Archive for October, 2013

Does the Government Shutdown Have Any Impact on My Qui Tam Case?

It has been 17 years since the United States government faced a partial shutdown as the result of a dispute between members of Congress. This is a tumultuous and uncertain time for our government and for all American citizens, and the simple reality is that we may not know answers about many aspects of the shutdown until the process fully plays out.

There are endless conversations playing out every day about the impact of the shutdown on major government programs such as the military, government-subsidized lifestyle services like the WIC program, and more personal issues like the US mail, trash, and even passport services. Buried underneath these more common discussions are inevitable questions about the impact of the shutdown on False Claims Act cases. FCA cases necessarily rely on the government- specifically on the US Department of Justice and local U.S. Attorney’s Offices- to be investigated and resolved through prosecution or settlement. Because of that relationship, it is understandable for whistleblowers and potential whistleblowers to be asking “What will this mean for us?”

The short answer is that there will undeniably be a direct impact on the prosecution of False Claims Act cases during the shutdown. Some have already taken effect, others are looming depending on the length of the shutdown. For example, immediately after the shutdown took effect, False Claims Act practitioners around the country received requests from the Department of Justice to agree to “stay” cases (meaning to put everything on hold) until further notice. The Department of Justice has indicated that, with minimal exceptions, its attorneys are prohibited from working on any cases that do not involve “emergencies involving the safety of human life or the protection of property.”

Following suit with the Department of Justice, certain courts have issued automatic stays of all cases involving the federal government, which includes qui tam cases. On October 3, 2013, just three days after the shutdown officially began, the Eastern District of Kentucky issued an automatic stay on all cases involving the United States of America or any party represented by the Department of Justice or the U.S. Attorney’s Office, citing a “lapse of congressional appropriations funding the federal government” and “workforce reductions.” It is not unreasonable to expect that other federal courts will follow suit with similar blanket orders.

Several Department of Justice attorneys who specifically work on False Claims Act cases, as well as a limited number of attorneys in the U.S. Attorney’s Offices around the country, are considered “essential employees” who will continue to work through the shutdown. However, as a practical matter, those employees are handling their own over-burdened workload in addition to the workloads of their furloughed colleagues, so the likelihood of seeing substantial progress made on any cases is minimal.

As False Claims Act practitioners, we have seen direct impacts on several of our cases in the past week. In at least one case, a defendant has paid the government for a settlement amount, but the individuals responsible for processing that money and paying out the relator’s share are on furlough, so the money is essentially being held in abeyance during the shutdown. In another case, a long-sought settlement is pending and the main parties on the case are available to sign off, but individuals who need to provide required signatures from several government offices are not available. As mentioned above, other cases have simply been stayed pending the resolution of the shutdown- a frustrating delay for cases that are known for their longevity in the best of circumstances.

So What Should I Do Now?

If you are a whistleblower in an active case, the most important thing to do is to keep in continuous contact with your attorney so you are prepared to provide any needed information if and when the government requests it. If your attorney advises that your case has been stayed, or placed on hold, then there are few options other than waiting it out.

If you are considering a False Claims Act case, do not let the government shutdown dissuade you or convince you to delay the case. There is no indication that the shutdown will have any impact on major case dispositive issues like the statute of limitations or the first-to-file bar, so it is still important to get a case on file as soon as practicable. As usual, False Claims Act attorneys will make a pre-filing disclosure to the appropriate governmental agency before filing a case, but there appears to be enough “essential employees” available that the process will not be interrupted.

If you believe you have information regarding fraud against the government and are considering bringing a False Claims Act case, please contact James Hoyer for an evaluation of your claims. Click here for more information about the firm and to submit your information electronically, or you may contact our office at 813-397-2300.

 

New York Considers More Incentives for Whistleblowers

In recent years we have seen two trends of great importance to the conduct and defense of government investigations – one, the growth of state agency investigations of matters previously handled on the federal level, and two, the growth of whistleblowing as a basis for government investigations. These two trends have come together in a proposed New York State law that would establish whistleblower bounties and protections for information given to the New York State Department of Financial Services (“DFS”) – a super agency formed in October 2011 to regulate banks and insurance companies in New York.  Read more at Forbes.com

 

Mississippi Woman Charged in Medicare Fraud Bought 20 Cars

JACKSON, Miss. — Newly released court records claim the owner of a Mississippi hospice ran a multimillion Medicare fraud and used some of the money to buy 20 cars since December 2009.

