Attorney General Sessions Condemns Companies That Sell Defective Equipment to First Responders

The U.S. Department of Justice issued a press release late today announcing a settlement in a 13-year long False Claims Act case. Toyobo Co. Ltd. of Japan and its American subsidiary, Toyobo U.S.A. Inc., f/k/a Toyobo America Inc. (collectively, Toyobo), have agreed to pay $66 million to resolve claims under the False Claims Act that they sold defective Zylon fiber used in bullet proof vests that the United States purchased for federal, state, local, and tribal law enforcement agencies.  Continue Reading Bullet-Proof Vest Qui Tam Case Settles

Press Release
October 31, 2016

On Tuesday November 1, 2016, The U.S. Supreme Court will hear oral argument in State Farm Fire and Casualty Company v. U.S. ex rel. Rigsby. Having suffered a 758-thousand-dollar jury verdict for defrauding the Government following Hurricane Katrina, State Farm is now attempting judicial gymnastics to avoid paying the judgment.

Continue Reading U.S. Supreme Court to Hear Oral Argument in State Farm Ex Rel. Rigsby

Today, the National Whistleblower Center filed an Amicus (friend of the court) brief in State Farm Fire and Casualty Company v. U.S. ex rel. Rigsby. Having suffered a 758-thousand-dollar jury verdict for defrauding the Government following Hurricane Katrina, State Farm is now attempting judicial gymnastics to avoid paying the judgment.

The question in this case is whether the harshest sanction available to a court to police its order sealing a case (i.e. dismissal) should be automatically applied, regardless of the intent of the party committing the infraction, harm caused to other parties, interest of the Government or nature of the violation itself.  In its amicus brief, the National Whistleblower Center argues against such an inflexible rule that is also contrary to Congress’s intent.

State Farm is asking the Supreme Court to read into the FCA a severe sanction for those who violate the seal provision (31 U.S.C.S. § 3730(b)(2)).  The 5th Circuit decision ruled against mandatory dismissal and in favor of a flexible balancing test that prioritizes the interests of the government, holding that a violation of the seal requirement did not warrant dismissal of this case since the government was not harmed by the disclosure and the whistleblowers did not act in bad faith. See United States ex rel. Rigsby v. State Farm Fire & Cas. Co., 794 F.3d 457, 465 (5th Cir. 2015).

The FCA is America’s most important—and successful—anti-fraud law, and its seal provision was designed for the exclusive benefit of the Government. Mandatory dismissal would undermine the FCA and hurt taxpayers—the intended beneficiaries of the False Claims Act. The NWC’s Executive Director Steve Kohn noted, “This is another attempt by the Chamber of Commerce to undermine the False Claims Act and protect corrupt government contractors who rip off the taxpayers from accountability.  It is time to stop shooting the messenger.”

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The post below was co-authored by Stephen M. Kohn, Michael D. Kohn David K. Colapinto, partners of the law firm Kohn, Kohn and Colapinto, LLP.

 One of the most destructive tools used to silence whistleblowers are non-disclosure agreements (often found in employment contracts and severance agreements) which prohibit employees from disclosing fraud and other crimes to law enforcement agencies.  Today’s Washington Post story exemplifies the problems faced by employees in every sector of the economy who are required to sign these gag orders in order to obtain jobs or badly needed severance payments.

On March 9th, we filed a complaint with the Department of Justice and the Securities and Exchange Commission seeking to have these agencies take strong action against illegal gag orders.  The complaint, based on information provided to the government by former KBR employee Harry Barko, exposed how KBR forced its employees to sign illegal gag orders when they were disclosing fraud in government contracting to company officials.  This complaint was reported in the Washington Post on March 10th.  Since then, the SEC has initiated an investigation into these practices. Today’s Post story indicates that momentum is building to stop these practices.    Continue Reading We Must Stop Illegal Gag Orders

This week the Department of Justice issued a series of press releases announcing settlements in several cases under the False Claims Act. The settlement of these cases, originally brought under the qui tam, or whistleblower, provisions of the False Claims Act, resulted in recoveries of over $200 million for the U.S. Taxpayers. The settlements are listed below:

Endo Pharmaceuticals and Endo Health Solutions to Pay $192.7 Million to Resolve Criminal and Civil Liability Relating to Marketing of Prescription Drug Lidoderm for Unapproved Uses

Pharmaceutical company Endo Health Solutions Inc. and its subsidiary Endo Pharmaceuticals Inc. (Endo) have agreed to pay $192.7 million to resolve criminal and civil liability arising from Endo’s marketing of the prescription drug Lidoderm for uses not approved as safe and effective by the Food and Drug Administration.

