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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 3, 2016

				 New York announced that Keisha Relf Davis, a New York State Department of Education vocational counselor, pleaded guilty to taking part in a scheme that stole over $2.3 million from New York State. As part of the scheme, Relf Davis, in exchange for cash bribes, approved students for the Office of Adult Career and Continuing Education Services’ Vocational Rehabilitation Program (“ACCES-VR”), although these students never applied to the program. The ACCES-VR program was created to help eligible New Yorkers with disabilities and functional limitations gain self-dependence through education, training, and employment. Relf Davis knew that the students she approved did not have disabilities or functional limitations to qualify for this program. NY				 					 

						
Tagged in:
													  Education Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 1, 2016

				 New York and the Justice Department announced that St. Joseph’s Hospital Health Center (St. Joseph’s) will pay $3.2 million to resolve allegations that it violated the federal and New York False Claims Act by presenting false claims for payment to the state Medicaid program for mental health services rendered by unqualified staff. settlements resolve allegations that St. Joseph’s knowingly presented false claims for payment to Medicaid for mobile-crisis outreach services rendered from January 1, 2007 through February 29, 2016 by personnel who failed to satisfy the basic CPEP staffing requirements. By submitting claims for payment to Medicaid without disclosing that its CPEP staff failed to meet the regulatory staffing requirements, and by accepting payment for these claims, the governments allege that St. Joseph’s misrepresented its compliance with mental health staffing requirements that are central to the provision of counseling services and, by doing so, violated the False Claims Act.  As part of the settlements, St. Joseph’s admits that it was improper to have conducted mobile crisis outreach visits without a member of its CPEP professional staff present and then bill Medicaid for such services. NY				 					 

						
Tagged in:
													  FCA Federal, 
													  FCA State, 
													  Hospital Fraud, 
													  Improper Medical Personnel, 
													  Medicaid, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
July 28, 2016

				 State Street Bank and Trust Company (State Street) will return $75 million in profits to resolve allegations it provided misleading information as to how it priced foreign exchange transactions, Massachusetts announced. The agreement is part of a $382 million federal-state global resolution in conjunction with the U.S. Securities and Exchange Commission, the U.S. Department of Justice, and the U.S. Department of Labor, along with three class action lawsuits. The agreement with the AG’s Office requires State Street to provide $75 million in disgorgement, along with a payment of $500,000 to the Commonwealth. Additional disgorgement and penalties will be paid by State Street through separate agreements with federal enforcement entities. MA				 					 

						
Tagged in:
													  Foreign Exchange, 
													  Misrepresentations, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
July 25, 2016

				 Florida announced the arrests of three individuals for operating a $1 billion Medicare and Medicaid fraud scheme involving numerous Miami-based health care providers. Attorney General Bondi’s MFCU, as part of the HEAT Strike Force, assisted in identifying more than $100 million of Medicaid fraud in connection to this scheme. According to the indictment, Philip Esformes, 47, operated a network of more than 30 skilled nursing homes and assisted living facilities that gave access to thousands of Medicare and Medicaid beneficiaries. Many of these beneficiaries did not qualify for skilled nursing home care or for placement in an assisted living facility. However, Esformes and co-conspirators admitted the beneficiaries to Esformes Network facilities, and received medically unnecessary services billed to Medicare and Medicaid. The defendants also allegedly received kickbacks by steering the beneficiaries to other health care providers, including community mental health centers and home health care providers, who also performed medically unnecessary treatments billed to Medicare and Medicaid. In order to hide the kickbacks from law enforcement, the kickbacks were often paid in cash, or were disguised as payments to charitable donations, payments for services and sham lease payments. FL				 					 

						
Tagged in:
													  Anti-Kickback and Stark, 
													  FCA State, 
													  Healthcare Fraud, 
													  Lack of Medical Necessity, 
													  Medicaid, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
July 21, 2016

