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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.

				

			

			
						
					
			

	
		
		

			

				
				
August 17, 2021

				 Bristol Myers Squibb (BMS) has agreed to pay $75 million to a resolve a whistleblower’s allegations that it underpaid drug rebates owed to state Medicaid programs nationwide.  In order to ensure states pay competitive prices, federal law requires pharmaceutical companies to return a portion of payments from state Medicaid programs, calculated based on the average price paid by drug wholesalers.  The misconduct involved BMS underreporting their drugs’ Average Manufacturer’s Price by treating wholesaler fees as discounts, thus decreasing the amount it supposedly owed to the healthcare programs.  CA AG; NJ AG				 					 

						
Tagged in:
													  FCA State, 
													  Healthcare Fraud, 
													  Medicaid, 
													  Whistleblower Case, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 12, 2021

				 United Behavioral Health and United Healthcare Insurance Co. will pay $2 million in penalties to resolve claims that the insurer unlawfully denied coverage for mental health and substance use disorder treatment in violation of laws that require health insurance plans to cover mental health and substance use disorder treatment the same way they cover physical health treatment. New York and the federal Department of Labor alleged that United reduced allowed amounts for mental health and substance abuse services provided by non-physicians, but not for medical treatments provided by non-physicians, and conducting utilization reviews for psychotherapy that were not conducted at the same rate for medical/surgical services.  In addition the penalty, United agreed to pay $13.6 million to affected participants and beneficiaries.  DOL; NY				 					 

						
Tagged in:
													  Healthcare Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 4, 2021

				 For causing more than $100 million in losses to employers, employees, financial institutions, and financing companies and laundering more than $1 billion in stolen funds, Michael Mann, the owner of shuttered payroll service companies ValueWise and MyPayrollHR, has been sentenced to 12 years in prison.  In addition to misappropriating payroll funds and money laundering, Mann was also found to have fraudulently obtained tens of millions of dollars in loans from three financing companies, as well as fraudulently obtained lines of credit from several banks in the New York area.  NY AG; USAO NDNY				 					 

						
Tagged in:
													  Criminal Proceedings, 
													  Financial and Investment Fraud, 
													  Money Laundering, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 3, 2021

				 Trucking operator Complete Logistics Company, LLC (CLC) has agreed to a $2.38 million settlement to resolve allegations of falsely certifying compliance with California’s emissions regulations in order to obtain $2.2 million in state grants under the state’s Goods Movement Emission Reduction Program, which incentivizes trucking companies to reduce emissions by offering grants for newer, cleaner trucks.  The alleged misconduct occurred during a health-related absence by CLC’s owner; upon the owner’s return in 2017, immediate remedial measures were taken.  CA AG				 					 

						
Tagged in:
													  Certifications, 
													  Environmental Fraud, 
													  Government Programs Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 3, 2021

				 In the largest prevailing wage criminal case in the country, one of the largest contractors to complete projects on behalf of the State of Pennsylvania, Glenn O. Hawbaker, Inc., has agreed to pay more than $20 million in wages stolen from over a thousand of its workers.  Between 2003 and 2018, Hawbaker disguised wage theft on an estimated $1.7 billion in state contracts by artificially inflating costs by millions of dollars annually, and by claiming credits for prohibited costs.  PA AG				 					 

						
Tagged in:
													  Government Procurement Fraud, 
													  Prevailing Wage, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
July 21, 2021

				 For their part in creating and fueling the opioid epidemic, three of the nation’s largest drug distributors—McKesson Corporation, Cardinal Health Inc., and AmerisourceBergen Drug Corporation—as well as one of the nation’s largest drug manufacturers, Johnson & Johnson, have agreed to pay $26 billion over the next 18 years to resolve claims from nearly 4,000 lawsuits, including multiple state and local governments.  In addition to the monetary settlement, the companies have signed onto a 10-year injunctive relief agreement that will require them to implement certain data-driven oversight measures and not fund or lobby to promote opioids, among other things.  CA AG; FL AG; MI AG; NY AG; PA AG				 					 

						
Tagged in:
													  Healthcare Fraud, 
													  Pharma Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
July 19, 2021

				 Prime Healthcare Services, one of the largest hospital systems in the nation, its founder and CEO Dr. Prem Reddy, and interventional cardiologist Dr. Siva Arunasalam have agreed to pay $37.5 million to resolve two suits filed by former executive Martin Mansukhani, and former employees Marsha Arnold and Joseph Hill.  In violation of the federal and California False Claims Acts, certain Prime hospitals had allegedly submitted inflated invoices to Medi-Cal and other government health programs, or submitted claims to Medi-Cal and Medicare under Arunasalam’s provider number for services provided by an excluded physician.  Additionally, in acquiring Arunasalam’s physician practice and surgery center, Prime allegedly paid above fair market value for referrals from Arunasalam to one of their hospitals.  For being the first to file, one of the whistleblowers, Mansukhani, will receive a relator’s share of nearly $10 million.  CA AG; USAO CDCA				 					 

						
Tagged in:
													  Anti-Kickback and Stark, 
													  FCA Federal, 
													  FCA State, 
													  Healthcare Fraud, 
													  Hospital Fraud, 
													  Medicaid, 
													  Medical Billing Fraud, 
													  Medicare, 
													  Other Government Health Programs, 
													  Provider Fraud, 
													  Whistleblower Case, 
													  Whistleblower Rewards, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
July 14, 2021

				 Diesel Direct, LLC of Stoughton, Massachusetts will pay $850,000 to resolve claims brought in a qui tam action alleging that the company knowingly delivered nonconforming petroleum diesel fuel to state agencies while charging for a higher-priced and more environmentally-friendly biodiesel fuel; improperly charged state agencies a federal fuel excise tax; and failed to comply with the state's Supplier Diversity Program requiring spending with women-owned, minority-owned, and veteran-owned businesses. Mass				 					 

						
Tagged in:
													  Contract Non-Compliance, 
													  FCA State, 
													  Government Procurement Fraud, 
													  Pricing Fraud, 
													  Set-Asides and Preferences, 
													  Whistleblower Case, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
July 13, 2021

				 A subsidiary of Teachers Insurance and Annuity Association of America (TIAA) has agreed to pay $97 million in restitution and make significant reforms to settle charges for making misleading statements and failing to disclose conflicts of interests to tens of thousands of customers.  Between 2012 and 2018, advisors with TIAA-CREF Individual & Institutional Services LLC (TC Services) pressured customers—many of them teachers and public sector employees—to move their investments from low-cost employer-sponsored retirement plans to higher-cost individually-managed accounts, which generated hundreds of millions of dollars in fees for TIAA.  NY AG; SEC				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  Financial Institution Fraud, 
													  Misrepresentations, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
June 16, 2021

				 Bedrock Group LLC agreed to pay $3.5 million to Massachusetts to resolve allegations that the company violated the Massachusetts False Claims Act by failing to fully and timely refund the state following the company's failure to deliver one million N95 masks ordered by the state.  Massachusetts placed an emergency purchase order with the company, agreeing to pay $3.6 million for the one million masks, which were to be delivered by April, 2020.  The company delivered fewer than 100,000 masks and, after the state cancelled the purchase order, failed to refund the state's payment. Bedrock also agreed to a voluntary debarment from contracting with the state or any political subdivision for five years.   MA				 					 

						
Tagged in:
													  Contract Non-Compliance, 
													  COVID-19, 
													  FCA State, 
													  Government Procurement Fraud, 
												
						

					
	
							
	
		
		
	


 			


											

						

								

									
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