Whistleblower Insider

Whistleblower Insider is written by the Constantine Cannon law firm team of experienced qui tam and whistleblower lawyers. It is updated daily to provide the latest whistleblower and fraud news and developments.

September 29, 2016

Whistleblower News From The Inside — September 29, 2016

By the C|C Whistleblower Lawyer Team

US hedge fund will pay over $400M to settle foreign bribery allegations—Och-Ziff Capital Management will pay more than $400M to settle charges it paid tens of millions to African Governmental officials and one unit will plead guilty to criminal charges. Och-Ziff is the largest publicly traded hedge fund in the US and this will be the first criminal foreign-bribery case against a major Wall street firm. Wall Street Journal

Hospital chains settles FCA suit for $32.4M—Vibra Healthcare has settled allegations that it billed Medicare for medically unnecessary services; Vibra runs 36 long term care hospitals and admitted patients which do not qualify for stays in such facilities. The case was brought by a whistleblower, a former coder at one of the facilities, who will receive at least $4M. DOJ

SEC penalizes Anheuser-Busch Inbev for whistleblower restrictions—This is the fourth SEC penalty in the recent past imposed on companies who allegedly restrict the rights of outgoing employees to blow the whistle. The company will pay the SEC $6M. Wall Street Journal

Former healthcare CEO settles FCA suit for $1M—Ralph Cox III, the former CEO of Toumey Healthcare, has agreed to $1m in personal liability for his involvement in a kickback scheme, he will also be excluded from participating in federal healthcare programs for four years. Toumey, as a company, settled related allegations for $72 million in 2015. Beckers Hospital Review

SEC whistleblower office names new chief—Jane Norberg has been promoted to chief of the SEC whistleblower office, she joined the SEC in 2012 and was the first deputy chief of the office, helping create it. Norberg has served as acting chief since the departure of the office’s inaugural chief Sean McKessy. Corporate Crime Reporter

Buffalo medical transport company settles NY FCA suit for $173k— First Call allegedly billed Medicaid for services provided by unqualified drives and without necessary documentation.  The case was brought by a whistleblower, Thomas Ayers, who is the former CEO of a different medical transportation under the same parent company. Buffalo News

September 28, 2016

In Their Own Words — Wyden

— “It has become clear that the Department of Energy is not going to change its culture of retaliation against whistleblowers, so it’s up to Congress to change it.”

Oregon Senator Ron Wyden commenting on his co-sponsored proposal for new whistleblower protections for Department of Energy employees.

September 28, 2016

Question of the Week: Are Accreditation Agencies the Cause of Education Fraud?

By the C|C Whistleblower Lawyer Team

The spectacular rise and crashing fall of for-profit colleges like Corinthian Colleges and ITT Technical Institute can be blamed on any number of causes—for example, aggressive advertising campaigns by unscrupulous institutions, generous federal loan programs, the move away from middle class manufacturing jobs, and a lack of standards for accrediting these colleges.  That last cause is now getting a lot of attention.

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September 28, 2016

DOJ Intervenes in Whistleblower-Initiated Customs Fraud Case (and, Likely Unintentionally, Potential Family Feud)

By Molly Knobler

The Department of Justice’s (DOJ) intervention last week in a whistleblower-initiated False Claims Act case is going to make for an awkward holiday season for at least one family. The case, US ex rel. Xing Wei v. Yingshun Garments, Inc. et al, was filed in January 2013 in the Southern District of New York and alleges a scheme to avoid import duties on women’s clothing manufactured in China and sold to retailers in the United States. The case was brought by whistleblower Xing Wei, an Australian resident and the mother of a former sales representative for one of the defendant companies. The DOJ also identified as co-conspirators in its complaint, but did not name as defendants, the owner of one of the defendant companies (Relator’s sister-in-law) and her daughter, the President of another of the Defendant companies (Relator’s niece).

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September 28, 2016

Whistleblower News From The Inside — September 28, 2016

By the C|C Whistleblower Lawyer Team

CDC Whistleblower Claims Agency has been Using Wrong Zika Test – Robert Lanciotti, one of the leading experts on Zika virus claims that the CDC is using a less effective test for Zika infections. Lanciotti raised concerns in May when the CDC was mulling changing the test and was demoted after raising his concerns. Lanciotti claims the alternate test misses nearly forty percent of Zika infections. Lanciotti was reinstated to his post after filing a whistleblower retaliation claim.  Washington Post

U.S. Probes Wells Fargo Whistleblower, Wage Theft Complaints – The U.S. Department of Labor is reviewing open and closed whistleblower complaints against Wells Fargo in light of new allegations the bank retaliated against employees who expressed ethics concerns. The Occupational Safety and Health Administration (OSHA) decided to take another look at claims following Wells Fargo’s admission to firing 5,300 workers in the past few years and the fake account scandal that has plagued the bank in recent weeks. CNN

Stronger Protections for VA Whistleblowers Included in Bill to Keep Government Open – The spending bill to keep the government functioning contained new whistleblower provisions to protect Department of Veterans Affairs employees who disclose waste and misconduct from retaliation. VA employees have disclosed manipulation of patient scheduling wait times and other mismanagement issues over the past two years and have faced retaliation from the agency, prompting the new provisions.  Washington Post

Three Senators Push to Enhance Whistleblower Protections After Energy Department Retaliations – On Monday, three democratic senators proposed new protections for whistleblowers in the Department of Energy following a GAO report that agency officials retaliated and intimidated employees. The bill would add waste, fraud, and abuse to the list of protected whistleblower disclosures, extend the amount of time employees can file a complaint, and allow employees to pursue a federal trial of Energy fails to investigate within a year.   Washington Examiner

Pittsburgh: Whistleblower Cop Sues Department, City Over Alleged Retaliation – A former high-ranking Pittsburgh police officer sued his department alleging retaliation for blowing the whistle on manipulation of crime statistics and police misconduct within the department. The whistleblower alleged that the department would falsify crime reports and turn them into information reports thereby lowering the city’s crime rates.  East Bay Times

September 27, 2016

In Their Own Words — Aaronson


Susan Ariel Aaronson, research professor and cross-disciplinary fellow at the George Washington University’s Elliott School of International Affairs, on the need for the United Nations to embrace whistleblowers.  Click here for more.

