Posts Tagged ‘DOJ’

Deputy Associate AG Talks False Claims Act

Yesterday, Deputy Associate Attorney General Stephen Cox delivered remarks on the False Claims Act and qui tam enforcement by the Department of Justice. 

His speech touched on five major topics:

  1. Fraud on the Taxpayer
  2. Qui Tam Dismissals
  3. Subregulatory Guidance
  4. Piling On
  5. Cooperation Credit
Read More…
 

DOJ: $4.7 Billion In Recoveries From 2016 Whistleblower Cases

DOJ Whistleblower Attorneys

DOJ Whistleblower AttorneysThe United States released data last week showing that the Department of Justice (DOJ) recovered more than $4.7 billion in 2016 from settlements and judgments in whistleblower cases involving fraud or false claims against the government. This is the third largest annual recovery in the history of the modern False Claims Act (FCA), which dates back thirty years to 1986. Read More…

 

Olympus Med Equip Co. to Pay $646 Million Over Kickbacks & Bribes

The  largest distributor of endoscopes and related equipment in the United States, Olympus Corporation, will pay $623.2 million to resolve criminal charges and civil claims relating to a scheme to pay kickbacks to doctors and hospitals, the Department of Justice announced today.  The Justice Department’s Criminal Division also announced that a subsidiary of the distributor will pay $22.8 million to resolve criminal charges relating to the Foreign Corrupt Practices Act (FCPA) in Latin America.

Lavish Gifts

The LA Times reports that after Olympus paid to fly three doctors from a prominent California hospital to Japan for a week-long vacation, one of the physicians thanked the company for providing them with “so much extra entertainment that we did not expect.”

The expense-paid trip was just one of the dozens of illegal kickbacks that the Japanese maker of endoscopes paid to American doctors and hospitals for at least five years as it sought to increase sales in its most lucrative market, according to a criminal complaint federal prosecutors released Tuesday.

Among the company’s other illegal payments and gifts, the complaint said, were $400,000 worth of endoscopes given to a doctor after he persuaded a New York hospital to buy millions of dollars’ worth of Olympus equipment, and the free use of scopes worth $1 million provided to a Midwestern institution.

At one Olympus-sponsored forum, the company paid for doctors’ lavish meals, ballooning, winery tours, golf and spa treatments because it was “a great way to network, talk business, socialize without our competitors,” an Olympus employee explained, according to the complaint.

Whistleblower was Chief Compliance Officer

Pharmalot reports the agreements resolve a long-running investigation that was triggered by a whistleblower lawsuit filed by a former Olympus executive. John Slowik had worked at the device maker for nearly 18 years before becoming its first chief compliance officer in 2009. However, he was fired the following year after protesting kickbacks and attempting to implement reforms, according to his attorney. Slowik will receive $51.1 million from the civil settlement, before paying attorneys fees.

Anti-Kickback Statute Violations

The DOJ news release says Olympus Corp. of the Americas (OCA) was charged in a criminal complaint filed today in Newark, New Jersey, federal court with conspiracy to violate the Anti-Kickback Statute (AKS), which prohibits payments to induce purchases paid for by federal health care programs.  OCA has entered into a three-year deferred prosecution agreement (DPA) that will allow it to avoid conviction if it complies with the reform and compliance requirements outlined in the agreement.

“For years, Olympus Corporation of the Americas and Olympus Latin America dropped the compliance ball and failed to have in place policies and practices that would have prevented the substantial kickbacks and bribes they paid,” said U.S. Attorney Fishman. “It is appropriate that they be punished for that.  At the same time, the deferred prosecution agreement takes into account the companies’ cooperation and commitment to fully functional corporate compliance.”

As a result of the conduct outlined in the government’s criminal complaint and DPA, OCA has agreed to pay a $312.4 million criminal penalty and an additional $310.8 million to settle civil claims under the federal and various state False Claims Acts, the largest total amount paid in U.S. history for violations involving the AKS by a medical device company.

“The Department of Justice has longstanding concerns about improper financial relationships between medical device manufacturers and the health care providers who prescribe or use their products,” said Principal Deputy Assistant Attorney General Mizer.  “Such relationships can improperly influence a provider’s judgment about a patient’s health care needs, result in the use of inferior or overpriced equipment, and drive up health care costs for everybody.  In addition to yielding a substantial recovery for taxpayers, this settlement should send a clear message that we will not tolerate these types of abusive arrangements, and the pernicious effects they can have on our health care system.”

In a separate DPA, Olympus Latin America Inc. (OLA), a subsidiary of OCA, will pay a $22.8 million criminal penalty for violations of the FCPA.

The criminal complaint against OCA, which OCA agrees is true, charges that OCA won new business and rewarded sales by giving doctors and hospitals kickbacks, including consulting payments, foreign travel, lavish meals, millions of dollars in grants and free endoscopes.  For example:

  • OCA gave a hospital a $5,000 grant to facilitate a $750,000 sale;
  • OCA held up a $50,000 research grant until a second hospital signed a deal to purchase Olympus equipment;
  • OCA paid for a trip for three doctors to travel to Japan in 2007 as a quid pro quo for their hospital’s decision to switch from a competitor to Olympus; and
  • a doctor with a major role in a New York medical center’s buying decisions received free use of $400,000 in equipment for his private practice.

These and other kickbacks helped OCA obtain more than $600 million in sales and realize gross profits of more than $230 million.

