Government Contracts

M&T Bank Agrees to Pay $64 Million to Resolve False Claims Act Case Arising from Lax Lending Practices

June 13, 2016 | Greene LLP

Last week, M&T Bank (“M&T”), headquartered in Buffalo, New York, agreed to pay $64 million dollars to settle allegations that the company violated the False Claims Act. Whistleblower Keisha Kelschenbach initiated the suit by alleging M&T knowingly originated and underwrote mortgage loans insured by the U.S. Department of Housing and Urban Development (HUD) that did not meet applicable requirements.

During the time period covered by the settlement, M&T Bank participated as a “direct endorsement lender” in the HUD insurance program. Under the program, M&T had the authority to originate, underwrite, and endorse mortgages for insurance. If M&T approved a mortgage loan for insurance and the loan later defaulted, the holder of the loan could submit an insurance claim to HUD for the losses resulting from the defaulted loan.

Under the program, HUD did not review M&T’s loans for compliance before it is endorsed them for insurance. M&T, as a government fiduciary, was therefore required to (1) follow program regulations intended to ensure the company is properly underwriting and certifying mortgages for insurance; (2) maintaining a quality control program that can prevent and correct deficiencies in underwriting practices, and (3) self-report any deficient loans identified by the bank’s quality control compliance program.

Greene, LLP Argues Qui Tam Healthcare Whistleblower in U.S. Supreme Court

April 23, 2016 | Greene LLP

A teenager who died after receiving mental healthcare services from unlicensed and underqualified professionals is the impetus behind a False Claims Act lawsuit handled by Greene, LLP on behalf of the late Yarushka Rivera. The case is now before the U.S. Supreme Court. The United States Office of the Solicitor General and the Department of Justice argued before the Supreme Court on April 19, 2016 with assistance from Greene, LLP.

Yarushka Rivera was a teenage enrollee of MassHealth benefits (Massachusetts’s state equivalent of Medicare) and began seeing Arbour counselor Maria Pereyra in 2007 after experiencing various behavioral problems at school. Pereyra, an Arbour staff member, lacked a professional license to provide mental-health therapy. Rivera’s parents met with Pereyra’s supervisor, clinical director Edward Keohan, after Yarushka complained that she was not benefiting from counseling. During the meeting, they became worried that Keohan was not properly supervising Pereyra and was unfamiliar with Yarushka’s treatment.

Yarushka was eventually transferred to another staff member, Diana Casado, who was also supervised by Keohan. Casado too, was unlicensed. Yarushka’s parents quickly became dissatisfied with her treatment and believed that Casado too, was not properly supervised.

New York District Court Closes the Door on Decade Long Schindler FCA Litigation

September 29, 2015 | Greene LLP

Earlier this month, the U.S District Court for the Southern District of New York decided for Schindler Elevator Corporation after more than a decade of prolonged litigation. The ten years of back and forth litigation included both a trip to the Second Circuit and one to the Supreme Court in 2011 for a decision on the meaning of the False Claims Act (FCA) public disclosure bar. The summary judgment decision is the final defeat for the whistleblower, a U.S Army veteran, in his attempt to prove that Schindler Elevator Corp. had committed fraud against the government by obtaining federal contracts through false representations. Continue reading ›

Supreme Court First-to-File Bar Ruling Opens Door for More False Claims Act Whistleblowers

May 29, 2015 | Greene LLP

On Tuesday, the Supreme Court decided unanimously on two issues: first, that the Wartime Suspension of Limitations Act (WSLA) applies only to criminal charges and not to civil claims; second, that the first-to-file bar does not apply to new claims once a previous claim has been dismissed. The suit brought forward by whistleblower Benjamin Carter against Kellogg Brown & Root Services, Inc. (KBR) alleged that KBR had fraudulently billed the Government for work they did not perform during the Iraq War. The Court’s holding will in some circumstances reduce the amount of time whistleblowers have to bring a claim under the False Claims Act, but will also allow whistleblowers to bring new claims that contain similarities to prior dismissed suits. Continue reading ›

