Archive for July, 2015

Happy 237th Birthday to Whistleblower Law!

Senator Chuck Grassley

Senator Chuck Grassley

Senator Chuck Grassley

To help celebrate the 237th anniversary of the first whistleblower law passed by the Continental Congress back in 1778, United States Senator Chuck Grassley of Iowa prepared a stirring statement recounting the law’s history and the obstacles it has had to overcome to become the effective tool for recovering taxpayer money that it is today.

Grassley first acknowledged that “Whistleblowers have always been crucial in helping Congress and the federal Government route out fraud and misconduct,” and as proof cited that since 1986 the federal Government has recovered $42 billion from whistleblower cases – $6 billion in the Fiscal Year 2014 alone.

Unfortunately, the path to recovery has not always been a smooth one. As Grassley recounted, the False Claims Act was essentially gutted in 1943 when Congress bowed to outside pressure to protect those who commit fraud. In 1981, the GAO reported that the “sad truth is that crime against the Government often does pay.”

Fortunately for taxpayers, Grassley co-authored much needed amendments to the False Claims Act in 1986 and acted again in 2009 to combat various courts’ efforts to create loopholes in the law that allowed subcontractors to get away with fraud because ether the Government was not directly presented with the false claims or the relator hadn’t proven a judicially-constructed “intent” requirement relating to whether the Government itself paid the false claims.

Grassley emphasized the importance of Congress staying vigilant over the application of the False Claims Act since government agencies and even courts can be swayed by the lobby groups and powerful corporate defendants who would stand to benefit from the weakening of laws designed to recover taxpayers’ money.

As an example of an agency working against Congress’s intent, Grassley cited the Department of Justice’s recent attempt to minimize a relator award in a Medicare and Medicaid fraud suit brought by a James Hoyer client that resulted in a $197 million settlement with Endo Pharmaceuticals. Fortunately the Court in our case recognized that our client had contributed significantly to the Government’s investigation and was a key component to achieving the massive recovery. The Judge observed that Congress intended that “the only measuring stick” for an award be “the contribution of the relator.”

Grassley concurred with the Court, explaining:

That Judge was right. Congress intended to empower, protect, and reward relators who identify fraud against the taxpayers. History teaches us that weakening the relator’s rights weakens the government’s ability to fight fraud. All that does is let wrongdoers off the hook and cost the taxpayers money.

In sum, Grassley urged his “colleagues to stand strong for the most effective tool we have to combat fraud.”

Happy Birthday Whistleblower Law!

You can read the entire statement here.


Senator Grassley Praises the False Claims Act

Senator Chuck Grassley

Iowa Senator Chuck Grassley praised the False Claims Act today on the 237 year anniversary of the passage of the country’s first whistleblower law.

On July 30, 1778, the Continental Congress passed the very first whistleblower law in the United States.  It read:

[I]t is the duty of all persons in the service of the United States . . . to give the earliest information to Congress or other proper authority of any misconduct, frauds or misdemeanors committed by any officers or persons in the service of these states, which may come to their knowledge.

Whistleblowers have always been crucial in helping Congress and the federal Government route out fraud and misconduct.  It is simple common sense to reward and protect whistleblowers who report waste, fraud, and abuse.  The False Claims Act does that.

Senator Grassley also mentioned the recent decision by a Pennsylvania federal court judge to give a 24-percent award to Peggy Ryan, James Hoyer client and whistleblower in the Endo Pharmaceuticals case.  The Department of Justice had requested a lower award, despite Ryan’s extraordinary efforts in the case.  The judge and Senator Grassley were critical of DOJ’s stance:

Just recently the Justice Department tried to minimize a relator award in a Medicare and Medicaid fraud suit.  The relator contributed significantly to the case.  The Judge recognized that Congress intended that “the only measuring stick” for an award is “the contribution of the relator.”

That Judge was right.  Congress intended to empower, protect, and reward relators who identify fraud against the taxpayers.  History teaches us that weakening the relator’s rights weakens the government’s ability to fight fraud.  All that does is let wrongdoers off the hook and cost the taxpayers money.  That is not the result we intended with the False Claims Act.  It is also not the result the Continental Congress, so concerned about identifying “misconduct, frauds and misdemeanors,” would have wanted.

Senator Grassley spoke passionately about the value of whistleblowers and how their efforts help the American government and taxpayers:

In Fiscal Year 2014 alone, the federal Government recovered nearly $6 billion under the Act.  That makes more than $22 billion since January 2009, and more than $42 billion since 1986.  These recoveries represent victories across a wide array of industries and government programs.  Those programs include mortgage insurance, federal student aid, and Medicare and Medicaid, as well as Defense contracts.

The Department of Justice credits whistleblowers for their important role in this success.
According to the Justice Department, whistleblowers accounted for $3 billion in recoveries under the Act in Fiscal Year 2014.  In fact, over 80% of False Claims Act cases are initiated by whistleblowers.  Clearly the False Claims Act is working very well.

