Published: February 22, 2017

The Chairman of the House Financial Services Committee, Jeb Hensarling, R-Tex., recently issued a memo outlining a plan to implement sweeping changes to a bill he introduced last year known as the Financial CHOICE Act. Hensarling’s five-page memorandum, titled “CHOICE Act 2.0 Changes,” outlines revisions to the draft legislation which could strip significant power from the SEC and sharply impact that agency’s Whistleblower Program.

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Published: February 15, 2017

In a decision issued yesterday, the United States Court of Appeals for the Fourth Circuit dismissed an appeal that would have addressed one of the most pressing unresolved issues in False Claims Act jurisprudence: whether relators in an FCA lawsuit can rely on “statistical sampling” to prove their case.

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Published: February 14, 2017

A jury recently found Bio-Rad Laboratories liable under the Sarbanes-Oxley Act and the Dodd-Frank Act for nearly $8 million in damages after the company’s alleged retaliatory firing of its former general counsel, Sanford Wadler.  The jury awarded Wadler $2.96 for past economic loss as a result of the termination and $5 million in punitive damages, after just three hours of deliberation.

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Published: February 10, 2017

​The U.S. Court of Appeals for the First Circuit recently called summary judgment “the put up or shut up moment in litigation.” On January 30, 2017, the relators in U.S. ex rel. Booker v. Pfizer – a long-running False Claims Act (“FCA”) case – were essentially told to “shut up,” when the Court upheld a grant of summary judgment for the defendants.

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Published: February 6, 2017

The Department of Justice recently announced that Jackson State University (“JSU”) will pay $1.17 million to settle allegations that it violated the False Claims Act (“FCA”) by mismanaging National Science Foundation (“NSF”) grants. According to the DOJ, the university submitted claims and expended funds under its NSF grants between June 2006 and September 2011, impliedly certifying that each claim was allowable and properly recorded.

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Published: February 1, 2017

The Eastern District of Pennsylvania recently allowed a fifteen-year old False Claims Act (“FCA”) qui tam action to proceed when it rejected a strict application of the statute of limitations and broadly construed the “relation back” doctrine.

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Published: January 25, 2017

On January 9, 2017, the Supreme Court denied certiorari in three cases concerning the issue of whether state student loan agencies and universities are protected by government immunity from False Claims Act (“FCA”) suits.  In denying certiorari, the Supreme Court opted not to create a unified test for government affiliation for purposes of the FCA.

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Published: December 29, 2016

In Jackson v. Univ. of N. Texas, et. al., the University of North Texas (“UNT”) and various student loan companies faced allegations of improper oversight of student loan certifications and claims submissions in violation of the False Claims Act (“FCA”).  Luckily for the defendants, the court dismissed the claims as untimely and did not address the merits. But even though the defendants won this particular case, all higher education institutions should see it as a warning that false claim submissions to the Department of Education can lead to FCA liability.
 

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Published: December 6, 2016

The Supreme Court ruled today (December 6, 2016) in State Farm Fire & Cas. Co. v. U.S. ex rel. Rigsby, ___ S. Ct. ___ (2016). The case probed whether a violation of the False Claims Act’s seal requirement mandated dismissal of a Relator’s complaint.

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Published: November 7, 2016

We blogged in September about State Farm Fire & Cas. Co. v. U.S. ex rel. Rigsby, 136 S. Ct. 2386 (2016), a case that is pending before the United States Supreme Court. On Tuesday, November 1, the Supreme Court heard oral arguments in Rigsby—here is a recap.

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Published: October 27, 2016

Title IV’s incentive compensation ban (“ICB”) prohibits higher education institutions from paying bonuses or commissions to student recruiters.  In a recent decision, the U.S. District Court for the Northern District of California recognized that an institution’s alleged false statements regarding its compliance with the ICB can provide a basis for a False Claims Act (“FCA”) violation.  

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Published: October 26, 2016

A Texas appellate court recently affirmed a judgment against a healthcare consulting firm that claimed that its former employee had misappropriated its confidential information to use in a False Claims Act (“FCA”) lawsuit against the consulting firm’s largest client.  The consulting firm, MJS and Associates, LLC (“MJS”), claimed that the employee’s conduct violated confidentiality agreements she had signed and caused MJS to lose business.&n

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Published: September 30, 2016

Ralph “Jay” Cox III, the former Chief Executive Officer of Tuomey Healthcare Systems (“Tuomey”) in Sumter, South Carolina, recently paid $1 million to settle his involvement in Tuomey’s illegal billing practices under Medicare and Medicaid. 

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Published: September 26, 2016

SEC Charges Against a Company and Its General Counsel Highlight Importance of Disclosing False Claims Act Investigations

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Published: September 22, 2016

In Carlson v. DynCorp, the United States Court of Appeals for the Fourth Circuit addressed 2009 and 2010 amendments to the False Claims Act (“FCA”) that broadened the scope of its anti-retaliation protection for whistleblowing employees.  As discussed more fully below, according to the Fourth Circuit, a whistleblowing employee can sue if his or her employer retaliates against him or her for making efforts to stop FCA violations, even if an FCA action against the employer was not a distinct possibility.