Washington-Based Medical Device Manufacturer to Pay up to $5.25 Million to Settle Allegations of Causing False Billing of Federal Health Care Programs

Medical device manufacturer EndoGastric Solutions Inc. has agreed to pay the government up to $5.25 million to resolve allegations that it violated the False Claims Act by misleading health care providers about how to bill federal health care programs for a procedure using a device manufactured by the company and by paying kickbacks.

Virginia-Based Contractor to Pay $6.5 Million to Settle Allegations of False Claims on Navy Contracts

Vector Planning and Services Inc. (VPSI), an information technology, systems engineering, program management and consulting firm headquartered in Chantilly, Va., has agreed to pay the government $6.5 million to settle False Claims Act allegations that the company inflated claims for payment under several Navy contracts.

MPRI Inc. Agrees to Pay $3.2 Million for False Labor Charges on Contract to Support Army in Afghanistan

MPRI Inc. has agreed to pay $3.2 million to resolve allegations that it submitted false labor charges on a contract to support the Army in Afghanistan.

The National Whistleblowers Center recently updated its False Claim Acts: Federal, State and Municipal Qui Tam Laws publication. This publication outlines all current U.S. laws that allow private citizens who witness fraud against a government entity to file suit “blowing the whistle” on greedy contractors who bilk government agencies, and to be awarded a portion of the monies recovered. The book contains the federal False Claims Act, the text of false claims act legislation from over 22 states, various city governments, as well as the federal qui tam provisions covering tax fraud. Colorado, Minnesota, New Hampshire, and New York City are among the many states that have amended existing or adopted new false claim legislation since the last update was published in September 2012.

This publication is an invaluable resource for whistleblowers and plaintiff’s attorneys who are interested in qui tam laws. Qui tam laws have become a popular tool for state and municipalities in the fight against government waste.

In 2012, the Federal Government recovered 4.95 billion dollars, 68% of that money was recovered via Qui Tam actions.*  This publication is available for purchase as a PDF Download.

Table of Contents:

  • Part I. Federal False Claims Act and IRS Recovery Provisions
  • Part II. State Protections
  • Part III. FCA Legislative History: “The False Claims Reform Act of 1985,”Senate Report No. 99-345
  • Part IV. Resources for Whistleblowers

*More information available in the National Whistleblower’s Center’s FCA Report.

During the 2013 fiscal year, the Justice Department secured $3.8 billion in settlements and judgments from civil cases under the False Claims Act (FCA).   This dollar amount, which is the second largest annual recovery of its type in history, brings total recoveries under the FCA since January 2009 to $ 17 billion – nearly half the total recoveries since the FCA was amended 27 years ago in 1986.  The largest annual recovery was in 2012 with nearly $5 billion recovered.

“It has been another banner year for civil fraud recoveries, but more importantly, it has been a great year for the taxpayer and for the millions of Americans, state agencies and organizations that benefit from government programs and contracts,” said Assistant Attorney General Delery.   “The $3.8 billion in federal False Claims Act recoveries in fiscal year 2013, plus another $443 million in recoveries for state Medicaid programs, restores scarce taxpayer dollars to federal and state governments.   The government’s success in these cases is also a strong deterrent to others who would misuse public funds, which means government programs designed to keep us safer, healthier and economically more prosperous can do so without the corrosive effects of fraud and false claims.”      

Continue Reading DOJ Secures Second Largest Annual Recovery from False Claims Cases in 2013

Proposed false claims act legislation is one of the first bills to advance in the West Virginia House Judiciary Committee on the first day of the legislative session.  The legislation establishes qui tam proceedings, legal action brought by private citizens against the state or companies doing business with the state believed to have committed fraud or violated the law.

“It incentivizes reporting internally from anyone working inside the government or anyone working inside private companies who see their companies overcharging the government,” Tim Miley, Speaker of the WV House of Delegates said on MetroNews Talkline last week. 

