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.

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

January 12, 2017 - 

Baxter International Inc. subsidiary Baxter Healthcare Corporation agreed to pay roughly $18 million to settle charges of violating the False Claims Act arising from the company’s failure to follow current Good Manufacturing Practices when manufacturing sterile drug products in North Carolina. Baxter admitted that it distributed products in interstate commerce that were adulterated in violation of the Federal Food, Drug, and Cosmetic Act FDCA. It will pay a total of $16 million in monetary penalties and forfeiture. It will also pay roughly $2 million to resolve allegations it violated the False Claims Act by submitting false claims to the Department of Veterans Affairs based upon Baxter’s failure to follow cGMPs. The allegations originated in a whistleblower lawsuit under the qui tam provisions of the False Claims Act by Baxter employee Christopher Wall. He will receive a whistleblower award of roughly $432,000 from the proceeds of the government’s False Claims Act recovery. DOJ

January 12, 2017 - 

Idia Oriakhi, the administrator of five Houston-area home health agencies, pleaded guilty to conspiring to defraud the State of Texas’ Medicaid-funded Home and Community-Based Service and the Primary Home Care Programs of more than $7.8 million. Oriakhi’s parents owned and operated Aabraham Blessings, LLC; Baptist Home Care Providers, Inc.; Community Wide Home Health, Inc.; Four Seasons Home Healthcare, Inc. and Kis Med Concepts, Inc. and admitted that she, her father Godwin Oriakhi and others obtained patients for her family’s home health agencies by paying illegal kickback payments to patient recruiters and physicians for referring and certifying Medicaid patients for services not medically necessary and often not provided. DOJ

January 12, 2017 - 

Two Greek shipping companies — Oceanfleet Shipping Limited and Oceanic Illsabe Limited — were sentenced to pay corporate penalties totaling $2.7 million after being convicted for obstructing justice, violating the Act to Prevent Pollution from Ships, tampering with witnesses and conspiracy. Each company was ordered to pay part of its penalty to Gray’s Reef National Marine Sanctuary in recognition of the threat posed by illegal discharges of oily waste to the marine environment. DOJ

January 12, 2017 - 

Indiana-based manufacturer of orthopedic and dental implant devices Zimmer Biomet Holdings Inc. agreed to pay a $17.4 million criminal penalty in connection with a scheme to pay bribes to government officials in Mexico and for violations of the internal controls provisions of the Foreign Corrupt Practices Act involving the company’s operations in Mexico and Brazil. By failing to require appropriate due diligence and documentation and contracts for payments to third parties, Biomet allowed its Mexican subsidiary Biomet 3i Mexico S.A. de C.V. to pay bribes to Mexican customs officials through customs brokers and sub-agents so 3i Mexico could import contraband dental implants into Mexico. Importing those products into Mexico violated Mexican law because they lacked proper registration or labeling. In related proceedings, the company also agreed to pay the SEC disgorgement of $6.5 million including pre-judgment interest and $6.5 million as a civil penalty. DOJ

January 12, 2017 - 

Connecticut home healthcare provider Family Care Visiting Nurse and Home Care Agency, LLC and its owners David A. Krett and Rita C. Krett agreed to pay roughly $5.25 million to resolve allegations they violated the False Claims Act by billing for services which under Medicaid required a registered nurse when in fact a registered nurse did not provide the services. The government further alleged the company submitted claims to Medicaid for patients who were or may have been dually eligible for Medicare and Medicaid without first following required procedures for submitting claims to Medicare. DOJ (DCT)

January 12, 2017 - 

The Confederated Tribes of the Colville Reservation (CGT) agreed to pay roughly $246,000 to settle charges it violated the False Claims Act by submitting false claims to Medicaid seeking the reimbursement of mental health counseling services either not provided or not medically indicated or necessary. The CCT is a federally recognized, sovereign Indian tribe, with tribal offices located at Nespelem, Washington, on the Tribes’ reservation. DOJ (EDWA)

January 11, 2017 - 

Volkswagen AG agreed to plead guilty to three criminal felony counts and pay a $2.8 billion criminal penalty as a result of the company’s long-running scheme to sell approximately 590,000 diesel vehicles in the U.S. by using a defeat device to cheat on emissions tests mandated by the Environmental Protection Agency and California Air Resources Board, and lying and obstructing justice to further the scheme. In separate civil resolutions of environmental, customs and financial claims, VW also agreed to pay $1.5 billion for a total payout of $4.3 billion in criminal and civil penalties. DOJ