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Published: September 14, 2016

Supreme Court May Soon Determine if Violation of False Claims Act’s Seal Requirement Requires Automatic Dismissal or Analysis of Harm to Government

The Supreme Court plans to review a decision that allowed relators to maintain their False Claims Act lawsuit even after a series of disclosures that may have violated the law’s requirement that lawsuits be “sealed” and hidden from defendants and the public for 60 days after they are initially filed.

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Published: September 13, 2016

A recent decision of the United States Court of Appeals for the Seventh Circuit addressed the standard that courts should use to decide whether a whistleblower plaintiff has adequately pleaded that a defendant committed fraud in violation of the False Claims Act (“FCA”).  In U.S. ex rel. Presser v.

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Published: September 6, 2016

In short order, the Securities and Exchange Commission fined two companies for using severance agreements with former employees that hampered the SEC’s whistleblower program.  We covered the first instance here, in which the SEC fined an Atlanta-based company $265,000 and required the company to modify its severance agreements and contact former employees who signed the allegedly illicit ones.

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Published: August 31, 2016

The nation’s top tax court recently broadened the definition of “collected proceeds” to include payments of criminal fines and civil forfeitures, which could result in increased awards for tax fraud whistleblowers.  This likely will encourage more whistleblowers to come forward with allegations of tax fraud.

The Tax Whistleblowing Law

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Published: August 15, 2016

The Securities and Exchange Commission recently announced that it had levied a $265,000 penalty against an Atlanta-based company, claiming the company’s severance agreements undercut its whistleblower program. By signing the severance agreements, outgoing employees agreed to waive recovery of potential whistleblower awards.  According to the SEC, these severance agreements violated Rule 21F-17, which prohibits impeding someone from telling the SEC about possible securities law violations.

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Published: May 24, 2016

On April 19, 2016, the United States Supreme Court heard oral argument on the viability and breadth of the “implied certification” theory of the False Claims Act (“FCA”).  The implied certification theory supports FCA liability for claimants who violate a statute or regulation that governs the substance of the claim they submit to the government.  Eight circuits courts have held that the implied certification theory is viable, but the Seventh Circuit recently rejected the theory.  Circuit courts also disagree as to the proper application of the theory, with the Second and Six

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Published: May 20, 2016

On May 13th and 17th, 2016, the U.S. Securities and Exchange Commission (SEC) announced that it had given awards of over $3.5 million and $5 million to two different whistleblowers. The Dodd-Frank Wall Street Reform and Consumer Protection Act created the SEC’s whistleblower program in 2010.  The award of $5 million was the third largest whistleblower award ever issued by the SEC’s whistleblower program. 
 

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Published: May 19, 2016

On May 11, 2016, President Obama signed the Defend Trade Secrets Act of 2016 (DTSA), the long-proposed legislation that establishes a federal trade secrets law.  The DTSA amends the Economic Espionage Act — which currently only provides for criminal charges for trade secret misappropriation — to create a federal private civil cause of action.  Previously, private civil cases of trade secret misappropriation have been purely a matter of state law. 

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Published: May 13, 2016

Federal agencies are now promulgating regulations nearly doubling the per claim civil penalty for False Claims Act violations. The Bipartisan Budget Act of 2015 requires federal agencies to implement a “catch up adjustment” based on inflation to increase civil FCA penalties from the current range of $5,500-$11,000 per claim. The Railroad Retirement Board just published an interim final rule setting a new range of $10,781-$21,563 per claim.

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Published: May 12, 2016

A federal judge recently dismissed a company’s counterclaim that it brought against a whistleblower for violating the company’s privacy policy and a confidentiality agreement by providing the government with confidential information.  In United States ex rel. Matthew Cieszynski, et al. v. LifeWatch Services Inc., No. 13 C 4052 (N.D. Ill. May 9, 2016), the court balanced public and private interests and found that the whistleblower had not divulged any more information than necessary to alert the government about the company’s alleged violation of the False Claims Act.

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Published: April 14, 2016

The U.S. Court of Appeals for the Sixth Circuit recently affirmed the dismissal of a False Claims Act (FCA) case premised on protected health data breaches.  In United States ex rel. Sheldon v. Kettering Health Network, the relator alleged that employees of Kettering Health Network (“KHN”), including her former husband, impermissibly accessed and shared the relator’s electronic personal health information (“e-PHI”).

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Published: April 13, 2016

Bard College recently entered into an agreement with the United States to pay $4 million to settle a whistleblower suit alleging violations of the False Claims Act.  Bard is a non-profit liberal arts institution founded in 1860 and based in New York’s Hudson River Valley. The alleged violations centered on its ill-fated attempt to start a Master’s of Arts in Teaching (MAT) program in Delano, California, beginning in 2009.

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Published: April 11, 2016

The U.S. Commodity Futures Trading Commission (CFTC) announced on April 4, 2016 that it awarded over $10 million to a whistleblower.  This is the largest award made by the CFTC’s Whistleblower Program. 
 

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Published: March 8, 2016

In order to state a cognizable claim under the False Claims Act (“FCA”) on a false certification theory, a plaintiff must allege that a defendant failed to comply with a federal statute or regulation that was a “condition of payment” from the federal government.  The Third Circuit Court of Appeals has held that violations of “conditions of payment” can result in liability under the FCA.  In contrast, “conditions of participation” result in administrative sanctions rather than liability under the FCA.  See United States ex rel. Wilkins v.