The criminal complaint alleges that the improper payments happened while Olympus lacked training and compliance programs.  Unlike other medical and surgical products companies, Olympus did not create the position of compliance officer until 2009 and did not hire an experienced compliance professional until August 2010.

The DPA requires OCA to adopt several compliance measures to remedy its problems:

  • OCA must enhance its compliance training and maintain an effective compliance program;
  • OCA must maintain a confidential hotline and website for OCA employees and customers to report wrongdoing;
  • OCA’s chief executive officer and board of directors must certify annually that the program is effective; and
  • OCA must adopt an executive financial recoupment program requiring executives who engage in misconduct or fail to promote compliance to forfeit up to three years of performance pay.

Larry Mackey, a former federal prosecutor best known for trying the Oklahoma City bombing cases, has been selected as an independent monitor to evaluate and oversee Olympus’ compliance with the DPA.  He was selected by U.S. Attorney Fishman under department guidelines and approved by the Deputy Attorney General.  The DPA and monitor will remain in place for three years and can be extended for another two years if Olympus violates the DPA.

In the civil settlement, Olympus agrees to pay $310.8 million to the federal government and the states to resolve claims that Olympus’s payment of kickbacks caused false claims to be submitted to federal health care programs Medicare, Medicaid and TRICARE, and thus violated not only the AKS but also the federal and various state False Claims Acts.  The federal share of the civil settlement is $267,288,323, and Olympus will pay $43,512,053 million to participating states that contributed to the falsely claimed Medicaid payments at issue.

The civil settlement resolves a lawsuit filed by John Slowik, the former chief compliance officer of OCA, in the District of New Jersey, under the federal and various state False Claims Acts.  The acts permit whistleblowers to file suit for false claims against the government entities and to share in any recovery.  Mr. Slowik will receive $44,102, 573 million from the federal share and $7 million from the state share of the civil settlement amount.

 

Nearly $4 Billion Recovered in 2015 Whistleblower Cases

For the 4th year in a row, the Department of Justice recovered more than $3.5 billion in settlements and judgements in False Claims Act cases for fraud against the government.

“The False Claims Act has again proven to be the government’s most effective civil tool to ferret out fraud and return billions to taxpayer-funded programs,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “The recoveries announced today help preserve the integrity of vital government programs that provide health care to the elderly and low income families, ensure our national security and defense, and enable countless Americans to purchase homes.”

These recoveries are often made possible by private individuals represented by whistleblower law firms like James HoyerTaxpayers Against Fraud, a non-profit which works to works to educate the public about whistleblower programs, noted that a higher percentage of successful cases were filed by whistleblowers in 2015.

  • Of the $3.58 billion collected under the federal False Claims Act in FY 2015, a record $ 2.91 billion was awarded in whistleblower-initiated cases.
  • Whistleblowers were awarded a record $597.6 million for their contribution in helping recover this $2.91 billion dollars.
  • Of the total amount awarded to whistleblowers, $334.6 million was awarded to relators in declined cases –  a record amount.

Patrick Burns, co-Executive Director of Taxpayers Against Fraud Education Fund, noted that the law was working exactly as it should.

“Government will never have all the resources it needs to find and pursue every act of fraud. That’s why the False Claims Act incentivizes whistleblowers to come forward with non-public information, and why it allows private lawyers, working for those whistleblowers, to pursue fraud cases on the government’s behalf,” said Burns.

Click here to read more from TAF.

Of the $3.5 billion recovered last year, $1.9 billion came from companies and individuals in the health care industry for allegedly providing unnecessary or inadequate care, paying kickbacks to health care providers to induce the use of certain goods and services, or overcharging for goods and services paid for by Medicare, Medicaid, and other federal health care programs.  The $1.9 billion reflects federal losses only.  In many of these cases, the department was instrumental in recovering additional millions of dollars for consumers and state Medicaid programs.

The next largest recoveries were made in connection with government contracts.  The government depends on contractors to feed, clothe, and equip our troops for combat; for the military aircraft, ships, and weapons systems that keep our nation secure; as well as to provide everything that is needed to fund myriad programs at home.  Settlements and judgments in cases alleging false claims for payment under government contracts totaled $1.1 billion in fiscal year 2015.

The False Claims Act is the government’s primary civil remedy to redress false claims for government funds and property under government contracts, including national security and defense contracts, as well as under government programs as varied as Medicare, veterans’ benefits, federally insured loans and mortgages, highway funds, research grants, agricultural supports, school lunches, and disaster assistance.  In 1986, Congress strengthened the Act by amending it to increase incentives for whistleblowers to file lawsuits on behalf of the government.

Click here to read the entire DOJ news release.

 

 

DOJ Announces Record Recovery for False Claims Act in 2014

The Department of Justice announced today it recovered nearly $6 Billion from False Claims Act Cases in Fiscal Year 2014.  It is the first annual recovery to exceed $5 Billion.  More than 700 Whistleblower Lawsuits were filed for second consecutive year.
Noted in the DOJ news release:
“It has been an extraordinary year for civil fraud recoveries, but the true significance is not in breaking records or making history; it is in the billions of dollars restored to the federal treasury,” said Acting Assistant Attorney General Branda.  “The False Claims Act was enacted both to protect vital taxpayer dollars and deter those who would misuse public funds.  The department will continue to enforce the law aggressively to ensure the integrity of government programs designed to keep us safer, healthier and economically more prosperous.”
Click here to read the entire DOJ news release.