The legislation will assist by identifying possible Medicaid fraud in the state, which is one of the main purposes of the bill. Some legislators have cautioned that the claims could overwhelm the Office of the Attorney General. “Anybody who is complaining about the bill for those reasons is doing so because they want to hide some of the government fraud," Delegate Stephen Skinner, D-Jefferson told The Journal

Skinner pointed to controversial deals such as "Routergate" to show the necessity for a state False Claims Act. In 2013, an audit revealed that state officials wasted millions of federal stimulus dollars when they purchased more than 1,000 routers. The $24 million was supposed to be used to increase Internet access in the state.

The legislation is under attack by West Virginia’s corporate lobby.  The chemical spill in Charleston that contaminated the drinking water for 300,000 residents hasn’t slowed down the corporate lobby’s drive to kill off this bill which is needed to protect the residents of West Virginia. The President of the West Virginia Chamber of Commerce, Steve Roberts, is characterizing the proposed law as a scheme for trial lawyers to get rich.

Roberts told Talkline that the proposal was nothing more than “a sue and settle scheme developed by the trial bar to try to expand the opportunity for lawsuits in West Virginia.”

Patrick Burns of Taxpayers Against Fraud took issue with Roberts’ claims.

“Do lobbyists for corporate crooks oppose paying fines and restitution?” Burns told Corporate Crime Reporter.  “Of course. The fox is always opposed to anyone guarding the hen house.”

“The good news is if West Virginia wants to see a model for success, they only need look next door.”

“Virginia passed a state False Claims Act in 2002, and since then that state’s Medicaid Fraud Control Unit has returned an average of $228 million per year.”

“Virginia has also recovered millions of stolen dollars for its state pension fund, and is set to recover millions more for defective water pipe installed by municipalities.”

The federal government’s first False Claims Act was signed into law in 1778.  Close to 30 states now have state False Claims Acts, including Texas, Maryland, New York, California, Michigan, Illinois, and Florida.

Intern Paul Lyons authored this post.

Stephen KohnOn Friday, December 6th, 2013, National Whistleblower Center Executive Director, Stephen Kohn, was a guest panelist at the Congressional Civil Justice Caucus Academy’s Briefing on False Claims Act Reform. The briefing was styled as a debate between Mr. Kohn and David Ogden. Mr. Ogden, a former Deputy U.S. Attorney General and the chair of WilmerHale’s Government and Regulatory Litigation Group, is one of the authors the U.S. Chamber’s Institute for Legal Reform’s proposed amendments to the FCA.

The Chamber claims that its proposed amendments will make the FCA more effective. The provisions are to incentivize companies to implement better compliance programs and prevent fraud before it happens. However, it is clear that the proposed reforms would do the opposite and actually hinder the FCA as well as the detection and prevention of fraud at large.

Mr. Ogden claims that the FCA is “simply ineffective at preventing fraud.” However, the FCA is the single most effective anti-fraud statute in the world. The FCA was reformed in 1986 to allow whistleblowers to perform qui tam actions, meaning that the whistleblower could pursue cases on behalf of the government and be rewarded for helping the government recover penalties from corporations that defraud the government. Since the inclusion of the Qui Tam provision the detection and prevention of fraud has risen exponentially. In 1986, prior to the reform, the U.S. government recovered 89 million dollars from detecting and prosecuting fraud. In 2012, that number rose to 4.95 billion dollars, 68% of that money was recovered via Qui Tam actions. All of this information and more is available in the National Whistleblower’s Center’s FCA Report.

Continue Reading NWC Rebuts Chamber’s Proposed FCA Reforms

Last week the Department of Justice issued a series of press releases announcing settlements of several claims made under the False Claims Act. These settlements resulted in recoveries of about $60 million. The settlements are listed below:

Fifty-Five Hospitals to Pay U.S. More Than $34 Million to Resolve False Claims Act Allegations Related to Kyphoplasty

07/02/2013

Fifty-five hospitals located throughout twenty-one states have agreed to pay the United States a total of more than $34 million to settle allegations that the health care facilities submitted false claims to Medicare for kyphoplasty procedures.

CyTerra Corporation Agrees to Pay $1.9 Million to Resolve False Claims Act Allegations

07/02/2013

CyTerra Corporation has agreed to pay the federal government $1.9 million to resolve civil liability arising from its failure to provide the U. S. Department of the Army with accurate, complete and current cost or pricing data for its sales of mine detectors.

 

Continue Reading DOJ Announces False Claims Act Settlements Recovering $60 Million for Taxpayers