Of course, the Act has no shortage of critics—typically the groups where you find perpetrators of fraud.  But we have learned our lesson that a weak False Claims Act is not in the taxpayer’s best interest.

In 1943, Congress bowed to pressure to undo the Act’s crucial qui tam provisions.
Amendments passed back then barred actions where the Government already had knowledge of the fraud.  The result was to block nearly all private actions.  Congress assumed that the Justice Department could do a good job prosecuting fraud all by itself.  They were wrong.
Between 1943 and 1986, fraud against the Government skyrocketed.  Most of those accused went unpunished.

Click here to read the complete statement by Senator Grassley.


James Hoyer Whistleblower Case Part of $13 Million Qui Tam Settlement

Whistleblower Attorney
Whistleblower Attorney

Lead Attorney Jesse Hoyer

The Department of Justice recently announced that Education Affiliates, a for-profit education company, agreed to pay $13 million to the United States to resolve allegations that it violated the False Claims Act.  The company was accused of submitting false claims to the Department of Education for federal student aid for students enrolled in its programs.

The James Hoyer whistleblower case, United States ex rel. Andrews v. Education Affiliates, Inc., et al., Civil Case No. H-13-2366 (S.D. Tex.), was one of several qui tam cases alleging predatory conduct that victimized students and bilked taxpayers out of millions of dollars. Partner Jesse Hoyer was the lead attorney on the firm’s case.

“This is another example of a for profit college taking advantage of students and taxpayers,” Hoyer said.  “It’s an issue we all need to care about and encourage our government to continue to crack down on these schools to stop predatory behavior, because we are all paying the tab.”

As outlined in the DOJ news release:  The government alleged that employees at EA’s All State Career campus in Baltimore altered admissions test results so as to admit unqualified students, created false or fraudulent high school diplomas and falsified students’ federal aid applications, and that multiple EA schools referred prospective students to “diploma mills” to obtain invalid online high school diplomas.  These allegations also led to criminal convictions of two All State Careers admission representatives, Barry Sugarman and Jesse Moore, and a test proctor, Jacqueline Caldwell.

“Using fake high school diplomas is a particularly insidious abuse of the federal student aid system,” said Inspector General Kathleen Tighe of the U.S. Department of Education’s Office of Inspector General (OIG).  “Students received only a worthless piece of paper.”

Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, described the settlement as an “excellent example of cooperation among multiple offices of the federal government to achieve a result that protects federal student aid funding and the interests of individual students.”

The settlement sends a message that schools have a responsibility to uphold standards when they accept taxpayer dollars to pay for a student’s education. “Schools have an obligation to live up to their commitment to the government and their students when they accept federal student aid funds,” said Mizer.

Click here to read the entire press release.


$33.6 Million Whistleblower Award for James Hoyer Client


Peggy Ryan

In a striking decision, Endo Pharmaceuticals former employee Peggy Ryan was granted a whistleblower award close to the maximum percentage that a whistleblower can receive in a False Claims Act case. United States District Court Judge Robert Kelly in the Eastern District of Pennsylvania ruled that Ryan is entitled to a 24-percent share of the federal government’s portion of a settlement reached in 2014. The whistleblower reward amounts to $33.6 million for Ryan, a client of the James Hoyer law firm.

For her efforts, the Taxpayers Against Fraud Education Fund named Peggy Ryan Whistleblower of the Year in 2015.  Click here to read the announcement on TAF’s website.  James Hoyer was also named Whistleblower Lawyers of the Year.

Decision Marks Strong Stand for Whistleblowers

“Judge Kelly’s decision is not only a testament to Peggy’s commitment in this decade-long case, but also reaffirms the value of all whistleblowers and the False Claims Act as the government’s most powerful tool in fighting fraud,” said James Hoyer law firm managing partner Chris Casper.

The Court called Ryan’s efforts “nothing short of extraordinary” in explaining his decision. “Without the assistance of Ryan, the probability of the Government recovering any funds for the FCA violations would have been slim at best.”

The government disputed that Ryan should be entitled to 24 percent, instead arguing she should receive only 19 percent of the federal recovery. Judge Kelly sharply disagreed and indicated the government’s attempt to minimize Ryan’s significant contribution was misguided. “In light of the nature and abundance of her contributions, it is clear that Ryan was indispensable to the investigation.”

Extraordinary Contribution

The case was first filed by Ryan, a pharmaceutical rep for Endo, in 2005, after she felt the company unduly pressured her to sell the Lidoderm patch off-label for unapproved uses. She showed remarkable strength and commitment over the past 10 years, helping the government make its case.

Ryan provided insider testimony, crucial documents and analysis, and even wore a wire for the FBI. “Throughout the nine-year period from her first qui tam complaint in 2005 to the settlement in 2014, Ryan continually provided access behind the corporate walls of Endo. Ryan’s insider status, conferred by her employment with Endo, enabled the government investigatory team to recover evidence which would have otherwise been unobtainable,” Judge Kelly explained.

