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State Enforcement Actions

Each state enforces its laws and defends its interests, and states often work with the federal government in investigating and prosecuting corporate frauds.  Whistleblowers with knowledge of fraud or wrongful conduct that involves state or local funds or programs may be able to bring a claim under a state or local False Claims Act, and may be eligible to receive a monetary reward and protection against retaliation.

Below are summaries of recent settlements, successful prosecutions, and enforcement actions by states. If you believe you have information about fraud which could give rise to a claim under a State or Local False Claims Act or other whistleblower reward provision, please contact us to speak with one of our experienced whistleblower attorneys.

June 1, 2022

Behavioral health provider Healthkeeperz, Inc. has agreed to pay $2.1 million to resolve allegations that it falsely billed North Carolina’s Medicaid program for services that were not covered.  The allegations arose from a lawsuit filed by Ginger Hill under the qui tam provisions of the federal False Claims Act and the North Carolina False Claims Act.  USAO WD NC; NC

May 19, 2022

Retailer H&M will pay $36 million to New York State to resolve claims that the company violated a New York law which requires gift card issuers to turn over unused balances on gift cards to the state’s Abandoned Property Fund after five years of inactivity.  The retailer repeatedly lied to the state about its failure to transfer the unused gift card balances as required, and falsely told the state that an out-of-state company was handling its gift cards business. A whistleblower who filed a lawsuit under the New York False Claims Act will receive $7.74 million for bringing H&M’s misconduct to light.  NY

May 9, 2022

Prism Behavioral Solutions has agreed to pay $650,000 to resolve allegations of violating the federal and California False Claims Acts by billing California’s Medicaid program for services not provided to autistic children and young adults.  The whistleblower in this case, Diana Mason, is a behavioral analyst employed by Prism, and will receive a $170,000 share of the settlement.  USAO SDCA; CA AG

May 4, 2022

Intuit reached an agreement with all 50 states to pay $141 million in restitution for deceptively steering low-income taxpayers to a paid tax preparation service rather than the free service as advertised. Intuit utilized deceptive television ads (“free, free, free”), paid search advertisements to direct customers to Intuit’s “freemium” product, and blocked its IRS Free File landing page from search engine results during the 2019 tax filing season. NYAG; NJ OAG; DE AG; FL AG; NY AG; PA AG; NC AG

May 3, 2022

McKesson Corp., Cardinal Health Inc., and AmerisourceBergen Drug Corp. will pay $518 million for their role in fueling the opioid epidemic. The three companies made billions by shipping excessive amounts of oxycodone, fentanyl, hydrocodone, and other prescription opioids, knowing they would likely wind up in the hands of drug dealers and people suffering from substance use disorder, and often filled orders without adequate identification or reporting. WA AG

March 25, 2022

Two New York-based home health agencies, All American Homecare Agency and Crown of Life Care NY LLC, have agreed to pay a total of $5.4 million to settle allegations of violating federal and state False Claims Acts.  The agencies had allegedly paid their home health aides below minimum wage, despite claiming otherwise and receiving millions for said wages from Medicaid.  In addition to the monetary penalties, the agencies will also pay back wages owed to current and former aides.  NY AG; USAO EDNY

March 24, 2022

A New York woman who defrauded the state out of millions of dollars has been sentenced to 3 to 9 years in prison and ordered to pay more than $4 million in restitution.  According to the Attorney General’s Office, Leslie Montgomery lured low-income New Yorkers to Health Living Community Center under the guise of helping them find housing, then used their information to submit false claims to a Medicaid-funded managed care organization.  The claims for custom-molded back braces were medically unnecessary and not requested by or provided to the intended recipients.  Montgomery then hid the illegal proceeds through multiple shell companies, including LCM Livery P/U, Inc.  NY AG

March 16, 2022

Online travel agency Fareportal Inc., which operates travel websites such as CheapOair.com and OneTravel.com, has agreed to pay $2.6 million to settle claims of misleading consumers with deceptive marketing tactics intended to create false demand and pressure consumers into making purchases.  As part of the settlement, the company is also required to display accurate, real-time information to consumers.  NY AG

March 14, 2022

An energy service company has agreed to pay $2.15 million in restitution to New York consumers after an investigation found that its dishonest business practices caused consumers to pay hundreds of dollars extra per year for gas and electricity.  In addition to the monetary penalty, Family Energy is also required to take measures to prevent future abuses, including adequately training its representatives, monitoring and recording telephone communications, refraining from misleading marketing, and implementing disciplinary actions for any violations.  NY AG

March 11, 2022

California state and local entities secured a $3.25 million settlement with Brookdale Senior Living, Inc. resolving allegations that the skilled nursing facility company misrepresented its services and quality of care, fraudulently inflating the star ratings for specific Brookdale facilities in California.  The government alleged that Brookdale failed to timely provide required notice to residents of transfers or discharges, and over-reported its nursing staffing hours to CMS.  CA DOJ
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