UPS Settles Relator’s Delivery Fraud Case for $25 Million

May 22, 2015 | Greene LLP

The U.S. Department of Justice announced this week that United Parcel Service Inc. (“UPS”) has agreed to pay $25 million to resolve allegations that it submitted false claims to the federal government in connection with its delivery of Next Day Air overnight packages. UPS provides delivery services to hundreds of federal agencies through contracts with the U.S. General Services Administration (“GSA”) and U.S. Transportation Command, which provides support to Department of Defense agencies. Under these contracts, UPS guaranteed delivery of packages by certain specified times the following day. From 2004 to 2014, however, UPS allegedly engaged in practices that concealed its failure to comply with its delivery guarantees, thereby depriving federal customers of the ability to request refunds for the late delivery of packages. More specifically, the shipping company allegedly recorded inaccurate delivery times on packages to make it appear that the packages were in fact delivered on time, applied inapplicable “exception codes” to excuse late delivery, such as “security delay,” “customer not in,” or “business closed”, and provided inaccurate “on-time” performance data under the federal contracts. Continue reading ›

IBM Loses Bid to Dismiss Allegations that it Defrauded the Department of Homeland Security

February 27, 2015 | Greene LLP

An 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 ›

Bollinger Shipyards Allegedly Defrauded the U.S. Coast Guard by Rendering its Vessels Unseaworthy

January 5, 2015 | Greene LLP

The Fifth Circuit Court of Appeals has revived the federal government’s False Claims Act case against Bollinger Shipyards, Inc. (“Bollinger”) in connection with a contract under which Bollinger was to modify eight vessels owned by the United States Coast Guard (“Coast Guard”). The $78 million in modifications ultimately rendered the vessels unseaworthy because Bollinger allegedly fraudulently miscalculated the hulls’ resistance to bending. The company had allegedly run three different calculations with false inputs and submitted the highest one to the Coast Guard. Bollinger also allegedly declined outside review of the calculations that it had made into preserving the integrity of the ships because of concerns that the review would reveal problems. Bollinger Shipyards specializes in new construction, steel fabrication, vessel repair, and conversion of a wide variety of Coast Guard and military vessels and commercial offshore and inland vessels. The company currently operates ten shipyards, all of which are located throughout South Louisiana and Texas. Continue reading ›

Company Allegedly Overbilled the Government for Cleaning Solvent Used on Overseas Combat Equipment

December 23, 2014 | Greene LLP

On Wednesday, an Alabama federal court judge refused to dismiss a whistleblower’s complaint filed against Safety-Kleen Systems Inc. (“Safety-Kleen”) under the False Claims Act. The Texas-based provider of environmental services, oil re-refining, and responsible cleaning solutions allegedly overbilled the federal government for cleaning solvents used by a military depot. More specifically, the suit alleges that Safety-Kleen repeatedly billed Northeast Alabama’s Anniston Army Depot for the total potential amount of solvent used each week to clean military equipment, including unused non-spent solvent that the government had already paid for. Safety-Kleen earned nearly $635,000 over the life of the contract at issue, which covered a period extending from August 1, 2008 through July 31, 2013. The PD680II solvent was used at the Army Depot to degrease tanks, vehicles and small arms returning from overseas combat. Continue reading ›

SUNY Research Foundation Allegedly Manipulated Medicaid Eligibility Audits

December 16, 2014 | Greene LLP

On Monday, the U.S. Department of Justice announced that the Research Foundation for the State University of New York (“SUNY”) has agreed to pay $3.75 million to settle allegations made by a number of relators that its Center for Development of Human Services (“CDHS”) violated the False Claims Act by manipulating the audits that it performed of federally funded health care programs in the state. The Research Foundation is a nonprofit educational corporation that administers grants and contracts that are awarded to university research projects by federal, state, and private entities. CDHS is a Research Foundation program headquartered at Buffalo State College, with offices in Albany, Buffalo, Syracuse, Rochester, and New York City. The complaint against the Research Foundation was filed in April 2010 by five of its former employees. The federal government then elected to intervene in the case. The relators will collectively receive $825,000, or 22%, of the total settlement for their role in uncovering the fraud. Continue reading ›

Defense Contractors Pay $389 Million for Inflating the Prices of Food and Water Supplied to Troops in Afghanistan

December 12, 2014 | Greene LLP

On Monday, overseas military contractors pled guilty in federal court to criminal fraud in connection with overcharging the federal government for food and water supplied to soldiers in Afghanistan. Supreme Foodservice GmbH, a privately-held Swiss company, and Supreme Foodservice FZE, a privately-held United Arab Emirates company, (collectively “Supreme Foodservice”) will pay the government over $288 million, the maximum criminal fines allowed. In addition, the companies have agreed to pay $101 million to resolve a relator’s allegations of fraud pursuant to the False Claims Act. The relator will receive $16.16 million of the civil settlement for his role in uncovering the fraud. The companies fraudulently inflated the price charged for Local Market Ready goods and bottled water sold to the government under an $8.8 billion Subsistence Prime Vendor Contract for services through 2013. Continue reading ›