In addition to “hours of incriminating evidence” recorded by Ryan and a bounty of invaluable documents, Judge Kelly also cited an 18-minute documentary produced by the James Hoyer law firm, which summarized the evidence in the Endo case, as a unique tool that helped to drive the case when it began to lag in 2010.

“An examination of the record exhibits that Ryan provided not only the spark for the investigation, but that she nurtured the flame at the darkest times when the possibility of a favorable outcome seemed most remote,” Judge Kelly wrote.

The Court’s decision on Ryan’s whistleblower award came exactly 10 years and 10 days after she first filed the case. “It has been a long and sometimes difficult road, but we are gratified that Peggy’s efforts to do the right thing are being recognized in such an extraordinary way,” said attorney Casper. “We are hopeful this decision will encourage other insiders with information regarding fraud against the government to come forward on behalf of American taxpayers. “It’s not easy to be a whistleblower,” he added, “but this decision shows their efforts are valued.”

Read more on the whistleblower award and the Court’s decision from ReutersCorporate Crime Reporter, The Legal Intelligencer, and USDC – Memorandum by Judge Robert F. Kelly, Sr.


James Hoyer Partner Handles International Abduction Case

Hague-Case- Jillian & Sofy-CROPPED

Attorney Jillian Estes and Sofia

In addition to her work as a whistleblower attorney, James Hoyer Partner Jillian Estes devotes her time to pro bono work handling international child abduction cases which fall under the Hague Convention.  In her latest case, she secured the return of a little girl to her father in Guatemala.

“This was my fifth Hague return case – five beautiful little children returned to the only lives they ever knew.  I am so proud to continue to be involved in these cases that truly protect children during an extremely traumatic situation caused by one parent’s decision to circumvent the laws of their own country.”

A Trip Under False Pretense

This latest case began when Elexis Martinez, the mother of 5-year old Sofia, took the little girl to Florida from her home in Guatemala, under the pretense of a vacation to visit family and Disney World.  Sofia’s parents are separated, but were co-parenting.  The father, Javier Escobar, gave his approval for the trip, with the understanding that it was a temporary vacation for 10 days over Christmas in 2014.  At the end of the trip, Martinez sent the child’s father a message via Skype saying they were not going to return.

Hague Case-JHNS Team and Escobar Family-CROPPED

James Hoyer legal team with Escobar family

After that one message, all communication was cut off, leaving Escobar in a panic, trying to contact and locate his ex and their daughter.  “She did not answer Skype, turned off her cellphone, didn’t respond to emails, and turned off all social media profiles,” explained attorney Estes.

Wet foot, Dry foot Maneuver

Martinez, a native of Cuba, entered the United States under Cuba’s “wet foot, dry foot” policy, which comes from a 1995 revision of the Cuban Adjustment Act of 1966.  It essentially states that anyone who fled Cuba and entered the United States would be allowed to pursue residency a year later.  In this case, Martinez did not flee Cuba directly. She came from Guatemala, where she had lived for many years.  Nevertheless, the legal maneuver left Sofia caught in the middle and her father desperately seeking his child’s return.

Sofia & her father Javier Escobar

Sofia & her father Javier Escobar

Hague Convention Rules: Child Abduction

Under the Hague Convention which is a series of international treaties agreed upon between countries on various issues of law, the case turned into a child abduction. Through the U.S. Department of State’s Hague Convention Attorney’s Network, Estes agreed to represent the father pro bono to help get Sofia back to her home in Guatemala.  Escobar filed a Petition for Return under the Hague Convention on Civil Aspects of International Child Abduction.

Authorities in the United States, Guatemala and Interpol all worked together to locate Sophia.  Several months later, she was finally tracked to Tampa, Florida.  Escobar traveled to the U.S. in May 2015 and was reunited with his daughter for the first time in five months.  Estes was there for the reunion.

“It was a sight to see as Sofia literally ran across the lobby into her dad’s arms.  I will never forget it,” Estes said.  “I was so fortunate to have such a dedicated client who clearly loved his little girl so much.”

Final Ruling

Hague case-Disney-CROPPED

Sofia and her dad at Disney World

The reunion was a big step, but not the final word.  Two hearings were held before U.S. District Court Judge Charlene Honeywell in Tampa to present the details of what happened.  At the final proceeding on June 24th, Attorney Estes showed that Sophia should be returned to Guatemala under Hague Convention rules, emphasizing the strong relationship between Sofia and her father. In the final ruling, Judge Honeywell ordered the return of Sofia to Guatemala.

“Javier’s steadfast commitment to doing the right thing for Sofia and the unwavering support from his family throughout the entire process are true reminders of what family is all about.” Estes said.

Sofia finally did get to visit Disney World with her father, before flying home to Guatemala on June 27th.  Her mother decided at the time to stay in the U.S. in pursuit of her legal residency.


Ignored Attorney Advice Leads to $237m Whistleblower Verdict

tuomey logoRepresenting a big win for whistleblowers, the Fourth Circuit Court of Appeal recently upheld a $237 million False Claims Act verdict against Tuomey Healthcare System, which some have billed as the “largest ever levied against a community hospital.” Read More…