Archive for July, 2014

Wall Street Journal shines light on the FCA

Insurance Fraud

FCAThe Wall Street Journal recently ran a small feature on the False Claims Act. The article answers some basic questions about the FCA, but more importantly than that, it provides much needed exposure to an important tool for recovering taxpayer’s money — money that would otherwise be lost to fraud.

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Halifax Votes to End Whistleblower Suit

After five years, a fiercely fought legal battle that cost Halifax Health more than $110 million in settlement and legal costs is drawing to a close.  The James Hoyer law firm is local counsel in the Halifax case. The Halifax Health Board of Commissioners voted unanimously Monday to settle remaining claims in a whistleblower lawsuit for $1 million plus $4.5 million in legal fees for the whistleblower’s attorneys. That’s on top of an $85 million settlement in March and about $29.5 million in legal fees. Officials at the public hospital say their decision to settle was not an admission of wrongdoing but to minimize potential legal risk. “We are disappointed in paying anything for providing exceptional care, but we are looking forward to putting this behind us and moving forward,” Halifax Health CEO Jeff Feasel said in a prepared statement. “Unfortunately, in situations like this, avoiding future appeals and legal fees is the right business decision.” Although parties have agreed to the settlement terms, a filing still must be entered in federal court in Orlando to dismiss the case, hospital officials said. The board also voted Monday night to evaluate the performance of the chief executive officer and legal counsel, as well as hold town hall meetings to answer questions from the public. No dates have been set. Click here to read more in the Daytona Beach News-Journal.

 

Justice Department Secures Record $7 Billion Global Settlement with Citigroup for Misleading Investors About Securities Containing Toxic Mortgages

The Justice Department, along with federal and state partners, today announced a $7 billion settlement with Citigroup Inc. to resolve federal and state civil claims related to Citigroup’s conduct in the packaging, securitization, marketing, sale and issuance of residential mortgage-backed securities (RMBS) prior to Jan. 1, 2009.  The resolution includes a $4 billion civil penalty – the largest penalty to date under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).  As part of the settlement, Citigroup acknowledged it made serious misrepresentations to the public – including the investing public – about the mortgage loans it securitized in RMBS.  The resolution also requires Citigroup to provide relief to underwater homeowners, distressed borrowers and affected communities through a variety of means including financing affordable rental housing developments for low-income families in high-cost areas.  The settlement does not absolve Citigroup or its employees from facing any possible criminal charges.

The settlement includes an agreed upon statement of facts that describes how Citigroup made representations to RMBS investors about the quality of the mortgage loans it securitized and sold to investors.  Contrary to those representations, Citigroup securitized and sold RMBS with underlying mortgage loans that it knew had material defects.  As the statement of facts explains, on a number of occasions, Citigroup employees learned that significant percentages of the mortgage loans reviewed in due diligence had material defects.  In one instance, a Citigroup trader stated in an internal email that he “went through the Diligence Reports and think[s] [they] should start praying . . . [he] would not be surprised if half of these loans went down. . . It’s amazing that some of these loans were closed at all.”  Citigroup nevertheless securitized the loan pools containing defective loans and sold the resulting RMBS to investors for billions of dollars.  This conduct, along with similar conduct by other banks that bundled defective and toxic loans into securities and misled investors who purchased those securities, contributed to the financial crisis.

“Today, we hold Citi accountable for its contributing role in creating the financial crisis, not only by demanding the largest civil penalty in history, but also by requiring innovative consumer relief that will help rectify the harm caused by Citi’s conduct,” said Associate Attorney General Tony West.  “In addition to the principal reductions and loan modifications we’ve built into previous resolutions, this consumer relief menu includes new measures such as $200 million in typically hard-to-obtain financing that will facilitate the construction of affordable rental housing, bringing relief to families pushed into the rental market in the wake of the financial crisis.”

Of the $7 billion resolution, $4.5 billion will be paid to settle federal and state civil claims by various entities related to RMBS: Citigroup will pay $4 billion as a civil penalty to settle the Justice Department claims under FIRREA, $208.25 million to settle federal and state securities claims by the Federal Deposit Insurance Corporation (FDIC), $102.7 million to settle claims by the state of California, $92 million to settle claims by the state of New York, $44 million to settle claims by the state of Illinois, $45.7  million to settle claims by the Commonwealth of Massachusetts, and $7.35 to settle claims by the state of Delaware.

 

Citigroup will pay out the remaining $2.5 billion in the form of relief to aid consumers harmed by the unlawful conduct of Citigroup.  That relief will take various forms, including loan modification for underwater homeowners, refinancing for distressed borrowers, down payment and closing cost assistance to homebuyers, donations to organizations assisting communities in redevelopment and affordable rental housing for low-income families in high-cost areas.  An independent monitor will be appointed to determine whether Citigroup is satisfying its obligations.  If Citigroup fails to live up to its agreement by the end of 2018,  it must pay liquidated damages in the amount of the shortfall to NeighborWorks America, a non-profit organization and leader in providing affordable housing and facilitating community development.

