WHISTLEBLOWER NEWS QUOTES OF THE DAY:

“Contractors are expected to deal fairly with federal agencies when receiving taxpayer funds,… As this settlement demonstrates, we will take action against those who knowingly fail to live up to the terms of their government contracts.”
 
— Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division
 

“American taxpayers deserve fair deals and prices from GSA contractors,…I appreciate the hard work and dedication that led to this significant recovery”
 
— GSA Inspector General Carol Fortine Ochoa
 

“Pharmaceutical companies have a responsibility to provide accurate information to patients and health care providers about their prescription drugs. The Department of Justice will hold those companies accountable that mislead the public about the efficacy of their products.”

— Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division
 

“This settlement demonstrates the government’s unwavering commitment to pursue violations of the False Claims Act and recover taxpayer dollars spent as a result of misleading marketing campaigns”

— U.S. Attorney Brian Stretch for the Northern District of California
 

“Pharmaceutical companies that make misleading or unsubstantiated statements about their products can put patients at risk. The FDA will continue to work to protect the public's health by ensuring that companies do not mislead healthcare providers about their products.”

— Deputy Commissioner Howard R. Sklamberg for FDA’s global regulatory operations and policy
 

“Drug manufacturers that make misleading claims about their product’s effectiveness can jeopardize the health of patients – in this case, cancer patients. Our agency will continue to protect both patients and taxpayers by holding those who engage in such practices accountable for their actions.”

— Special Agent in Charge Steven J. Ryan for the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG)

DAILY WHISTLEBLOWER HEADLINES:

Supreme Court issues orders, adding a False Claims Act case to its merits docket for next Term

Since the death of Justice Antonin Scalia on February 13, the Court has granted review in only eight cases.  Today’s announcement that the Justices would take on State Farm Fire & Casualty Co. v. United States ex rel. Rigsby means that the Court now has thirteen cases for its next Term, which begins in October.
 
The case has its roots in the devastation that followed Hurricane Katrina.  Sisters Cori and Kerri Rigsby were working as claims adjusters for a company that provided services to insurance giant State Farm.  The Rigsbys contend that State Farm fraudulently attributed damage to homes caused by high winds – which State Farm would have to cover – to flooding, which the federal government would cover instead under its National Flood Insurance Program.

They filed a lawsuit in federal court under the False Claims Act, a Civil-War-era law enacted to combat fraud against the federal government.  To encourage whistleblowers to report fraud, it allows a private citizen to bring a lawsuit on the government’s behalf; if the suit succeeds, the whistleblower can receive a share of the money that the government recovers. read more »

Social Security officials not answering questions about whistleblower retaliation

As more and more whistleblowers step forward, the troubled Social Security Administration is clamming up.

The Senate Homeland Security and Governmental Affairs Committee in recent weeks has taken in a “lot of information,” a source close to the situation said. The committee has received complaints from several employees at the SSA’s Office of Disability Adjudication and Review since Wisconsin Watchdog first broke the story in early May about incompetence, misconduct and retaliation in the agency’s offices, the source said.

While SSA officials have provided committee staff members with a briefing on the million-plus case backlog in the disability claim system, they have gone silent when asked about retaliation, the source said.

Instead, the SSA is citing the Privacy Act, insisting it cannot disclose information to Congress unless the whistleblower signs a waiver or the chairman of the committee — in this case Sen. Ron Johnson, R-Oshkosh — signs on. 

Oracle Whistleblower Suit Raises Questions Over Cloud Accounting

A whistleblower lawsuit filed against Oracle over its accounting practices underscores the pressures established computer companies face to show that they are growing in the fast-moving business known as the cloud.

The lawsuit, filed on Wednesday in U.S. District Court in San Francisco by former Oracle senior finance manager Svetlana Blackburn, also revives longstanding questions about proper accounting when software and computer services are bought on a subscription basis rather than as a single package, analysts said.

Those questions are becoming more urgent as companies including Oracle, IBM, Microsoft and SAP race to transform their businesses for an era in which customers no longer own and operate their own information technology systems and instead lease computing services and software from cloud vendors using vast data centers.

Blackburn's lawsuit accuses Oracle management of pushing her to "fit square data into round holes" to make Oracle's cloud services' results look better. She alleges that her bosses instructed her to add millions of dollars of accruals for expected business "with no concrete or foreseeable billing to support the numbers." read more » 

Jazz Pharmaceuticals Discloses DOJ Subpoena on Patient Assistance Program

Jazz Pharmaceuticals recently revealed, in a filing with the Securities and Exchange Commission, that it received a documents subpoena from the United States Attorney's Office for the District of Massachusetts. The subpoena requested documents related to Jazz' support of 501(c)(3) organizations that provide financial assistance to Medicare patients.

