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.
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May 22, 2017

Trump to Propose Slashing Medicaid, Giving States Power to Limit Other Benefits

By the C|C Whistleblower Lawyer Team

The Trump Administration plans to reveal its first major budget proposal on Tuesday and it will include large cuts to Medicaid and call for more state powers in limiting benefits. The Trump budget plan calls for a reduction of $800 billion to Medicaid over the next decade. The proposals also call for allowing states more flexibility to impose work requirements for people in anti-poverty programs. The proposals are contingent upon the House approved American Health Care Act being passed in the Senate and signed into law by President Trump. The proposal would not only roll back the Medicaid expansion that many states conducted after the Affordable Care Act was passed, but would also prohibit new states from expanding Medicaid.

The proposal for Medicaid cuts could clash with the views of some Senate Republicans who are reluctant to make major cuts to the Medicaid program. The budget proposal is also expected to include recommendations to change the food stamps program SNAP. Critics of the changes argue that allowing work requirements creates blanket ultimatums that do not take into account a recipient’s age, physical or cognitive state, or limitations caused by local economies. Critics also argue that many of these benefits are already low and do not replace the income one could earn from a job anyway. Another criticism is that implementing work requirements could be seen as a precursor for stricter requirements including drug testing that courts have rejected in the past. click here for more »

May 22, 2017

Whistleblower News From The Inside — May 22, 2017

By the C|C Whistleblower Lawyer Team

DOJ Brass Says Sessions Has Eye on Health Care Fraud — U.S. Attorney General Jeff Sessions will keep health care fraud high on the U.S. Department of Justice agenda, the agency’s acting criminal head said at a speech Thursday. Criminal Division acting head Kenneth Blanco said the attorney general “feels very strongly” that tackling schemes that divert funds from Medicare should be a DOJ priority. “I can tell you that he has expressed this to me personally,” Blanco said at an American Bar Association conference on health care fraud. The DOJ emphasis on health care fraud is not new, as the remarks Thursday made clear. During his speech, Blanco took the opportunity to recap some of the high-profile cases brought during the Obama administration. Law360

U.S. Charges Virginia Man in Fitbit Stock Hoax — A Virginia man who orchestrated a hoax takeover bid that drove up Fitbit ‘s stock price last November, yet made only about $3,000 for his efforts, has been arrested and charged with fraud, U.S. prosecutors said on Friday. Robert Walter Murray, 24, of Chesapeake, was accused of submitting a sham regulatory filing in which the nonexistent, Shanghai-based ABM Capital offered to buy Fitbit for $12.50 per share, roughly a 46% premium. The filing caused Fitbit ‘s share price to rise 8% to $9.27 on Nov. 10, boosting the company’s market value by $122 million, before the San Francisco-based maker of step counters and other wearable devices denied knowledge of any tender offer. Authorities said Murray had spent less than $1,000 on Fitbit call options, a bet the share price would rise, just before submitting the hoax offer, and made a roughly $3,000 profit in one day by selling the options after the stock jumped. Fortune

Jury Rules in Favor of West Hollywood in Whistleblower Trial — A Los Angeles jury Friday decided in favor of the City of West Hollywood in a wrongful termination case in which a former City Council aide alleged she was fired for reporting the sexual harassment of a colleague and other wrongdoing. In a downtown civil courtroom, the jury determined that the city had legitimate, non-retaliatory reasons for firing Michelle Rex, a former aide to Councilman John D’Amico, when it eliminated its controversial council deputy system, leaving Rex without a job. The verdict marked the end of a two-week trial. West Hollywood Mayor John Heilman said in a statement that the city “could not be more pleased” with the outcome. Los Angeles Times

May 19, 2017

Fraudster of the Week — Texas State Senator Carlos Uresti

By the C|C Whistleblower Lawyer Team

On Tuesday, a federal grand jury in San Antonio returned two indictments against state senator Carlos Uresti in connection with two schemes—one involving alleged kickbacks for a medical services contract at a county jail, and a second dealing with an alleged Ponzi scheme that marketed sand used for hydraulic fracking.  He now faces more than a dozen criminal charges and, if convicted, could be imprisoned for decades.  Senator Uresti has served in the Texas state legislature for over twenty years, while also maintaining a solo law practice.