 

 

James Hoyer Partner Running Marathon for a Good Cause

Jesse_Marathon_Pic

Partner Jesse Hoyer after running the Gasparilla Distance Classic in Tampa.

 

James Hoyer partner Jesse Hoyer was profiled as the featured athlete on the Little Things for Cancer marathon team, this week.  Little Things for Cancer raises money to help cancer patients being treated at Moffitt Cancer Center in Tampa, the Lahey Medical Center in Peabody and  Burlington, Massachusetts and in the state of Maryland.

Team Little Things for Cancer will run in the Marine Corps Marathon on October 26th in Washington D.C.  Here’s wishing Jesse and her teammates a swift and easy 26.2 miles!

Click here to read the featured athlete profile on Jesse and to learn more about the Little Things for Cancer charity.

 

James Hoyer New Partners Announcement

James, Hoyer Newcomer & Smiljanich is pleased to announce that attorney Chris Casper has been named managing partner and attorneys Jillian Estes, Sean Estes, Jesse Hoyer, and Sean Keefe have been named partners.  James Hoyer is an investigative law firm with an emphasis on False Claims Act whistleblower cases.

Chris Casper – Managing Partner

Chris Casper - Partner

Chris Casper – Partner

Chris Casper joined James Hoyer in 1995 and was named partner in 2000. His practice focuses primarily on representing victims of fraud and deceptive practices, whether individual consumers in class action litigation or the federal and state governments in whistleblower (qui tam) actions.

Christopher is a member of the Florida Bar and admitted to practice in the U.S. District Courts for the Middle and Southern Districts of Florida, the Eleventh Circuit Court of Appeals, and the United States Supreme Court. He has served as Chair of the Trial Lawyers Section of the Hillsborough County Bar Association, and Civil Chair of the Tampa Bay Chapter of the Federal Bar Association. He is also a longtime member of the Federalist Society.

Christopher received his law degree from the University of Florida (J.D., with honors, 1994), and his undergraduate degree from Georgetown University (B.A., 1990).  He is an avid outdoorsman who enjoys fishing, diving, and spending time with his wife, three daughters and young son.

Contact Chris: ccasper@jameshoyer.com

Phone: 813-397-2300 or 1-800-651-2502 (toll free)

 

  Jillian Estes – Partner

Jillian Estes - Associate

Jillian Estes – Associate

Jillian Estes joined James Hoyer in 2008 with a passion for helping the underprivileged and advocating for “the little guy.”  She began in the Consumer Class Action division where she helped initiate a series of class action cases against for-profit higher education institutions related to deceptive marketing practices.

Jillian is now a partner in the firm’s False Claims Act qui tam division.  She was lead counsel on a qui tam case involving Medicaid payments to a hospital in violation of the Stark Statute and led the briefing team for James Hoyer’s victory representing the sole relator in the $192 million Endo Pharmaceutical off-label settlement, in addition to working on many other healthcare, pharmaceutical, and defense contracting qui tam cases.

Jillian’s career in advocacy started in the International Division of the National Center for Missing and Exploited Children, where she worked in case management from 2004-2005.  As a result of that work, Jillian is an active volunteer for the U.S. Department of State’s Attorney Network, taking pro bono cases representing parents whose children were abducted into or are being wrongfully retained in the United States.  In 2012, Jillian was awarded with the Thirteenth Judicial Circuit’s Outstanding Pro Bono Service by a Young Lawyer award for her efforts in representing a father in Denmark to secure the return of his young daughter who was being wrongfully retained in the United States.  In 2014, Jillian also received a Certificate of Appreciation from the U.S. Department of State in recognition of  her efforts as a member of the Hague Convention Attorney Network.

Jillian graduated cum laude from the University of Florida Levin College of Law in 2008. Prior to law school, she completed her undergraduate work at the University of Florida, where she graduated summa cum laude with a B.A. in Criminology.  During law school, Jillian helped found the Law School Mentoring Project to provide more than 150 mentors to a local underprivileged charter school, was the Student Works Editor for the Journal of Law and Public Policy, while earning a certificate in Estates and Trusts.  Jillian also interned with the Eighth Judicial Circuit Probate Division in Gainesville, FL and served as a law clerk with Moody, Salzman & Lash in Gainesville.

