Archive for December, 2014

Lockheed Martin Integrated Systems Agrees to Pay $27.5 Million to Settle Overbilling Allegations

Lockheed Martin Integrated Systems (LMIS) has agreed to pay $27.5 million to resolve allegations that it violated the False Claims Act by knowingly overbilling the government for work performed by LMIS employees who lacked required job qualifications.

The settlement was announced today by Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division and U.S. Attorney Paul J. Fishman for the District of New Jersey.

“Contractors that knowingly bill the government in violation of contract terms will face serious consequences,” said Acting Assistant Attorney General Branda.  “The department will ensure that those who do business with the government, and seek taxpayer funds, do so fairly and in accordance with the applicable rules.”

“U.S. forces rely on the goods and services provided by defense contractors, so it is imperative the government be able to rely on those contractors to adhere to the rules,” said U.S. Attorney Fishman.  “This settlement should remind all who do business with the government that there is a price to pay for fudging the math.”

LMIS is a subsidiary of Lockheed Martin Inc., which is headquartered in Bethesda, Maryland.  The alleged labor mischarging occurred on the Rapid Response (CR2) contract and the Strategic Services Sourcing (S3) contract, both issued by the U.S. Army Communication and Electronics Command (CECOM).  CECOM is located at Fort Monmouth, New Jersey, and at the Aberdeen Proving Group in Maryland.  The purpose of the CR2 and S3 contracts is to provide rapid access to products and services to be provided to the Army in Iraq and Afghanistan. Individual task orders then are separately negotiated, based on these contracts, to quickly meet the needs of CECOM.  LMIS allegedly violated the terms of the contracts by using under-qualified employees who were billed to the United States at the rates of more qualified employees.  The overbilling allegedly resulted in greater profit for LMIS.

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Study: Life Sciences Companies Concerned With Qui Tams

Whistleblower Case

IS099S4MG A recent study of “life sciences companies” (i.e. biotechnology, medical device, and healthcare companies) revealed that False Claims Act qui tam liability is a primary issue discussed in general counsels’ offices. The study was sponsored by Foley Hoag and conducted by ALM Legal Intelligence.

According to Kevin Iredell, vice president of ALM Legal Intelligence, “[t]he survey revealed a surprising disconnect between the concern among legal departments over False Claims Act compliance and the internal procedures designed to address those risks.” Iredell observed that “[o]ne in four respondents did not have internal compliance policies in place, despite the fact that one in three had been subject to an FCA investigation in the past five years, with the Department of Justice siding with the whistleblower in half of those cases.”

One would think that life science companies would take notice, given that the Department of Justice recently reported that it recovered almost $6 billion from qui tam cases in 2014 and that the number was expected to grow next year.

According to ALM, the study’s other key findings included:

• Over half of the general counsels surveyed listed the False Claims Act as one of the top three risks their companies face.
• Potential “off-label” claims for marketing products for unapproved uses also ranked as a concern.
• Most general counsels cited damage to the company’s reputation as their chief vulnerability.
• Virtually all respondents said their companies offer compliance or ethics training to executives and senior managers, and most require the training.

If you have questions about this post, or to contact James Hoyer about a suspected False Claims Act violation, please contact us here or call us toll-free at 1-800-651-2502.

And the Emmy goes to…


Angie Moreschi & Larry Wiezycki at the Emmys!

Big congratulations to our media team members Angie Moreschi and Larry Wiezycki for their Emmy wins Saturday night at the 38th Annual Suncoast Emmy Awards.  It was an exciting night of glitz and glamour as hundreds gathered in Fort Lauderdale to honor the best in broadcasting in the Southeast United States.

Larry won for excellence in Historical Documentaries for his work on JFK in Tampa: The 50th Anniversary.  Angie won two Emmys for her Consumer Wise segment which airs on Bay News 9 in Tampa and News 13 in Orlando– one  for excellence in Business/Consumer Reporting and another for On Camera Talent in Reporting.

Angie is our Communications Director and Investigative Producer here at James Hoyer, and Larry is our Creative Director.  They combine their award winning talents to produce powerful documentaries that the firm shares with the government and media to help educate them on our whistleblower cases. They are a great team and add a unique asset to the firm.


