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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.

				

			

			
						
					
			

	
		
		

			

				
				
March 15, 2016

				 New York announced a settlement with the owner of two Manhattan restaurants for wage underpayments. The owner, Wallace Lai, admitted to a number of labor law violations, including keeping tips intended for delivery workers after customers ordered through online delivery services. From May 2014 until January 2015, the restaurants delivered food to customers through the food delivery websites Delivery.com, GrubHub.com, and Seamless.com. Through those websites, customers paid with credit cards, typically including a tip for delivery workers. Lai unlawfully kept the tips charged through the sites – never paying them to the delivery workers as customers intended. New York Labor Law prohibits employers from keeping any part of the tips that are intended for service employees, including delivery workers. NY				 			
	
		
		
	


 			




	
		
		

			

				
				
March 10, 2016

				 New York announced the felony convictions of estate planning attorney Stephen M. Newman and caregiver Joan M. Morgante, for stealing over $900,000 from the estates of wealthy brother and sister June and Worth Farrington. After being appointed sole trustee, between November 2008 and November 2011, Newman diverted over $900,000 in monies from the Farringtons’ trust accounts to himself.  Additionally, Newman diverted over $400,000 to Morgante, including the purchase of a $325,000 townhouse.  As part of his plea, Newman agreed to forfeit $800,000 and to surrender his licenses to practice law in New York and Florida. NY				 			
	
		
		
	


 			




	
		
		

			

				
				
March 10, 2016

				 Florida announced a lawsuit filed against Prime Resorts International, a central Florida-based timeshare resale company, and its President and owner, John Piccione for alleged violations of the Florida Deceptive and Unfair Trade Practices Act and the Florida Timeshare Resale Accountability Act. The defendants allegedly made unsolicited telephone calls to consumers nationwide claiming to have ready buyers and renters willing to pay a specified price for consumers’ timeshare properties. The defendants collected upfront fees from consumers ranging from $595 to more than $4,000, and purportedly did not have buyers or renters lined up to pay any price for consumers’ timeshares. FL				 			
	
		
		
	


 			




	
		
		

			

				
				
March 9, 2016

				 Florida arrested a couple for defrauding the Medicaid program out of more than $180,000 in fraudulent claims. Oscar Alzate, 48, and Alba Garcia, 48, owners of Digital Radiology Center, Inc. and Medisound, Inc., allegedly operated a clinic without the appropriate licensure or proper oversight by a physician as required by Florida law. The investigation revealed that Alzate and his partner Garcia, neither who are physicians, billed the Medicaid program for services never rendered. The clinic owners also allegedly forged physicians’ signatures on medical reports and provided defective mammography services. FL				 					 

						
Tagged in:
													  FCA State, 
													  Improper Medical Facility, 
													  Improper Medical Personnel, 
													  Laboratory and IDTF, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
March 9, 2016

				 New Jersey announced that the owner of a now-defunct Bergen County used car dealership, D.I.B Leasing, along with three employees and a bookkeeper, have been charged with conspiracy, money laundering, and other offenses in connection with bank financing scam that allegedly netted $1.4 million in fraudulent loans for luxury cars. Prosecutors allege the defendants created fake employment records, inflated incomes, and supplied false pay stubs and fictitious employee verifications to dupe banks into approving auto financing for customers whose income levels did not qualify them for loans on the pricey vehicles. NJ				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
March 8, 2016

				 A Connecticut psychiatrist will pay $404,798 to settle a civil False Claims Act lawsuit alleging that she submitted false claims for payments to Connecticut’s Medicaid program. The state alleged that, from March 2010 to September 2013, while operating a private practice in Mansfield, Dr. Panoor submitted upcoded claims indicating that she provided Medicaid patients with both group counseling and either individual psychotherapy or a detailed examination on the same dates of service when, in fact, she did not provide psychotherapy or detailed examination sessions but instead provided medication management services or a brief meeting with the patient for the purpose of monitoring or changing a patient’s drug prescription – services that are coded, and thus reimbursed, at lower payment rates.				 					 

						
Tagged in:
													  FCA State, 
													  Medicaid, 
													  Provider Fraud, 
													  Upcoding, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
March 7, 2016

				 A Colorado-based telecommunications and Internet service provider company, Level 3 Communications, has agreed to pay more than $8 million to resolve allegations it improperly withheld rental payments to the Massachusetts Department of Transportation (“MassDOT”) under an agreement that allows it to run fiber optic cables alongside state highways. The settlement agreement resolves allegations that Level 3 Communications breached its contract with MassDOT and violated the Massachusetts False Claims Act by concealing the amount it owed the state agency and knowingly avoiding its annual rent obligations. MA				 					 

						
Tagged in:
													  FCA State, 
													  Financial and Investment Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
March 7, 2016

				 The U.S. Supreme Court denied Apple Inc.’s request for the Court to review a lower court decision, clearing the way for the distribution of $400 million to U.S. consumers who paid artificially-inflated prices for e-books.  The case was tried jointly, between a 33-state coalition and the U.S. Department of Justice.  The district court’s ruling was affirmed by the United States Court of Appeals for the Second Circuit in June 2015.  With the Supreme Court declining to review that decision, Apple has no further opportunity to contest its liability. CT				 			
	
		
		
	


 			




	
		
		

			

				
				
March 4, 2016

				 Texas reached a settlement with online daily fantasy sports site FanDuel, under which the company will stop accepting paid entries for cash prizes in the state on May 2.  Traditional fantasy sports leagues that are not operated by a third party for revenue are, as a general rule, legal under Texas law.  In those leagues, participants generally split any pot amongst themselves, so there is no house that takes a cut.  FanDuel will continue to operate its free games in Texas, but will stop accepting paid contest entries on May 2.  In return, the Office of the Attorney General agrees not to take any legal action against FanDuel in connection with the operation of its contests.				 			
	
		
		
	


 			




	
		
		

			

				
				
March 3, 2016

				 New York announced an agreement with Endo Health Solutions Inc. and Endo Pharmaceuticals Inc. (“Endo”), which make and sell the long-acting opioid, Opana ER. The agreement requires Endo to cease all misrepresentations regarding the properties of Opana ER, to describe accurately the risk of addiction to Opana ER, and to summarize studies regarding Opana ER on its website. Endo must also create a program that will prevent its sales staff from promoting this powerful narcotic painkiller to health care providers who may be involved in the abuse and illegal diversion of opioids. Endo, an Irish company with U.S. headquarters in Pennsylvania, makes a variety of prescription drugs. Endo’s opioid drug Opana ER has been widely abused in New York State. NY				 					 

						
Tagged in:
													  Pharma Fraud, 
												
						

					
	
							
	
		
		
	


 			


											

						

								

									
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