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Published: February 26, 2016

On February 2, 2016 the Third Circuit addressed Weist v. Tyco Electronics Corp., for a second time and, on this occasion, affirmed an Eastern District of Pennsylvania order granting summary judgment to Tyco.

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Published: February 17, 2016

In the February 12, 2016 Federal Register, the Centers for Medicare & Medicaid Services (CMS) published a final rule (Final Rule) with respect to reporting and returning overpayments by Medicare Part A and Part B providers to the Medicare program. The Final Rule is effective on March 14, 2016.  All Medicare providers and suppliers should take the time to understand the Final Rule and their responsibilities in the event of receiving an overpayment from Medicare.

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Published: February 16, 2016

On February 4, 2016, the United States Court of Appeals for the Sixth Circuit rejected the “tainted claim” theory of damages under the False Claims Act where money damages alone can cure a breach of contract.  The court in U.S. ex rel Wall v.

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Published: February 15, 2016

The Fourth Circuit recently held that a relator is prohibited from pursuing a False Claims Act (FCA) claim based on facts learned by relator’s counsel in a previous FCA suit. In United States ex rel. May v. Purdue Pharma L.P., the court reasoned that the FCA’s pre-2010 public disclosure bar precludes relators from relying on facts from a previous suit with different relators.

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Published: December 7, 2015

In November, an Illinois federal judge blocked a former bank employee from collecting his claimed relator’s share of a potential settlement between the FDIC (acting as the bank’s receiver) and the bank’s former directors.  In denying the relator’s share, the court affirmed the previous ruling of a magistrate judge holding the FDIC in this case did not constitute a “government” agency as contemplated

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Published: November 19, 2015

On November 13, 2015, the Supreme Court of New York dismissed a former Vanguard Group tax attorney's New York False Claims Act whistleblower complaint against his former employer.  The court held that the attorney violated New York attorney ethics rules by bringing suit while employed at Vanguard in a position to obtain confidential information from his employer.  Specifically, the court ruled that the attorney could "not proceed with, nor profit from, any disclosure of confidential information" related to the case.

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Published: October 2, 2015

Pharmaceutical industry and constitutional buffs have been closely watching Amarin Pharma Inc. v. U.S. Food and Drug Administration.  The case presented the (not wholly novel) question whether the First Amendment protects truthful, non-misleading promotional statements about off-label uses for approved drugs.

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Published: September 30, 2015

A recent settlement by retailer Kmart Corp. illustrates the breadth of practices in the healthcare space that the government considers to be illegal kickbacks that violate the False Claims Act (FCA).

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Published: September 28, 2015

In United States ex rel. Barko v. Halliburton Co. et al., a qui tam suit we previously covered here, the District of Columbia Circuit Court of Appeals once again ruled that defense contractor KBR Inc.’s internal investigation documents were privileged, rejecting for the second time the District Court ’s decision to the contrary.

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Published: September 25, 2015

On September 10, 2015, the Second Circuit held that an employee who reports wrongdoing internally -- but not to the SEC -- is protected under the whistleblower provisions of the Dodd-Frank Act.  In Berman v. Neo@Ogilvie LLC, the plaintiff, a finance director of the defendant, alleged that he was fired after internally reporting that some of the defendant’s practices amounted to accounting fraud. He did not timely report any allegedly unlawful activities to the SEC.

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Published: July 30, 2015

The Fourth Circuit recently affirmed a $237 million jury verdict against Tuomey Healthcare System under the False Claims Act (FCA) for claims arising from Stark Law violations. The Stark Law violations stemmed from part-time employment contracts Tuomey had entered into with physicians to perform outpatient surgeries exclusively at the health system. Tuomey defended in part on the ground that it had relied on legal advice from several experienced attorneys when entering into the contracts.

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Published: July 30, 2015

The Fourth Circuit recently affirmed a $237 million jury verdict against Tuomey Healthcare System under the False Claims Act (FCA) for claims stemming from Stark Law violations. The Stark Law violations stemmed from part-time employment contracts Tuomey had entered into with physicians to perform outpatient surgeries exclusively at the health system. Tuomey defended in part on the ground that it had relied on legal advice from several experienced attorneys when entering into the contracts.

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Published: July 27, 2015

For-profit education company Education Affiliates (EA) paid $13 million to the federal government in June to settle multiple False Claims Act (FCA) suits involving alleged fake test scores, bogus diplomas, and falsified financial aid applications.

Maryland-based EA operates post-secondary education training programs in healthcare and other industries across 50 campuses nationwide using various trade names, including All State Career, Fortis Institute, and Technical Career Institute, Inc.

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Published: July 23, 2015

In a matter of first impression, the Court of Appeals for the Ninth Circuit held that a relator cannot partake of proceeds from an FCA action if he has been convicted of criminal conduct arising from his role in the fraud.  A CH2M Hill employee, Carl Schroeder, participated in fraudulent over-billing practices along with many of his colleagues. Schroeder pled guilty to one felony count of conspiracy to commit fraud.  After initial interviews by the U.S.

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Published: July 15, 2015

An en banc panel of the Ninth Circuit Court of Appeals loosened the requirements for whistleblowers to qualify as an “original source” under the False Claims Act (FCA), overturning precedent that had stood for 23 years.

