Whistleblower Rewards

September 19, 2017

A judgment of roughly $296 million was awarded against the entities formerly known as Allied Home Mortgage Capital Corporation and Allied Home Mortgage Corporation and a judgment of roughly $25 million was awarded against Allied's president and CEO Jim Hodge, following a jury verdict that Allied and Hodge violated the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”) for over a decade of fraudulent misconduct while participating in the Federal Housing Administration (“FHA”) mortgage insurance program.  According to the evidence presented at trial, Allied and Hodge abused the FHA mortgage insurance program by falsely certifying that thousands of high risk, low quality loans were eligible for FHA insurance and then submitting insurance claims to FHA when any of those loans defaulted.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act.  The whistleblower will receive an award from the proceeds of the government's recovery. DOJ (SDNY)

September 13, 2017

MediSys Health Network Inc., which owns and operates the two Queens hospitals Jamaica Hospital Medical Center and Flushing Hospital and Medical Center agreed to pay $4 million to settle allegations that it violated the False Claims Act by engaging in improper financial relationships with referring physicians.  These relationships took the form of compensation and office lease arrangements that did not comply with the requirements of the Stark Law, which restricts the financial relationships that hospitals may have with doctors who refer patients to them.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by Dr. Satish Deshpande.  Dr. Deshpande will receive a whistleblower award of $600,000 from the proceeds of the government's recovery. DOJ

September 13, 2017

Virginia-based contractor Pacific Architects and Engineers, LLC agreed to pay $5 million to settle charges of violating the False Claims Act by failing to follow vetting requirements for personnel working in Afghanistan under a State Department contract for labor services.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by former PAE manager Robert J. Palombo.  Mr. Palombo will receive a whistleblower award of $875,000 from the proceeds of the government's recovery. DOJ (DDC)

September 13, 2017

Virginia-based government contractor Calnet, Inc. and its CEO Kaleem Shah agreed to pay $300,000 to settle charges they violated the False Claims Act by submitting false information in Calnet’s bid proposal to the Federal Aviation Administration to win an FAA contract for IT help desk services.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act.  The whistleblower will receive an award from the proceeds of the government's recovery. DOJ (EDVA)

September 11, 2017

Family Medicine Centers of South Carolina LLC agreed to pay $1.56 million, and the company's principal owner and former CEO Dr. Stephen F. Serbin and its former Laboratory Director Victoria Serbin, agreed to pay $443,000 to settle charges they violated the False Claims Act and Stark Law.  Specifically, the government alleged FMC’s incentive compensation plan improperly paid FMC’s physicians a percentage of the value of laboratory and other diagnostic tests that they personally ordered through FMC.  Dr. Serbin allegedly initiated this program and reminded FMC’s physicians that they needed to order tests and other services through FMC in order to increase FMC’s profits and to ensure that their take-home pay remained in the upper level nationwide for family practice doctors.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by former FMC physician Dr. Catherine A. Schaefer.  She will receive a whistleblower award of $340,510 from the proceeds of the government's recovery. DOJ

September 8, 2017

Galena Biopharma Inc. agreed to pay more than $7.55 million to resolve allegations it violated the False Claims Act by paying kickbacks to doctors to induce them to prescribe its fentanyl-based drug Abstral.  These included providing more than 85 free meals to doctors and staff from a single, high-prescribing practice; paying doctors thousands of dollars to attend an “advisory board,” and paying roughly $92,000 to a physician-owned pharmacy under a performance-based rebate agreement.  Two of the doctors who received remuneration from Galena were convicted and later sentenced to prison.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by Lynne Dougherty.  She will receive a whistleblower award of more than $1.2 million from the proceeds of the government's recovery. DOJ

September 7, 2017

Connecticut substance abuse treatment provider the Hartford Dispensary and the Hartford Dispensary Endowment Corporation and its former CEO Paul McLaughlin agreed to pay $627,000 to resolve allegations they violated the False Claims Acts by falsely representing and certifying to federal and state authorities that Hartford Dispensary had a medical director, as defined by relevant regulations, who was performing the duties and responsibilities required by federal and state law.  The allegations originated in a whistleblower lawsuit filed by former Hartford Dispensary employees Russell Buchner and Charles Hatheway under the qui tam provisions of the False Claims Act.  They will receive a whistleblower award of roughly $113,000 from the proceeds of the government's recovery.  DOJ (DCT)

September 5, 2017

Novo Nordisk Inc. agreed to pay $58.65 million to settle charges it violated the False Claims Act and Food, Drug, and Cosmetic Act by failing to comply with the FDA-mandated Risk Evaluation and Mitigation Strategy (REMS) for its Type II diabetes medication Victoza.  The New Jersey based pharmaceutical manufacturer is a subsidiary of Denmark’s Novo Nordisk A/S.  At the time of Victoza’s FDA approval in 2010, the FDA required a REMS to mitigate the potential risk in humans of a rare form of cancer called Medullary Thyroid Carcinoma (MTC) associated with the drug. Under the REMS, Novo Nordisk was required to disclose to physicians the potential risk. If it failed to comply with these disclosure requirements, including requirements to communicate accurate risk information, the drug would be considered misbranded under the law.  According to the government, Novo Nordisk failed to comply with the REMS requirements, providing information to physicians that created the false or misleading impression that the Victoza REMS-required message was erroneous, irrelevant, or unimportant.  The allegations originated in several whistleblower lawsuits filed under the qui tam provisions of the False Claims Act. The whistleblowers who brought these actions will receive a yet-to-be-determined whistleblower award from the proceeds of the government’s recovery. Whistleblower Insider

September 5, 2017

National dental chain Dental Dreams, LLC agreed to pay $1.375 million to resolve allegations it improperly billed the Massachusetts Medicaid program for unnecessary and unjustifiable dental procedures.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by Dental Dreams former employee.  The whistleblower will receive an award from the proceeds of the government's recovery.  DOJ (DMA)

September 1, 2017

New Mexico-based Christus St. Vincent Regional Medical Center and its partner Texas-based Christus Health agreed to pay $12.24 million to resolve allegations they violated the False Claims Act by making illegal donations to county governments which were used to fund the state share of Medicaid payments to the hospital.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by a former Los Alamos County, New Mexico Indigent Healthcare Administrator.  The whistleblower will receive an award of $2.25 million from the proceeds of the government's recovery. DOJ