DOJ Fraud Settlements

The Department of Justice is the principal federal agency authorized to enforce the laws and defend the interests of the United States. As such, it oversees the enforcement of the False Claims Act, the foundation of the American whistleblower system, and by far the most widely used statute by whistleblowers to report corporate fraud and misconduct.

The agency traces its origins to the Judiciary Act of 1789 which created the Office of the Attorney General, and the 1870 Act to Establish the Department of Justice, which established the agency as "an executive department of the government of the United States" with the Attorney General as its head.

The agency is comprised of numerous divisions with the Civil Division and in some instances, the Criminal Division, overseeing investigations and prosecutions under the False Claims Act. The U.S. Attorneys Office of the federal district where the False Claims Act case is filed also plays a key role in False Claims Act enforcement.

Below are summaries of the most recent DOJ settlements or successful resolutions under the False Claims Act as well as other successful prosecutions for fraud and misconduct. If you believe you have information about fraud against the government, including against the Medicare or Medicaid systems, please contact us to speak with one of our experienced whistleblower attorneys.

February 2, 2017 - 

Pain management physician Dr. Robert Windsor, owner of National Pain Care, Inc. which owns pain management clinics in Georgia and Kentucky, agreed to the entry of a $20 million consent judgment to resolve allegations he violated the False Claims Act by billing federal health care programs for surgical monitoring services he did not perform and for medically unnecessary diagnostic tests.  The allegations originated in two whistleblower lawsuits filed under the qui tam provisions of the False Claims Act by Kris Frankenberg, Stephanie Herder and Bradley Davis.  They will receive a yet-to-be-determined whistleblower award from the proceeds of the government’s recovery.  Whistleblower Insider

February 1, 2017 - 

Florida urologist Dr. Meir Daller agreed to pay $3.81 million to resolve allegations he violated the False Claims Act by causing claims to be submitted to federal health care programs for laboratory tests that were not medically necessary.  Dr. Meir practices as part of Gulfstream Urology, a division of 21st Century Oncology, LLC, which is a nationwide provider of integrated cancer care services.  The government previously entered into settlements relating to similar allegations with 21st Century Oncology for $19.75 million and urologists David Spellberg and Robert Scappa for $1,050,000 and $250,000, respectively.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by Mariela Barnes, a former medical assistant for Dr. Spellberg at Naples Urology Associates, also a division of 21st Century Oncology.  She will receive a whistleblower award of $571,500 from the proceeds of the government’s recovery in this settlement.  This is in addition to a $3,437,000 million award she already received from the prior settlements.  DOJ (MDFL)

February 1, 2017 - 

Iowa nursing facility the Abbey of Le Mars, Inc., and other individuals with financial interests in the Abbey’s operations, agreed to pay $100,000 to settle allegations they violated the False Claims Act by submitting or causing claims to be submitted to Medicaid when the care provided to nursing facility residents was so grossly substandard it was worthless and effectively without value.  DOJ (NDIA)

January 27, 2017 - 

Brooklyn residents Olga Proskurovsky, Yuriy Omelchenko and Isak Aharanov pleaded guilty in connection with a health care fraud scheme involving two Brooklyn clinics that caused approximately $55 million in false claims to Medicare and Medicaid.  They agreed to forfeiture money judgments in the amount of roughly $17 million.  Proskurovsky served as a medical biller and Omelchenko worked as a therapist manager at Prime Care on the Bay LLC and Bensonhurst Mega Medical Care P.C. where they assisted in a scheme to defraud the Medicare and Medicaid programs in which patients subjected themselves to medically unnecessary health services, including physical and occupational therapy, provided by unlicensed staff.  DOJ

January 25, 2017 - 

Rodney Hesson and Gertrude Parker, owners of several psychological services companies, were convicted for their involvement in a $25.2 million Medicare fraud scheme carried out through eight companies at nursing homes in four states in the Southeastern United States.  According to evidence presented at trial, the defendants’ companies contracted with nursing homes for psychological testing services the nursing home residents did not need or did not receive.  DOJ

