: Qui Tam : Whistleblower Protection Blog

Bard Whistleblower Awarded $10.1 Million

Posted on May 14, 2013 by Mary Jane Wilmoth

C.R. Bard Inc., a medical device company based in New Jersey, has agreed to pay the United States $48.26 million to resolve claims that it knowingly caused false claims to be submitted to the Medicare. The claim alleged that the company paid off doctors and hospitals to induce them to prescribe brachytherapy seeds. Giving such kickbacks is a violation of the False Claims Act.

The settlement requires that Bard pay $48.26 million and it resolves claims relating to Bard’s sale of brachytherapy seeds, a form of radiation therapy, to hospitals. The United States alleged that from 1998 to 2006, Bard provided illegal remuneration to customers and physicians to induce them to purchase Bard’s seeds, in violation of the Anti-Kickback Statute. The illegal remuneration allegedly took the form of certain grants, guaranteed minimum rebates, conference fees, marketing assistance and/or free medical equipment that Bard paid to customers and/or physicians who used the seeds to perform treatment for prostate cancer. Hospitals ultimately submitted bills to Medicare for these seeds, which the government alleged were rendered false by Bard’s illegal kickback activity. The government alleged that Bard was liable under the False Claims Act for causing the submission of those false claims.

The U.S. government joined the suit filed by Julie Darity, a former contracts administration officer for Bard. The settlement resolves the lawsuit filed in the U.S. District Court for the Northern District of Georgia under the qui tam, or whistleblower provisions, of the False Claims Act. United States ex rel. Darity v. C.R. Bard, Inc., et al., Civ. Action No. 1:06-cv-0208-SCJ (N.D. Ga.). Under the False Claims Act, private citizens may bring suit for false claims on behalf of the United States and share in any recovery obtained by the government. Darity will receive $10,134,600 as her share of the civil settlement.

Read the DOJ Press Release.

Tags: False Claims / Qui Tam, Medicare fraud, Qui Tam, false claims act, whistleblower rewards

D.C. Councilmember Mary Cheh introduces whistleblower bill to curb tax evasion

Posted on February 6, 2013 by David Colapinto

Yesterday, District of Columbia Councilmember Mary Cheh introduced the "False Claims Act of 2013," which will amend the D.C. False Claims Act to permit whistleblowers to bring tax-related fraud claims. If enacted into law, the bill would permit whistleblowers to seek a qui tam or relator’s share when the amount of uncollected tax is worth $350,000 or more, and brought against taxpayers who have an income above $1 million.

Councilmember Cheh stated in her press release:

Under current District law, the False Claims Act does not apply to violations of the tax code. Therefore, the District cannot obtain information from whistleblowers that may be relevant to the investigation and prosecution of tax evaders. This bill would allow the District to use the tools of the False Claims Act against the District’s biggest tax evaders in a manner already authorized for other applications of the Act.

Under this bill, whistleblowers would be eligible to receive a reward for providing information that helps the District collect money that it is owed. As with all other applications of the False Claims Act, the whistleblower would only be eligible for a reward if the District recovered money from the tax evader, the recovery was based in part on information supplied by the whistleblower, and the supplied information was non-public information that the government did not already have. Thus, people with information that could actually help the government would have an incentive to come forward, but those who just have a hunch or hold a grudge would not.

A copy of the press release can be found here, and a copy of the bill introduced today can be found here.

“Amending the D.C. False Claims Act to permit whistleblowers to collect a reward for reporting major tax frauds will greatly enhance efforts to combat tax fraud and protect honest taxpayers,” said Stephen Kohn, President of the National Whistleblowers Center, and one of the attorneys who represented Bradley Birkenfeld, who blew the whistle on major off-shore tax fraud by the Swiss bank UBS, resulting in the collection of billions of dollars in unpaid taxes by US taxpayers.

“We hope the D.C. Council will move swiftly to enact this bill into law,” he added. “This one small change in the law has the potential to help honest taxpayers by making sure that the D.C. government collects what is owed by high income tax evaders.”

If the “False Claims Act of 2013” is passed the District of Columbia will join New York which is currently the only state with a False Claims Act statute that permits qui tam recoveries for reporting major tax frauds.