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Published: July 14, 2015

Based on a recent decision of a Federal District Court in Missouri, companies may be protected from  potential False Claims Act (FCA) liability when they submitted claims to the government based on a reasonable, although perhaps financially motivated and not the most reasonable, interpretation of an ambiguous reimbursement regulation.

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Published: July 6, 2015

In recent months, we have seen a marked increase in the number of providers who have opted to enter the OIG Self-Disclosure Protocol (SDP) for the employment of, or contracting with, individuals who have been excluded from participation in federal health benefit programs (“Excluded Individuals”).  Though we have not been able to discern any basis for this disturbing trend, it is clear that the benefits of good faith disclosure of such a violation, coupled with cooperation with the OIG’s review and resolution process, can result in a release of OIG’s permissive exclusion authorities, a

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Published: July 1, 2015

Washington D.C.’s Children’s Hospital recently chose to settle a False Claims Act (“FCA”) lawsuit.  The federal government had alleged in its complaint in intervention that the hospital misreported its bed count on an application for the Children’s Hospital Graduate Medical Education Payment Program, which was submitted to the U.S.

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Published: June 12, 2015

This month, a federal jury found former defense contractor Armet Armored Vehicles, Inc. not liable in a False Claims Act (“FCA”) lawsuit that alleged the company overcharged the federal government for armored vehicles by shipping defective vehicles and failing to deliver all the vehicles ordered. 

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Published: June 1, 2015

A Pennsylvania federal court recently ruled that a drugmaker may be held liable under the False Claims Act (FCA) even though it was not the one that submitted claims to the government. 

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Published: May 26, 2015

The U.S. Supreme Court today issued its ruling in Kellogg Brown & Root Services, Inc., et al. v. United States ex. rel. Carter, a case we reported on previously (http://www.saul.com/blogs/whistleblower-wire/4528). The Court was asked to decide 1) whether the Wartime Suspension of Limitations Act (“WSLA”), 18 U.S.C. § 3287, applies to FCA claims to toll the statute of limitations when the U.S. is at war; and 2) whether the FCA’s first-to-file bar, found at 31 U.S.C.

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Published: May 19, 2015

An Ohio federal district court ruled earlier this week that a non-profit law firm was not an “original source” and thus could not bring claims as a relator under the False Claims Act (FCA).  The non-profit law firm, Advocates for Basic Legal Equality, Inc. (ABLE), contended that U.S. Bank, N.A. defrauded the federal government by submitting insurance claims for foreclosed properties which had mortgages insured by the Federal Housing Administration (FHA).  ABLE argued that U.S.

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Published: May 15, 2015

The government recently applied a time-honored criminal prosecution strategy in a pending False Claims Act (FCA) case against the pharmaceutical giant Novartis.  In United States of America, ex rel Kester et al v.

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Published: May 14, 2015

An Arkansas federal judge clarified the requirements for reinstating a whistleblower who succeeds on a retaliation claim under the False Claims Act (FCA) in a May 4, 2015 decision. Mike Townsend had won a retaliation claim against his former employer, Bayer Corp., after he was allegedly fired for reporting a customer’s Medicaid fraud scheme. Along with $900,000 in damages, the judgement ordered Bayer to reinstate Townsend to a comparable position.

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Published: May 6, 2015

Earlier this month, U.S. District Court Judge Thomas O’Neill of the Eastern District of Pennsylvania allowed several major claims against pharmaceutical maker Cephalon to survive a motion to dismiss.  In 2010, ex-employees of the former drug giant (now a wholly-owned subsidiary of Teva Pharmaceuticals) filed the False Claims Act suit, claiming that Cephalon submitted, or caused doctors to submit, illegally filed claims for reimbursement for blockbuster drugs Provigil and Nuvigil.

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Published: April 28, 2015

The U.S. Court of Appeals for the 1st Circuit recently reversed a District Court’s dismissal of a False Claims Act (FCA) complaint against a health care provider, rejecting the “condition of participation” defense accepted by the District Court.

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Published: April 27, 2015

The Department of Justice’s three-year battle with Quicken Loans over its mortgage underwriting practices came to a head last week, when the DOJ filed suit against the lender seeking to recover treble damages under the False Claims Act.  In its complaint, the DOJ also seeks damages for breach of fiduciary duty and negligence for harm sustained by the U.S.

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Published: April 24, 2015

Prior to the Dodd-Frank Act’s adoption of a three-year limitations period for retaliation claims, the False Claims Act did not have an explicit statute of limitations.  Accordingly, courts applied the most closely analogous state limitations period.  In U.S. el rel. Sefen v. Animas Corp., the relator’s claims were clearly time-barred under both of the two potentially applicable Pennsylvania limitations periods.

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Published: April 24, 2015

In Weist v. Tyco, an employee in Tyco’s accounting department brought a suit against the company under the Sarbanes-Oxley Act, alleging that he was fired in retaliation for his objection to corporate spending on extravagant parties.

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Published: April 23, 2015

The U.S. District Court for the District of Columbia recently denied retired professional cyclist Floyd Landis’ motion for approval of settlement of his False Claims Act (FCA) claim against his former teammate Lance Armstrong’s agents, even though the government declined to intervene in the allegations against those defendants. 

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Published: April 21, 2015

The U.S. District Court for the Eastern District of Pennsylvania recently held that a False Claims Act (FCA) conspiracy claim can satisfy the Rule 9(b) pleading standard for fraud, even when the complaint does not expressly allege that the defendant had an “agreement” with another party to violate the law. 