January 11, 2017 - 

Ireland-based Shire Pharmaceuticals LLC and certain subsidiaries agreed to pay $350 million to settle charges that Shire and the company it acquired in 2011, Advanced BioHealing violated the False Claims Act and Anti-Kickback Statute by using kickbacks and other unlawful methods to induce clinics and physicians to use or overuse their “Dermagraft” skin product. It is the largest False Claims Act recovery in a kickback case involving a medical device. According to the government, Dermagraft salespersons unlawfully induced clinics and physicians with lavish dinners, drinks, entertainment and travel; medical equipment and supplies; unwarranted payments for purported speaking engagements and bogus case studies; and cash, credits and rebates. The allegations originated in six whistleblower lawsuits filed under the qui tam provisions of the False Claims Act. The whistleblowers will receive a yet-to-be-determined whistleblower award from the proceeds of the government recovery. Whistleblower Insider

January 9, 2017 - 

Detroit-area neurosurgeon Aria O. Sabit was sentenced to 235 months in prison for his role in a $2.8 million health care fraud scheme in which he caused serious bodily harm to patients by performing unnecessary invasive spinal surgeries. Sabit owned and operated the Michigan Brain and Spine Physicians Group. He admitted deriving significant profits by convincing patients to undergo spinal fusion surgeries with “instrumentation” (medical devices designed to stabilize and strengthen the spine) that he never performed and billed public and private healthcare benefit programs for those fraudulent services. Whistleblower Insider

January 5, 2017 - 

Ultimate Nursing Services of Iowa, Inc. and its president Steven Tucker Anderson agreed to pay $1 million to settle charges they violated the False Claims Act by submitting cost reports for non-reimbursable travel and entertainment expenses and for non-reimbursable costs associated with services provided to Ultimate Nursing by other entities owned by Anderson or a family member. DOJ (NDIA)

December 29, 2016 - 

Kentucky-based manufacturer and distributor of cable and wire General Cable Corporation agreed to pay a $20 million penalty to resolve the government’s investigation into improper payments to government officials in Angola, Bangladesh, China, Indonesia and Thailand to corruptly gain business in violation of the Foreign Corrupt Practices Act (FCPA).  The company also agreed to pay approximately $55 million in disgorgement to the SEC in related proceedings for a total payout of roughly $76 million. DOJ

December 28, 2016 - 

United Shore Financial Services LLC agreed to pay $48 million to resolve allegations it violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) that did not meet applicable requirements. DOJ

December 28, 2016 - 

Bay Sleep Clinic, its related businesses — Qualium Corporation and Amerimed Corporation — and their owners and operators, Anooshiravan Mostowfipour and Tara Nader, agreed to pay $2.6 million to settle allegations they fraudulently charged Medicare for diagnostic sleep tests and medical devices in violation of Medicare payment rules. The allegations originated in a whistleblower lawsuit filed by Elma F. Dresser under the qui tam provisions of the False Claims Act. She will receive a whistleblower award of approximately $545,000 from the proceeds of the government’s recovery. DOJ (NDCA)

December 22, 2016 - 

Teva Pharmaceutical Industries Ltd., the world’s largest manufacturer of generic pharmaceutical products, and its wholly-owned Russian subsidiary Teva LLC (Teva Russia) agreed to pay a criminal penalty of more than $283 million in connection with schemes involving the bribery of government officials in Russia, Ukraine and Mexico in violation of the Foreign Corrupt Practices Act.  According to the companies’ admissions, Teva executives and Teva Russia employees paid bribes to a high-ranking Russian government official intending to influence the official to use his authority to increase sales of Teva’s multiple sclerosis drug, Copaxone, in annual drug purchase auctions held by the Russian Ministry of Health.  Teva also admitted to paying bribes to a senior government official within the Ukrainian Ministry of Health to influence the Ukrainian government’s approval of Teva drug registrations, which were necessary for the company to market and sell its products in the country.  In related SEC proceedings, Teva agreed to pay an additional $236 million in disgorgement for a total payout of roughly $520 million in criminal and regulatory penalties.  DOJ

