Archive for the ‘Government Intervention’ Category

Corning Incorporated Settles False Claims Act Allegations for $5.65 Million

Corning Incorporated, (Corning) headquartered in the State of New York, has settled False Claims Act allegations that through its Corning Life Science division it submitted false claims to the United States for reimbursement of laboratory research products sold to various federal agencies.  The false claims relate to a contract Corning Incorporated entered into in 2005 to sell laboratory research products to federal government entities through the General Services Administration’s Multiple Award Schedule program.  Under the Multiple Award Schedule program, a company enters a contract with the General Services Administration (GSA) and in exchange for gaining access to the government marketplace and the hundreds of government purchasers, a company agrees to disclose its commercial pricing policies and practices and abide by the contract terms.

The settlement resolves a qui tam lawsuit filed by whistleblower Kevin Jones under the False Claims Act provisions.  Mr. Jones was a former Corning Life Science sales representative.  The settlement resolves allegations that Corning did not disclose its commercial pricing policies and practices during contract negotiations with GSA and during the course of the contract’s administration.  Specifically, Corning knowingly failed to provide GSA with current, accurate and complete information regarding its commercial sales practices, including discounts offered to other commercial customers and that Corning knowingly made false statements regarding its sales practices and discounts.  Additionally, allegations were settled that Corning knowingly failed to comply with the price reduction clause of the GSA contract by not disclosing those discounts and that the discounts were actually higher than what Corning had disclosed to GSA.   Corning also failed to pass those discounts onto its government customers.  The United States government alleged that because of Corning’s actions, it received lower discounts and paid far more than it should have for Corning’s products.

For his role as a whistleblower, Mr. Jones will receive $904,000 of the government’s recovery under the provisions of the False Claims Act.

Posted in False Claims, Federal False Claims Act, Government Intervention, Healthcare Fraud, Mens Rea, Qui Tam, Settlements, Whistleblower LawsuitNo Comments

United States settles $30 Million False Claims Act Kickback Allegations with Orthofix International NV

The Department of Justice announced today, Friday, November 2, 2012, that it entered a settlement with Orthofix International NV  (Orthofix) to settle allegations that its subsidiary, Blackstone Medical Inc., paid kickbacks to spinal surgeons to induce them to use the company’s spinal surgery products.  Blackstone Medical, Inc. is headquartered in Springfield, Massachusetts.  Orthofix is headquartered in Curacao, with its North American headquarters located in McKinney, Texas.  Through its subsidiaries, Orthofix manufactures and sells spinal implants and other spinal surgery products.

Blackstone Medical Inc., through its sales representatives, offered spinal surgeons a variety of kickbacks to convince them to purchase the company’s products.  The government’s complaint alleged that the doctors did not always use these products but always billed Medicare, Medicaid, TRICARE and other government health programs for such use.  The kickbacks included entering sham consulting agreements, wherein the surgeons received payments without providing any consultation services, sham royalty agreements and research grants.  The sales representatives also lavishly entertained the surgeons with dinners, travel, and entertainment.

As part of the $30 million dollar settlement, Orthofix also agreed to enter a corporate integrity agreement.  These agreements are usually five years in duration and require the company to put in place procedures, reviews and audits to avoid and/or promptly detect conduct similar to that alleged  in the settlement.

This case was brought to the government’s attention through the qui tam action filed by whistleblower Susan Hutcheson in the federal district court in Massachusetts:  United States ex rel. Hutcheson v. Blackstone Medical, Inc. et al.   As the whistleblower and under the provisions of the False Claims Act Ms. Hutcheson will receive $8 million as her share of the settlement.

Posted in Anti-Kickback Statute, False Certifications, False Claims, Federal False Claims Act, Government Intervention, Healthcare Fraud, Qui Tam, SettlementsNo Comments

U.S. enters $5.25 Million False Claims Act Settlement with CVS Subsidiary, RxAmerica for False Pricing relating to its Medicare Part D Plan

On October 15, 2012, the United States government announced a False Claims Act settlement with RxAmerica, LLC to resolve allegations that it made false submissions to the Centers for Medicare & Medicaid Services (CMS) regarding the prices it charged for drugs under its Medicare Part D plan.

In one of the first False Claims Act settlements involving Medicare’s Prescription Drug Program, more commonly referred to as Medicare Part D, the government alleged that between January 1, 2007 and December 31, 2008, RxAmerica, LLC, a wholly owned subsidiary of CVS Caremark Corporation, made false submissions to CMS regarding prices for certain generic prescription drugs CMS used for its  Plan Finder program.  CMS offers Plan Finder, a web-based tool,  to Medicare Part D beneficiaries in order to determine the estimated prescriptions drug prices for each Medicare Part D plan. The beneficiaries make their choice to join a particular Part D prescription plan based on this pricing information.  The data CMS uses for its Plan Finder is submitted by each Part D plan sponsor.  Each sponsor, including RxAmerica,  certified to CMS that it would submit accurate pricing data for Plan Finder.

