Monthly Roundup -- September 2014
Here is our look-back at the key whistleblower and fraud developments we have written about over the past month:
Featured Posts and Commentary
Shire Pharmaceuticals LLC agreed to pay $56.5 million to settle charges it violated the False Claims Act through improper marketing and promotion of several drugs used to treat attention deficit hyperactivity disorder (ADHD) and ulcerative colitis. Click here for more.
A complaint alleging that the FDA engaged in whistleblower retaliation was dismissed by a federal court this week, but the case may be far from over. Click here for more.
The Right Livelihood Award Foundation Honorary Prize goes to Edward Snowden for “revealing the unprecedented extent of state surveillance.” He was jointly awarded the prize along with Alan Rusbridger, editor-in-chief of The Guardian, with whom Snowden collaborated to publish his findings on NSA surveillance. Click here for more.
The SEC announced an expected whistleblower award of more than $30 million. It will be the largest award to date under the SEC whistleblower program established in 2012 under the Dodd-Frank Act. It surpasses the $14 million award the SEC made to great fanfare roughly a year ago. Click here for more.
A Plus Home Health Care Inc. and its owners, Tracy Nemerofsky and her father, Stephen Nemerofsky, agreed to pay $1.65 million to settle charges that A Plus paid spouses of referring physicians for sham marketing positions to induce patient referrals. Click here for more.
The whistleblower advocacy and education group Taxpayers Against Fraud (TAF) just had their fourteenth annual conference in Washington. And in what has become a highlight of the three-day event, the organization made its annual Whistleblower of the Year award. This year’s winner is Elin Baklid-Kunz. She is the long-time employee of Halifax Health Medical Center who exposed the hospital’s wayward ways in how it compensated certain physicians to induce referrals to the hospital and, in many cases, unnecessary surgeries altogether. Click here for more.
Drug abuse and misuse by the older generation is on the rise, according to a recent article in the Wall Street Journal. And the forecast predicts things may get worse. Click here for more.
Attorney General Eric Holder wants to raise the award limits for Wall Street whistleblowers, citing the need to provide greater incentives to blow the whistle. Click here for more.
This week’s “Whistleblower Spotlight” shines on the unidentified individual who goes by the Twitter handle @mujtahidd. With more than 1.5 million followers, he appears to be on a one-man crusade to expose corruption in and bring transparency to this historically tight-lipped desert kingdom of 28 million people. Click here for more.
The DOJ announced its filing of two False Claims Act lawsuits against Reliance Medical Systems, two of its distributorships — Apex Medical Technologies and Kronos Spinal Technologies — and Michigan neurosurgeon Dr. Aria Sabit. The complaints allege that Apex and Kronos paid physicians, including Sabit, to induce them to use Reliance spinal implants in the surgeries they performed. Click here for more.
The Court of Appeals for the District of Columbia Circuit issued an opinion recently affirming a trial court’s grant of summary judgment against a qui tam relator. The ruling in U.S. ex rel. Folliard v. Government Acquisitions, Inc. dealt with two issues: whether the lower court properly denied discovery of certain information and whether the defendant had “knowingly” submitted false claims for payment to the government. Click here for more.
Nearly one in 10 people over the age of 60 suffer abuse and neglect, including physical, sexual and emotional abuse, consumer scams, health care fraud and various forms of financial exploitation. To protect older Americans, the DOJ’s Elder Justice Initiative launched an elder abuse website as a resource for elder abuse prosecutors, researchers and practitioners –- and, most importantly, for victims of such abuse. Click here for more.
In an eagerly awaited decision out of federal court in Idaho last week, Chief Judge B. Lynn Winmill has dealt a mighty blow to proponents of the so-called “Ag-Gag” laws that several states have passed in recent years to ensure what goes on in factory farms, stays in factory farms. Click here for more.
Smith & Nephew agreed to pay $11.3 million to settle charges it sold the U.S. government orthopaedic products that it claimed were US-made but actually came from Malaysia. Click here for more.
This week’s “Whistleblower Spotlight” shines on Bill Lloyd, a former agent with the insurance company MassMutual Financial Group based in Springfield, Massachusetts. Last month, Lloyd revealed himself as the unnamed whistleblower to whom the SEC awarded $400,000 for helping the agency uncover an allegedly fraudulent investment scheme at the company. Click here for more.
The Eighth Circuit has become the latest appellate court to join the fray over what is required of False Claims Act complaints. Last Friday, in U.S. ex rel. Thayer v. Planned Parenthood of the Heartland, the Court held that a qui tam relator need not plead a representative sample of a false claim in order to survive a motion to dismiss the complaint. Click here for more.
The much claimed but never proven tension between the False Claims Act and First Amendment is being tested again in United States v. Millenium Pharmaceuticals Inc., currently pending in the Eastern District of California. Click here for more.
The attorney-client privilege is perhaps the most critical component of the attorney-client relationship. As most would agree, without the privilege there would be no justice, no rule of law at all. But as with every rule, there is always an exception — even with the mighty attorney-client privilege. This was made painfully clear last week by Middle District of Georgia Judge Clay D. Land to the defendants in Barker v. Columbus Regional Healthcare System, Inc. Click here for more.
DOJ Fraud Settlements
The DOJ settled False Claims Act and other fraud allegations with CVS Caremark, Shire Pharmaceuticals, A Plus Home Health Care, Hewlett Packard, and Kawasaki Kisen, among others, for a combined recovery this month of roughly $200 million. Many of these matters were initiated by whistleblowers under the qui tam provisions of the False Claims Act. Click here for more.