Tags: District of Columbia, False Claims / Qui Tam, Qui Tam, Stephen M. Kohn, false claims act, tax fraud, tax whistleblower, taxpayer fraud

Record Recoveries under False Claims Act

Posted on December 5, 2012 by Mary Jane Wilmoth

The Justice Department confirmed in a release issued on December 4 that it has been a record year for recoveries from the False Claims Act. In fact 2012 garnered the DOJ the “largest annual recovery in Department history.” Most of the recoveries were from actions filed under the whistleblower/qui tam provisions of the FCA. The DOJ release notes, “Of the $4.9 billion in fiscal year 2012 recoveries, a record $3.3 billion was recovered in whistleblower suits.”

“The whistleblowers who bring wrongdoing to the government’s attention are instrumental in preserving the integrity of government programs and protecting taxpayers from the costs of fraud,” said Principal Deputy Assistant Attorney General Stuart F. Delery. “We are extremely grateful for the sacrifices they make to do the right thing.”

“The Justice Department’s official recognition of the importance of whistleblowers in fraud detection is an important step forward,” stated Stephen Kohn, Executive Director of the National Whistleblowers Center, in response to the DOJ release. Kohn continued, “Whistleblower reward laws are the single most effective mechanism to induce employees with knowledge of fraud to risk their careers in serving the public interest.

The DOJ’s release is linked here.

Tags: False Claims / Qui Tam, Qui Tam, Stephen Kohn, false claims act, rewards

NWC Asks Plaintiffs Not To Appeal ACLU v. Holder Decision

Posted on April 5, 2011 by Michael Kohn

The National Whistleblowers Center (NWC) today asked the three plaintiffs in the court case ACLU et al. v. Holder not to appeal the decision of the U.S. Court of Appeals for the Fourth Circuit dismissing their challenge to a key provision of the False Claims Act (FCA). The American Civil Liberties Union (ACLU), Government Accountability Project (GAP) and OMB Watch commenced the lawsuit seeking to have the provision of the law that permits whistleblowers to file their cases confidentially declared unconstitutional.

The Department of Justice and other whistleblower protection groups opposed the lawsuit. The Appeals Court rejected the plaintiffs' claims on March 28, 2011.

In a letter sent today to plaintiffs' counsel, the NWC warned that the challenge to the FCA threatened the right of whistleblowers to file claims confidentially and could undermine America's "most effective whistleblower law." The Letter further states:

The FCA seal can act as a bulwark of a whistleblower's First Amendment protection to speak up about misconduct of his or her employer while minimizing the chilling effect of retaliation. Without the added protection of the seal, individuals who might otherwise come forward with information will remain silent. If you proceed with your claims in ACLU v. Holder, you could dry up an important safe harbor for many whistleblowers.

The plaintiffs have 45 days from the issuance of the appeals court ruling to seek a full review by the U.S. Court of Appeals for the Fourth Circuit. They can also file a petition for certiorari with the Supreme Court within 90 days.

Links:

April 5, 2011 Letter from the NWC Re: ACLU v. Holder

ACLU et al. v. Holder, decision of U.S. Court of Appeals for the 4th Circuit

Tags: ACLU, ACLU v. Holder, Corporate Whistleblowers, FCA, GAP, OMB Watch, Qui Tam, false claims act

NWC Hosts Seminar on Dodd-Frank Reform & the False Claims Act

Posted on July 26, 2010 by Lindsey Williams

On Friday, July 23, 2010, the National Whistleblower Center (NWC) hosted a seminar on the False Claims Act 2010-07-23 NWC Seminar on FCA and Dodd-Frank that included a special presentation on the Dodd-Frank Wall Street Reform and Consumer Protection Act that was recently signed into law. Stephen M. Kohn, Executive Director of the National Whistleblower Center, gave the presentation on the new financial regulations and whistleblower protections outlined in the new law.

Along with creating better financial regulations to prevent problems on Wall Street that have affected the nation, the bill also includes better whistleblower protections and increases the statute of limitations for retaliation claims under the False Claims Act to 3 years. The bill has created two new qui tam provisions for commodities and securities exchanges, thus providing employees who witness fraud the ability to report it and sue on behalf of the government. The bill also closes a loophole in the Sarbanes-Oxley Act, assuring coverage for whistleblowers employed by subsidiary companies. Mr. Kohn stated that this bill might possibly be the single most important whistleblower protection law in the United States, aside from the First Amendment and the False Claims Act.

After the presentation on the Dodd-Frank bill, Michael Kohn, NWC President, David Colapinto, NWC General Counsel, and Tony Munter, an NWC Attorney, gave a presentation on the False Claims Act and how to integrate it into one’s law practice. They gave a run-down of the steps involved in screening clients with potential False Claims Act cases and the steps involved in filing and litigating such a case.