Angie Moreschi accepting award — Angie and husband Chris Jadick


Larry Wiezyck & producer Lynn Marvin Dingfelder accepting award — Larry & family





ALBANY, NEW YORK: The Research Foundation for the State University of New York has agreed to pay the United States $3,750,000 to resolve allegations that its Center for Development of Human Services (CDHS) violated the False Claims Act by manipulating audits it performed of federally funded health care programs in New York State, announced United States Attorney Richard S. Hartunian.

The Research Foundation is a nonprofit educational corporation whose mission includes supporting research for the State University of New York. CDHS is a Research Foundation program headquartered at Buffalo State College, with offices in Albany, Buffalo, Syracuse, Rochester, and New York City. In 2007, Research Foundation entered into a contract with the New York State Department of Health to review and report to the federal government information concerning eligibility for New York State’s Medicaid and Children’s Health Insurance Programs (CHIP). These audits – known as the Payment Error Rate Measurement (PERM) and Medicaid Eligibility Quality Control (MEQC) reviews – were designed to measure, among other things, errors in local determinations as to which New York State residents were eligible to receive Medicaid and CHIP benefits during the period of October 1, 2007 through September 30, 2008.

The settlement resolves allegations that CDHS manipulated both the PERM and MEQC audits by prescreening and altering the cases selected for inclusion in what were supposed to be random sample reviews of New York State’s Medicaid and CHIP eligibility determinations. CDHS, which cooperated during the investigation, acknowledged in the settlement agreement that it submitted false statements to the Centers for Medicare & Medicaid Services pertaining to New York State’s eligibility error rates. Based in part on the findings of the investigation, Research Foundation adopted enhanced compliance measures, including appointing a Chief Compliance Officer to oversee the administration of the activities it sponsors.

United States Attorney Hartunian said: “The effort to provide better health care to more people at a lower cost depends on the faithful application of Medicaid eligibility requirements and the reduction of erroneous payments based upon accurate information provided by independent reviewers. In this case, the Center for Development of Human Services failed to fulfill its contractual obligation, as a federal grant recipient, to deliver the accurate and reliable information necessary to maintain the integrity of the Medicaid program. We will continue to pursue vigorously entities that deliver substandard work on taxpayer-funded projects and violate the public trust by falsifying information to receive federal funds.”

“CDHS skewed its audits of New York health care programs for its own gain. We will not tolerate such schemes, which waste scarce federal taxpayer dollars and undercut the integrity of public health care programs,” said Thomas O’Donnell, Special Agent in Charge, United States Department of Health and Human Services, Office of Inspector General (HHS-OIG), New York region.

The government’s investigation was triggered by a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act, which allows private persons, known as “relators,” to file civil actions on behalf of the United States and share in any recovery. The relators in this case will receive $825,000, which is 22% of the settlement proceeds. The case is docketed with the United States District Court for the Northern District of New York under number 10-cv-385.

The investigation and settlement were the result of a coordinated effort between the United States Attorney’s Office for the Northern District of New York, the Department of Justice’s Civil Division (Fraud Section), and HHS-OIG. Locally, the United States was represented by Assistant United States Attorney Adam J. Katz.


TAF Education Fund Has Fun Explaining False Claims Act

Enjoy this video from the Taxpayers Against Fraud Education Fund.  It explains the False Claims Act and why whistleblowers are so important to taxpayers and our communities.


Rite Aid Corporation Pays $2.99 Million for Alleged Use of Gift Cards to Induce Medicare and Medicaid Business

Rite Aid Corporation, a Delaware corporation and national retail drugstore chain with its principal place of business in Camp Hill, Pennsylvania, has paid the United States $2.99 million to resolve allegations that it violated the False Claims Act by inappropriately using gift cards as inducements, the Department of Justice announced today.

The settlement resolves allegations that Rite Aid offered illegal inducements to Medicare and Medicaid beneficiaries to transfer their prescriptions to Rite Aid pharmacies.  The government alleged that from 2008 to 2010, Rite Aid had knowingly and improperly influenced the decisions of Medicare and Medicaid beneficiaries to transfer their prescriptions to Rite Aid pharmacies by offering them gift cards in exchange for their business.