Contact Jillian: jestes@jameshoyer.com

Phone: 813-397-2300 or 1-800-651-2502 (toll free)

 

Sean Estes – Partner

Sean Estes - Associate

Sean Estes – Associate

Sean Estes joined James Hoyer in 2008. He began in the firm’s Consumer Class Action division where he helped represent one of the largest classes ever, involving more than 200 million individuals. The settlement changed the way data aggregators use and disclose information protected by the Drivers Privacy Protection Act. Sean was also a key part of the legal team handling a whistleblower retaliation case, which resulted in a verdict in favor of our James Hoyer client. He is now a partner representing consumers and whistleblowers in the firm’s Consumer Class Action and False Claims Act qui tam divisions.

Sean is a “Double Gator” having graduated cum laude with majors in Economics and Political Science from the University of Florida (B.A., 2005) and cum laude from the University of Florida Levin College of Law (J.D., 2008). While cheering the Gator football and basketball teams on to four national championships, Sean interned for the Honorable Peter K. Sieg of the Eighth Judicial Circuit and the Office of the State Attorney in Levy County. He also worked as a law clerk for Fine, Farkash & Parlapiano, PA.  Sean was a Pro-Bono Certificate Recipient and a teaching assistant for the Trial Practice course.

In 2010, he became a member of the Ferguson-White Inn of Court, an organization dedicated to fostering ethics and integrity in the legal profession that was co-founded by senior partner Judy Hoyer. Sean has given accredited CLE courses on the ethics of cloud computing and has also spoken to groups of lawyers and investigators on related ethical issues.

Contact Sean: sestes@jameshoyer.com

Phone: 813-397-2300 or 1-800-651-2502 (toll free)

 

Jesse Hoyer – Partner

Jesse Hoyer - Partner

Jesse Hoyer – Partner

Jesse Hoyer joined James Hoyer in 2009. She is a partner in the False Claims Act qui tam division, with a focus on education fraud.

From 2010 through 2013, Jesse was a member of the Ferguson-White Inn of Court, an organization dedicated to fostering ethics and integrity in the legal profession that was co-founded by senior partner Judy Hoyer.

At the University of Florida, Jesse received her undergraduate degrees in Criminology (B.A., 2006) and Psychology (B.S., 2006), and her law degree with honors (J.D., 2009). In law school, Jesse focused her attention on the practice of international law and spent one summer abroad studying international business law and white collar crime in Paris and Montpellier, France. She was actively involved in the Criminal Law Society and the International Law Society. She interned in the felony division at the Public Defender’s Office, Thirteenth Judicial Circuit in Tampa and conducted legal research for the Law Offices of Gilbert A. Schaffnit in Gainesville, Florida.

While at U.F., Jesse was an active, competitive horseback rider and traveler. Now that she’s back in Tampa, Jesse still enjoys being as active as possible. In 2010, she picked up distance running as a hobby. To date, she has completed more than forty half marathons and five full marathons. She’s also tried her hand at several sprint triathlons around the Tampa area. When she can squeeze some free time in between training runs, Jesse loves to watch football—especially her Gators, and the Tampa Bay Buccaneers.

Jesse is licensed to practice in Florida state courts and the Middle District of Florida.

Contact Jesse: jlhoyer@jameshoyer.com

Phone: 813-397-2300 or 1-800-651-2502 (toll free)

 

Sean Keefe – Partner

Sean P. Keefe - James Hoyer Associate

Sean P. Keefe – James Hoyer Associate

Sean joined James Hoyer in January 2011, after serving as an assistant state attorney for the Thirteenth Judicial Circuit for Hillsborough County for nearly a decade.

In his career as a state prosecutor, Sean gained extensive trial experience prosecuting white collar crimes, drug trafficking cases, and homicides, including death penalty cases. He now works in the firm’s False Claims Act qui tam division. Sean also represents the receiver in a major Ponzi scheme litigation.

Sean majored in history at the University of South Florida (B.A., 1996) and received his law degree from Florida State University in 2000. He is a member of the Herbert G. Goldburg Criminal Law American Inn of Court and the Florida Bar.

Sean enjoys spending his free time with his wife, keeping up with current events and experimenting in the kitchen.

Contact Sean: skeefe@jameshoyer.com

Phone: 813-397-2300 or 1-800-651-2502 (toll free)

 

Will the Supreme Court slash False Claims Act penalties?

Gosselin Worldwide MovingOne case we’ll be watching next term is whether the Supreme Court takes the appeal of Gosselin World Wide Moving, N.V. v. U.S. ex rel Bunk.

The complicated fact pattern laid out in the Fourth Circuit’s opinion tells the tale of the defendant moving company colluding with its industry peers to artificially inflate the packing and loading component of bids submitted to the government. For its actions, the moving company was convicted of federal criminal offenses in the Eastern District of Virginia. See United States v. Gosselin World Wide Moving, N.V., 411 F.3d 502 (4th Cir. 2005).