If you are an attorney and would like to be added to the NWC's list for notification on upcoming events, please contact Lindsey M. Williams at lmw@whistleblowers.org. The full agenda and written materials from the seminar are available here.

*Phil Shank (NWC intern) drafted this post.

Tags: Dodd-Frank Act, False Claims / Qui Tam, Qui Tam, event, false claims act, sec, seminar

Whistleblower faces tax penalty for misreporting qui tam reward

Posted on February 15, 2010 by Richard Renner

Albert D. Campbell worked for Lockheed Martin from 1981 to 1995. He worked as a financial analyst, and was promoted in 1989 to chief of cost control for the $3.5 billion LANTIRN project. The LANTIRN project built navigation and targeting pods for fighter jets. Between 1993 and 1995, Campbell used sophisticated analytic exercises to show that LANTIRN was wasting millions of dollars in non-productive costs. Company management warned him that it would be career suicide to raise these concerns. In 1995, Campbell filed two qui tam whistleblower suits under the False Claims Act (FCA) against Lockheed Martin, alleging that the company had defrauded the federal government. The government intervened in one case, and in 2003, Lockheed Martin entered into a settlement of both claims. Campbell received a reward of $8.75 million from the government. This reward was paid to his attorneys who deducted their fee of $3.5 million and then paid $5.25 million to Campbell. Instead of reporting this income and paying taxes on it, Campbell filed a "disclosure" of the reward, but paid no tax. Campbell did not consult with a tax attorney, but prepared and filed his own tax return. When the IRS disagreed with this tax position, Campbell claimed that his reward was not taxable income, but rather an assignment of the government's non-taxable fraud recovery. The Tax Court has disagreed. While the government had no duty to pay tax on its recovery, the reward to Campbell was income to him, and taxable. The Tax Court did allow Campbell to deduct the $3.5 million paid to his attorneys. For the other $5.25 million, Campbell now has to pay taxes, and also a penalty for asserting a position that had no reasonable basis. The case is Albert D. Campbell v. Commissioner, 134 T.C. No. 3 (January 21, 2010). Campell testified to a House Committee about his support for FCA amendments. It is too bad that the government could not be content with collecting the taxes and interest due. Imposing a penalty on the whistleblower works a disservice to the goal of encouraging knowledgeable officials to come forward with information that will actually save the taxpayers money. Given that this decision now requires whistleblowers to pay taxes on qui tam rewards, it would be wise for whistleblowers getting such a reward to hire a good tax attorney to prepare their return.

Tags: Campbell, FCA, Qui Tam, Tax Justice for Whistleblowers

The Next Big Thing In False Claims Act Litigation

Posted on November 4, 2009 by Anthony Munter

“Securities fraud,” said the state official and with that about 20 attorneys, all experts in False Claims Act litigation, fell off their chairs.

We were in a small room, down the hall in the last break out session of the annual meeting of False Claims Act attorneys sponsored by Taxpayers Against Fraud.

Most of our colleagues chose to go to another session involving particular issues of pleading fraud. That issue comes up in every case: plead fraud with particularity. Having to plead with particularity so often, we knew enough about it to understand that is a big headache.

So, looking for something different, a few of us went to a seminar on State Cases. We were experts. We all had filed a lot of federal cases. There are only so many people who specialize in this area, so by the end of the conference we were acting a little smug.

Nobody has filed many purely State False Claims cases. Sure there are a lot of State qui tam laws now. Most of the laws aren’t even five years old. Even in the states with older laws most of the cases are filed as part of, or the result of a big federal case. Even when the cases are not Medicare or Medicaid related, most purely state cases look like the same thing as a federal case. The state gets ripped off so somebody files a qui tam action. States are defrauded just like the federal government.

We thought the only big difference in filing such a case under state law as opposed to the federal law is the agency you work with to conduct the initial investigation under seal –instead of working with the Federal Department of Justice, you work with the state Attorney General. We figured there were some technical differences with State qui tam laws, but nothing experienced qui tam attorneys could not handle.

Indeed, in the first part of the seminar the state officials on the dais played to our smugness. Both state officials said, “You may have to work with the local Attorney General’s office to explain how their state qui tam law can work.” Sure we can do that, we thought. We can lecture the highest law enforcement officials of a state as to how their own law can work for them.

