Articles Posted in Qui Tam Lawsuits

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iStock-513229490-300x200Pilot training program allegedly falsified enrollment figures to obtain Veterans Affairs funding

Universal Helicopters Inc. and Dodge City Community College have paid $7.5 million to resolve allegations they violated the False Claims Act by making false statements to the U.S. Department of Veterans Affairs in connection with a training program they jointly run for helicopter pilot flight instructors in Ford County, Kansas and Chandler, Arizona.

Universal paid $7 million, while Dodge City paid $500,000—an amount the U.S. Department of Justice noted was based on Dodge City’s ability to pay.

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Biotronik allegedly paid doctors illegal kickbacks to promote the sale of its implantiStock-1182459087-1-300x210able cardiac devices

Medical device manufacturer Biotronik has agreed to pay $12.95 million to settle allegations that it violated the False Claims Act through payment of illegal kickbacks to physicians as part of an effort to market and promote its implantable cardiac devices, including pacemakers and defibrillators. Two former sales executives of the company who exposed the fraud by filing a qui tam lawsuit will share a whistleblower award of $1.25 million.

A multi-pronged kickback scheme
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Qui tam whistleblower alleged that Aerojet Rocketdyne misled the government regarding itsiStock-1355638834-2-300x169 compliance with cybersecurity standards

Defense contractor Aerojet Rocketdyne (NYSE: AJRD) has agreed to pay $9 million to settle allegations it violated the False Claims Act by falsely certifying its compliance with federal cybersecurity requirements in connection with multiple procurement contracts with the Department of Defense (DOD) and the National Aeronautics and Space Administration (NASA).  The qui tam relator whose whistleblower complaint exposed the alleged fraud will receive a whistleblower award of $2.61 million.

Critical cybersecurity deficiencies
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Importer of welded outlets knowingly evaded applicable anti-dumping duties

A federal court in California has awarded $24 million damages—and an additional $2.7 million in attorney’s fees—to a corporate qui tam whistleblower that successfully sued a rival company under the False Claims Act claiming that it unlawfully evaded anti-dumping duties on “welded outlet” imports from China.  The whistleblower—Tennessee-based Island Industries, Inc.—accused importer Sigma Corp. of being able to undersell law-abiding competitors like Island by cheating U.S. Customs and Border Protection (CBP) out of the anti-dumping tariffs.

Jury rules in favor of whistleblower
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As the IRS and state tax authorities cracking down on crypto investors and traders, cryptocurrency tax fraud whistleblowers stand to receive significant awardsCryptocurrency tax fraud

Mark A. Strauss Law, PLLC, a whistleblower law firm, is encouraging individuals with information regarding tax evasion in connection with cryptocurrency transactions to contact whistleblower attorney Mark A. Strauss for a free consultation.

In Notice 2014-21, the IRS made clear that convertible digital currencies comprise intangible “property”—just like shares of stock or other financial assets—for tax purposes.   What that means is that when crypto currencies like Bitcoin (BTC), Etherium (ETH), Ripple (XRP) are sold or exchanged—or simply used as a means of payment—the transaction in question is a taxable event.  Capital gains taxes are owed on any price increases realized.  Parties accepting crypto as payment for goods or services must include the value thereof in their gross income.  Moreover, a wide range of transactions involving cryptocurrencies are potentially taxable, including staking, mining, and crypto-to-crypto trading.

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Athenahealth allegedly violated the Anti-Kickback Statute (AKS) and False Claims Act by paying kickbacks for clients referrals

Electronic Health Records -- Reading patient report on digital tablet

Healthcare technology firm Athenahealth has agreed to pay $18.25 million to settle allegations it violated the False Claims Act by paying illegal kickbacks for client referrals as part of initiatives to promote its Electronic Health Records platform athenaClinicals. Two qui tam relators whose whistleblower complaints exposed the fraud stand to receive significant whistleblower rewards.

Three illegal “marketing” initiatives
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Company allegedly gave government inflated cost and pricing data when negotiating no-bid contracts for drone-related military projects
Insitu drone.

Insitu drone. The company settled False Claims Act allegations that it inflated the prices of parts sold to the U.S. Navy and the Special Operations Command (SOCOM).

Insitu, Inc., a subsidiary of aerospace and defense contractor Boeing, has agreed to pay $25 million to settle a False Claims Act lawsuit alleging it defrauded the government by passing off recycled and reconditioned drone parts and components as new under defense contracts with the U.S. Navy and the Special Operations Command (SOCOM). The former Insitu employee who filed the qui tam lawsuit and thereby exposed the fraud received a whistleblower reward of $4.6 million.

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Service member wearing Army uniform (ACU) filling real estate related paperwork.Court takes “holistic approach” to materiality, rejecting strict focus on the ultimate “payment decision” in significant win for qui tam whistleblowers and the government

A few weeks ago, I blogged about United States v. Strock. There, the Second Circuit Court of Appeals determined that the Supreme Court’s decision in Universal Health Services v. Escobar—which held that misrepresentations regarding compliance with a statutory, regulatory, or contractual requirements “must be material to the Government’s payment decision” to be actionable under the False Claims Act—did not invalidate the “fraudulent inducement” theory of False Claims Act liability. Under that theory, which predates Escobar, a violation of the False Claims Act can be established by showing that the defendant submitted claims for payment under a contract obtained by fraud—even if the subsequent claims for payment under the contract were themselves entirely truthful. The focus in a such a case, the Second Circuit confirmed, still includes the fraudulent statements’ impact on the government’s initial decision to award the contract. Any subsequent payments are “tainted” by that original fraud.

Now—in another key victory for whistleblowers and the government—the Eleventh Circuit has taken a similarly broad view of Escobar’s materiality requirement. In United States ex rel. Bibby v. Mortg. Inv’rs Corp., the court adopted a “holistic approach” to the assessment of materiality under the False Claims Act, rejecting a “strict focus” on the ultimate “payment decision.”

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Second Circuit rules that relevant government “payment decision” under Escobar included Veterans Administration’s initial decision to award contracts based on claim that contractor qualified as a “service-disabled, veteran-owned small business”—not just the VA’s subsequent decisions to make payments under those contracts

In a key victory for the federal government and qui tam whistleblowers, the Second Circwhistlebloweruit Court of Appeals has affirmed that false statements regarding eligibility to take part in government programs—and not just subsequent false claims for payment after being allowed to participate—are actionable under the False Claims Act notwithstanding the U.S. Supreme Court’s 2016 landmark decision in Universal Health Services v. Escobar. The court in United States v. Strock rejected the idea that the only relevant “payment decision” under Escobar was the decision to pay a contractors’ invoices without regard to the initial decision to award the contract.

Impact on False Claims Act cases involving eligibility
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Insurance fraud (arson)Court holds that whistleblower standing under the Insurance Claims Fraud Prevention Act—like the federal False Claims Act—does not require that the qui tam relator suffered injury

The Supreme Court of Illinois has upheld the qui tam whistleblower provisions of the Illinois Insurance Claims Fraud Prevention Act, affirming the reversal of a trial court decision that would have essentially gutted them. The court agreed that a whistleblower need not have suffered harm to be an “interested person” with standing—and therefore able to sue—under the Act. Instead, the phrase “interested person” in the statute simply refers to a party with material information about insurance fraud who brings a qui tam lawsuit and may be eligible for a whistleblower award, the court held in State ex rel. Leibowitz v. Family Vision Care, LLC.

Rooting out insurance fraud
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