The Fourth Circuit’s opinion ends with a final judgment of $24 million in False Claims Act (FCA) penalties even though the actual damages inflicted on the government were much less than that amount. This is because once liability is established, the FCA permits treble damages plus a civil penalty of $5,000 to $11,000 for each false claim submitted. In the Gosselin case, the penalties added up quickly because the Fourth Circuit ruled that the FCA allows for a separate penalty for each of the more than 9,000 false invoices the moving company submitted to the government.

The American Hospital Association, United States Chamber of Commerce, and the Pharmaceutical Research and Manufacturers of America joined forces to submit an amici curiae brief (amici curiae is a legal term meaning that the organizations are offering the court information although they are not parties in the case) to encourage the Supreme Court to hear the case in order to limit the moving company’s exposure under the FCA.

The organizations that joined in the amici curiae brief are made up of businesses that would greatly benefit from decreased FCA exposure so their interest in the case is readily apparent. Conversely, the case is equally important to whistleblowers who could see their case’s value severely diminished by an adverse Supreme Court decision.

We at James Hoyer hope that the Supreme Court agrees with the Fourth Circuit that the dollar amount “appropriately reflects the gravity of Gosselin’s offenses and provides the necessary and appropriate deterrent effect going forward.” We’ll let you know what happens.

If you have any questions about this case or any other whistleblower matter, please contact us.

 

U.S. Supreme Court Agrees to Hear False Claims Act Case about Statute of Limitations and First-to-File

The United States Supreme Court granted certiorari today in Kellogg Brown & Root Services, Inc. v. United States ex rel. Carter, a False Claims Act case addressing two issues: the proper statute of limitations under the Wartime Suspension of Limitations Act (“WSLA”), and the application of the first-to-file bar once an earlier case is no longer pending. “Granting certiorari” is the legal terminology which means that the country’s highest court will hear arguments and make a decision in a case. This is a big step in itself, because very few cases which apply for certiorari actually get reviewed by the Court. The Supreme Court Justices and their clerks receive 8,000 to 10,000 petitions for review every year, and only 80 – 100 actually are heard during a term.

KBR v. U.S ex rel. Carter is a False Claims Act case which was originally filed in the Eastern District of Virginia and appealed to the Fourth Circuit Court of Appeals.  Benjamin Carter, a KBR employee in Iraq, filed the qui tam case regarding allegations that KBR submitted false claims by failing to perform required water purification services and by manipulating time records to submit bills for work not actually performed.  The procedural history of the case is complex, involving multiple dismissals and re-filings of Carter’s case over a period of years. The complaint at issue in the case was ultimately filed in 2011.

The first issue on appeal involves the application of the WSLA to False Claims Act cases. The WSLA is a provision of the United States Civil Code which extends the statute of limitations to bring a case during periods when the United State is at war.  The Fourth Circuit held that the WSLA applied to civil fraud cases during times of conflict, whether or not a “war” was formally declared. The court held, “The purpose of the WSLA – to combat fraud at times when the United States may not be able to act as quickly because it is engaged in ‘war’ – would be thwarted were we to find that the United States must be involved in a declared war for the Act to apply.” U.S. ex rel. Carter v. Halliburton Co., 710 F.3d 171, 179 (4th Cir.2013).  By the court’s calculation, the United States had been “at war” since Congress authorized President Bush to use military force in Iraq on October 11, 2002, and the WSLA tolled the statute of limitations since that time.

The second issue on appeal addresses whether the “first to file” bar – the rule that requires that a relator be the first to file a case against a defendant in order to bring the case – applies once an earlier case has been dismissed.  The Carter case presents a unique situation where earlier cases were pending at the time that Carter originally filed his case, but he re-filed the case once the earlier cases had both been dismissed. The Fourth Circuit held that, “once a case is no longer pending the first-to-file bar does not stop a relator from filing a related case.” Id. at 183. Therefore, Carter’s re-filed case was permitted to move forward.

From the prospective of relators’ counsel, it is not necessarily a positive sign that the Court has granted cert on both of these issues – though we are far from being able to predict the Court’s decision on any issue.  On one hand, the Court could have denied cert if it was comfortable with the holdings from the Fourth Circuit and wanted to leave the decisions as they stand.  On the other hand, both of these issues have caused splits among the circuit courts, so the Supreme Court may want the opportunity to clarify that these are the proper standards for all circuits to apply.  We are hopeful for the more optimistic approach, but with the present make-up of the Court, it is reasonable to be a bit concerned about what the Court has in mind.

The KBR case has been slated for the October 2014 term.  We will keep a very close eye on this case and post updates as soon as they are available.

If you have any questions about this blog or about the False Claims Act in general, please contact us through the website or give us a call at 1-800-651-2502.