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Hedge-Fund-Manager-Holding-MoneyA qui tam complaint unsealed in New York federal court this week alleges that Commerzbank AG (“CBK”) violated the False Claims Act in connection with a $350 million loan that it secured from the Federal Reserve Bank as a result of the 2007 financial crisis. In response to the crisis, the Bank introduced the Term Discount Window program, allowing banks to borrow from the discount window for longer periods. CBK was the first foreign bank to take advantage of this money. The bank allegedly failed to disclose that they had traded gold on behalf of the Central Bank of Iran. CBK had, however, impliedly and expressly certified compliance with the rules and regulations regarding sanctions on Iran as well as other statutes that prohibited its activities. CBK therefore fraudulently received the benefits of a loan from the federal government of the United States. CBK is a German global banking and financial services company headquartered in Frankfurt, Germany. Its three main businesses are retail banking, commercial and mortgage banking, and investment banking. Continue reading

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Govt-Health-Insurance-Policy-300x200 3Yesterday the Court of Appeals for the First Circuit revived the False Claims Act case against Universal Health Services Inc. (“Universal Health”) filed by two relators that alleges that the company improperly billed the government for mental health services provided by unsupervised and unqualified staff. Universal Health owns and operates Arbour Counseling Services (“Arbour clinic”), a provider of mental-health services in Lawrence, Massachusetts. The Arbour clinic participates in MassHealth, the Medicaid program of the state of Massachusetts, and bills MassHealth for services rendered to individuals insured by the program. United States ex rel. Escobar et al. v. Universal Health Services Inc. was filed in 2011 by the parents of Yarushka Rivera who died in 2009 after suffering seizures allegedly caused by a reaction to the medication she received from unlicensed counselors and nurses at the Arbour clinic. The decision almost entirely reverses the district court’s dismissal of the suit, the Court of Appeals finding that the cost of staff supervision is automatically built into MassHealth reimbursement rates. Continue reading

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BU009443Miami, Florida-based lender and financial services company Hencorp Becstone Capital LC (“Hencorp”) has agreed to pay $3.8 million to settle allegations that it violated the False Claims Act in connection with an elaborate scheme to defraud the Export-Import Bank of the United States. The Export-Import Bank, founded in 1934, is the official export credit agency of the federal government that guarantees loans made by approved lenders to foreign companies for use in purchasing American-made products. Hencorp, acting through its regional director Ricardo Maza, procured candidates in Latin America for participation in the loan guarantee program of the Bank. Hencorp allegedly approached business in Latin America and offered to help them make an application to the Bank for inclusion in the program, and then offered to make a the loan to such businesses if the Export-Import Bank approved them for the loan guarantee. The applications were false because Hencorp did not intend to provide a loan but instead planned to divert the loan funds. Continue reading

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Govt-Health-Insurance-Policy-300x200 3Century Ambulance Service Inc. (“Century Ambulance”) of Jacksonville, Florida allegedly defrauded Medicare and Medicaid out of $5 million by submitting claims for ambulance services that were unnecessary or inflated. With the help of local hospitals, Century Ambulance allegedly falsified documents and records on a daily basis regarding patients transported either to or from hospitals owned by Southern Baptist Hospital of Florida Inc., Memorial Medical Care Group Inc., Orange Park Medical Center Inc., and Shands Jacksonville Medical Center Inc. (now UF Health Jacksonville). Relator Shawn Pelletier, a former emergency medical technician (“EMT”) employed by Century Ambulance, claims that the conduct has occurred since at least 2005 in his amended complaint filed today under the federal False Claims Act and the Florida False Claims Act. Pelletier has been an EMT since 1998 and worked for Century Ambulance from 2004 through 2006. Century Ambulance is a provider of both emergency and non-emergency medical transport services. Continue reading

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College-classroom2The former president of Concorde Career Colleges Inc. (“Concorde”) is alleging that the concerns he raised regarding the recruitment policies of the for-profit school resulted in his termination in violation of the federal False Claims Act. The complaint also alleges breach of contract, and violations of Delaware Whistleblower’s Protection Act and Oregon Whistleblower Protection Statute. According to relator John L. Hopkins, the network of schools was risking defauding the U.S. Department of Education based on its recruitment policies. The network of schools allegedly requires its recruiters to get a set number of students to enroll every week in addition to developing a program that tries to steer potential nursing students into less popular careers in order to increase enrollment in its other programs. Continue reading