The government alleged that despite RxAmerica’s certification to CMS regarding the submission of accurate pricing to Plan Finder, it actually submitted one set of prices to CMS to use with the program and submitted another set of prices for payment from Medicare Part D.  Some prices were significantly higher than the prices that RxAmerica had originally reported to Plan Finder.  RxAmerica was charged with advertising false prices to Medicare Part D enrollees.

The settlement resolves two separately filed qui tam actions.  The first complaint, U.S. ex rel. Doe v. RxAmerica was filed in the United States District Court of the Eastern District in November 2008.  The second complaint, U.S. ex rel. Hauser v. CVS Caremark Corp., and RxAmerica was filed in the United States District Court for the Western District of North Carolina in June 2009.  The two cases were consolidated in the Eastern District of New York in November 2011.

Posted in False Claims, Federal False Claims Act, Government Intervention, Healthcare Fraud, Other Kinds of Fraud, Qui Tam, SettlementsNo Comments

United States Intervenes in False Claims Case Involving Overcharging for Delivery of Humanitarian Food Aid

On Friday, October 19, 2012, the Department of Justice announced that the United States government was intervening in the False Claims Act case United States ex rel. John Raggio v.  Jacintoport International LLC, alleging that Jacintoport International LLC, (Jacintoport) a cargo handling and stevedoring firm headquartered in Houston, fraudulently exceeded the explicit caps set on the rates Jacintoport could charge for loading humanitarian food aid onto cargo ships.

The government’s complaint alleges that in 2007 Jacintoport entered into a warehousing and logistics contract with the U.S. Agency for International Development (USAID) for the storage and redelivery of emergency humanitarian food aid bound for crisis areas around the world.  By that contract’s terms, Jacintoport agreed to explicit caps on the rate that Jacintoport could charge for stevedoring.   In the shipping industry, stevedoring refers to the actual loading of the cargo onto ships.  The government alleges that between January 2008 and at least October 2009, Jacintoport regularly charged rates that exceeded those explicit caps, resulting in inflated rates charged to the United States for the delivery of more than 50 thousand tons of humanitarian food aid.

This qui tam action was originally brought by the whistleblower John Raggio.  Mr. Raggio allegedly received an invoice from Jacintoport that contained the excessive stevedore rates.  The claims alleged in United States’ complaint are only allegations and do not constitute a determination of liability.

Posted in False Claims, Federal False Claims Act, Government Intervention, Other Kinds of Fraud, Qui Tam, Whistleblower LawsuitNo Comments

New York District Court Holds that Government May Contact Employees Without Counsel Present

The United States District Court for the Eastern District of New York held that the Government did not violate the “no-contact” rule in connection with an investigation of Amgen, Inc., a biotechnology company.  Since 2006, the United States District Attorney for the Eastern District of New York has been investigating allegations that the company violated the False Claims Act and other federal statutes.  Amgen alleged that the Government violated New York professional responsibility rules when it contacted Amgen employees directly instead of through counsel.

New York Rule of Professional Conduct 4.2(a) generally prohibits an attorney from communicating with a party to a particular matter when the attorney knows the party to be represented by another attorney in the same matter. The court held that, because the Government had not intervened in the qui tam lawsuits against Amgen, it was not a “party” to the matter, and thus Rule 4.2(a) did not apply.  The court further held that Amgen was not a “party” to the grand jury investigation; therefore, Rule 4.2(a) did not prohibit Government attorneys or investigators from communicating directly with Amgen employees in connection with the investigation.

Posted in Case Studies, Government InterventionNo Comments

Who is liable for the oil spill? Geoff Berg answers.

Who is liable for man-made disasters such as the oil spill? Just the primary corporation, like BP, or also the suppliers of their equipment and parts? See what Geoff Berg has to say in this article:

Cameron Provided Blowout Gear for Rig That Sank
“I don’t think it could possibly be much more serious than a severe incident like this,” Geoff Berg, a partner at the Houston law firm Berg & Androphy, said today in a telephone interview. “If there is some evidence of liability, then you can bet that everyone will and should be sued over it.” Read More

Posted in Damages, Government Intervention, Jurisdictional IssuesNo Comments

Whistleblower Recieves $176,000 in Cochlear Case

$176,000 was just paid to qui tam whistleblower who filed a lawsuit against Cochlear Americas on behalf of the federal government. Whistleblower Brenda March filed the lawsuit as the company allegedly paid illegal remuneration to health care providers as an incentive to sell Cochlear devices.

