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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 18, 2022

The organized healthcare system for Ventura County, as well as three healthcare providers, have agreed to pay a combined total of $70.7 million to resolve allegations of violating the California and federal False Claims Acts in connection with Medi-Cal’s Adult Expansion program, which extended coverage to previously uninsured adults without dependents.  Gold Coast Health Plan, Dignity Health, Clinicas del Camino Real, Inc., and Ventura County (the owner and operator of Ventura County Medical Center) allegedly submitted, or caused to be submitted, bills for unallowed expenses, bills for “Additional Services” that were duplicative of services already required, and bills with pre-determined costs that weren’t reflective of fair market value.  CA AG; USAO CDCA

July 29, 2022

Allergan will pay up to $2.27 billion to settle allegations they deceptively marketed opioids by downplaying the risks of opioid addiction and instead touting exaggerated benefits from the drugs. Rather than encouraging alternative treatments, Allergan encouraged doctors to prescribe more opioids, and failed to maintain effective controls to prevent diversion of opioids. This settlement involves multiple states, excluding New York, which settled separately with Allergan. VA OAG

July 27, 2022

Trident Mortgage Company entered into a settlement agreement with federal and state agencies to resolve allegations that the non-bank lender intentionally discriminated against minority loan applicants by engaging in a pattern or practice of lending discrimination through “redlining.”  Trident agreed to invest over $20 million to increase credit opportunities in neighborhoods of color in the Philadelphia metropolitan area, and pay a $4 million penalty to the CFPB. DOJ; CFPB; PA; NJ; DE

July 26, 2022

Mallinckrodt ARD, LLC f/k/a Questcor Pharmaceuticals, Inc. will pay over $233 million over a 7-year period to settle False Claims Act violations, which occurred from January 2013 through June 2020. During this time, Mallinckrodt knowingly underpaid Medicaid rebates on its H.P. Acthar Gel. The practice was exposed by a whistleblower lawsuit originally filed in Massachusetts. Mallinckrodt paid rebates for Achtar in 2013 as if it was a “new drug” rather than one that was introduced to the market in 1952. NJ OAG

July 26, 2022

Teva will pay $4.25 billion to resolve allegations that it promoted potent fentanyl products to non-cancer patients, deceptively marketed opioids by downplaying the addiction risks and overstating the drugs’ benefits, and failed to comply with suspicious order monitoring requirements. The final settlement is contingent on agreement on critical business practice changes and transparency requirements. CA AG, PA OAG

July 26, 2022

Wawa, Inc. agreed to an $8 million settlement for a 2019 data breach which occurred due to Wawa’s failure to deploy reasonable information security measures. Hackers accessed Wawa’s network and extracted sensitive customer information, impacting stores in 6 states and the District of Columbia. In addition to the payment, Wawa is required to implement new security practices to secure customers’ sensitive personal information, including providing resources necessary to implement their security program and providing security awareness and privacy training. FL AG, VA AG, NJ OAG

July 22, 2022

Vanderpoel family members Neal J. II, Eileen, Ryan, and Neal J. IV will pay $1.88 million in penalties, disgorge their ill-gotten gains, and are barred from performing any loan modification, debt adjustment, or mortgage compliance in New Jersey because of their predatory mortgage adjustment services targeting distressed homeowners. The family violated New Jersey’s Consumer Fraud Act and the Debt Adjustment Act, selling worthless loan modification and other adjustment services to borrowers, and charged excessive upfront fees. The entities used in furtherance of the fraud—Financial Services of America, Financial Processing Services, LLC, Tri-State Financial Relief, LLC, and Mortgage Help and Loan Audits of America, LLC—were also shut down. NJ OAG

June 23, 2022

Carnival Cruise Line has agreed to pay $1.25 million to 46 states following a data breach that revealed the personal information of approximately 180,000 employees and customers.  The company revealed in March 2020 that an unauthorized actor had gained access to the data, but it first became aware of suspicious activity nearly a full year before it reported the breach.  As part of the settlement, Carnival will be required to implement higher email security practices, implement and maintain a breach response and notification plan, and submit to an independent security assessment.  GA AG; NC AG; NY AG

June 13, 2022

Centene Corporation has agreed to pay $13.7 million to the State of New Mexico, after an investigation by the Attorney General’s Office found the company layered fees and failed to pass discounts onto the state’s Medicaid program, in violation of Medicaid rules and the New Mexico Medicaid False Claims Act.  NM AG

June 10, 2022

A doctor who allegedly submitted claims to Medicare and Medi-Cal for unperformed procedures, services, and tests, in violation of the California and federal False Claims Acts, has agreed to pay $9.5 million to resolve a civil suit.  The qui tam case by Minas Kochumian’s former medical assistant Elize Oganesyan, and former IT consultant Damon Davies, alleged that claims for treatment of osteopathic issues that were submitted over a six year period were false.  The settlement includes $5.5 million that Kochumian already paid as criminal restitution in a separate case in the Central District.  As part of the civil settlement, Oganesyan and Davies will share a $1.75 million award.  CA AG; USAO EDCA
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