Archive for 2015

DOJ To Whistleblower Attorneys: Go After Individuals!

DOJ Whistleblower Attorneys

DOJ Whistleblower AttorneysLast month, Deputy Attorney General Sally Q. Yates issued a memorandum on behalf of the Department of Justice (DOJ) that should help whistleblowers nationwide. The memorandum instructs DOJ attorneys investigating criminal and civil corporate misconduct to zero-in on the individual wrongdoers rather than just the corporate entity.  The guidance will hopefully lead to larger, quicker settlements of False Claims Act qui tam cases brought by whistleblowers and their attorneys.

Yates identified six key steps to bring about her goal of providing “effective enforcement of the civil and criminal laws that protect our financial system and, by extension, all our citizens.”  The key steps’ common thread is a focus on individual accountability for the people who actually perpetuated the fraud.  According to Yates, such accountability “deters future illegal activity, … incentivizes changes in corporate behavior, … ensures that the proper parties are held responsible for their actions, and … promotes the public’s confidence in our justice system.”

The six steps in full are:

  1. In order to qualify for any cooperation credit, corporations must provide to the DOJ all relevant facts relating to the individuals responsible for the misconduct;
  2. Criminal and civil corporate investigations should focus on individuals from the inception of the investigation;
  3. Criminal and civil attorneys handling corporate investigations should be in routine communication with one another;
  4. Absent extraordinary circumstances or approved departmental policy, the [DOJ] will not release culpable individuals from civil or criminal liability when resolving a matter with a corporation;
  5. DOJ attorneys should not resolve matters with a corporation without a clear plan to resolve related individual cases, and should memorialize any declinations as to individuals in such cases; and
  6. Civil attorneys should consistently focus on individuals as well as the company and evaluate whether to bring suit against an individual based on considerations beyond that individual’s ability to pay.

The aforementioned guidance applies “to all future investigations of corporate wrongdoing” so whistleblowers considering whether to come forward should be able to rely on the might of the DOJ to be behind them seeking to hold individuals accountable for corporate misconduct.

Each step should help qui tam cases brought by whistleblowers.

In explaining the first step, the DOJ states its position that “‘full cooperation’ under the False Claims Act, 31 U.S.C. § 3729(a)(2), will be that, at a minimum, all relevant facts about responsible individuals must be provided,” in order to get any “cooperation credit.” The DOJ attorneys are further encouraged to be proactive in the discovery process — one that is usually fraught with obstacles and objections that whistleblowers often have to overcome on their own.

Second, the memo recognizes that because “a corporation only acts through individuals, investigating the conduct of individuals is the most efficient and effective way to determine the facts and extent of any corporate misconduct.” For years, whistleblower attorneys have attempted to bring individuals into the fray in order to hold them accountable for their corporation’s misdeeds.  Having skin in the game often enhances an officer or director’s motivation to resolve the issue.  Naturally, whistleblowers should be encouraged by the DOJ advocating the same tactic.

Third, whistleblower attorneys have seen cases stalled for years while the civil and criminal DOJ attorneys take turns investigating, sometimes to the case’s detriment as facts become stale over time. Here, Yates advocates for full cooperation between the civil and criminal divisions in order to promote the “most thorough and appropriate resolution in every case.”

The fourth and fifth steps combine to require attorneys to not release individuals from liability as a part of a corporate whistleblower settlement unless it has been “personally approved in writing by the relevant Assistant Attorney General or United States Attorney.” Further all decisions to not pursue individuals must be explained in writing.

This is perhaps the most significant portion of the memo as it should decrease the possibility of individual officers and directors escaping liability based on the company’s willingness to cut a small check. Barring individual releases and requiring DOJ attorneys to explain why they didn’t pursue an individual may change the way qui tam lawsuits are defended and will hopefully lead to better results for whistleblowers and their attorneys.

Finally, Yates emphasizes that an ability to pay should not compromise the pursuit of individuals. The memo explains that short term monetary returns can be far outweighed by the “significant long-term deterrence” of individual accountability. This step will likely prompt officers and directors to authorize larger payouts in order to attempt to provide both a short term monetary return for the Government and the deterrence that the DOJ seeks in the memo.

In sum, Yates is directing the attorneys charged with prosecuting whistleblower cases to hotly pursue the individuals responsible for corporate misconduct. Hopefully, we will see an increased willingness for companies to come to the settlement table with generous offers for whistleblowers to try to avoid the individual liability advocated by DOJ attorneys.


