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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.

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; AG FL

July 22, 2020

Tony Garrett Taylor has been sentenced to 8 years in prison and ordered to pay over $6 million to the North Carolina Medicaid program and over $1 million to the IRS after pleading guilty to committing healthcare fraud and tax evasion.  Along with his brother, Jerry Lewis Taylor, the defendant conspired to use outpatient behavioral health services companies owned and operated by the brothers to submit false claims to Medicaid for services that were either never provided or misrepresented.  Jerry Lewis Taylor has also pleaded guilty and is currently awaiting sentencing.  AG NC

July 21, 2020

The Montachusett Regional Transit Authority (MART), a quasi-public transportation authority that brokers medical transportation, will pay $300,000 to resolve allegations that it improperly caused false claims to be submitted to MassHealth, the Massachusetts state Medicaid program. MART allegedly did not have appropriate procedures in place to verify that its transportation subcontractors had actually provided rides as they claimed, and MART billed MassHealth for thousands of rides that were not, in fact, provided. MA; USAO MA

July 13, 2020

The owner and operator of a skilled nursing facility has agreed to pay $1 million to settle allegations of submitting false claims to Medi-Cal in violation of the California False Claims Act.  According to the Attorney General, Legacy Post-Acute Rehabilitation Center (Legacy) failed to provide the minimum number of nursing hours required for the level of care that it billed for.  AG CA

July 10, 2020

Universal Health Services, Inc. and UHS of Delaware, Inc. (collectively, UHS), and a Georgia-based UHS facility, Turning Point Care Center, LLC, have agreed to pay a combined $122 million to settle 18 qui tam cases pending in four jurisdictions.  In violation of the False Claims Act, UHS allegedly billed federal healthcare programs—including Medicare, Medicaid, TRICARE, the Department of Veteran Affairs, and the Federal Employee Health Benefit programs—for medically unnecessary inpatient behavioral health services, failed to provide adequate or appropriate services, and paid illegal inducements to beneficiaries of those programs.  UHS will pay over $88 million to the federal government and nearly $29 million to individual states, for a combined penalty of $117 million, with a relator share of about $15.8 million.  Turning Point will pay $5 million to the federal government and the State of Georgia; the whistleblower in that case will receive $861,853.64.  USAO MDFL; USAO NDGA; USAO EDPA; AG FL; AG MI; AG NC; AG VA

July 7, 2020

Deutsche Bank AG and Deutsche Bank Trust Company America will pay a $150 million penalty to New York in a settlement with the State’s Department of Financial Services resolving charges that the bank failed to adequately monitor the activity of its customer Jeffrey Epstein and failed to adequately monitor its international corresponding banking relationships with Danske Bank Estonia and FBME Bank.  In the case of Epstein, Deutsche Bank processed hundreds of transactions totaling millions of dollars that allegedly should have prompted additional scrutiny.  In the case of Danske Bank and FBME, Deutsche Bank was alleged to have been put on notice that those foreign banks were engaged in money laundering but, despite assigning the highest risk ratings to those institutions, failed to take appropriate actions to prevent the processing of suspicious transactions by those banks through Deutsche Bank accounts.  NY

July 2, 2020

The Lithuanian Assistance Foundation, together with several of its individual officers and directors, will pay $7 million and be dissolved.  The settlement resolves claims of charity fraud based on allegations that property interests donated to the Foundation were improperly transferred to members of the board, their relatives, and employees at prices significantly below the fair market value.  The Foundation failed to disclose the transfers in regulatory filings, and filed false registration renewals.  CA

July 1, 2020

Novartis Pharmaceuticals Corporation will pay a total of $678 million to resolve a case brought by a whistleblower, Oswald Bilotta, alleging that between 2002 and 2011 the pharmaceutical company violated the Anti-Kickback Statute and False Claims Act by providing doctors with cash payments and luxury travel and meals to induce them to prescribe Novartis cardiovascular and diabetes drugs reimbursed by federal healthcare programs.  The total settlement consists of $591.4 million as federal FCA damages, $48.2 million as state FCA damages for Medicaid false claims submitted to 28 states and the District of Columbia, and $38.4 million as forfeiture under the Anti-Kickback Statute.  The whistleblower award has not yet been determined.  In addition to the monetary settlement, Novartis entered into a Corporate Integrity Agreement obligating the company to, among other things, significantly reduce its volume and spending on paid speaker programs.  DOJ; USAO SDNY; CA AG; MI AG; NY AG

June 3, 2020

In the largest consumer relief package ever obtained in California against a timeshare company, Welk Resorts Inc., which develops and operates timeshares in the U.S. and Mexico, has agreed to a $3.5 million settlement with the California Attorney General’s Office, the San Diego District Attorney’s Office, and the California Department of Real Estate.  The California-based company’s sales practices allegedly violated the state’s Timeshare Law, Vacation Ownership Timeshare Act of 2004 (VOTA), the Unfair Competition Law (UCL), and the False Advertising Law (FAL).  In addition to the settlement payment, which will go toward restitution, Welk has also agreed to pay $2 million in penalties and reimbursement of investigation costs, and will implement a compliance program to prevent future violations.  CA AG

May 19, 2020

The country’s largest subprime auto financing company, Santander Consumer USA Inc, has agreed to pay over $550 million to resolve allegations of violating consumer protection laws by knowingly placing consumers in auto loans that the company expected would default at a rate of over 70%.  Under the settlement, affected consumers in 34 states who defaulted on loans between 2010 and 2019 will receive restitution.  Additionally, Santander has agreed to various relief efforts, including transferring titles and waiving balances for consumers who defaulted on loans and had not had their cars repossessed yet, waiving balances or debt still owed even on cars already repossessed, and helping to repair consumer credit scores.  CA AG; NY AG; VA AG
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