A Whistle-Blower Tells of Health Insurers Bilking Medicare

When Medicare was facing an impossible $13 trillion funding gap, Congress opted for a bold fix: It handed over part of the program to insurance companies, expecting them to provide better care at a lower cost. The new program was named Medicare Advantage.

Nearly 15 years later, a third of all Americans who receive some form of Medicare have chosen the insurer-provided version, which, by most accounts, has been a success.

But now a whistle-blower, a former well-placed official at UnitedHealth Group, asserts that the big insurance companies have been systematically bilking Medicare Advantage for years, reaping billions of taxpayer dollars from the program by gaming the payment system.

The Justice Department takes the whistle-blower’s claims so seriously that it has said it intends to sue the whistle-blower’s former employer, UnitedHealth Group, even as it investigates other Medicare Advantage participants. The agency has until the end of Tuesday to take action against UnitedHealth. read more »

Hyundai Whistle-Blower, in Rarity for South Korea, Prompts Recall

Kim Gwang-ho, an automotive engineer, did something last year that many South Koreans saw as an act of betrayal: He became a whistle-blower.

Mr. Kim was then a 25-year veteran of Hyundai Motor Group, one of South Korea’s most successful companies and an icon of its industrial might. But he believed Hyundai was hiding dangerous defects from the public and the authorities, and he sent a batch of internal Hyundai documents to officials in South Korea and the United States to prove his allegations.

“If someone higher-ranked than you says you do it, you do it, no questions asked,” Mr. Kim, 55, said in an April interview, echoing critics who say South Korea suffers from a rigid hierarchical corporate culture. His eyes showed signs of fatigue that he attributed to months of publicly clashing with Hyundai. “If you talk back to a boss frankly, you’ll get fired,” he said.

Hyundai, which fired Mr. Kim, disputes his allegations. But on Friday, the government ordered Hyundai to recall 240,000 vehicles in South Korea and said that it would refer accusations that it hid defects to prosecutors. The government cited manufacturing issues brought to its attention by an insider it did not identify, but Hyundai, government officials, the local news media and Mr. Kim have all said that he is that insider. read more »

Cyber attack could spark lawsuits but not against Microsoft

Businesses that failed to update Microsoft Windows-based computer systems that were hit by a massive cyber attack over the weekend could be sued over their lax cyber security, but Microsoft Corp itself enjoys strong protection from lawsuits, legal experts said.

The WannaCry worm has affected more than 200,000 Windows computers around the world since Friday, disrupting car factories, global shipper FedEx Corp and Britain's National Health Service, among others. The hacking tool spreads silently between computers, shutting them down by encrypting data and then demanding a ransom of $300 to unlock them.

According to Microsoft, computers affected by the so-called "ransomware" did not have security patches for various Windows versions installed or were running Windows XP, which the company no longer supports.

"Using outdated versions of Windows that are no longer supported raises a lot of questions," said Christopher Dore, a lawyer specializing in digital privacy law at Edelson PC. "It would arguably be knowingly negligent to let those systems stay in place.” read more »

Corruption Is Costly — and Pervasive

Companies appear to be waking up to corruption’s pervasiveness. According to the 5th Annual Anticorruption Survey by AlixPartners, more executives appear to be taking action (1) when dishonest behavior by those in positions of power is exposed and (2) beforehand, by establishing practices to prevent bribery and other malfeasance from happening in the first place.

Forty-two percent of the corporate counsel, legal, and compliance officers surveyed by AlixPartners last fall say they have stopped doing business with certain partners due to corruption risk, up from 32% in 2015. Thirty-one percent lost business due to corruption risk, up from 23% the year before, and 37% pulled out of or delayed an acquisition due to corruption risk, compared with 36% in 2015.

Executives in the AlixPartners survey also indicate that it is becoming tougher for their companies to steer clear of potential corruption. About two-thirds (67%) of respondents believe there are some geographies where it is impossible to avoid corrupt business practices: Russia (35% of respondents), the continent of Africa (33%), and China (27%) top the list. In Russia and Africa in particular, CFOs shouldn’t expect the situation to change anytime soon: Africa has the worst anticorruption laws, according to 81% of respondents, followed closely by Russia (73% of respondents). read more »

Supreme Court May Weigh Big Weapon for U.S. Companies Sued Abroad

A $9.5 billion pollution lawsuit against Chevron could clarify the reach of racketeering law.

Can U.S. companies use the federal racketeering law to fend off costly foreign court judgments? For Chevron Corp., the answer was yes—and that saved the oil and gas giant $9.5 billion. Now the Supreme Court will decide whether to hear an appeal by Chevron antagonists, who argue that the company pulled a fast one.

The federal appeals court in New York ruled last August that Chevron, and indeed, any American corporation facing an expensive judgment abroad, may come home and use the civil provisions of the Racketeer Influenced and Corrupt Organizations Act (RICO) as a weapon to go after the lawyers on the other side. The losers in that clash—impoverished Ecuadorian villagers and their New York-based attorney, Steven Donziger—are asking the justices to forbid this use of RICO as unwise and unfair. Chevron, naturally, wants the high court to stay out of it. The justices are expected to announce their intentions in the coming weeks. read more »

New York county sues Purdue, J&J over opioid marketing

A county in New York state has sued Purdue Pharma LP, Johnson & Johnson and other drugmakers, accusing them of engaging in fraudulent marketing that played down the risks of prescription opioid painkillers, leading to a drug epidemic.

The lawsuit, which also named units of Teva Pharmaceutical Industries Ltd and Endo International Plc as defendants, was announced on Monday by Orange County, New York, which is located in the southeastern part of the state.

The case, filed in a New York state court on Thursday, is the latest lawsuit by local and state governments seeking to hold drugmakers accountable for a national opioid epidemic. read more »