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Whistleblower Rewards

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April 6, 2022

Florida hospital chain BayCare Health System Inc. will pay $20 million to resolve claims that the company knowingly caused false claims for federal Medicaid matching funds to be submitted to the United States by making improper, non-bona fide cash donations to the Juvenile Welfare Board of Pinellas County (JWB) knowing that the funds would be transferred by JWB to the State of Florida’s Agency for Health Care Administration for Florida’s Medicaid Program, which would trigger a corresponding federal matching payment.  The prohibition on non-bona fide donations ensures that states are paying a share of Medicaid payments; the non-bona fide donations increased Medicaid payments received by BayCare without any actual expenditure of state or local funds and enabled BayCare to recoup its original donations to JWB and also receive federal matching funds. The case was initiated with a qui tam complaint filed by Larry Bomar, who will receive $5 million as an award for initiating the whistleblower action. DOJ; MD FL

March 18, 2022

The SEC has made three awards totaling approximately $3 million to three whistleblowers whose actions helped lead to three enforcement actions.  All three whistleblowers were said to have provided information that prompted the agency to open investigations into potential securities law violations.  Two of the whistleblowers were company insiders who reported concerns internally before coming forward.  SEC

March 14, 2022

Freight carriers YRC Freight Inc., Roadway Express Inc., and Yellow Transportation Inc. will pay $6.85 million to resolve government claims that they knowingly overcharged the Department of Defense on military freight shipments.  Whistleblower James Hannum, a Yellow Transportation employee, filed a qui tam action alleging that the companies had a practice of re-weighing shipments and, when the reweighs showed an increase from the original weight, defendants charged DOD for these higher weights, but when the reweighs showed a decrease from the original weight, defendants allegedly concealed the lower weight and instead charged DOD for the original, inflated weights.  Hannum will receive a whistleblower award of approximately $1.3 millionDOJ

March 11, 2022

A whistleblower was awarded $14 million by the SEC in a decision that departed from the recommendation of the Claims Review Staff to deny the award.  A report about a fraud committed by a company and its CEO was published online; two individuals claimed to be authors of the report, which contained analysis derived from a large number of publicly-available and non-public sources.  Neither submitted a TCR to the SEC at the time the report was published, although the whistleblower who received the award provided the report directly to Commission staff and provided additional information during the course of the enforcement action that the SEC initiated based on the report’s allegations.   The whistleblower did submit a TCR two months after the SEC posted a Notice of Covered Action, more than four years after the report was publicly released.  The Commission found that it would be in the public interest and consistent with the protection of investors to exercise its discretionary authority and grant an award despite the individual’s failure to initially file a TCR.  The second claimant, who did not submit a TCR at any time, and who did not communicate with enforcement staff, was denied an award.  SEC

March 10, 2022

The CFTC has awarded two whistleblowers awards totaling approximately $500,000 after they separately provided significant information and substantial assistance that helped lead to a successful enforcement action.  According to the agency, the whistleblowers’ tip helped expand the scope of an existing investigation and led to other key evidence.  CFTC

March 8, 2022

The SEC has awarded more than $3.5 million to a whistleblower whose information significantly contributed to two successful enforcement actions by prompting staff to further investigate securities violations, saving time and resources, and helping to advance settlement discussions.  SEC

March 7, 2022

Pharmaceutical company Mallinckrodt ARD LLC will pay $260 million to resolve allegations that it violated the False Claims Act in the sale and marketing of its drug H.P. Acthar Gel.  The government intervened in whistleblower actions alleging that Mallinckrodt and its predecessor Questcor Pharmaceuticals Inc. knowingly underpaid state Medicaid programs by improperly calculating amounts it owed under the Medicaid Drug Rebate Program, and unlawfully used a foundation as a conduit to subsidize co-payments.  With respect to the Medicaid rebate claims, which represent $234.7 million of the settlement, defendants were alleged to have calculated rebate amounts as if Acthar was a “new drug” first marketed in 2013, rather than a drug that had been approved since 1952.  By using 2013 for Acthar’s Base Date Average Manufacturer Price (AMP), the company ignored price increases prior to 2013 and fraudulently reduced Acthar drug rebates.  With respect to the copayment fraud claims, which represent $26.3 million of the settlement, defendants were alleged to have violated the Anti-Kickback Statute by subsidizing copayments through payments to three funds that Mallinckrodt had a foundation set up to induce Medicare-reimbursed purchases of Acthar, using the subsidies to counteract doctor and patient concerns about the drug’s high cost.  The whistleblower in the Medicaid rebate case, James Landolt will receive an award of $24.7 million, representing 20% of the $123.6 million federal share of that settlement; the relator’s share for the state share of the settlement was not announced.  The whistleblowers in the copayment case, Charles Strunck and Lisa Pratta, will receive an award of $4.9 million, representing 19% of that settlement.  The settlement includes a five-year corporate integrity agreement (CIA) with monitoring provisions.  DOJ; USAO MA; USAO EDPA

February 23, 2022

TriMark USA, LLC and related entities will pay $48.5 million to resolve claims brought in a whistleblower lawsuit alleging that they improperly manipulated federal contract set-asides for service-disabled, veteran-owned small businesses (SDVOSB) by enlisting small business to secure the contracts while TriMark actually performed all of the work and received most of the benefits of the federal contract.  In addition, former TriMark executive Kimberley Rimsza has agreed to pay $100,000 to resolve claims against her.  The whistleblower, Fox Unlimited Enterprises, LLP, will receive an award of $10.9 millionUSAO ND NY; USAO ED WA
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