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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.

November 6, 2014

Michigan Attorney General announced the distribution of $747,000 from the State’s Foreclosure Scam Restitution Fund to compensate 36 southeast Michigan victims of mortgage modification fraud from Nationwide Consulting, LLC. The operators of the business, Kenneth Sandoval and Zacharia Ortiz were both previously convicted for their role in the scam. MI AG

November 5, 2014

The Florida Attorney General’s Office filed a complaint against Federal Verification Co, Inc. dba GSA Applications for allegedly misleading small businesses by claiming to be the U.S. General Services Administration or implying a government affiliation to solicit small businesses and guarantee them a GSA contract for an upfront fee ranging typically from $5,000 to $8,000. FL AG

October 31, 2014

Oklahoma-based dental company, Ocean Dental PC, which operates 28 clinics in seven states, agreed to pay more than $5M to settle charges it violated the False Claims Act by submitting false claims to the Oklahoma Medicaid program for dental work never performed or billed at a higher rate than allowed. The charges apparently stem from dental restorations by former employee Robin Lockwood who was sentenced to 18 months in federal prison in a separate case. NewsOK

October 16, 2014

Texas Attorney General Greg Abbott entered into a settlement with generic drug maker Ranbaxy Pharmaceuticals, Inc., Ranbaxy Laboratories, Inc., Ranbaxy USA, Inc. and Ranbaxy, Inc. to resolve allegations they violated the Texas Medicaid Fraud Prevention Act by fraudulently reporting inflated drug prices to the Medicaid program. Under the settlement, Ranbaxy must pay the State of Texas about $18M. TXAG

October 13, 2014

California Attorney General Kamala D. Harris announced a $28.4M settlement with Aaron’s, Inc., the second largest rent-to-own business in the nation, to resolve allegations the company violated California consumer protection and privacy laws by charging improper late fees, overcharging customers who paid off contracts early, and omitting important contract disclosures. The settlement requires Aaron’s to refund $25M to California customers who signed lease agreements between April 1, 2010 and March 31, 2014 and to pay $3.4M in civil penalties and fees. Approximately 100,000 California customers will be eligible for restitution. CAAG

October 9, 2014

New York Attorney General Eric T. Schneiderman announced a settlement with retail specialty pharmacy Sorkin’s Ltd Rx. (d/b/a CareMed Pharmaceutical Services) resolving allegations it made false statements to the New York State Medicaid Program to secure expeditious prior authorizations for the coverage of specialty drugs, and that it submitted false claims to the New York State Medicaid Program for certain prescription medications that were restocked and resold and for refills that recipients never obtained. Sorkin’s will return $846,224 to Medicaid. NYAG

October 9, 2014

New York Attorney General Eric T. Schneiderman announced an agreement with Citigroup Global Markets, Inc. to reimburse more than 31,000 Citi customers who were charged higher advisory fees than they negotiated. The agreement returns nearly $16 million to about 31,000 Citigroup customers. NYAG

October 8, 2014

New York Attorney General Eric T. Schneiderman announced that his office, along with the Attorneys General of 49 other states and the District of Columbia, the Federal Trade Commission, and the Federal Communications Commission, reached a $105M settlement with AT&T Mobility LLC resolving allegations that AT&T Mobility placed on consumers’ mobile telephone bills charges for third-party services that had not been authorized by consumers, a practice known as “cramming.” One common cramming charge is a $9.99-per-month premium text message subscription service (also known as PSMS) for horoscopes, trivia, and sports scores that consumers often never requested. NYAG

September 18, 2014

New York Attorney General Eric T. Schneiderman announced that 46 states and the District of Columbia have reach a settlement agreement with Minnesota-based company Medtronic to resolve claims under the False Claims Act that Medtronic improperly induced physicians to recommend Medtronic devices to treat cardiac rhythmic disease. New York led a national team composed of members from Oregon, Texas and California to negotiate the settlement. The federal government settled its matter in May of this year. The agreement requires Medtronic to pay the settling states $362,362 which will go to those states’ Medicaid programs. The matter was brought by a whistleblower, Adolfo Schroeder. NYAG

August 20, 2014

New York Attorney General Eric T. Schneiderman and U.S. Attorney Loretta Lynch announced they have entered into settlement agreements with New Rochelle nursing home Ralex Services, Inc., doing business as Glen Island Center for Nursing and Rehabilitation, to resolve allegations the facility and its owner Leah Friedman submitted tens of thousands of inflated claims to the New York State Medicaid Program. According to the government, the 182-bed Glen Island facility submitted more than 62,000 false claims to New York’s Department of Health from April 2002 to November 2006. The false claims used Medicaid reimbursement rates based, in part, on up-coded Patient Review Instruments (PRIs), which falsely represented the degree of care required by many Glen Island residents. Under the settlement, Glen Island Center and Friedman will return $2.2M to Medicaid. NYAG
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