Whistleblower News: DOJ Appeals AseraCare hospice lawsuit & CFTC hits Citibank with $250M fine
WHISTLEBLOWER NEWS QUOTE OF THE DAY:
"The CFTC’s order demonstrates that we will vigorously continue to investigate any efforts to manipulate financial benchmarks, and we will take action where possible to protect the integrity of these benchmarks. The terms of this settlement are intended to reflect all aspects of Citibank’s response to the investigation, including the evolving nature of its cooperation."
— Aitan Goelman, the CFTC’s Director of Enforcement
DAILY WHISTLEBLOWER HEADLINES:
DOJ appeals judge's order tossing out whistleblower lawsuit against AseraCare hospice
The U.S. Department of Justice last week filed a notice that it is appealing a federal judge's order that dismissed a whistleblower lawsuit that claims hospice provider AseraCare fraudulently billed Medicare millions of dollars for patients who were not really on the verge of dying.
The DOJ, which says AseraCare should be on the hook for more than $200 million for overbilling reimbursement, fines and fees, on Friday filed its notice to the U.S. Court of Appeals for the 11th Circuit Court of Appeals.
The DOJ is not only appealing U.S. District Court Judge Karon Bowdre's March 31 order granting summary judgment and dismissing the lawsuit against Aseracare. It is also appealing two earlier orders by Bowdre in the case - the May 20, 2015 order to bifurcate the trial (hold it in two phases) and the order granting of a new trial after a jury in the first phase had found AseraCare filed false claims in 104 of 121 patient cases.
The patient cases represented a sampling of the thousands of hospice patients the company had served during a several year period.
Federal prosecutors had to seek permission from the U.S. Solicitor General in order to appeal the judge's ruling.
The case has been watched by the hospice industry and False Claims Act experts.
Hospice patients must be certified by doctors to be within six months of dying, if their disease runs its normal course, in order to qualify for federal Medicare hospice benefits.
Several lawsuits were filed by former AseraCare workers in Alabama, Wisconsin and Georgia as whistleblowers under the federal False Claims Act. The lawsuits, combined into one action, claims AseraCare submitted false claims for a number of patients, many who stayed in hospice well beyond six months.
The Department of Justice in 2012 intervened in the litigation on the side of the whistleblowers.
During the case, Bowdre decided to bifurcate it into the two phases. In the first phase jurors were only allowed to determine whether each claim was false and in the second phase the jury was to consider the larger issues, such as evidence that nurses and doctors were being pressured with things such as quotas.
DOJ lawyers had fought against the bifurcation, which tied their hands on what information they could present during the first phase.
But after the jury found against AseraCare in the first phase after a two-month trial, Bowdre in October ordered a new trial. She said she believed she had given the jury bad instructions before their deliberations.
Then a month later, on her own and without a motion from either side, Bowdre told DOJ attorneys that she would dismiss the lawsuit altogether if they couldn't come up with more evidence that claims to Medicare by AseraCare were false other than the opinion of the government's expert. read more »
CFTC Orders Citibank to Pay $250 Million for Attempted Manipulation and False Reporting of U.S. Dollar ISDAFIX Benchmark Swap Rates
The U.S. Commodity Futures Trading Commission (CFTC) issued an Order today filing and settling charges against Citibank, N.A. (Citibank or the Bank). The CFTC Order finds that, beginning in January 2007 and continuing through January 2012 (the Relevant Period), Citibank on multiple occasions attempted to manipulate, and made false reports concerning, the U.S. Dollar International Swaps and Derivatives Association Fix (USD ISDAFIX), a global benchmark for interest rate products.
The CFTC Order requires Citibank to pay a $250 million civil monetary penalty and to immediately cease and desist from further violations of the Commodity Exchange Act. Further, Citibank is required take specified steps to implement and strengthen its internal controls and procedures, including measures to detect and deter trading potentially intended to manipulate swap rates such as USD ISDAFIX and to ensure the integrity of interest-rate swap benchmarks.
“The CFTC’s order demonstrates that we will vigorously continue to investigate any efforts to manipulate financial benchmarks, and we will take action where possible to protect the integrity of these benchmarks,” said Aitan Goelman, the CFTC’s Director of Enforcement. Mr. Goelman further commented, “The terms of this settlement are intended to reflect all aspects of Citibank’s response to the investigation, including the evolving nature of its cooperation.”
Citibank, by and through certain of its traders, attempted to manipulate and made false reports concerning USD ISDAFIX by skewing the Bank’s USD ISDAFIX submissions, in the Bank’s role as a panel bank in the USD ISDAFIX setting process, in order to benefit the Bank’s trading positions at the expense of its derivatives counterparties. In addition, Citibank, through its traders, bid, offered, and executed trades in targeted interest rate products, including swap spreads and U.S. Treasuries, in a manner designed – including in timing and pricing – to influence the published USD ISDAFIX to benefit the Bank in its derivatives positions, according to the Order.
As the Order sets forth, Citibank attempted to manipulate USD ISDAFIX by making false USD ISDAFIX submissions. According to the Order, on multiple occasions during the Relevant Period, Citibank, in its role as a panel bank, submitted a rate or spread higher or lower than the reference rates and spreads disseminated to the panel banks on certain days that Citibank had a derivatives position settling or resetting against the USD ISDAFIX benchmark, in an attempt to benefit that derivatives position.
The Order also finds that Citibank, on multiple occasions, attempted to manipulate USD ISDAFIX by bidding, offering, and executing transactions in targeted interest rate products, including swap spreads and U.S. Treasuries at or near the critical 11:00 a.m. fixing with the intent to affect the reference rates and spreads captured in the snapshot sent to submitting banks, and thereby to affect the published USD ISDAFIX. As captured in electronic communications, Citibank traders boasted about “pushing out the isdafixing” or “push[ing]” the market, described USD ISDAFIX as being “suprising[ly] easy to push,” and explained the best way to “influence the set.” read more »
State Farm Gets U.S. High Court Hearing in Katrina Billing Case
The U.S. Supreme Court agreed to hear State Farm Fire and Casualty Co.’s bid to overturn a finding that the insurance company fraudulently overbilled the government for damage from Hurricane Katrina.
The case tests the U.S. False Claims Act, the law that lets whistle-blowers sue on behalf of the federal government and then collect a share of any funds recovered.
State Farm is fighting a lawsuit by two claims adjusters who say the insurer improperly classified hurricane damage from the 2005 storm as having been caused by flooding, rather than by wind, in order to collect federal reimbursement. A federal jury ruled against State Farm in a test case involving a home in Biloxi, Mississippi, and a judge ordered the insurer to pay more than $3 million in damages and attorneys’ fees.
The high court dispute centers on the consequences for violations of the requirement that whistle-blower lawsuits remain under seal for the first 60 days. That requirement is designed to give the federal government time to investigate a claim and decide whether to intervene.
Federal appeals courts around the country are divided on that question. One court says a violation requires dismissal of a complaint, while others say it depends on the circumstances.
Bloomington, Illinois-based State Farm says independent claims adjusters Cori and Kerri Rigsby and their then-lawyer, Dickie Scruggs, undertook a public relations campaign before the seal was lifted. A federal trial judge and an appeals court rejected State Farm’s request to dismiss the case.
The U.S. Chamber of Commerce joined State Farm in arguing for high court review, saying lawsuits under the False Claims Act have soared in recent years.
The Supreme Court’s decision to take up the case came against the advice of the Obama administration, which urged the court to reject the appeal without a hearing. read more »