January 23, 2017 - 

Washington River Protection Solutions LLC agreed to pay $5.275 million to settle allegations it knowingly submitted false claims to the Department of Energy for overtime and premium pay and also failed to comply with the contract’s internal audit requirements in connection with work performed at DOE’s Hanford Nuclear Site known as the Tank Farms.  DOJ

January 19, 2017 - 

The University of Pennsylvania Health System agreed to pay $845,000 to settle charges of violating the False Claims Act by improperly billing Medicare for stent procedures two interventional cardiologists performed at Pennsylvania Hospital.  DOJ (EDPA)

January 19, 2017 - 

Nevada-based gaming and resort company Las Vegas Sands Corp. agreed to pay a $6.96 million criminal penalty to resolve the government’s investigation into violations of the Foreign Corrupt Practices Act (FCPA) in connection with business transactions in China and Macao. According to admissions by Sands, certain Sands executives failed to implement internal accounting controls to ensure the legitimacy of payments to a business consultant who assisted Sands in promoting its brand in China and Macao and to prevent the false recording of those payments in its books and records. Sands continued to make payments to the consultant despite warnings from its finance staff and an outside auditor that the business consultant had failed to account for portions of these funds. In addition, Sands terminated the finance department employee who raised concerns about the payments. Sands also agreed to pay a civil penalty of roughly $9 million to settle related SEC charges for a total payout of roughly $16 million. DOJ

January 19, 2017 - 

Meadowvale Dairy, LLC — which operates multiple concentrated animal feeding operations in Rock Valley, Iowa — agreed to pay a civil penalty of $160,000 for alleged violations of the Clean Water Act related to mismanagement of animal wastes. The company also agreed to take actions to prevent illegal discharges to Iowa streams which EPA estimates will result in a reduction of approximately 200,000 pounds of pollutants discharged annually into Iowa streams. DOJ

January 19, 2017 - 

Costco Wholesale will pay $11.75 million to settle allegations that its pharmacies violated the Controlled Substances Act when they improperly filled prescriptions for controlled substances. The settlement resolves allegations that Costco pharmacies filled prescriptions that were incomplete, lacked valid Drug Enforcement Administration (DEA) numbers or were for substances beyond various doctors’ scope of practice. Additionally, the settlement resolves allegations that Costco failed to keep and maintain accurate records for controlled substances at its pharmacies and centralized fill locations. In addition to the payment, Costco purchased a new pharmacy management system at a total budgeted five year cost of approximately $127 million. DOJ

January 19, 2017 - 

Magellan Pipeline Company agreed to roughly $16 million worth of injunctive relief across its 11,000 mile pipeline system and to pay a $2 million civil penalty to resolve alleged violations of the Clean Water Act related to gasoline, diesel and jet fuel spills in Texas, Nebraska and Kansas. DOJ

January 19, 2017 - 

Colorado-based global money services business Western Union Company agreed to forfeit $586 million and enter into agreements with DOJ, FTC, and the U.S. Attorney’s Offices for the Middle District of Pennsylvania, the Central District of California, the Eastern District of Pennsylvania and the Southern District of Florida to settle criminal violations relating to the company’s failure to maintain an effective anti-money laundering program and aiding and abetting wire fraud. According to company admissions, Western Union violated the Bank Secrecy Act (BSA) and anti-fraud statutes by processing hundreds of thousands of transactions for Western Union agents and others involved in an international consumer fraud scheme. As part of the scheme, fraudsters contacted victims in the U.S. and falsely posed as family members in need or promised prizes or job opportunities. The fraudsters directed the victims to send money through Western Union to help their relative or claim their prize. Various Western Union agents were complicit in these fraud schemes, often processing the fraud payments for the fraudsters in return for a cut of the fraud proceeds. The company also agreed to pay a $586 million judgement to settle related FTC charges. DOJ

