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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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Fourth Circuit reasons that proving the fraudulent state of mind required for False Claims Act liability would defeat any claim of qualified immunity.

State or local government officials alleged to have violated the False Claims Act by defrauding the federal goveriStock-535378977-1024x796nment cannot raise “qualified immunity” as a defense, the Fourth Circuit Court of Appeals has held.  The state of mind required to establish False Claims Act liability forecloses it, the court reasoned in U.S. ex rel. Citynet v. Gianato.

Alleged grant fraud

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Linde AG used incorrect Harmonized Tariff Schedule (HTS) codes and failed to declare “assists” on steel products imported from China.

The German firm Linde AG has agreed to pay $22.2 million to resolve allegations it knowingly dodged U.S. customs duties on iLogistics and transportation of Container Cargo ship and Cargo plane with working crane bridge in shipyard at sunrise, logistic import export and transport industry backgroundmports of steel components from China. The qui tam whistleblower who exposed the fraud—the company’s former logistics coordinator—will receive a whistleblower award (or “relator’s share”) of $3.7 million under the False Claims Act.

Evasion of antidumping and countervailing duties (AD/CVD)

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Fraud in connection with receipt of federal bailout funds held to be actionable under the False Claims Act.

The Second Circuit Court of Appeals has ruled in favor of two financial sector shutterstock_401325058-2-300x134qui tam whistleblowers, reviving their claims under the False Claims Act that Wells Fargo lied about its financial condition in order to get billions of dollars in low-interest emergency bailout funds from regional Federal Reserve Banks during the Financial Crisis.

The whistleblowers–who were former employees of Wells Fargo–alleged that the financial institution falsely certified that it was adequately capitalized and in compliance with applicable banking and mortgage lending laws when it requested billions of dollars in emergency loans from the Fed’s Discount Window and Term Auction Facility. As a result, it could get interest rates on the borrowed funds that were much lower than those for which it would otherwise have qualified.

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Centric Parts of California evaded 2.5% tariff by misclassifying “mounted” brake pads as “unmounted.”

In yet another False Claims Act settlement involving customs fraud and tariff enforcement, California aftermarket auto partshutterstock_493303243-300x200s supplier CWD Holdings, LLC – which does business as Centric Parts – has agreed to pay $8 million to revolve claims it knowingly evaded import duties owed on imported brake pads.  Two former employees of Centric who blew the whistle on the customs fraud scheme by filing qui tam lawsuits under the False Claims Act will share a $1.48 million reward.

If you have information about customs fraud and would like to discuss your rights, reach out to whistleblower attorney Mark A. Strauss, who has represented whistleblowers in successful cases based on customs fraud in the past.

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Firm allegedly provided government with inaccurate cost data during contract negotiations, failed to disclose that estimates had been reduced by automation of manual tasks.

Federal prosecutors have announced that CDM Smith, an environmental engineering and construction firm located in Fairfax, Virginia, has agreshutterstock_752242222-300x200ed to pay $5.6 million to resolve claims that it violated the False Claims Act by overcharging the U.S. Navy in connection with two waste water system contracts.  The company employee who blew the whistle on the misconduct by filing a qui tam lawsuit under the False Claims Act stands to receive a significant whistleblower reward.

Inaccurate cost and labor figures used

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Management pressured staff to inflate Medicare reimbursements by “upcoding” and “ramping.”

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The Seventh Circuit Court of Appeals has held that arrangements with a third-party litigation funder did not deprive a whistleblower of legal “standing” to pursue her claims under the False Claims Act.  It also upheld a $255 million jury verdict for Medicare fraud against the two Florida skilled nursing facilities where the whistleblower worked and the management firms that ran them.

The court’s decision in Ruckh v. Salus Rehabilitation counts as a significant victory for whistleblowers.  Healthcare industry defense lawyers are fretting about its potential consequences.

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Former employee blows the whistle, receives reward

In another False Claims Act settlement involving trade fraud, the owner of New York jewelry wholesaler Anaya Gems Inc. has agreed to pay $415,000 to resolve allegations relating to iStock-1035265296-1-300x200import duty evasion.  The former employee who blew the whistle on the scheme by filing a qui tam lawsuit received 22% of the recovery as a reward.

Millions of dollars in undeclared “assists”

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Downstream wholesaler allegedly turned a blind eye to suppliers’ import fraud while receiving goods at below-market prices. Whistleblowers reap rshutterstock_214476049-300x200ewards.

The increased use of the False Claims Act to combat duty evasion has alarmed importers — as it well should!

Liability under the False Claims Act can be significant — three times damages plus penalties for each false entry document.  This is far more severe than the penalties generally awarded in U.S. Customs & Border Protection administrative proceedings.  The False Claims Act’s qui tam provisions also incentivize whistleblowers to come forward and expose import fraud by offering awards of up to 30% of the amount recovered.  Current and former employees of importers — as well as their competitors — have reaped millions of dollars in awards for filing whistleblower claims.

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Court says that disputed medical judgments present a triable issue for a jury, creating a Circuit split and pavingshutterstock_1549738514-1-300x196 the way for similar whistleblower claims.

The Third Circuit Court of Appeals has ruled that a physician’s judgments and opinions can be considered “false” under the False Claims Act, rejecting the Eleventh Circuit’s “objective falsehood” requirement and creating a Circuit split.  In United States v. Care Alternatives, the Third Circuit found that contradictory medical expert opinions as to whether patients were “terminally ill” as defined by Medicare and thus eligible for hospice care benefits raised a triable issue for the jury as to falsity under the False Claims Act and did not warrant dismissal on summary judgment.

The decision conflicts with that of the Eleventh Circuit last year in United States v. AseraCare, where the court ruled that medical expert testimony standing alone cannot prove the falsity of a clinical judgment of hospice care eligibility because “a claim cannot be ‘false’ [under the False Claims Act] if the underlying clinical judgment does not reflect on objective falsehood.”