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Published: April 17, 2015

The U.S. District Court for the Southern District of Georgia recently clarified the standard for determining whether a procedure is “medically necessary” for purposes of the False Claims Act (FCA). 

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Published: April 16, 2015

In United States v. United Technologies Corp., the 6th U.S. Circuit Court of Appeals found that a $657 million judgment awarded to the U.S. government for the defendant’s overbilling on military jet engines was not supported by the evidence.  Under the False Claims Act (FCA), the government bears the burden to prove its damages by a preponderance of the evidence. See 31 U.S.C. § 3731(c).

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Published: April 10, 2015

Three former managers of the AIDS Healthcare Foundation (AHF) filed federal and Florida False Claims Act claims alleging that the company paid employees and patients kickbacks for patient referrals. The complaint alleges that beginning in 2010, AHF generated consumer demand by implementing a system of illegal incentive payments that awarded patients for self-referrals to AHF services and rewarded employees for referring patients to AHF’s clinic and pharmacies.

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Published: April 6, 2015

The U.S. District Court for the Southern District of Texas has dismissed qui tam claims against Solvay Pharmaceuticals, Inc. (Solvay), relying on a broad view of the public disclosure bar and holding that the relators failed to qualify for the “original source” exception to that bar because they gave the government too little time to consider the claims prior to filing their complaint.

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Published: April 3, 2015

The Securities and Exchange Commission this week announced its first victory in a case where it accused a defendant of stifling potential whistleblowers. Houston-based contractor KBR, Inc. was alleged to have used confidentiality agreements that could have prevented current or former employees from reporting securities violations to the commission without first getting approval from KBR's legal department.

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Published: April 2, 2015

The Fifth Circuit recently affirmed a prior ruling of first impression for its court that government investigators may bring whistleblower actions in their individual capacities.  In the course of upholding its prior ruling, the court also removed U.S. District Judge Lynn Hughes from the action for stalling the proceeding and failing to heed the appellate court’s directive on remand.

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Published: April 1, 2015

The U.S. Court of Appeals for the Seventh Circuit recently clarified the standard for pleading the “knowledge” element in False Claims Act (FCA) actions.  To be liable under the FCA, the defendant must have acted with “actual knowledge” or “reckless disregard” to the possibility that the claims it submitted to the federal government were false.  

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Published: March 28, 2015

In Brief

  • Government files a Statement of Interest in Cestra case to argue that free speech is not an issue in FCA off-label drug promotion cases.
  • If the court rejects the Government’s argument, pharmaceutical producers and medical device manufacturers may gain more freedom to promote their products off-label so long as they are truthful.

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Published: March 26, 2015

The Securities and Exchange Commission (SEC) plans to award between $475,000 and $575,000 to a former company officer who reported “original, high-quality information about a securities fraud that resulted in an SEC enforcement action with sanctions exceeding $1 million.”  Generally, company officers, directors, trustees or partners who learn about fraud through internal reports are not eligible for whistleblower awards.

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Published: March 25, 2015

Lawyers and industry members should keep their eyes on a pending motion to dismiss regarding a “reverse false claims” lawsuit in the U.S. District Court for the Southern District of New York.  The case, on which Saul Ewing previously wrote in October 2014, is United States of America ex rel. Kane v. Continuum Health Partners, Inc., Case No. 11-2325, and it presents the first time the government has intervened in a reverse false claims lawsuit.

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Published: March 24, 2015

The Eleventh Circuit recently affirmed the dismissal of a qui tam complaint pursuant to the public disclosure bar of the False Claims Act.  Relator Marc Osheroff alleged several health clinics and health insurers that contracted with clinics violated the False Claims Act, the Anti-Kickback Statute, and the Civil Monetary Penalties Law by providing a variety of free services including transportation, meals, spa and salon services, and entertainment to patients.

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Published: March 24, 2015

The Eleventh Circuit recently affirmed the dismissal of a qui tam complaint pursuant to the public disclosure bar of the False Claims Act.  Relator Marc Osheroff alleged several health clinics and health insurers that contracted with clinics violated the False Claims Act, the Anti-Kickback Statute, and the Civil Monetary Penalties Law by providing a variety of free services including transportation, meals, spa and salon services, and entertainment to patients.

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Published: March 18, 2015

In brief:

  • The 6th Circuit recently held that the False Claims Act’s bar on bringing qui tam actions where the fraud allegations have been publicly disclosed does not encompass information disclosed in government investigations.  
  • The court’s decision aligns it with the 1st, 4th, 9th, 10th, and D.C. Circuits in reading a public disclosure to mean an affirmative disclosure made to the public at large.  The 7th Circuit disagrees.  The remaining circuit courts have not yet considered the issue.

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Published: March 6, 2015

The U.S. Department of Labor has issued its final rule governing the procedures for handling whistleblower retaliation complaints under the Sarbanes-Oxley Act (SOX).  The department issued the final rule on March 4, 2015, which is nearly four years since it issued its interim final rule.