January 19, 2017 - 

Nationwide retail pharmacy operator Walgreen Co. agreed to pay $50 million to settle charges it violated the False Claims Act and the Anti-Kickback Statute by enrolling hundreds of thousands of beneficiaries of government healthcare programs in its Prescription Savings Club program by inducing them with discounts and other monetary incentives. According to the government, Walgreens understood that allowing government beneficiaries to participate in the program was a violation of the Anti-Kickback Statute but nevertheless marketed the program to them anyway and paid its employees bonuses for each customer they enrolled in the program, without verifying whether the customers were government beneficiaries. The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act. DOJ (SDNY)

January 18, 2017 - 

Dmitriy V. Melnik, the owner and operator of Candy Color Lenses, a major online retailer of colored contact lenses, was sentenced to 46 months in prison and to pay $200,000 in restitution and forfeit $1.2 million for running an international operation importing counterfeit and misbranded contact lenses from suppliers in Asia and then selling them over the internet without a prescription to tens of thousands of customers around the country. DOJ

January 18, 2017 - 

Massachusetts-based global financial services company State Street Corporation agreed to pay a $32.3 million criminal penalty to resolve charges it engaged in a scheme to defraud a number of the bank’s clients by secretly applying commissions to billions of dollars of securities trades. The company also agreed to pay the SEC a civil penalty of the same amount to settle related charges for a total government payout of roughly $65 million. According to company admissions, bank employees conspired to add secret commissions to fixed income and equity trades performed for at least six clients of the bank’s “transition management” business, which helps institutional clients move their investments between and among asset managers or liquidate large investment portfolios. The commissions were charged on top of fees the clients had agreed to pay the bank, and despite written instructions to the bank’s traders that generally reflected that the clients were not to be charged trading commissions. State Street employees took steps to hide the commissions from the clients. DOJ

January 18, 2017 - 

Credit Suisse agreed to pay $5.28 billion to resolve charges it misled investors in the packaging, securitization, marketing, sale and issuance of residential mortgage-backed securities (RMBS) in the years leading up to the Great Recession. As part of the settlement, the bank agreed to a detailed Statement of Facts describing how it knowingly made false and misleading representations to investors about the characteristics of the billions of dollars of mortgage loans it securitized in RMBS. Whistleblower Insider

January 17, 2017 - 

Deutsche Bank agreed to pay $7.2 billion to resolve charges it misled investors in the packaging, securitization, marketing, sale and issuance of residential mortgage-backed securities (RMBS) in the years leading up to the Great Recession. It is the largest RMBS resolution in what has been a string of multi-billion dollar settlements. As part of the settlement, the bank agreed to a detailed Statement of Facts describing how it knowingly made false and misleading representations to investors about the characteristics of the billions of dollars of mortgage loans it securitized in RMBS. Whistleblower Insider

January 17, 2017 - 

McKesson Corporation, one of the country’s largest distributors of pharmaceutical drugs, agreed to pay a record $150 million civil penalty for alleged violations of the Controlled Substances Act. The settlement requires McKesson to suspend sales of controlled substances from distribution centers in Colorado, Ohio, Michigan and Florida for several years and according to the government is among the most severe sanctions ever agreed to by a Drug Enforcement Administration registered distributor. According to the government, McKesson failed to design and implement an effective system to detect and report “suspicious orders” for controlled substances distributed to its independent and small chain pharmacy customers and supplied various U.S. pharmacies an increasing amount of oxycodone and hydrocodone pills, frequently misused products that are part of the current opioid epidemic. DOJ

