False Claims Act Update & Alert |
||||||
Taxpayers
Against Fraud Education Fund | Washington, D.C. | WWW.TAF.ORG |
||||||
| |
|
|||||
 Supremes Undecided on
FCA TaxIn a ruling in Commissioner of Internal Revenue v. Banks and Commissioner of Internal Revenue v. Banaitis, the U.S. Supreme Court has ruled, as a generality, that those portions of award to victorious plaintiffs paid as contingency fees to their attorneys are taxable income for the plaintiffs. However, the court specifically left open the question of whether contingency fees of relators under the False Claims Act have to be counted as income by the relator. Citing the amicus curiae brief of the Taxpayers Against Fraud Education Fund, the court noted that "[W]e do not reach the instance where a relator pursues a claim on behalf of the United States." What this means for relators is that the double taxation of awards in cases settled prior to passage of the American Jobs Creation Act of 2004 is still open in all circuits that haven't issued a ruling against relators. All FCA recoveries after passage of the new law will are specifically exempt from double taxation. >> To read the Supreme Court decision >> To read TAF-EF's amicus curiae brief |
||||||
 Illinois
Investigating CaremarkIllinois Attorney General Lisa Madigan has launched an investigation into whether mail-order pharmacy Caremark, which handles prescriptions for most state employees, routinely and illegally sold drugs to patients that had previously been returned by other customers. The investigation is sealed as part of a state False Claims Act case, but the charges appear to have arisen out of a similar whistleblower case filed in Florida. The relators in the Florida case are seeking $100 million in damages from Caremark. Ironically, in the Florida case Caremark had claimed they were not reselling returned drugs in Florida, but sending them to Illinois for resale where it was legal. Unfortunately, Caremark did not check the law; reselling returned drugs is allowed in Illinois only under very limited circumstances. >> To read more |
||||||
 Grassley Grills Gonzalez
In early January, Senator Charles Grassley (R-IA), Chairman of the Senate Finance Committee, sent U.S. Attorney General nominee Alberto Gonzalez a series of questions governing management of of False Claims Act cases at the U.S. Department of Justice. Sen. Grassley noted that "In a nutshell, I believe that the [Justice] Department's administration of the False Claims Act lacks vision, transparency, energy, authority, goals and resources -- almost everything a program should have to succeed." To read Sen. Grassley's questions and Mr. Gonzalez's answers >> Click here |
||||||
 Group Purchasing
Organizations The U.S. Department of Justice is investigating Group Purchasing Organizations which supply hospitals with everything from bedpans to x-ray machines. The DoJ investigation appears to be focused on Novation, the largest GPO, and the fees paid to it by drug companies and equipment manufacturers. More than a dozen medical-supply companies have received subpoenas. Now an audit of the three largest GPO's by the Inspector General of HHS reveals that these companies collected a total of $1.8 billion in administrative fees from vendors between 1998 and 2002, retaining $415 million over operating costs of $500 million and distributing $898 million to members. >> To read the HHS report (20-page PDF) |
||||||