Jazz also received requests about documentation about the provision of financial assistance to Medicare patients who receive the prescription Xyrem, a narcolepsy drug and Jazz' top-selling product.

The patient assistance programs at issue in Jazz' case involved a free product voucher program for Xyrem and copayment coupon programs for Xyrem and other products. Jazz also makes grants to independent charitable foundations that help financially needy patients with their premium, copayment, and coinsurance obligations.

Cigna Wants Home Care False Claims Suit Tossed

Cigna Corp urged an Illinois federal court Monday to dismiss a whistleblower suit accusing Addus Homecare Corp. and a Cigna subsidiary of defrauding the government by providing Medicare- and Medicaid-covered services to beneficiaries who did not need them.
 
Stop Illinois alleges that from 2008 through March 2013, Addus “aggressively marketed” its home health care program to increase its worth and then sell it. Addus tried to convert patients who only needed unskilled services, such as bathing and grooming, to those who needed skilled services, such as physical therapy or occupational therapy, the relator alleges.

From 2009 through 2011, Addus took in about $30.16 million, $32.63 million and $33.44 million respectively from Medicare for skilled services, Stop Illinois claims, quoting the company’s annual reports. read more »

France to strengthen whistleblower protection in economic reform bill

After the EU’s fierce debate over whistleblower protection, France has proposed a much tighter set of safeguards in its draft bill for transparency and the modernization of the economy. EurActiv France reports.

French MPs on Monday (6 June) began their examination of the draft bill for transparency and the modernization of the economy, known as the Sapin 2 bill. Central to this bill is the question of how whistleblowers can be protected from prosecution.

Proposed by the French Minister of Finance Michel Sapin, this economic reform bill aims to lay the foundations for a whistleblower protection regime, with a certain number of safeguards against possible reprisals. read more »

False Claims Act Penalties Set for Significant Increase Later This Year

Liability under the False Claims Act (“FCA”) results in the imposition of treble damages and penalties. Government contractors should be aware that the mandatory penalties for FCA violations may nearly double starting in August of 2016.

On November 2, 2015, President Obama signed into law the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Sec. 701 of Public Law 114-74) (the “2015 Act”). The 2015 Act requires federal agencies to issue regulations adjusting civil monetary penalties for inflation to retain the deterrent effect of those penalties. Agencies must make a catch-up adjustment for civil monetary penalties with the new levels published by July 1, 2016, to take effect no later than August 1, 2016. Further, agencies are required to make annual inflationary adjustments starting in January 2017 based on the Office of Management and Budget (“OMB”) guidance with adjusted penalties to take effect immediately. read more »

Amid controversy over secrecy, T pension fund head to resign

Michael Mulhern, executive director of the MBTA’s retirement fund, will step down in August.
Michael H. Mulhern, whose tenure as chief of the MBTA retirement fund was marked by controversy over its investment performance and penchant for secrecy, said Monday he would step down in August.

A former bus driver who served as general manager of the transit authority before moving to the $1.5 billion pension fund, Mulhern said he was leaving with “decidedly mixed emotions” after a decade in the job.

His resignation notice, made in a letter to the retirement fund’s chairman, came just days after Governor Charlie Baker signed a bill that makes the pension plan subject to public records law, a move its leadership opposed.

Mulhern, 57, has been under pressure from union and administration officials over the pension’s lack of transparency, after a $25 million hedge fund loss in 2012 went undisclosed for more than a year.

The pension fund for employees at the Massachusetts Bay Transportation Authority is organized as a private trust and has used that status to avoid disclosures that are typical of other pension funds for public workers in the state. The fund does not hold open meetings, for example, and for years has published late and incomplete annual reports.

The Globe sued the T pension board after it refused in 2014 to release meeting minutes and other records concerning the $25 million hedge fund loss. That investment was made in 2007, when Mulhern was in charge, at the recommendation of his predecessor, Karl White, who was by then working for that hedge fund. read more »

Whistleblower Ties Northern Trust to NHL Fraud Scheme

Northern Trust bank may have played a role in a real-estate scheme that defrauded several professional hockey players out of roughly $13.5 million.

According to federal prosecutors, Kenner maxed out these lines of credit to fund his own lavish, jet-setting lifestyle. Once the funds were exhausted, Kenner could no longer pay the interest, so the bank, apparently unaware of his misdeeds, closed the lines of credit and seized the accounts used as collateral. Northern Trust escaped from the prosecution largely unscathed.