Adventist Health Pays $118 Million to Settle Whistleblower Case

The Department of Justice announced one of the largest False Claims Act settlements ever over Stark Statute violations, related to improper compensation to doctors for referrals.  Adventist Health System has agreed to pay more than $118 million to settle allegations from multiple whistleblowers.  The U.S. government will receive $115 million and $3.75 million will go to the states of Florida, North Carolina, Tennessee and Texas.  Here is the DOJ news release:

Adventist Health System Agrees to Pay $115 Million to Settle False Claims Act Allegations

Adventist Health System has agreed to pay the United States $115 million to settle allegations that it violated the False Claims Act by maintaining improper compensation arrangements with referring physicians and by miscoding claims, the Justice Department announced today.  Adventist is a non-profit healthcare organization that operates hospitals and other health care facilities in 10 states.

“Unlawful financial arrangements between heath care providers and their referral sources raise concerns about physician independence and objectivity,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Patients are entitled to be sure that the care they receive is based on their actual medical needs rather than the financial interests of their physician.”

The settlement announced today resolves allegations that Adventist submitted false claims to the Medicare and Medicaid programs for services rendered to patients referred by employed physicians who received bonuses based on a formula that improperly took into account the value of the physicians’ referrals to Adventist hospitals.  Federal law restricts the financial relationships that hospitals and clinics may have with doctors who refer patients to them.

“Adventist-owned hospitals, such as Park Ridge, allegedly paid doctors’ bonuses based on the number of test and procedures they ordered,” said Acting U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina.  “This type of financial incentive is not only prohibited by law, but can undermine patients’ medical care.  Would-be violators should take notice that my office will use the False Claims Act to prevent and pursue health care providers that threaten the integrity of our healthcare system and waste taxpayer dollars.”

“Companies that financially reward physicians in exchange for patient referrals – as the government contended in this case – undermine the physicians’ impartial medical judgment at the expense of patients and taxpayers,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) in Atlanta.  “We will continue to investigate such wasteful business arrangements.”

The settlement also resolves allegations that Adventist submitted bills to Medicare for its employed physicians’ professional services containing certain improper coding modifiers, and thereby obtained greater reimbursement for these services than entitled.

The allegations settled today arose from two lawsuits filed respectively by whistleblowers Michael Payne, Melissa Church and Gloria Pryor, who worked at Adventist’s hospital in Hendersonville, North Carolina, and Sherry Dorsey, who worked at Adventist’s corporate office, under the qui tam provisions of the False Claims Act.  The act permits private parties to file suit on behalf of the United States for false claims, and to share in any recovery.  The whistleblowers’ share of the settlement has not yet been determined.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $25 billion through False Claims Act cases, with more than $16 billion of that amount recovered in cases involving fraud against federal health care programs.

The cases, United States ex rel. Payne, et al. v. Adventist Health System/Sunbelt, Inc., et al. No. 12-856 (W.D.N.C), and United States ex rel. Dorsey v. Adventist Health System Sunbelt Healthcare Corp., et al., No. 13-217 (W.D.N.C), were handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the Western District of North Carolina and HHS-OIG.  The claims settled by this agreement are allegations only, and there has been no determination of liability.


Bill James Tribute on 40th Anniversary of Mafia Crackdown

Bill James - 1992 photo

Bill James – Founding Partner

Bill James was one of the founding partners of the James Hoyer law firm. He was always known as a man of integrity, strength and fearlessness.  It’s been 40 years since he battled Tampa’s mafia, despite the personal danger he faced as a result.  Tampa Tribune writer Paul Guzzo takes a look back at Bill James and his brave role in that turbulent time: Read More…


Whistleblower Award Held To Be Ordinary Income

Whistleblower Award

Whistleblower AwardIn our experience, whistleblowers by and large do not do it for the money. Rather they bring the case in order to right a wrong inflicted upon their government and fellow taxpayers. That said, whistleblowers are financially incentivized to bring their cases. Read More…


Founding Partner Judy Hoyer Describes Firm Philosophy

Judy Hoyer is one of the founding partners of the James Hoyer law firm. She made her name as a prosecutor and carried that experience into private practice here as a whistleblower attorney at the James Hoyer law firm, with a focus on qui tam litigation.

Judy believes that the means and methods of committing fraud have changed over the years, but that stealing is still stealing and a thief is still a thief, no matter how well-dressed. Watch the video below to hear Judy describe the philosophy of the firm and her transition from prosecutor to whistleblower attorney.


Annual James Hoyer Baseball Outing

The annual James Hoyer law firm baseball outing was great fun once again.  Every year, we gather with our family and friends at Tropicana Field to enjoy America’s great pastime, good food and good company. It’s always a special time to remember why we all work so hard.  Enjoying the good times with our loved ones makes it all worth it.

And capping off a great afternoon, the Tampa Bay Rays pulled out a win over the Kansas City Royals, 3-to-2.

The James Hoyer whistleblower law firm take in a Tampa Bay Rays game.

Great view from the Papa Johns Bullpen


Ninth Circuit Removes Bar To Whistleblower Lawsuits

DisclosureLast month, the Ninth Circuit Court of Appeals issued an important ruling for whistleblower lawsuits, reversing 23-years of bad law pertaining to what a relator must prove to overcome the Public Disclosure Bar.