The details about Angelic Hospice in Greenwood and its owner’s purchases were outlined in a 27-page document dated Feb. 19 but only made public Oct. 3 in U.S. District Court in Oxford.

The document is an affidavit supporting prosecutors’ efforts to seize cars and cash in the case. It said the hospice billed Medicare for millions of dollars services that were never rendered, sometimes involving forged documents.

Regina Swims-King was charged in June in a 37-count criminal indictment and pleaded not guilty. Her trial is scheduled for Dec. 2.

Click here to read more.
 

SEC Announces $14 Million Whistleblower Award

Right on the heels of Chief Sean McKessy’s interview promising more resolved cases and whistleblower awards, the U.S. Securities and Exchange Commission (“SEC”) announced an award of more than $14 million to a whistleblower today.  The whistleblower has requested to stay anonymous, which the SEC law permits – a distinct difference from typical False Claims Act cases where the whistleblower’s identity is almost always revealed at the resolution of a case.

The SEC has not yet identified the target company nor the total amount of recovery, but does state that it brought an enforcement action against the company less than six months after the whistleblower tip was filed.  The speed of the SEC’s action – particularly in light of the clearly large value of the settlement – is encouraging and hopefully indicative that other cases may be fast-tracked as well.

As we have previously discussed on this blog, the James Hoyer law firm has significant experience representing clients in filing anonymous tips with the SEC Office of the Whistleblower.  If you have knowledge of a violation of federal securities laws or regulations and are considering filing a complaint with the SEC, please contact James Hoyer for an evaluation of your claims.  Click here for more information about the firm and to submit your information electronically, or you may contact our office at 813-397-2300.

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FOR IMMEDIATE RELEASE
2013-209

Washington D.C., Oct. 1, 2013

The Securities and Exchange Commission today announced an award of more than $14 million to a whistleblower whose information led to an SEC enforcement action that recovered substantial investor funds.  Payments to whistleblowers are made from a separate fund previously established by the Dodd-Frank Act and do not come from the agency’s annual appropriations or reduce amounts paid to harmed investors.

The award is the largest made by the SEC’s whistleblower program to date.

The SEC’s Office of the Whistleblower was established in 2011 as authorized by the Dodd-Frank Act.  The whistleblower program rewards high-quality original information that results in an SEC enforcement action with sanctions exceeding $1 million, and awards can range from 10 percent to 30 percent of the money collected in a case.

“Our whistleblower program already has had a big impact on our investigations by providing us with high quality, meaningful tips,” said SEC Chair Mary Jo White.  “We hope an award like this encourages more individuals with information to come forward.”

The whistleblower, who does not wish to be identified, provided original information and assistance that allowed the SEC to investigate an enforcement matter more quickly than otherwise would have been possible.  Less than six months after receiving the whistleblower’s tip, the SEC was able to bring an enforcement action against the perpetrators and secure investor funds.

“While it is certainly gratifying to make this significant award payout, the even better news for investors is that whistleblowers are coming forward to assist us in stopping potential fraud in its tracks so that no future investors are harmed,” said Sean McKessy, chief of the SEC’s Office of the Whistleblower.  “That ultimately is what the whistleblower program is all about.”

The SEC’s first payment to a whistleblower was made in August 2012 and totaled approximately $50,000.  In August and September 2013, more than $25,000 was awarded to three whistleblowers who helped the SEC and the U.S. Department of Justice halt a sham hedge fund, and the ultimate total payout in that case once all sanctions are collected is likely to exceed $125,000.

By law, the SEC must protect the confidentiality of whistleblowers and cannot disclose any information that might directly or indirectly reveal a whistleblower’s identity.

For more information about the whistleblower program and how to report a tip, visit www.sec.gov/whistleblower.