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Red-Line-300x199 2Cause of Action, a Washington-based, independent, non-profit, public interest group, asked the Seventh Circuit today to revive its False Claims Act suit against the Chicago Transit Authority (“CTA”) for allegedly overbilling the government up to $55 million for bus usage. From at least 2001 through 2010, CTA allegedly fraudulently billed and collected approximately $2.6 million to $5.5 million per year in federal funds from the U.S. Department of Transportation under the Urbanized Area Formula Program, paid through and administered by, the Federal Transit Administration (“FTA”). In general, the program provides federal grant monies to fund the capital and operating expenses of transit programs in urbanized areas, such as Chicago. The program’s funds are disbursed using a grant formula that pays for vehicle revenue miles (“VRMs”). By charging “non-revenue” bus miles as “revenue” miles, CTA allegedly charged federal taxpayers for approximately 98.2% of its bus miles, while the nation’s eighteen other large bus operators charged for only approximately 83.5%. Continue reading

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Whistle 2An Illinois federal court rejected IBM Corporation’s (“IBM”) motion to dismiss a relator’s False Claims Act case accusing it of conspiring with other companies to submit approximately $50 million worth of fraudulent claims for a U.S. Department of Homeland Security (“DHS”) emergency response project. Although it went awry, “Project Shield” was to provide emergency response vehicles with mobile platforms to instantly connect them to a central database in the event of a terrorist attack or natural disaster. Relator Michael McGee filed the complaint on behalf of the federal government and the state of Illinois after his company, Responder Systems, LLC, was solicited and hired as a subcontractor to fix the mobile platforms’ functionality issues. IBM had argued in its motion for dismissal that news reports about the project and a federal audit bar McGee’s claims through the public disclosure provision of the Act. But the court determined that McGee was in fact an original source of the information, having direct and independent knowledge of the alleged fraud that he shared with government officials prior to filing the complaint. Continue reading

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Stethoscope1On Wednesday, the U.S. Department of Justice announced that AstraZeneca LP, a Delaware-based pharmaceutical manufacturer, has agreed to pay the federal government $7.9 million to settle allegations that it engaged in a kickback scheme in violation of the Anti-Kickback statute and the False Claims Act. AstraZeneca markets and sells pharmaceutical products in the United States, including a drug sold under the trade name Nexium. The settlement specifically resolves the allegations made by two relators that AstraZeneca agreed to provide remuneration to Medco Health Solutions, a pharmacy benefit manager, in exchange for Medco maintaining Nexium’s “sole and exclusive” status on certain Medco formularies and through other marketing activities related to those Medco formularies. AstraZeneca allegedly provided some or all of the remuneration to Medco through price concessions on drugs other than Nexium, namely on Prilosec, Toprol XL and Plendil. Such remuneration amounted to approximately $40 million. Continue reading

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Iraq-TankA recent ruling by the Fourth Circuit has put the False Claims Act allegations made by Frank Skinner, a former executive of Armet Armored Vehicles Inc. (“Armet”), back in play. According to a federal district court in Virginia, the Circuit’s decision in Badr v. Triple Canopy Inc. has amounted to a change in the law that now allows the government to bring “implied certification” claims when a contractor withholds information about any non-compliance with its contractual obligations. Accordingly, the court denied Armet’s motion to dismiss in its entirety. The company is alleged by Skinner to have defrauded the federal government by supplying U.S. forces in Iraq with substandard gun trucks. The now defunct company designed, manufactured, and supplied armored vehicles for government and commercial customers. It was headquartered in Miramar Beach, Florida, but also had offices in Danville, Virginia, and Ontario, Canada. Continue reading

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WhistleThe U.S. Department of Justice announced today that medical device manufacturer Medtronic Inc. has agreed to pay the federal government $2.8 million to settle a relator’s allegations of fraud brought under the False Claims Act against the Minnesota-based company. Medtronic allegedly caused a number of physicians, located throughout twenty states, to submit false claims to federal health care programs for a medical procedure known as “SubQ stimulation” between 2007 and 2011. As an investigational procedure, it was not eligible for reimbursement. United States ex rel. Nickel v. Medtronic, Inc. was filed in federal court in New York by Jason Nickell, a former Medtronic sales representative. The government subsequently elected to intervene in the case, leading to this settlement. For his role in helping to uncover the fraud, Nickell will receive $602,000.  Continue reading