The Public Disclosure Bar seeks to prevent lawsuits by “opportunistic plaintiffs who have no significant information to contribute of their own.” Graham County Soil & Water Conservation Dist. v. U.S. ex rel. Wilson, 559 U.S. 280, 294 (2010).  Generally speaking, there are two requirements to qualify as an “original source” and overcome the bar when the alleged fraud has already been aired publicly:

  1. the relator must have direct and independent knowledge of the information on which the allegations are based; and
  2. the relator must have voluntarily provided that information to the government before filing the lawsuit.

31 U.S.C. § 3730(e)(4)(B). In the 1992 case captioned Wang v. FMC Corp., the Ninth Circuit added a third requirement that the relator have “had a hand in the public disclosure.”

The Court inferred that the third requirement was necessary from the False Claims Act’s legislative history, which suggested that the “information” referenced in the phrase “original source of the information,” 31 U.S.C. § 3730(e)(4)(A), meant the information underlying the publicly disclosed allegations that triggered the public disclosure bar, rather than the information which underlay the plaintiff’s complaint.

The third prong proved to be a high barrier for relators.  Fortunately, the recent decision captioned U.S. ex rel. Hartpence v. Kinetic Concepts removed the obstacle with the Ninth Circuit acknowledging that the law “has two, and only two, requirements.”  The Ninth Circuit also found support for its reversal in the Supreme Court’s Rockwell International Corp. v. United States, which the Court found to be in “serious tension with the hand-in-the-public disclosure requirement this court adopted in Wang.

The Ninth Circuit therefore concluded that “Wang impermissibly drew on language from 31 U.S.C. § 3730(e)(4)(A) to read a nonexistent, extratextual third requirement into § 3730(e)(4)(B). We overrule it as wrongly decided.”

This ruling should ease the path for whistleblower lawsuits brought in the Ninth Circuit.  You can read both rulings by clicking on the links below:


Quest Diagnostics Pays $1.8 Million in Whistleblower Case

The United States Department of Justice announced today that Quest Diagnostics Inc. and Quest Diagnostics Clinical Laboratories Inc. (collectively “Quest Diagnostics”) have paid the United States $1.79 million to settle claims that it violated the False Claims Act.

This settlement resolves allegations that Quest Diagnostics submitted duplicative claims to Medicare for certain venipuncture services and diagnostic tests and certain panel tests and select components of those panels. The United States alleged that these payments violated the False Claims Act.

“We are committed to fighting fraud and abuse to help preserve scarce Medicare funds for those who need it the most, the sick and the elderly.” said U.S. Attorney Benjamin Wagner.

The settlement announced today resolves a lawsuit filed in the Eastern District of California under the qui tam, or whistleblower, provisions of the False Claims Act. These provisions allow private citizens to bring civil actions on behalf of the United States and share in any recovery. The whistleblower in this case will receive $358,000 of the recovery proceeds.

This case was investigated by the United States Attorney’s Office for the Eastern District of California. Assistant United States Attorney Catherine Swann handled the matter for the United States. The claims settled by this agreement are allegations only, and there has been no determination of liability.


Whistleblower Case Exposes Harm to Babies and Moms

13 WTHR Indianapolis

The case of a baby who suffered permanent neurological damage during birth was exposed in a whistleblower case filed by James Hoyer client Dr. Judith Robinson.  WTHR, the NBC affiliate in Indianapolis, profiled the story of little Denise and her mom, Nancy Koger. The Koger’s case was one of three permanently injured babies and 17 “near misses” in a six month period documented by Dr. Robinson when she worked at IU Health and Methodist Hospital.  Dr. Robinson blew the whistle on the health network for allowing midwives to care for low-income, high risk, pregnancy patients, in violation of state Medicaid rules by filing a whistleblower case.

Investigative Reporter Sandra Chapman took viewers into the delivery room to witness alarming moments during baby Denise’s birth and revealed that her mom required an emergency C-section, after a mid-wife missed key warning signs two days earlier and sent her home. As a result, Denise suffered brain damage.  The toddler is now in a wheelchair, unable to talk and must be fed through a tube.  Nancy Koger is in the process of filing suit against IU Health and Methodist Hospital.

WTHR Report- PART 2: Mom Claims Botched Delivery & Missing Medical Records13 WTHR Indianapolis

In this second report, WTHR Investigative Reporter Sandra Chapman looks at the case of Dorothy Riggle and her daughter Crystal, who is now 10-years old. Crystal suffered brain damage and permanent injury to her arm and eye after a traumatic birth, at Methodist Hospital. Her mom says a midwife refused to call a doctor when she came to the emergency in labor, despite telling her that she had a high risk pregnancy. Adding insult to injury, the hospital told them it lost the medical records of Crystal’s birth, so their efforts to take legal action have been compromised.


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.