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Published: March 3, 2015

A Florida federal court took the rare step of overturning a relator’s $1.5 million jury verdict.  The relator claimed that his former employer, a radiology company, had submitted false claims for PET/CT scans.  The case turned on the fact that the scans had been performed by general radiographers, not licensed nuclear medicine technologists as required by state law.  In vacating the jury’s verdict, the court held that these scans were not fraudulent in that they were actually performed and medically necessary.

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Published: March 3, 2015

The Justice Department announced a record amount of False Claims Act recoveries for 2014, totaling more than $5 billion.  Following up on that announcement, the department has now requested a $1 million increase for the hiring of 15 positions to bolster the Civil Division’s enforcement efforts.  The department supported its request by citing not only its recent successes, but also the advent of an increasing number of whistleblower cases.

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Published: February 23, 2015

In Brief:

  • A federal District Court judge in the Eastern District of Pennsylvania has addressed the corporate knowledge requirement for claims brought under the whistleblower protection provisions of the Sarbanes-Oxley Act.
  • The court ruled whistleblowers need only allege their supervisor knew about their protected reporting activity and need not allege the person who decided to terminate the employee also knew.

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Published: February 19, 2015

In Brief:

  • The Fourth Circuit recently applied the theory of implied certification to resuscitate a False Claims Act lawsuit against a military contractor, holding that knowingly withholding information regarding noncompliance with a material contractual provision regarding marksmanship qualifications of security guards constituted a false claim within the meaning of the Act.
  • The court’s decision provides guidance as to whether a contractual provision may be deemed “material” for purposes of the False Claims Act, which requires that a false statement be “material” in order to support a claim.

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Published: January 29, 2015

Well, we knew it wasn’t going to be pretty when Judge Richard A. Posner introduced the plaintiff as  “[o]ur bounty hunter,” and things didn’t get any better for the relator as the opinion went on in a False Claims Act case decided by the Seventh Circuit Court of Appeals in U.S., et al., ex rel. Yury Grenadyor v. Ukrainian Village Pharmacy, Inc. et al.  The relator had alleged that the pharmacy he worked for defrauded the government by giving customers tiny tins of caviar and Russian-language TV Guides, forgiving copays, and seeking reimbursement for drugs the pharmacy never delivered.

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Published: January 26, 2015

In Brief:

  • A California Institute of Technology professor recently filed a lawsuit against the school claiming retaliation for her involvement in a federal investigation into alleged espionage activity.
  • The Caltech suit provides another example of the types of lawsuits whistleblowers bring against higher education institutions and the importance for colleges and universities to maintain robust compliance programs to ensure their institutions follow applicable laws and regulations in the first instance – especially where enhanced whistleblower protections apply to employees working on federal contracts or grants.

 

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Published: January 14, 2015

On January 12, 2015, the U.S. Supreme Court heard oral argument in Kellogg Brown & Root Services, Inc., et al. v. United States ex. rel. Carter, a pivotal False Claims Act case, which Saul Ewing’s White Collar and Government Enforcement Practice first discussed in August 2014.  In that case, which arises from a qui tam claim advanced by Benjamin Carter against his former employer, Kellogg Brown & Root (KBR), the court is considering two important issues.

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Published: January 9, 2015

A former Countrywide Financial Corporation executive who blew the whistle and filed a qui tam lawsuit under the False Claims Act against Bank of America (“BOA”) is slated to receive $57 million dollars for his assistance in helping prosecutors reach a $16.65 billion settlement with BOA in August 2014.

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Published: January 9, 2015

OtisMed Corporation and its former CEO, Charlie Chi, agreed to pay $80 million to resolve criminal and civil allegations that the company intentionally distributed knee replacement surgery cutting guides after its application for marketing clearance had been rejected by the Food and Drug Administration).

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Published: January 9, 2015

In an issue of first impression, the U.S. Court of Appeals for the Third Circuit ruled in Khazin v. TD Ameritrade Holding Corp., No. 14-1689, 2014 WL 6871393 (3d Cir. Dec. 8, 2014) that certain whistleblower retaliation claims arising under the Dodd-Frank Wall Street Reform and Consumer Protection Act were not exempt from predispute arbitration agreements. The court reached this decision after a plaintiff, Boris Khazin, sought to invalidate the predispute arbitration agreement he signed with his former employer, TD Ameritrade, in order to allow his case to proceed to trial.

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Published: January 7, 2015

In Brief:

  • The Supreme Court of New Jersey will soon decide whether a former employee whistleblower facing criminal charges for allegedly taking sensitive documents from her employer to support her planned discrimination and retaliation claims is shielded by the Conscientious Employee Protection Act (“CEPA”) and Law Against Discrimination (“LAD”).
  • The court’s decision will provide guidance on whistleblowers’ ability to collect confidential documents from their employers to pursue their whistleblower claims – an issue which both sides argue would have a chilling effect on the losing party.

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Published: December 19, 2014

In Brief:

  • Pleading regulatory noncompliance does not equate to a false claim; plaintiffs must show scienter.  
  • Federal courts have refused to permit plaintiffs to use the False Claims Act to police technical compliance with complex federal regulations.  The court in this case advised that it would likely have stayed the case and submitted the issues to the Federal Aviation Administration for consideration if the alleged regulatory noncompliance had not already been reviewed and approved by the agency.

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Published: December 10, 2014

In Brief:

The Securities and Exchange Commission has unveiled new data about tipsters who report corporate wrongdoing under the Dodd-Frank Whistleblower Program. This whistleblower profile data is a powerful tool that can help businesses prudently address the concerns of those whistleblowers most likely to report to SEC.