However, The New York Daily News was recently approached by a whistleblower named Aaron Mascarella, a former vice president of lending at the bank, with a series of potentially damning secret recordings that suggest that Northern Trust executives were aware of the fraud while it was in progress and did not do enough to stop it or alert the clients involved to satisfy the bank’s fiduciary duties.

Interestingly, Mascarella was a key witness for the prosecution in Kenner’s trial, but did not directly criticize Northern Trust’s role in the case in his testimony at that time. He did, however, imply that he may have lost his job at the bank in 2011 as a result of a difference in opinion over how the bank was handling these clients.

“Northern Trust did nothing to protect its clients and continued collecting interest and investment management fees until the money was all gone,” Mascarella told the Daily News. read more »

Long Ordeal for Seattle Worker Who Exposed Veteran's Fraud

A federal employee in Seattle helped expose a fraud in which an Army veteran lied his way to a Purple Heart and hundreds of thousands of dollars in government benefits.

Her reward?

The agency Cristina Jackson works for repeatedly tried to punish her for what it said were violations of the man's privacy, according to an AP review of hundreds of pages of personnel and investigative records.

U.S. Commerce Department officials proposed suspending her for at least a month — even as they reached one of two settlements with the veteran. Darryl Lee Wright was paid for skipped work and legal fees he incurred complaining about a hostile work environment.

They tried to downgrade Jackson's annual rating, then proposed a shorter suspension.

Jackson says she has racked up $20,000 in legal bills fighting the discipline. The Commerce Department, which did not respond to requests for comment, has refused to reimburse her. 

Statistical Sampling in Health Care Litigation

This article is about the latest arrow the government, the whistleblowers and the private insurers are attempting to add to their quiver: statistical sampling and extrapolation. Quite simply, sampling and extrapolation is a scientific way to estimate something about a large population by examining only a small subset of that population. Much like political poll takers ask a few thousand people how they intend to vote, and then project that number to the entire electorate, in the health care realm, payors may review 100 bills submitted by a provider and project any error rate they identify in that subset to the thousands of similar unreviewed claims the provider has submitted.
 
When this technique is utilized in litigation under the False Claims Act (FCA), a federal statute that provides for treble damages and a penalty of up to $11,000 per claim in any case where a materially false claim has been paid by the government, a small number of improper health care billings can easily be transformed into a massive financial liability. (The FCA also permits whistleblowers to bring lawsuits on behalf of the government, and, if successful, the whistleblower is entitled to share in any amounts recovered.)
 
Type "Qui Tam healthcare" into your search engine... read more »

WHISTLEBLOWER SETTLEMENT NEWS:

Pharmaceutical companies Genentech Inc. and OSI Pharmaceuticals LLC will pay $67 million

Pharmaceutical companies Genentech Inc. and OSI Pharmaceuticals LLC will pay $67 million to resolve False Claims Act allegations that they made misleading statements about the effectiveness of the drug Tarceva to treat non-small cell lung cancer, the Department of Justice announced today.  Genentech, located in South San Francisco, California, and OSI Pharmaceuticals, located in Farmingdale, New York, co-promote Tarceva, which is approved to treat certain patients with non-small cell lung cancer or pancreatic cancer.  OSI Pharmaceuticals LLC is the successor to OSI Pharmaceuticals Inc., which was acquired by Astellas Holding US Inc. in 2010 and converted to a limited liability company in 2011.

“Pharmaceutical companies have a responsibility to provide accurate information to patients and health care providers about their prescription drugs,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “The Department of Justice will hold those companies accountable that mislead the public about the efficacy of their products.”

The settlement resolves allegations that, between January 2006 and December 2011, Genentech and OSI Pharmaceuticals made misleading representations to physicians and other health care providers about the effectiveness of Tarceva to treat certain patients with non-small cell lung cancer, when there was little evidence to show that Tarceva was effective to treat those patients unless they also had never smoked or had a mutation in their epidermal growth factor receptor, which is a protein involved in the growth and spread of cancer cells. read more »

Deloitte Consulting LLP Agrees to Pay $11 Million for Alleged False Claims Related to General Services Administration Contract

The Department of Justice announced today that Deloitte Consulting LLP (Deloitte) has agreed to pay $11.38 million to resolve allegations under the False Claims Act that it submitted false claims under a General Services Administration (GSA) contract.  Deloitte is a nationwide consulting company headquartered in New York City.
 
In 2000, GSA awarded Deloitte a contract for the provision of information technology services.  The contract required Deloitte to reduce the prices it charged the government if it offered lower prices to specific commercial customers during the course of the contract.  This settlement resolves allegations that between 2006 and 2012, Deloitte failed to comply with the price reductions clause in its contract, resulting in government customers paying more for Deloitte’s services than comparable commercial customers. read more »