“This case demonstrates the government’s ongoing commitment to enforcing accountability, transparency and fairness in the retail pharmacy industry,” said Acting Assistant Attorney General Joyce R. Branda for the Civil Division.  “The government will continue to advocate for the best interests of Medicare and Medicaid patients, and prevent pharmacies from improperly manipulating their healthcare choices.”

Read rest of story here


Senate Bill Seeks New Motor Vehicle Safety Whistleblower Program

Car CrashAs recently reported by the New York Times, whistleblower programs have been an unqualified success for the government in 2014, assisting in a record return of $5.69 billion.

The government is now trying to expand this success to new areas. For example, on November 20, 2014, a new Senate bill was introduced to create an automobile safety whistleblower program whereby whistleblowers could report a “defect, noncompliance, or any violation or alleged violation of any notification or report requirement” related to safety.

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United States Files Suit Against Orlando, Florida, based Air Ideal and its Owner, Kim Amfraut, for Allegedly Submitting False Claims Under HUBZone Program

The United States has filed a complaint against Orlando, Florida, based Air Ideal Inc. and its owner, Kim Amkraut, for allegedly making false statements to the Small Business Administration (SBA) to obtain certification as a Historically Underutilized Business Zone (HUBZone) company, the Justice Department announced today.

“The HUBZone program is intended to create jobs in areas that have historically had trouble attracting business,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division.  “This suit demonstrates that the United States will hold accountable those who knowingly violate the requirements of this vital program.”

“The HUBZone procurement program imposes very clear requirements upon contractors that must be followed,” said U.S. Attorney A. Lee Bentley III for the Middle District of Florida.  “By intervening in this case, we reaffirm our commitment to maintaining the integrity of vital programs such as these, which undergird our economy.”

Under the HUBZone program, companies that maintain their principal office in a designated HUBZone and meet certain other requirements can apply to the SBA for certification as a HUBZone small business company.  HUBZone companies can then use this certification when bidding on government contracts.  In certain cases, government agencies will restrict competition for a contract to HUBZone-certified companies.

The complaint alleges that Air Ideal and Kim Amkraut originally applied to the HUBZone program in 2010 by claiming that Air Ideal’s principal office was located in a designated HUBZone.  The complaint further alleges that, in fact, this location was a “virtual office” where no Air Ideal employees worked and Air Ideal was actually located in a non-HUBZone location.  Allegedly, the defendants not only misrepresented the location of Air Ideal’s principal office to the SBA, but also submitted to the SBA a fabricated lease agreement for its purported HUBZone office.

Read rest of story here


James Hoyer Prime Hospital Case Takes Major Step Forward

Prime Whistleblower

Karin Berntsen – James Hoyer Client

The whistleblower case filed against Prime Healthcare by James Hoyer client Karin Berntsen has cleared a major hurdle.  The defendant’s Motion to Dismiss the case was denied in its entirety.  Judge Patrick Walsh of the U.S. District Court for the Central District of California wrote:

Based on these allegations, the Court is satisfied that Berntsen has stated an FCA (False Claims Act) claim with sufficient particularity as against all Defendants. Having carefully reviewed the FAC, the Court finds that it includes the who, what, when, where, and how of the alleged fraud.

The San Jose Mercury News wrote about the decision in an article, Controversial hospital chain owner poised to expand empire to Bay Area, about the hospital chain’s rapid expansion.  The article outlined the allegations in Berntsen’s complaint against Prime Healthcare:

Karin Berntsen, who gathered information during meetings with Reddy, alleges in the civil suit that Prime hospitals admit patients when medically unnecessary; “upcode” — that is, falsify patient records and billing codes to increase reimbursement; and, in order to make more money, often refuse to discharge patients or transfer them to another hospital.

The article goes on to further explain the allegations:

Berntsen is a veteran registered nurse, author of a book on patient safety and is currently the director of performance improvement at Alvarado Hospital in San Diego. In her suit, she accuses Reddy, as well as the hospital’s CEO and 14 of Prime’s California hospitals, of bilking the federal government of at least $50 million.

Click here to read the entire article in the San Jose Mercury News.