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Published: December 9, 2014

A former Sanofi paralegal filed a lawsuit claiming that she was fired after complaining the pharmaceutical company paid $34 million in kickbacks to induce physicians, hospitals and pharmacies to use its diabetes drugs.

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Published: December 9, 2014

Defense contractor Supreme Foodservice pleaded guilty on December 8, 2014 to fraud charges and settled civil False Claims Act allegations regarding overcharges to the U.S. government for food and water provided to American soldiers in Afghanistan.   Supreme Foodservice paid $288 million in the criminal case and agreed to pay an additional $101 million to settle the separate False Claims Act whistleblower lawsuit brought by a former executive of the company.

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Published: December 4, 2014

According to the U.S. Department of Justice, Rite Aid allegedly “knowingly and improperly influenced the decisions of Medicare and Medicaid beneficiaries” by offering them gift cards to move prescriptions to Rite Aid from other pharmacies. 

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Published: December 4, 2014

In Brief:

  • The U.S. Department of Justice has declined to intervene in a False Claims Act whistleblower claim against military contractor DynCorp International, Inc.

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Published: December 2, 2014

In Brief:

  • Maricopa County Community College District (MCCCD) in Arizona has agreed to pay $4.08 million to resolve allegations under the False Claims Act that it submitted false claims to the Corporation for National and Community Service (CNCS) concerning AmeriCorps state and national grants.

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Published: October 31, 2014

In Brief

  • The Office of Inspector General of the Department of Health and Human Services recently issued a warning to pharmaceutical manufacturers, reminding them that copay coupons used for drugs purchased through federal healthcare programs can constitute illegal kickbacks and a violation of the False Claims Act.

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Published: October 31, 2014

In Brief:

  • Under a little-known provision of the Patient Protection and Affordable Care Act (“ACA”), healthcare providers could face millions of dollars in liability for failing to reimburse the government for overpayments in a timely manner. Pursuant to this “reverse false claims” provision as amended by the ACA, providers now have only 60 days from the moment they identify an overpayment to reimburse the government. While much has been written about this amendment, and many concerns have been raised by providers and commentators alike, the federal government has recently demonstrated its willingness to enforce this provision and hold providers to this 60-day standard.

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Published: October 1, 2014

In Brief

  • Recently, a federal district court in Georgia ruled that a defendant waived the attorney-client privilege in communications with counsel about the lawfulness of its conduct under the False Claims Act simply by pleading good faith compliance in its answer to the complaint.
  • In considering whether to plead good faith compliance or another affirmative defense that negates a statute’s mens rea requirement, industry members should consider the possibility that a court may order disclosure of attorney-client communications. 

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Published: September 30, 2014

In Brief

  • Recently, several courts have dismissed False Claims Act suits after determining that the allegations involved “conditions of participation” rather than “conditions of payment” and therefore did not involve “false” claims for purposes of the False Claims Act.
  • Although the distinction between “conditions of payment” and “conditions of participation” is fact-specific and better defined in some jurisdictions than in others, defendants facing a False Claims Act lawsuit should consider whether an argument that the allegations are mere conditions of participation could prove a successful defense.

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Published: September 30, 2014

In Brief

  • The Securities and Exchange Commission awarded $300,000 to a whistleblower who performed audit and compliance functions at a company.

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Published: September 30, 2014

In Brief:

  • A Cook County judge recently upheld the verdict in a whistleblower case against Chicago State University.  In February 2014, former university employee James Crowley told a jury that Chicago State fired him after he reported misconduct by the school’s leadership. Chicago State countered that it terminated Crowley for “improper financial dealings and misuse of university resources.”  The jury found for Crowley and the judge ordered the university to pay Crowley more than $3 million and to reinstate him.

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Published: August 28, 2014

In Brief:

  • A federal court of appeals has been asked to clarify the scope of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010’s (“Dodd-Frank” or “Act”) whistleblower protections.  Specifically, the court has been asked to clarify whether the Act protects whistleblowers who do not complain directly to the U.S. Securities and Exchange Commission (“SEC”) about potential fraud relating to securities laws. The court’s decision will have a significant impact on how employers respond to employees who disclose internally what they believe are violations of securities laws.

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Published: August 28, 2014

In Brief:

  • Whistleblower incentives and awards are not unique to the False Claims Act or Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.  On August 12, 2014, the Internal Revenue Service (“IRS”) issued long-awaited guidance for its own whistleblower program. As in the past, the IRS will continue to pay at least 15 and not more than 30 percent of the “collected proceeds” resulting from information provided by a whistleblower.  The new regulations define several key terms and facilitate awards.

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Published: August 28, 2014

In Brief

  • The Supreme Court has agreed to hear an appeal which will likely reconcile an appellate split as to whether the Wartime Suspension of Limitations Act applies in False Claims Act cases and the first-to-file bar.
  • The Court’s holding with regard to the application of each of these doctrines will significantly impact the viability of a number of potential False Claims Act claims.

