False Claims Act Update & Alert


Taxpayers Against Fraud Education Fund | Washington, D.C. | WWW.TAF.ORG          
February 14, 2012


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Massive State Pension Frauds Ahead?
Massive FCA cases dealing with billions of dollars stolen from state pension funds may lie ahead. Federal prosecutors have already collected over $1.6 billion in FCA settlements from Bank of America, Citigroup, Deutsche Bank and Flagstar, based on the defrauding of federal home insurance programs. Billions more may yet be collected by state pension funds ripped off when they invested in mortgage-backed securities sold by companies who knew the ratings were rotten. Notes Eric Havian of Phillips & Cohen, "If issuers knew the ratings were false and they sold securities to state pension funds, they would absolutely be liable.  That's an easy FCA case." Other potential state pension fraud cases cover foreign-exchange and Libor fraud.



JPMorgan Chase Pays $296 Million
The SEC says at least one whistleblower is responsible for all or part of an SEC case filed against JPMorgan Chase which has resulted in $296 million in fines collected. Whistleblowers have until May 9th to apply to collect anywhere from 10% to 30% of penalties collected.

Shire Reserves $57 Million for Fraud
Irish drug maker Shire has reserved $57.5 million in expectation of settling a pricing and marketing fraud case involving ADHD drugs Adderall XR, Vyvanse, and Daytrana, as well as colitis drugs Lialda and Pentasa.

How Do You Count Success?
The 2012 Health Care Fraud and Abuse Control report is out, and in that report, HHS and DoJ note that “for every dollar spent on health care-related fraud and abuse investigations in the last three years, the government recovered $7.90.” Not said:  almost all the money coming in is due to whistleblower-initiated False Claims Act cases, with other expensive fraud fighting efforts producing comparatively little revenue. The HCFAC report notes that “government’s health care fraud prevention and enforcement efforts recovered a record $4.2 billion in taxpayer dollars in Fiscal Year (FY) 2012,” but fails to even mention a $1.5 billion settlement with Abbott or the
nearly 200 million dollars returned to the federal government from state-initiated FCA cases (SCAN in California, and Janssen and Actavis in Texas). 

DaVita Shoot Itself in the Foot?
Dialysis company
DaVita is trying to sue a whistleblower for breach of contract for not internally reporting first, but that legal gambit might have backfired. As District Court Judge Charles Pannell notes: "In order to prove that Alon Vainer breached the contract by not informing the defendants about violations of applicable law, the defendants would have to first prove that such violations actually occurred. If these violations occurred, then the defendants would be liable for them."  Oops!

Well Fargo Fails to Avoid More Liability
Wells Fargo has been trying to argue that it can’t be sued by the U.S. over illegal mortgage practices because an earlier deal with the government covered all bad actions.  Nope. U.S. District Judge Rosemary Collyer has ruled that the $25 billion agreement that Wells Fargo and four other banks made with DoJ in April of 2012 does not release the banks from facing allegations of FHA fraud filed by the U.S. attorney in New York in October.

Doctor to Pay $26 Million in FCA Case
Florida dermatologist Steven J. Wasserman did thousands of unnecessary surgeries on patients in order to increase billing to Medicare and Medicaid and now, after a whistleblower-initiated lawsuit was filed, he will have to pay $26.1 million to settle an FCA case charging him with accepting millions of dollars in kickbacks as well.

Other Stories:
4Cornell Law School Course on the FCA
4St. Luke’s-Roosevelt to Pay $2.3 Million
4Catholic Health to Pay $4.9 Million
4Sen. Grassley Will Have Questions for the IRS
4Get Rid of the Term "White Collar Crime"?
4Gallup Fraud on NPR
4The Rise of SEC Whistleblower Cases