According to the indictments, the first alleged scheme involved Four Winds Logistics LLC, a now-bankrupt company formed at the height of the recent oil boom to buy and sell sand used in fracking.  Uresti, a personal injury lawyer, allegedly caused one of his clients to invest a $900,000 settlement in Four Winds, which paid commissions to Uresti for drawing investors.  Prosecutors, however, assert that Four Winds turned out to be a Ponzi scheme.  In Four Winds’ ongoing bankruptcy proceedings, investors claim that the CEO grossly misrepresented the state of the company’s finances and used the company as a personal bank account. click here for more »

May 19, 2017

DOJ Catch of the Week — Mercy Hospital

By the C|C Whistleblower Lawyer Team

This week’s Department of Justice “Catch of the Week” goes to two Southwest Missouri hospitals who yesterday agreed to pay $34 million to settle charges they violated the False Claims Act by engaging in improper financial relationships with referring physicians.  The two hospitals are Mercy Hospital Springfield and its affiliate Mercy Clinic Springfield Communities (formerly known respectively as St. John’s Regional Health Center and St. John’s Clinic). See DOJ Press Release.

According to the government, the hospitals submitted false claims to Medicare for chemotherapy services to patients referred by oncologists whose compensation was based in part on the value of their referrals.  The Stark Law restricts the financial relationships that hospitals and clinics may have with doctors who refer patients to them.  In announcing the settlement, the government stressed the importance of ensuring medical decisions remain untainted by these kinds of improper financial incentives: click here for more »

May 19, 2017

Ex-Snapchat Employee Files Federal Whistleblower Suit

By the C|C Whistleblower Lawyer Team

Former Snapchat employee Anthony Pompliano filed suit against the company for allegedly breaking federal whistleblower protection laws and misleading investors ahead of Snap’s initial public offering.  Pompliano has previously filed suit in January against the company in L.A. County Superior Court on similar claims but decided to transfer the case to federal court and file for whistleblower protections under Dodd-Frank.

When Snap Inc. began pitching themselves to investors in the lead-up to their IPO, they presented a series of numbers including Daily Active Users, Monthly Active Users, and growth projections to increase their valuation (about $20 billion at IPO). click here for more »

May 19, 2017

Whistleblower News From The Inside — May 19, 2017

By the C|C Whistleblower Lawyer Team

Mercy Springfield to pay $34 million to resolve allegations doctor compensation violated law — Health system Mercy Springfield Communities has agreed to pay $34 million to settle allegations levied by the federal government that it violated the False Claims Act by engaging in improper financial relationships with referring physicians.  According to the DOJ, the health system submitted false claims to Medicare for chemotherapy services rendered to patients referred by oncologists whose compensation was based, in part, on a formula that improperly took into account the value of their referrals. Springfield News Leader

Chelsea Manning’s new life — Chelsea Manning took to social media to reveal her new look for the start of her life outside of prison. Reuters

New York Citigroup whistleblower case dismissed A state court dismissed a whistleblower lawsuit against Citigroup Inc. alleging that the company improperly took state net operating loss deductions.  The case, along with one against Sprint Nextel Corp., is being watched closely by tax practitioners because it is among the first and highest-profile tax cases filed under the state False Claims Act. BNA

May 18, 2017

Roger Ailes, Who Built Fox News Into an Empire, Dies at 77

By the C|C Whistleblower Lawyer Team

Roger Ailes, the former head of Fox News died Thursday at the age of 77. No cause of death was given but Ailes was a hemophiliac and had other health issues. Ailes worked for the presidential campaigns of Richard Nixon in 1968, Ronald Reagan in 1984, and George H.W. Bush in 1988. Ailes also informally advised the campaign of President Donald Trump in 2016. Ailes headed Fox News from its start in 1996 and used the network as a bastion for conservative media and figures. By 2002, Fox News had become the number one most-watched cable news network.

By the time Ailes left Fox News in 2016, daily viewership had risen to approximately two million. Prior to his time at Fox News, and after his political work, Ailes worked on CNBC business news network and America’s Talking a second NBC cable channel. Disagreements over programming control led to Ailes leaving the networks in 1995. Ailes then convinced Rupert Murdoch to help start Fox News as both allegedly believed the mainstream media was too liberal.

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May 18, 2017

Whistleblower News From The Inside — May 18, 2017

By the C|C Whistleblower Lawyer Team

Russia Investigation Gets Special Counsel – The Justice Department appointed Robert S. Mueller III, a former F.B.I. director, as special counsel on Wednesday to oversee the investigation into ties between President Trump’s campaign and Russian officials, dramatically raising the legal and political stakes in an affair that has threatened to engulf Mr. Trump’s four-month-old presidency.