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Published: July 14, 2014

In Brief:

  • Ambiguous contract terms are ordinarily a liability for government contractors, opening the possibility of misunderstandings, expensive disputes, and, potentially, unpaid additional work.  However, contract ambiguity recently came to the aid of a federal contractor accused of False Claims Act (“FCA”) violations.  The U.S. Court of Appeals for the Third Circuit upheld dismissal of a suit alleging FCA violations by a contractor for the Pennsylvania Department of Transportation, holding that internally contradictory and vague contract language defeated the possibility of a jury finding of requisite intent for an FCA violation.

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Published: July 14, 2014

In Brief

  •  In contrast to the recent, public and record-breaking False Claims Act settlements with Big Pharma, the government’s intervention in a relator’s suit against a computer software company, alleging that the contractor overcharged agencies by at least $100 million since 2006, should be a warning to other industries – the classic FCA suit is still as effective as ever in recovering against fraudulent billing based on a contract for services

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Published: June 3, 2014

In Brief

  • Schuylkill Products case highlights how a whistleblower can put an employer on track to face both criminal and civil proceedings under the False Claims Act.

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Published: June 3, 2014

In Brief

  • Stevens-Henager College and its owners are accused of offering compensation incentives to admission consultants based on the number of students they recruit.
  • The government alleges that the college falsely certified compliance with federal law that prohibits such incentives in a case originally brought by two whistleblowers.

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Published: June 3, 2014

In Brief

  • When an alleged scheme to market drugs for unapproved “off-label” uses had already been identified by an earlier complaint, a later complaint providing additional details, but alleging the same “essential facts,” was barred by the statute.
  • The Court of Appeals rejected the argument that later complaints were only barred if they alleged identical facts.

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Published: May 1, 2014

In Brief

  • A federal district court recently held that documents relating to a government contractor’s internal compliance investigations regarding fraud were not protected by the attorney-client privilege because the investigations were undertaken to comply with regulations and corporate policy rather than to obtain legal advice.
  • If upheld, this decision will present pitfalls to companies which conduct internal reviews at the direction of regulatory authorities or pursuant to a statutory mandate.
  • Companies should involve counsel in each step of internal investigations and expressly articulate and document the legal purpose of the investigation at every phase.

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Published: May 1, 2014

In Brief

  • The complaint claims lender OneWest falsely certified that it made required disclosures to homeowners, leading the federal government to pay more than $200 million in false claims.
  • OneWest acquired its loan portfolio from the failed IndyMac Bank, which collapsed amid the financial crisis in 2008.

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Published: May 1, 2014

A federal jury recently ordered Playboy Enterprises to pay $6 million to a former accounting executive who was wrongfully terminated in retaliation for blowing the whistle internally on what she perceived was improper executive compensation.  The executive-turned-whistleblower, Catherine Zulfer, learned that the CEO and CFO intended to pay themselves $1 million in bonuses without first obtaining board approval.  Zulfer reported her concerns internally to Playboy’s general counsel and outside Securities and Exchange Commission counsel.  

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Published: March 28, 2014

In Brief

  • The U.S. Securities and Exchange Commission asserts its position with an amicus brief supporting whistleblowers using internal compliance programs.
  • Siemens’ support for a narrow construction of Dodd-Frank whistleblower protections could undermine industry efforts to encourage internal reporting.

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Published: March 28, 2014

In Brief

  • Supreme Court asked to review ruling in Halliburton case in which the Fourth Circuit ruled that a World War II-era law trumps the statute of limitations on prosecution of whistleblower claims under the False Claims Act.
  • The decision could affect contractors in an array of industries who supply goods and services to the government if the Supreme Court does not act.

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Published: February 3, 2014

In Brief

  • Fourth Circuit finds $24 million penalty award does not violate Eighth Amendment ban on excessive fines despite disproportion to payments at issue.
  • Other courts have yet to react and ruling provides no guidance.

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Published: February 3, 2014

In Brief

  • Fifth Circuit ruling finds University of Texas Health Science Center is an “arm of the state” as part of the University of Texas System and therefore exempt from liability under the False Claims Act.
  • Decisions around similar cases in the Fourth and Sixth Circuits set differing standards.

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Published: February 3, 2014

In Brief

  • The owner of Passages Hospice is alleged to have set in motion a scheme to move patients into a more intense level of care that netted the company higher Medicare and Medicaid reimbursements.
  • Case demonstrates the government’s increasing focus on health care-related prosecutions and its reliance on willing whistleblowers.

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Published: February 3, 2014

In Brief

  • Case alleges that a whistleblower’s former employer processed drugs in violation of safety regulations and, therefore, caused those drugs to be ineligible for reimbursement by Medicare and Medicaid.
  • The decision closes a potentially lucrative avenue for False Claims Act cases against pharmaceutical companies and others based solely on regulatory non-compliance.

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Published: January 13, 2014

In Brief

  • Case against JPMorgan Chase vice president illustrates the benefits of a robust compliance program as federal prosecutors turn to mid-level executive to expose company’s practices related to municipal bond offerings.

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Published: January 3, 2014

In Brief

  • Complaints and referrals from whistleblowers increased 8 percent compared to the previous year, particularly relating to offering fraud and manipulation.
  • Whistleblowers span all 50 states and are particularly active in California, New York and Florida.

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Published: January 2, 2014

In Brief

  • Recall of Buckyballs® leads to lawsuit filed by the CEO of company that produces magnetic desk toy, as Consumer Product Safety Commission aims to hold him personally responsible for alleged safety risks.

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