December 22, 2016 - 

December 22, 2016 — California-based Total Call Mobile, LLC agreed to pay $30 million for defrauding the Lifeline Program, a federal government subsidy program that offers discounted mobile phone services to eligible low-income consumers.  According to the government, Total Call and its co-defendant Locus Telecommunications, LLC, and their shared corporate parent KDDI America, Inc., knowingly submitted false claims for federal payments by seeking reimbursement for consumers who did not meet Lifeline eligibility requirements.  As part of the settlement, Total Call admitted and accepted responsibility for the alleged misconduct, including seeking reimbursement for tens of thousands of ineligible consumers.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act.  The whistleblower will receive a yet-to-be-determined whistleblower award from the proceeds of the government’s recovery.  DOJ (SDNY)

December 21, 2016 - 

Odebrecht S.A., a global construction conglomerate based in Brazil, and Braskem S.A., a Brazilian petrochemical company, pleaded guilty and agreed to pay a combined total penalty of at least $3.5 billion to resolve charges with authorities in the United States, Brazil and Switzerland arising out of their schemes to pay hundreds of millions of dollars in bribes to government officials around the world in violation of the anti-bribery provisions of the Foreign Corrupt Practices Act.  It is the largest foreign bribery case in history.  DOJ

December 15, 2016 - 

Raciel Leon, manager of Mercy Home Care Inc. and a billing employee for D&D&D Home Health Care Inc. was convicted for his role in a $2.5 million Medicare fraud scheme.

According to evidence presented at trial, Leon and his co-conspirators used the companies to submit false claims to Medicare that were based on services that were not medically necessary, not actually provided and for patients that were procured through the payment of illegal kickbacks to doctors and patient recruiters.  DOJ

December 15, 2016 - 

New York City-based Forest Laboratories LLC and its subsidiary Forest Pharmaceuticals Inc. agreed to pay $38 million to resolve allegations they violated the False Claims Act and Anti-Kickback Statute by paying kickbacks to induce physicians to prescribe the drugs Bystolic, Savella and Namenda.  According to the government, Forest provided payments and meals to certain physicians in connection with speaker programs about the drugs as improper inducements to prescribe them.  The allegations originated in a whistleblower lawsuit filed by former Forest employee Kurt Kroening under the qui tam provisions of the False Claims Act.  He will receive a whistleblower award of approximately $7.8 million from the proceeds of the government’s recovery.  Whistleblower Insider

December 15, 2016 - 

E.I. du Pont de Nemours and Company agreed to a proposed settlement valued at approximately $50 million to resolve claims stemming from the release of mercury from the former DuPont facility in Waynesboro, Virginia which led to the contamination of more than 100 miles of river and associated floodplain in the South River and South Fork Shenandoah River watershed.

In addition to a cash payment of just over $42 million, DuPont will fund the design and implementation of significant renovations at the Front Royal Fish Hatchery, estimated to cost up to $10 million.  DOJ

December 15, 2016 - 

ThunderCat Technology, LLC agreed to pay $1 million to settle civil False Claims Act, Anti-Kickback Act, and Procurement Integrity Act claims relating to bid rigging and kickback schemes in connection with six government procurements.  According to the government, ThunderCat solicited or submitted inflated third party bids or “loser bids” during competitions for five government contracts and/or purchase orders awarded by the Department of Homeland Security on behalf of the U.S. Customs and Border Protection and U.S. Citizenship and Immigration Services and one government contract awarded by the General Services Administration.  In connection with one CBP contract, ThunderCat agreed to pay CPB employees 10 percent of ThunderCat’s profits on the contract in exchange for procurement sensitive independent government cost estimates prior to ThunderCat’s submission of its proposal.  DOJ(EDVA)

December 13, 2016 - 

Elite Lab Services, LLC, along with its husband-and-wife owners Gerard and Suzanne Dengler, agreed to pay $3.75 million to settle charges of their violating the False Claims Act through their billing Medicare for tens of thousands of miles that were never driven by Elite Lab’s personnel.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by former Elite Lab employee Karen Malcolm.  She will receive a whistleblower award of $787,500 from the proceeds of the government’s recovery.  DOJ (EDTX)