The decision by the deputy attorney general, Rod J. Rosenstein, came after a cascade of damaging developments for Mr. Trump in recent days, including his abrupt dismissal of the F.B.I. director, James B. Comey, and the subsequent disclosure that Mr. Trump asked Mr. Comey to drop the investigation of his former national security adviser, Michael T. Flynn. NYT

Sanofi Wins False Claims Case Appealed by Rival Drugmaker – Generic drugmaker Amphastar Pharmaceuticals has failed in its attempt to revive a False Claims Act lawsuit against Sanofi over the misrepresentation of drug patent information ( Amphastar Pharm. Inc. v. Aventis Pharma S.A. , 2017 BL 157523, 9th Cir., No. 15-56122, 5/11/17 ). The U.S. Court of Appeals for the Ninth Circuit May 11 affirmed the dismissal of Amphastar’s FCA lawsuit based on the public disclosure of the misrepresentation allegations in an earlier patent infringement lawsuit brought by Sanofi’s subsidiary, Aventis Pharmaceuticals, against Amphastar. Aventis alleged that Amphastar’s generic version of Aventis’s blood-thinner infringed its patent. The patent was invalidated after Amphastar discovered during litigation that the patent was based on a misrepresentation by Aventis to the U.S. Patent and Trademark Office and Food and Drug Administration. BNA

Chelsea Manning, Who Gave Trove of U.S. Secrets to WikiLeaks, Leaves Prison – Chelsea Manning, the transgender Army private who passed a trove of sensitive government documents to WikiLeaks in 2010, walked out of the disciplinary barracks at Fort Leavenworth, Kan., on Wednesday morning after serving an abbreviated sentence in connection with one of the most notorious leaks of classified documents in U.S. history. Manning’s 35-year sentence was commuted by President Barack Obama, who concluded that seven years in federal custody was enough for her crimes. She now heads to Maryland, according to supporters who set up an online fundraising site that collected more than $150,000 for housing and other essentials as she re-enters society. Washington Post

CVS’s Omnicare to Pay $8 Million to Settle U.S. Probe – CVS Health Corp’s Omnicare unit has agreed to pay $8 million to resolve claims that its prescription verification system resulted in false claims being submitted to government healthcare programs. The settlement, announced on Tuesday by Acting U.S. Attorney William Fitzpatrick in New Jersey, resolves claims by the federal government and 28 states arising out of a whistleblower lawsuit filed under the False Claims Act. The deal resolved civil claims arising from what the U.S. government said was Omnicare’s submission of false claims for payment for drugs under the Medicare Part D and Medicaid programs from 2008 to 2014. The government said Omnicare, in order to increase profits, designed an automated label verification system that resulted in the submission of claims for generic drugs different from those dispensed to patients. New Hampshire Union Leader

May 17, 2017

Question of the Week — Did the U.S. Government Give Russian Mobsters a Sweetheart Deal?

By the C|C Whistleblower Lawyer Team

A multi-year case against Russian mobsters for laundering many hundreds of millions of dollars just settled on the eve of trial for a fraction of the damages at issue.  This “surprise settlement” allowed the Russian-owned Prevezon Holdings to pay less than $6 million to settle the charges, even after losing their summary judgment motion and other potentially damaging evidentiary motions.

The Office for the U.S. Attorney for the Southern District of New York brought the case while under the direction of Preet Bharara, who was fired by President Trump in March.  Much of the case was based on evidence from Sergei Magnitsky, a whistleblower who died in Russian custody after being jailed by the same officials he reported on.  Mr. Magnitsky’s family lawyer, Nikolai Gorokhov, then reportedly “fell” out of a window earlier this year before being able to testify.  The sudden and unexpected settling of the Prevezon case after Mr. Bharara’s firing and the public outcry over the mysterious injuries to key witnesses has raised questions about the fairness of the settlement.  click here for more »

May 17, 2017

United States Files Complaint-in-Intervention in Constantine Cannon Whistleblower’s Case Against UnitedHealth Group

By the C|C Whistleblower Lawyer Team

The Department of Justice announced yesterday that it has filed a complaint-in-intervention against UnitedHealth Group (UHG) in a case brought by Constantine Cannon client Ben Poehling.  The government’s complaint alleges that UHG knowingly obtained inflated risk adjustment payments from Medicare Advantage based upon false information regarding the health of beneficiaries in its plans.

UHG is the nation’s largest health insurer and largest operator of Medicare Advantage plans.  “As the nation’s largest Medicare Advantage Organization, UHG received substantial overpayments based upon untruthful and inaccurate information about the health status of those enrolled in its plans,” said Acting U.S. Attorney James P. Kennedy Jr. for the Western District of New York in a statement released by the Department of Justice.  “Such fraudulent spending of taxpayer’s dollars will not be tolerated.” click here for more »