				 New Jersey filed an action against an Ocean County home improvement contracting company and two of its owners for allegedly taking more than $1.1 million from Superstorm Sandy victims – including over $898,000 in federal relief grants – and failing to begin or complete the contracted-for work. The Price Home Group Limited Liability Company of Manahawkin, and its owners Jonathan Price of Manahawkin, and Scott Cowan of Demarest, took significant initial payments to elevate or replace Sandy-damaged homes then failed to begin work, performed the work in a substandard manner and/or abandoned unfinished projects without returning for weeks, months, or at all, according to the state’s Complaint filed in Ocean County Superior Court. NJ				 					 

						
Tagged in:
													  Grant and Research Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
July 19, 2016

				 New York announced a $4.28 million settlement with international art dealer Gagosian Gallery following an investigation into sales tax collection practices. The Attorney General alleges that from at least 2005 to 2015, Pre-War Art, Inc., a California affiliate of Gagosian Gallery, sold and shipped nearly $40 million of art to customers in New York without collecting or remitting New York state and local sales tax. During this time, employees of Pre-War, and the Gagosian Gallery location in New York, engaged in substantial economic activity to promote and facilitate the sale of Pre-War’s art in New York. Additionally, the Attorney General alleges that from at least 2012 to 2015, Gagosian Gallery Inc. sold a significant volume of art in New York that was shipped out of state, for which it should have, but did not, collect New York state and local sales tax. NY				 					 

						
Tagged in:
													  Tax Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
July 18, 2016

				 Bristol-Myers Squibb agreed to a $30 million settlement to resolve allegations of unlawful kickbacks to physicians in the marketing of Pravachol and other drugs.  The claims were made in a whistleblower suit filed under the California Insurance Frauds Prevention Act by three former Bristol-Myers sales representatives, who will receive a share of the settlement.  CA				 					 

						
Tagged in:
													  Anti-Kickback and Stark, 
													  Pharma Fraud, 
													  Private Insurance Whistleblower Reward Programs, 
													  Whistleblower Case, 
													  Whistleblower Rewards, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
July 8, 2016

				 Virginia announced that it has secured financial commitments of up to $12 million from Alpha Natural Resources for cleanup and reclamation of the former Twin Star mine in Buchanan County. The cleanup funds, which were secured as part of the federal bankruptcy proceedings of Alpha Natural Resources, will provide significant water quality and environmental benefits to Buchanan County and prevent taxpayers from having to fund cleanup, closure, and water quality improvement efforts at the former mine site. The Twin Star complex is the only Virginia mine still owned by Alpha, after the company sold off its other Virginia mines. VA				 					 

						
Tagged in:
													  Environmental Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
July 8, 2016

				 California announced that the Bureau of Children’s Justice and False Claims Unit of the California Department of Justice has reached a settlement agreement with K12 Inc., a for-profit online charter school operator, and the 14 affiliated non-profit schools known as the California Virtual Academies (“CAVA Schools”) that it manages, over alleged violations of California’s false claims, false advertising and unfair competition laws. As part of the settlement, which is subject to court approval, K12 will provide approximately $160 million in debt relief to the non-profit schools it manages—“balanced budget credits” that were accrued by the schools as a result of the fee structure K12 used in its contracts—and will pay $8.5 million in settlement of all claims.  In addition, K12 has agreed to implement significant reforms of its contracts with the CAVA Schools, undergo independent reviews of its services for students with disabilities, ensure accuracy of all advertisements, and provide teachers with sufficient information and training to prevent improper claiming of attendance dollars. CA				 					 

						
Tagged in:
													  Education Fraud, 
													  FCA State, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
July 8, 2016

				 Florida and the Federal Trade Commission announced that a federal court has temporarily shut down an international tech support operation bilking consumers out of millions of dollars. According to the investigation, the scam attempted to scare consumers into believing their computers were compromised by malware or hackers, and then company representatives pretending to be certified by or affiliated with Microsoft and Apple offered to fix the problem for a fee. The court order temporarily shut down the defendants’ operation, froze the defendants’ assets and placed control of those assets with a court-appointed receiver. The complaint filed jointly by Attorney General Bondi’s Office and the FTC alleges that defendants based in Florida, Iowa, Nevada and Canada relied on a combination of deceptive online ads and misleading, high-pressure sales tactics to frighten consumers into spending hundreds of dollars for dubious computer repairs and antivirus software. FL				 			
	
		
		
	


 			


											

						

								

									
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