September 27, 2016

“Meaningful Use” Meaningful Error: HHS OIG Finds over $11 Million in Incorrect EHR Incentive Payments

By Ronny Valdes 

On September 22, 2016, the U.S. Department of Health and Human Services Office of the Inspector General (HHS OIG) released a report finding that Washington State made incorrect Medicaid incentive payments for the “meaningful use” of electronic health records (EHR). The incentive payment structure was created by the Health Information Technology for Economic and Clinical Health Act (HITECH Act) in 2009. This program allowed incentive payments to hospitals and physicians that attest to the “meaningful use” of EHR. To receive incentive payments, entities must meet federal program requirements by self-reporting necessary data using the CMS National Level Repository.

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September 27, 2016

Whistleblower News From The Inside — September 27, 2016

By the C|C Whistleblower Lawyer Team

The world needs whistleblowers — “The United Nations should embrace whistleblowing in order to prevent more systemic failures.”  US News

 Weatherford Int’l to pay $140M SEC penalty — The SEC charged the company with inflating earnings by using deceptive income tax accounting.  SEC

Andrew Cuomo and the corruption of Albany — “Through many years and scandals, the power structure in Albany has proved to be incapable of policing itself.”  New Yorker

Wells Fargo employees sue, claiming they are “biggest victims” of fraud — “In a class action suit, the employees say the bank pressured them to open additional accounts for customers, whether they wanted them or not, driving employees to the ‘breaking point.'”  Consumer Affairs

A new debate over pricing the risks of climate change — “Some companies, including Exxon Mobil, say the economics of climate change are too hard to predict for them to give investors hard numbers about the business impact of global warming.  Federal regulators may disagree and are considering requiring Exxon to do just that….”  NYT

Merrill Lynch to pay $12.5M SEC penalty — The SEC charged the company with maintaining ineffective trading controls that failed to prevent erroneous orders from being sent to the markets and causing mini-flash crashes.  SEC

September 26, 2016

In Their Own Words — Schruben

— “We’re just two guys that know the industry well and figured out what was going on.”

Thomas Schruben, consultant in underground storage tank industry, and one of the partners in whistleblower plaintiff American Cost Recovery, which secured settlement valued at $170 million from Shell Oil.   SacBee

September 26, 2016

Whistleblower News From The Inside — September 26, 2016

By the C|C Whistleblower Lawyer Team

Whistle-Blower Suit Accuses Visiting Nurse Service of Fraud – The lawsuit, brought under federal and state False Claims Acts by a senior manager who worked at the agency for 16 years, charges that the Visiting Nurse Service of New York has systematically extracted hundreds of millions of dollars from Medicare and Medicaid through falsified and improper billings, while shortchanging needy patients of the care their doctors ordered.  NYTimes

Government Intervenes in Defective Steel Case Filed by Whistleblower – The United States intervened in a False Claims Act lawsuit against Energy & Process Corporation alleging that E&P knowingly failed to perform required quality assurance procedures and supplied defective steel reinforcing bars (rebar) in connection with a contract to construct a Department of Energy nuclear waste treatment facility.  The case was filed by former employee, Deborah Cook.  DOJ

Shell Settles Whistleblower Lawsuit Accusing it of Fraudulently Billing California for Underground Storage Tank Clean-up Costs – The suit alleged that Shell effectively double billed, collecting insurance proceeds and then submitting claims to a cleanup fund run by the State Water Resources Control Board.  As part of the settlement, Shell agreed to abandon $150 million in cleanup fund claims and pay an additional $20 million in penalties.  SacBee; CA Water Boards

Government Joins Whistleblower Lawsuit Alleging Scheme to Avoid Import Duties on Clothing – The government’s complaint alleges that defendants defrauded U.S. Customs and Border Protection by engaging in a double-invoice scheme to present false and fraudulent invoices to CBP for the purpose of avoiding import duties on garments. USAO SDNY

Charges in $5 million Miami-Dade County Aviation Department Kickback Scheme – Five individuals were charged in a scheme whereby procurement officials passed information to a contractor bidding to supply light fixtures.  When the contractor won the bids, kickbacks were paid to procurement officials and excess profit was retained by the contractor.  USAO SD FL

‘’Movie Studio’’ Executives Charged With Microcap Fraud – The SEC charged three individuals with making false and misleading statements to, including claims that construction of the touted “Studioplex” outside Savannah, Georgia, was underway and projected dates by which it would be operational while knowing full well they did not have anywhere near sufficient funding to begin building.  The individuals reportedly used the company funds for personal expenses.  SEC

Whistleblower Receives Award from Fiji Revenue and Customs Authority – The individual provided information to Fiji tax authorities that led to recovery of more than half a million dollars in customs duty and VAT.  Fiji Sun