In truth, a lack of information is a problem because State False Claims Acts are new. State prosecutors have a lot of experience going after consumer protection cases, but do not yet know much about how to apply the qui tam procedures even to similar facts. Those procedures can be very tricky at every level. We know the procedure. We know the law and we know what can make a good claim in a False Claims case.

So, one lawyer a veteran of many conferences, asked what we all wanted to know, but few figured would elicit such a surprising answer. He asked “What kind of cases do you see being filed in State Court in the future?” When the state official answered “securities fraud” we were a little stunned.

We looked at each other. Maybe this guy is thinking of Sarbanes Oxley or class action cases? Then the penny dropped and we started to see dollar signs. Big dollar signs with lots of zeroes.

Pension funds. States have pension funds. The Federal Government has a printing press--not investments.

In the federal context the Securities and Exchange Commission handles fraud issues. The federal government does not usually own stocks or bonds.

Some states, like Illinois or California, allow us to sue on behalf of any political subdivision. So, if the city of Santa Monica has a pension fund and there is a securities fraud violation we can sue under the California False Claims Act.

When there is securities fraud usually a state pension fund will have bought the security. The City of New York supposedly has 80 billion dollars in assets in its pension fund alone. The damages for fraud have the potential to be huge and this is a new area of qui tam action.

Three days later a colleague sent me a story on the State of California suing for $200 million in securities violations.

So, if you have heard of any major securities scam, do what any smart whistleblower should do. Hire a lawyer who knows about qui tam and run to your nearest state court house.

If your state does not have a qui tam provision, maybe they should. After all, why should the pension funds covering workers in Columbus, Ohio not get the same protection as the pension funds for those who work in Richmond, Virginia?

You can see if your state has a qui tam law by clicking here.

Tags: False Claims / Qui Tam, Qui Tam, false claims act, fraud

Study Released Today on State Whistleblower Laws

Posted on April 16, 2009 by Lindsey Williams

Today, the Public Employees for Envirnonmental Responsibility (PEER) released a study and ranking of state whistleblower laws. PEER found that more than 20 states have broadened their whistleblower laws since 2006. Please click here to read the highlights of the study.

If you are looking for more information on state whistleblower laws please visit the new interactive map of the U.S. on the National Whistleblowers Center website. The map shows the qui tam laws, whistleblower statutes, and common law remedies for each state.

Tags: News, Qui Tam, state whistleblower laws, whistleblower laws

Supreme Court May Hear Case To Limit False Claims Act Recoveries

Posted on December 9, 2008 by Marshall Chriswell

The Boston Globe is reporting that the Supreme Court is considering taking up a case that "might set new limits on whistle-blower lawsuits against drugmakers, biotechnology companies, and other businesses." The court has requested advice from the Department of Justice regarding the suit.

The case in question deals with the False Claims Act and specifically whether FCA cases can be based on allegations which have previously been made public in state government documents. Limitations have currently only been applied when the whistleblowers' allegations have previously seen light in Federal Government documents.

Industry groups support the new limitations, which is no surprise considering the FCA has been the most effective fraud-fighting law in history, netting over $1 Billion in fraud recoveries for American taxpayers last year alone.

FCA-type laws are also helping uncover massive government contractor fraud schemes in countries like South Korea

Click here to DIGG this story

Tags: False Claims / Qui Tam, News, Qui Tam, false claims act, south korea, supreme court, taxpayer fraud

CBO Says Proposed False Claims Act Amendment Legislation Will Increase Government Revenue

Posted on November 24, 2008 by Marshall Chriswell

Last week the Congressional Budget Office released this report on the revenue-creating potential of current proposed legislation in the to amend the False Claims Act. Similar bills are now pending in the Senate (S. 2041) and the House of Representatives (H.R. 4854). This marks a turnaround in opinion for the CBO on this issue. In April, the CBO released a report stating that the Senate version of the bill would not significantly increase government revenues, but this most recent report (which officially only deals with the House version of the bill) indicates that they have improved their assessment with regard to both bills.

This 2-page document offers a concise description of the legislation (H.R. 4854), and states that:

"[The] CBO originally estimated that S. 2041 would not significantly increase revenues and collections. However, based on additional information, CBO now expects that either H.R. 4854 or S. 2041 could increase revenues and collections."

This is another promising sign for this much-needed legislation. For more blog posts about the False Claims Act, click here.

Tags: CBO, False Claims / Qui Tam, Legislation, Qui Tam, congress, false claims act, legislative updates

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