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Government Enforcement Actions

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July 30, 2020

Computer Sciences Corporation (CSC), now known as DXC Technology, and New York City have agreed to pay approximately $2.8 million to resolve allegations of violating the federal and New York State False Claims Acts in connection with New York City’s Early Intervention Program (EIP), which provides speech and physical therapy services for infants and toddlers with possible developmental disabilities.  According to a qui tam lawsuit, while retained by the City to process and submit its EIP claims to various insurers, CSC allegedly received permission from the City to categorize claims submitted to private insurers as “denied” if no response was received within 90 days.  CSC then resubmitted those claims to Medicaid using an improper code, causing Medicaid to make payments it would not have otherwise.  For revealing the misconduct, the unnamed whistleblower in this case will receive $416,250.  AG NY; USAO SDNY

July 28, 2020

Savraj Gata-Aura, a British citizen, has been sentenced to four years in prison and ordered to forfeit nearly $3 million for his role in a massive Ponzi scheme involving coworking space Bar Works that defrauded over 800 investors of more than $40 million.  Together with fellow British citizen Renwick Haddow—who was widely reported to be disqualified from serving as the director of a U.K. company and was managing Bar Works under the alias “Jonathan Black”—Gata-Aura solicited investors by making material misrepresentations about Bar Works’ management and the company’s financial condition.  Haddow is due to be sentenced later this year.  USAO SDNY

July 28, 2020

A pharmaceutical company accused of paying illegal inducements to physicians has agreed to pay $3.5 million to resolve allegations of violating the False Claims Act.  In order to induce physicians to prescribe its newly-launched local analgesic, EXPAREL, Pacira Pharmaceuticals Inc. allegedly paid doctors kickbacks that were half-heartedly disguised as grant money for research.  In order to receive the so-called research grant, Pacira required EXPAREL to be placed on formulary at the physician’s institution, but did not document why such research was needed or follow up on research results.  The fraud was eventually exposed by a pharmacist in a qui tam suit; the pharmacist will receive $638,000 as part of the settlement.  USAO NJ

July 27, 2020

The owner and operator of three California-based companies, Brandon Frere, has been sentenced to over three years in prison for using deceptive sales tactics to draw customers to his companies’ student loan repayment services programs.  Between 2014 and 2018, Frere allegedly instructed employees of American Financial Benefits Center (AFBC), the Financial Education Benefits Center (FEBC), and Ameritech Financial (Ameritech) to make false statements concerning the companies’ abilities, engage in improper enrollment practices that made customer payments look smaller, and hide monthly fees.  A hearing later this year will determine the amount of restitution that Frere will be required to pay.  USAO NDCA

July 24, 2020

Several divisions of pharmaceutical company Indivior, which marketed of the opioid-addiction drug Suboxone, pleaded guilty to felony healthcare fraud, entered into a five-year Corporate Integrity Agreement, and will pay a total of $600 million in criminal fines, restitution, civil damages, and penalties.  In six separate cases brought by whistleblowers, Indivior was also alleged to have caused false claims to be submitted to government healthcare programs including by promoting the sale of Suboxone to physicians who were prescribing it outside of medically accepted indication, misrepresenting the likelihood of Suboxone being diverted, and taking steps to delay generic competition for Suboxone. Indivior admitted making false statements about the safety of the film version of Suboxone in order to promote its sale.  In addition, the FTC claimed that violated antitrust laws through a deceptive scheme to thwart lower priced generic competition with Suboxone.  The total settlement consists of criminal restitution of $289 million; a civil settlement of $300 million, with $209.3 million paid to resolve claims by the federal government and $90.7 million to participating states; and, $10 million in penalties to the Federal Trade Commission.  The settlement also requires Indivior to take steps including the dissolution of its Suboxone sales force. Indivior was until 2014 a subsidiary of Reckitt Benckiser Group PLC, which previously paid $1.4 billion to resolve claims related to Suboxone marketing.  DOJ; USAO NJ; FTC

July 23, 2020

Certified Forensic Loan Auditors, LLC (CFLA) and its president and CEO, Andrew Lehman, have been ordered to pay a suspended judgment of $3 million in restitution and $40,000 in civil monetary penalty for making misleading statements about the content and efficacy of its services, the qualifications of its employees, and its ability to help customers avoid foreclosure, all while charging unlawful advance fees.  For violating Regulation O and the Consumer Financial Protection Act of 2010 (CFPA), CFLA and Lehman have been permanently banned from providing similar services in the future.  CFPB

July 23, 2020

Two pharmacists who were co-owners of Advantage Pharmacy in Mississippi have been sentenced to over 12 years in prison each and ordered to pay between $9 million and $29 million in civil monetary judgment, and between $185 million and $189 million in restitution for committing healthcare fraud.  According to the press release, Glenn Doyle Beach and Hope Thomley marketed, dispensed, and distributed compounded medications without regard to medical necessity, causing various health benefit programs, including TRICARE, to pay over $200 million in reimbursements.  Thomley’s husband, Randy Thomley, has been sentenced to 8 years in prison and ordered to pay judgment and restitution of $3.6 million each for his role in helping to recruit TRICARE beneficiaries.  USAO SDMS

July 23, 2020

Progenity, Inc., f/k/a Ascendant MDx, Inc., has agreed to pay a total of $49 million to resolve allegations that the California-based clinical laboratory submitted false claims to Medicaid, the VA, TRICARE, and the Federal Employees Health Benefits Program (FEHBP) through different fraudulent schemes.  First, from 2012 to 2016, Progenity allegedly billed the programs for non-reimbursable prenatal tests using a reimbursable billing code.  Second, in claims originally brought by a whistleblower under the False Claims Act, the company was alleged to violate the Anti-Kickback Statue by providing improper incentives to physicians—including paying above fair market value for blood specimen “draw fees”, providing tens of thousands of dollars in free food and alcohol, and routinely reducing or waiving co-insurance or deductibles—in order to induce physicians to order their tests.  Approximately $35.9 million of the settlement proceeds will go toward resolving federal claims, with the remaining $13.1 million paid to different states.  AG NC; USAO SDCA; USAO SDNY

July 22, 2020

Auto parts distributor CWD Holdings LLC, which does business as Centric Parts, will pay $8 million to resolve claims in False Claims Act cases brought by two whistleblowers, Steven Hughes and Jeffrey Hawk.  The government alleged that over the course of ten years the defendant imported brake pads, falsely identifying them as unmounted brake pads, which are not subject to any tariff, when they were, in fact, mounted brake pads, which are subject to a 2.5% tariff.  Defendant thereby knowingly evaded millions of dollars in customs duties.  The whistleblowers will share a $1.48 million whistleblower award.  USAO ED MI; USAO CD CA
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