The total settlement with Cochlear Americas was worth $880,000. The defendant company is a subsidiary of the Australian company Cochlear Limited.

March originally filed using provision in the Anti-Kickback Act and False Claims Act, saying that the company was clearly paying kickbacks to physicians who sold Cochlear devices to Medicare and Medicaid patients.

Posted in Anti-Kickback Statute, False Claims, Federal False Claims Act, Government Intervention, Healthcare Fraud, Qui Tam, Qui Tam Litigation, SettlementsNo Comments

District Court in Massachusetts Holds that Relators Can Invoke Relation Back Doctrine and Tolling Provision When Government Declines to Intervene

By: Joel Androphy, Rachel Grier, and Stephanie Gutheinz

For purposes of the FCA’s statute of limitations, an amended complaint filed by the government relates back to the relator’s original qui tam complaint. In United States ex rel. Ven-A-Care v. Actavis Mid Atlantic LLC, a district court in Massachusetts extended this principle to amended complaints filed by the relator as well. Although the defendants argued that the relation back doctrine only applies to the government, the court explained that the FCA contemplates a direct link between the interests of the relator and the interests of the government in every qui tam suit, even when the government declines to intervene. The court also considered the defendants’ argument that allowing relation back under the circumstances of the case would violate their due process rights under the Fifth Amendment due to the delay in unsealing the case. In rejecting this argument, the court noted that the defendants did not allege any prejudice that would implicate due process concerns. The court also noted that the delay was caused by the government exercising its legitimate right to obtain extensions of the seal to investigate the complex allegations of fraud. Therefore, the court held that the relator’s most recent amended complaint was not barred by the statute of limitations because it related back to an earlier complaint that identified the specific drugs at issue.

The court then considered whether relators can invoke the FCA’s tolling provision. Section 3731(b)(2) of the FCA provides that a claim otherwise barred by the statute of limitation may be brought within three years after the date when facts material to the cause of action are known or reasonably should have been known by the official of the United States charged with responsibility to act in the circumstances. While acknowledging a disagreement among the courts on whether the tolling provision applies in cases in which the government has not intervened, the court sided with the line of cases allowing relators to invoke the tolling provision. According to the court, allowing relators to do so is most consistent with the language of the statute because there is no language prohibiting relators from invoking the provision. The court also emphasized that when the government declines to intervene in a case, the relator has the right to conduct the action; therefore, absent clear language providing otherwise, the relator has the right to invoke the provisions of the FCA—including the tolling provision. United States ex rel. Ven-A-Care v. Actavis Mid Atlantic LLC, 2009 WL 3171798 (D. Mass. Oct. 2, 2009).

Posted in Federal False Claims Act, Government Intervention, Statute of LimitationsNo Comments

United States is Not a “Party” to Privately-Initiated FCA Action Unless it Intervenes

By: Joel Androphy, Rachel Grier, and Stephanie Gutheinz

In United States ex rel. Eisenstein v. City of New York, New York, the United States Supreme Court considered the applicable time period for filing a notice of appeal in FCA actions where the United States has declined to intervene.  Generally, a notice of appeal must be filed within 30 days; however, the time limit is extended to 60 days when the United States is a party to the action.  The Supreme Court held that, even though the United States is a real party in interest in every action brought under the FCA, it is not a “party” to the action unless it exercises its statutory right to intervene. 

Therefore, when the United States declines to intervene, the 30-day period for filing a notice of appeal applies rather than the extended 60-day period.  The Court reasoned that any other interpretation would render the FCA’s intervention provisions superfluous.  Because the FCA expressly gives the United States discretion to intervene in FCA actions, courts cannot disregard the government’s decision as well as congressional intent by designating the United States a “party” even though it has declined to assume the rights and burdens associated with acquiring the primary responsibility of prosecuting the action. 

United States ex rel. Eisenstein v. City of New York, New York, 129 S. Ct. 2230 (2009).

Posted in Federal False Claims Act, Government InterventionNo Comments

Court Holds Texas FCA Subject to Four-Year Statute of Limitations

By: Joel Androphy, Rachel Grier, and Scott Braden

The Texas FCA does not contain an express limitations period on Medicaid fraud claims. However, under Texas law, if a cause of action does not contain an express limitations period, it is subject to a default four-year limitations period unless the cause of action is one that belongs to the state. The whistleblower argued that a qui tam lawsuit is a right of action belonging to the government and is therefore exempt from the four year limitations period. Relying on Fifth Circuit case law, the court held that if the state has not intervened, the right of action belongs to the whistleblower and is subject to the four year default statute of limitations. The case is United States ex rel. Foster v. Bristol-Myers Squibb Co., a court in the Eastern District of Texas, Lufkin.

Posted in Government Intervention, Jurisdictional Issues, Statute of LimitationsNo Comments

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