January 17, 2017 - 

United Kingdom-based manufacturer and distributor of power systems for the aerospace, defense, marine and energy sectors Rolls-Royce plc agreed to pay nearly $170 million as part of an $800 million global resolution to investigations by DOJ and U.K. and Brazilian authorities into a long-running scheme to bribe government officials in exchange for government contracts in violation of the Foreign Corrupt Practices Act. According to company admissions, Rolls-Royce paid more than $35 million in bribes through third parties to foreign officials in various countries including Thailand, Brazil, Kazakhstan, Azerbaijan, Angola and Iraq in exchange for those officials’ assistance in providing confidential information and awarding contracts to Rolls-Royce and affiliated entities. DOJ

January 17, 2017 - 

Freeport-McMoRan, Inc. subsidiaries Cyprus Amax Minerals Company and Western Nuclear, Inc. agreed to the cleanup of 94 abandoned uranium mines on the Navajo Nation in a settlement valued at over $600 million. DOJ

January 17, 2017 - 

NCR Corporation agreed to complete one of the nation’s largest Superfund cleanup projects at Wisconsin’s Lower Fox River and Green Bay Site. An enormous amount of cleanup and natural resource restoration work has already been done in the area under a set of partial settlements, an EPA administrative cleanup order, and court orders in a federal lawsuit brought by the United States and the State of Wisconsin. The final phase of cleanup taken on by NCR will cost up to $200 million or more over the next few years. The total cleanup costs for the Fox River Site will exceed $1 billion. DOJ

January 13, 2017 - 

The Department of Justice, 21 states, and the District of Columbia reached a nearly $864 million settlement agreement with Moody’s Investors Service Inc., Moody’s Analytics Inc., and their parent, Moody’s Corporation to resolve allegations arising from Moody’s role in providing credit ratings for Residential Mortgage-Backed Securities (RMBS) and Collateralized Debt Obligations (CDO), contributing to the worst financial crisis since the Great Depression. According to the government, “Moody’s failed to adhere to its own credit rating standards and fell short on its pledge of transparency in the run-up to the Great Recession [and] . . . used a more lenient standard than it had itself published.” The settlement includes a $437.5 million federal civil penalty, which is the second largest payment of this type ever made to the federal government by a ratings agency. DOJ

January 13, 2017 - 

Massachusetts-based ambulance company Medstar Ambulance Inc., including four subsidiary companies and its two owners, Nicholas and Gregory Melehov, agreed to pay $12.7 million to resolve allegations that they violated the False Claims Act by submitting false claims to Medicare for ambulance transport services. According to the government, Medstar routinely billed for services that did not qualify for reimbursement because the transports were not medically reasonable and necessary, billed for higher levels of services than were required by patients’ conditions, and billed for higher levels of services than were actually provided. The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by Dale Meehan, a former employee in Medstar’s billing office. Mr. Meehan will receive a whistleblower award of roughly $3.5 million. DOJ

January 13, 2017 - 

Chilean chemicals and mining company Sociedad Química y Minera de Chile (SQM) agreed to pay a criminal penalty of more than $15 million in connection with payments to politically-connected individuals in Chile in violation of the Foreign Corrupt Practices Act. According to the government, SQM made donations to dozens of foundations controlled by or closely tied to Chilean politicians with influence over the government’s mining plans in Chile, a key segment of SQM’s business. SQM also admitted to falsifying its books and records to conceal payments to vendors associated with politicians, logging them as consulting and professional services SQM never received. In total, SQM admitted having paid nearly $15 million between 2008 and 2015 to vendors despite having no evidence any goods or services were actually received. SQM also agreed to pay $15 million to settle related charges with the Securities and Exchange Commission, for a total payment of $30 million. DOJ

January 13, 2017 - 

Potomac Electric Power Company (Pepco) agreed to pay a civil penalty of $1.6 million for alleged violations of Pepco’s Clean Water Act permit at its service center located in Anacostia. It also agreed to implement a number of measures to reduce metals in stormwater entering into its drainage system and will install an in-pipe treatment system to further treat the stormwater, which discharges into the Anacostia River. DOJ