OSC set to launch paid whistleblower program in July led by senior regulator

The Ontario Securities Commission will officially launch a rewards-backed whistleblower program July 14, and has named longtime regulator Kelly Gorman as the first Chief of the Office of the Whistleblower.

“The OSC’s Office of the Whistleblower will be the first paid whistleblower program [operated] by a securities regulator in Canada,” said Maureen Jensen, chair and chief executive of the OSC.

“Kelly’s leadership expertise and oversight of several high-profile enforcement initiatives, as well as her accounting background, make her uniquely suited to lead this investigative multi-disciplinary team.”

The whistleblower program will pay compensation of up to $5 million to whistleblowers who come forward with tips that lead to successful enforcement action.

The OSC, Canada’s biggest capital markets regulator, says the program is expected to increase the effectiveness its enforcement efforts by providing access to high quality information about matters such as insider trading, accounting and disclosure violations, and misconduct by those registered with the commission.

The program will provide important protection for whistleblowers, including confidentiality and anti-retaliation provisions, which are expected to be in place by the time of launch.

Gorman, who some observers viewed as a strong candidate to cover the vacant position of director of the OSC’s enforcement branch, joined the regulator in 2002. She was most recently deputy director of enforcement, where she oversaw the development of the whistleblower program.

She also led the implementation of the OSC’s no-contest settlement program and oversaw investigation and litigation teams specializing in securities-related misconduct. read more »

BREAKING: Ex-Warner Chilcott Exec Acquitted In Doctor Bribery Scheme

Former Warner Chilcott president Carl Reichel was acquitted by a federal jury in Boston Friday morning on a charge that he participated in a sweeping scheme to bribe doctors with pricey meals and speaking fees.

The jury deliberated for less than a day to find Reichel was not guilty of the scheme to induce doctors into writing Warner Chilcott prescriptions.

“This was a very well-tried case,” Judge Douglas Woodlock told the jurors after they announced the verdict on the single charge of conspiring to violate the anti-kickback statute at about 11:15 a.m. Borrowing a phrase from Warner Chilcott performance reviews, Judge Woodlock said the case “exceeded expectations.”

Reichel had arrived in the courtroom as soon as it opened at 8:30 a.m. Friday. The defendant sat alone in the nearly empty room, scribbling notes in a yellow legal pad.

Less than three hours later, he was a free man. He hugged his family and his teary-eyed attorneys, then left the courtroom without commenting. His lawyers also declined to comment.

United States Attorney Carmen Ortiz was in the courtroom to hear the verdict, and also left without commenting.

Prosecutors had said Reichel oversaw stunning levels of bribery at Warner Chilcott: 200,000 dinner tabs, $25 million in speaking fees for health care providers, and sailing trips in Rhode Island, all in service, they said, of the company’s bottom line.

The company itself and several witnesses had previously pled guilty.

Reichel was told by several employees that the company’s speaker payments and its medical education events, held at swanky restaurants, broke the law, according to prosecutors. Secret recordings showed that Reichel was in the room as company executives discussed using $100 steak dinners as leverage for prescriptions, which he encouraged, prosecutors said.

Reichel’s attorneys, who presented three witnesses — including one who testified that Reichel told her that legal compliance was more important than sales — had said that the only bribery undertaken at Warner Chilcott was the initiative of rogue employees. The admitted felons took the stand in order to get plea deals, immunity or to settle grudges by pointing the finger at Reichel, his attorneys said.

They also had argued that Reichel believed in good faith that he was not violating the anti-kickback statute, and that no documents could be tied to the pharma division president — hardly enough evidence for a conspiracy, they said. read more »

Supreme Court Preserves Implied Certification Theory in Closely Watched False Claims Act Case

In the much-anticipated ruling on Universal Health Services Inc. v. United States ex rel. Escobar, the United States Supreme Court today held that False Claims Act liability can be predicated on an implied certification theory of liability. The court also clarified the materiality threshold that must be satisfied to pursue actionable claims under this theory, finding that materiality can be established with or without express language in the regulations that it is a condition of payment.

In upholding the theory of implied certification, the court addressed the situation under which a misleading omission could render a claim false or fraudulent, stating that when a defendant “makes representations in submitting a claim but omits its violations of statutory, regulatory, or contractual requirements, those omissions can be a basis for liability if they render the defendant’s representations misleading with respect to the goods or services provided.” The court found that the omission of critical qualifying information—that is, information that would cast doubt on a claimant’s entitlement to payment—can create an actionable misrepresentation.

The court commented that merely submitting request for payment was not sufficient for liability, instead holding that the claim must also make specific representations about the goods or services provided. For example, the court found that when the defendant submitted Medicaid claims using National Provider Identification (NPI) numbers that corresponded to specific job titles, the defendant was representing that its providers met the requirements for these job titles. By failing to disclose that its staff was in violation of state licensing requirements, the defendant’s claims constituted actionable misrepresentations. read more »