribe Boehringer’s drugs.

As a result of the $95 million settlement, the federal government will acquire $78,455,048, and state Medicaid programs will obtain $16,544,952.  The settlement was filed in the District of Maryland under the Federal False Claims Act and the whistleblower in this case, Mr. Heiden, will receive $17 million.

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No Low Price Guarantee for Uncle Sam

Tuesday, November 6th, 2012

A whistleblower suit alleging that office supply giant, Office Depot, was fraudulently overcharging the government for supplies such as pens, ink, furniture and other miscellaneous goods was unsealed late last month.  The case claims that the company overcharged government agencies in San Diego County and throughout California under a series of office supply contracts.  The case was filed under seal in March 2009 in Los Angeles Superior Court.

Office Depot declines the allegations that it overcharged any agency, and claims that they had fairly bid and won the contracts by offering prices lower than its competitors.  The lawsuit also alleges that Office Depot intentionally failed to fulfill lowest-price guarantees and switched some customers to an alternate pricing option without alerting the customer that he alternative pricing will most likely end up costing them more.

Allegations of overpayments made to Office Depot are certainly not new.  Since 2008, Office Depot has been fighting allegations it overcharged its customers.  In settling disputes elsewhere, the company has never admitted wrongdoing.  It says it issued settlements, refunds or courtesy payments in order to ensure the satisfaction of customers.

Ex Office Depot employee David Sherwin was the whistleblower in this case.  Sherwin handled government contracts at Office Depot and allegedly made it known to company executives during his tenure that there were discrepancies in the way they were billing the government agencies.  Sherwin stands to receive a percentage of damages under the qui tam action, possibly more than 33 percent depending on several factors, including any involvement he may have had in overcharges.

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