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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.

May 7, 2020

Seattle Pain Center, Northwest Analytics, and owner/physician Dr. Frank Danger Li have agreed to pay $2.85 million to settle allegations of defrauding Washington’s Medicaid program.  An investigation revealed that between 2013 and 2015, Li had instituted a policy required nearly every patient treated at Seattle Pain Center to be administered the full urine drug panel at each visit even if they were not medically necessary.  The drug tests were then sent to Li’s exclusively-owned laboratory to be analyzed.  Additionally, the investigation revealed that between 2007 and 2016, Li wrote an excessive amount of prescriptions for opioids, and at least 60 of his patients died due to opioid-related causes during this period.  AG WA; USAO WDWA

April 30, 2020

Israel-based Bank Hapoalim, together with its Swiss and other subsidiaries, will pay nearly $875 million and plead guilty to charges that it conspired with U.S. taxpayers and others to conceal $7.6 billion in thousands of Swiss and Israeli bank accounts from the Internal Revenue Service and other U.S. government entities, including New York State.  As part of its plea, the bank admitted that it assisted U.S. customers in setting up secret accounts, sheltering assets and income, and evading taxes.  The total payment by bank entities consists of $216.8 million in restitution to the IRS, $160.3 million in forfeiture, federal penalties of $239.8 million, $37.4 million in civil monetary penalties to the Federal Reserve System, and $220 million in penalties to the New York State Department of Financial Services.   As part of a deferred prosecution agreement, the bank will cooperate with ongoing investigations and disclose information regarding U.S.-related accounts. The bank simultaneously entered into a separate settlement agreement regarding money laundering with respect to the FIFA bribery investigation. DOJ; USAO SDNY; NY.

April 29, 2020

North Carolina physician Ibrahim Oudeh and his wife Teresa Sloan-Oudeh will pay up to $8.8 million to resolve claims of Medicare and Medicaid fraud.  Between 2010 and 2017, the Oudehs reportedly submitted more than 40,000 false claims, including more than 37,000 claims for laboratory tests, including nerve-conduction studies that Dr. Oudeh was not qualified to interpret, the vast majority of which were medically unnecessary.  To submit as many claims as they did, defendants falsely billed for office visits, in some instances billing for more than 24 hours of visits in a single calendar day.  The Oudehs sometimes used outside physicians to interpret laboratory tests, but paid those physicians less than their practice’s Medicare reimbursement, a violation of the Anti-Markup Rule.  Defendants will forfeit $3.3 million in assets and pay an additional $5.5 million.   USAO EDNC; NC

April 29, 2020

Ecotrust Forest Management and its non-profit affiliate, Ecotrust, will pay $4.4 million to resolve claims under the Oregon False Claims Act that they fraudulently claimed entitlement to New Market Tax Credits, which are meant to provide incentives for economic development in disadvantaged areas of the state, on their financing of two development projects, the Rough & Ready Sawmill in Cave Junction and the purchase of forestland in Desolation Creek.  The companies allegedly overstated their expenses on the projects in order to secure larger tax credits.  OR

April 15, 2020

A Florida-based reference laboratory, pain clinic, and two former executives have agreed to pay $41 million to settle claims of defrauding Medicaid, Medicare, TRICARE, and other government health programs by billing for medically unnecessary urine drug tests between 2010 to 2017.  Led by Michael T. Doyle and Christopher Utz Toepke, the defendants allegedly had a policy of automatically ordering both presumptive and definitive urine drug tests for all patients at every visit regardless of need, with Toepke’s Tampa Pain Relief Centers Inc. performing all presumptive tests, and Doyle’s Logan Laboratories Inc. performing all definitive tests.  The alleged False Claims Act violations were eventually brought to light in two qui tam cases; the whistleblowers of those cases will split a relator’s share of approximately $7.79 million.  DOJ; EDPA; MDFL; FL

March 4, 2020

STG Healthcare of Atlanta, Inc. and senior executives Paschal Gilley and Mathew Gilley have agreed to resolve fraud allegations by paying $1.75 million.  The case against the hospice was launched by two former employees, Serita Samuel and Miranda Eskridge, who alleged in a qui tam suit that STG Healthcare submitted false claims to Medicare and Medicaid that arose from illegal payments to so-called back-up medical directors, and that were on behalf of patients who were not terminally ill and thus ineligible for palliative care.  GA AG; USAO NDGA

March 2, 2020

Arizona became the third state, following Oregon and Washington, to reach a settlement with telecommunications CenturyLink resolving allegations that the company mislead consumers about its prices and fees.  The settlement is valued at $11 million, with the company agreeing to refund $1.9 million to consumers, provide $2 million in fiber optic services, and pay a fine of $7 million.  AZ

February 25, 2020

In a global settlement agreement with states and local entities, Mallinckrodt, the largest generic opioid manufacturer in the United States, has agreed to pay at least $1.6 billion in cash to a trust that would help fund treatment for opioid addiction.  Mallinckrodt also agreed to be subject to stringent injunctive terms, including prohibitions on the marketing of its opioid products and safeguards to prevent them from ending up in the wrong hands.  The pharmaceutical company had earlier paid $35 million to the DOJ for other opioid related charges.  CA AG; FL AG; GA AG; VA AG

February 20, 2020

Three Vermont nursing homes operated by Genesis Healthcare will pay $740,143 to resolve claims of neglect and substandard care arising from inadequate staff training, improper use of third-party contractors, and failure to adequately document resident care.  The settlement also requires Genesis to create a Patient Care Coordinator position and be subject to an independent monitor.  VT

February 4, 2020

Psychotherapy, adolescent therapy, and tutoring company The Center of Attention, LLC: No One Left Behind, together with its owner Selina Christian, will pay $200,000 and be suspended from Connecticut's Medicaid program, based on allegations that defendants violated the Connecticut False Claims Act and submitted false claims for services that were either never provided, or that were for non-psychotherapy services that were not covered by Medicaid.  CT
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