Archive for February, 2015

One Step Closer: Senate Committee Greenlights Lynch for US Attorney General

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The Senate Judiciary Committee voted 12-8 to approve Loretta Lynch as the next United States Attorney General.  If confirmed, Lynch will succeed soon-to-be resigned Eric Holder and would become the first African-American female to fill that position.  Lynch earned votes from all nine Democratic senators on the committee, as well as three cross-over votes from Republican Senators Orrin Hatch (R-Utah), Lindsey Graham (R-SC) and Jeff Flake (R-Az).

Flake, one of the Republicans to cross party lines, stated, “I’ve always felt that it’s my position here to try to determine if somebody’s qualified for the position, not if I agree with every position that they take.  I think she is eminently qualified.”  Of note, Senator Chuck Grassley, who co-sponsored the modern False Claims Act, opposed her nomination.

The next step towards confirmation of President Obama’s nomination will be a full vote by the Senate, expected in late March.  Lynch will once again require bipartisan support, needing support from at least four Republicans to trigger a tiebreaker vote by Vice President Joe Biden, or five Republican votes to reach a simple minority without Biden’s vote.  Lynch is expected to obtain the votes she needs to get through the Senate vote, but has faced increasing opposition in recent weeks related to her statements in support of President Obama’s immigration reform actions.

We will continue to monitor and post about the process of confirming the next U.S. Attorney General.


Armstong Update: Fined $10 Million for Perjury; False Claims Act Case Still Moving Forward

Paolo Cocco/Getty Images

Paolo Cocco/Getty Images

Throughout 2014, we posted articles and blog discussions of the nearly $100 million False Claims Act case that the United States is pursuing against disgraced cyclist, Lance Armstrong.  While the FCA case presses forward, Armstrong faces legal issues on multiple fronts related to his use of performance-enhancing drugs (“PEDs”) while riding for the U.S. Postal Service’s professional cycling team from 1996 to 2004.

On Monday, an arbitration panel handed down a $10 million penalty against Armstrong, the second major financial repercussion resulting from Armstrong’s admittedly-false statements regarding PED use.  (He was ordered to pay back $3 million in race bonuses in 2013.)

In the 2-1 ruling, the arbitration panel condemned Armstrong’s continuing, seemingly-intentional deception, saying he had likely carried out “the most devious sustained deception ever perpetrated in world sporting history.”  The panel ordered that Armstrong pay the $10 million to SCA Promotions, an insurance company responsible for paying bonuses based on Armstrong’s Tour de France wins.

In 2006, Armstrong and SCA had settled a legal dispute over the race awards, which resulted in SCA paying Armstrong $7.5 million.  But, during those negotiations, Armstrong testified under oath that he had not used PEDs.  SCA re-opened the litigation in 2012 after Armstrong was stripped of his race titles and permanently banned from professional cycling.  Armstrong has indicated that he will not comply with the arbitration award, so SCA filed a lawsuit in Texas state court to try to recover the money.

Just four days before the arbitration decision was released, Armstrong lost a fight in the False Claims Act case as well.  Judge Christopher Cooper of the U.S. District Court for the District of Columbia threw out six of Armstrong’s affirmative defenses, since some were vague and lacked clarity.  Judge Cooper also threw out an affirmative defense seeking dismissal of the case because fellow-cyclist-turned-relator Floyd Landis may also face criminal sanctions for his conduct, noting “Landis has entered into a deferred prosecution agreement, he has not been convicted.”  The Judge concluded that these facts were not sufficient to require the dismissal of Landis’ claims.

Armstrong did retain six other affirmative defenses, most of which argue that the United States did not suffer or failed to mitigate any harm caused by Armstrong’s conduct.  The court also did not strike an affirmative defense related to the federal government’s public disclosure of the case while a seal order was in place.

Reports that Armstrong has issued broad subpoenas to other former cyclists indicate that the case is progressing through the discovery phase.  Landis and the United States will surely face another round of motions aimed at ending the False Claims Act case at the end of discovery.  If the case survives those motions, a trial could be held shortly thereafter.

We will continue to monitor the myriad of issues that Armstrong is facing and post updates of any major events in the False Claims Act case.


Michael Reinstein, an Illinois Physician, Pleads Guilty to Taking Kickbacks from Pharmaceutical Company and Agrees to Pay $3.79 Million to Settle Civil F.C.A Case

The Department of Justice announced today that an Illinois physician, Dr. Michael J. Reinstein, pleaded guilty to a federal crime for receiving illegal kickbacks and benefits totaling nearly $600,000 from two pharmaceutical companies in exchange for regularly prescribing an anti-psychotic drug — clozapine — to his patients.  Reinstein also agreed to pay the United States and the state of Illinois $3.79 million to settle a parallel civil lawsuit alleging that, by prescribing clozapine in exchange for kickbacks, Reinstein caused the submission of false claims to Medicare and Medicaid for the clozapine he prescribed for thousands of elderly and indigent patients in at least 30 Chicago-area nursing homes and other facilities.

“The Department of Justice is committed to ensuring that physicians who accept payments from pharmaceutical manufacturers to influence prescribing decisions are held accountable,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division.  “Schemes such as this one undermine the health care system and take advantage of elderly patients who are among the most vulnerable health care recipients.”

“Physicians must prescribe medications for their patients solely on the basis of the patients’ best medical interests and not because those decisions were improperly influenced by kickbacks and other financial favors,” said U.S. Attorney Zachary T. Fardon of the Northern District of Illinois.

Read rest of story here


Successful Whistleblowers Fined For Disclosing Case to the Media

top_secretAt the outset of every case, we explain and re-explain the concept that a False Claims Act complaint will be filed “under seal.” This is a basic tenant of False Claims Act law, yet is a unique concept to most individuals since most cases are filed in court and are immediately accessible to the public.  False Claims Act cases are different — they are filed confidentially and served only on the United States or any participating state, not on the defendant.

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