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Stethoscope-2-300x199A midwest healthcare provider agreed to resolve False Claims Act allegations brought by two whistleblowers for $18 million dollars.

The plaintiffs in the qui tam case were former employees of the company. Evercare, now known as Optum Palliative and Hospice Care, is a Minnesota-based provider of hospice care in Arizona, Colorado, and other states across the United States.

The False Claims Act (“FCA”) allows the government to recover damages and penalties of three times those damages. The fraudulent government contractor is also hit with an $11,000 penalty per false claim.  Last November, those penalties per claim will raise to nearly $22,000.

This month, the Department of Justice (“DOJ”) announced that Shire Pharmaceuticals will pay $350 million to settle False Claims Act (“FCA”) allegations that Shire and the company it acquired in 2011, Advanced BioHealing (“ABH”), used kickbacks and other prohibited sales methods to compel hospitals, Doctors, and their firms to overuse its product “Dermagraft.”

Shire is a pharmaceutical company headquartered in Ireland. Its United States headquarters are located in Lexington, Massachusetts.

The allegations resolved by the settlement were brought in six lawsuits filed under the qui tam whistleblower provisions of the FCA. Those provisions permit private parties to sue on behalf of U.S. and state governments for false claims.

A Michigan mortgage services company settled a protracted $48 million dollar False Claims Act (“FCA”) lawsuit this week. The U.S. Attorney for the Eastern District of Michigan announced, “the settlement announced today holds United Shore accountable for its endorsement of ineligible loans for FHA mortgage insurance.”

United Shore Financial Services LLC (“USFS”) agreed to pay the U.S. government $48 million to resolve allegations that it violated the FCA by underwriting and originating “bad” mortgage loans that were insured by the U.S. Department of Housing and Urban Development (“HUD”). The loans USFS originated were disproportionality soured by borrowers’ inability to pay, in part, the Government alleged, because of the company’s improper process of approving hundreds of loans that HUD would not normally insure.

The False Claims Act was passed following the American Civil war, after widespread fraud on the Union army frustrated citizens, soldiers, and lawmakers alike. Sometimes dubbed “[President] Lincoln’s Law,” the FCA has become one of the U.S. government’s most effective tools in combating frauds on government-funded programs.

A physician practicing in Townshend, Vermont, paid $76,000 to the U.S. government to resolve allegations that she violated the federal False Claims Act (“FCA”) by submitting “false claims” for reimbursement to Medicare for unnecessary and unapproved “pain management” injection procedures.

The False Claims Act, passed in the aftermath of the American Civil War, and signed into law by President Abraham Lincoln, is a legal vehicle for people with knowledge about fraud on the government to recover money on behalf of the United States and to which they are entitled to a portion. If the case proves successful, the FCA plaintiff, called a “relator” or a “whistleblower,” is generally entitled to 15-30% of the recovered money.

In 2015 alone, the U.S. government recovered over $3.6 billion in either settlements or judgments in cases brought under the False Claims Act.

Supreme-Court-PillarsGreene LLP secured another win for its clients in the U.S. Court of Appeals for the First Circuit in the firm’s seminal False Claims Act case, U.S. ex rel. Escobar v. Universal Health Services. The First Circuit’s decision will allow Greene LLP’s clients to continue pursuing fraud claims against the healthcare company, Universal Health Services Inc., the largest provider of mental health services to Medicaid programs across the country. Courts and lawyers across the country were tracking the First Circuit’s most recent Escobar ruling, as the decision could have made bringing False Claims Act cases considerably more onerous for whistleblowers from the outset.

In June, Greene LLP secured a favorable and unanimous decision for its clients in the U.S. Supreme Court. The Escobar decision represents the Supreme Court’s willingness to bolster the variety of viable theories of recovery under the statute. The June decision promises to have lasting consequences for a wide variety of whistleblower suits filed under the False Claims Act.

Greene LLP’s clients were prompted to file an FCA suit under Massachusetts’ qui tam provision by the death of their daughter, Yarushka Rivera, a Massachusetts teenager who died from an epileptic seizure after being treated at a mental health facility run by Universal Health Services (“UHS”). Under Massachusetts Medicaid (“MassHealth”) regulations, health care professionals must meet licensing and minimum qualification requirements to provide services reimbursed by the government.

Yellow-and-Red-Pills-150x150A federal judge will decide the fate of a “whistleblower’s” and the United States Postal Service’s (“USPS”) lawsuit against cyclist Lance Armstrong and his now defunct racing company, Tailwind Sports. The False Claims Act (“FCA”) lawsuit, originally filed by Armstrong’s former teammate, Floyd Landis, alleges that Tailwind Sports and Armstrong unlawfully submitted bills to the federal government for sponsorship. Landis alleges that Tailwind athletes and Armstrong, who were sponsored by the USPS from 2001-2004, were involved in an illegal “doping” scheme, which allegedly violated material elements of their contract with the federal government.

The FCA allows the government to recover actual damages and penalties of three times those damages. The fraudulent government contractor is also hit with an $11,000 penalty per false claim. In November, those penalties per claim will raise to nearly $22,000 per claim.

At its core, the statute allows individuals (“whistleblowers”) to file lawsuits with allegations that fraud has been committed against the federal government. Whistleblowers are entitled to share in any recovery received by the government.

Loan-Application 2B&H Education, the operator of a chain of beauty and massage schools known as the “Marinello School of Beauty,” which are located in the state of California, paid over $8 million dollars to settle a False Claims Act (“FCA”) lawsuit brought by employees-turned-whistleblowers.

The False Claims Act, originally enacted in 1863 during height of the civil war to combat rampant fraud in government contracting, was amended by Congress in 1986 to enhance the federal government’s ability to recover losses from fraud against the United States.

Violations of the FCA are subject to civil penalties (approximately $20,000) for each false claim plus three times the amount of the loss that the government incurred as a result of the defendant’s actions.

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Paradigm Spine, a medical device manufacturer, has agreed to pay the United States $585,000 to resolve allegations under the False Claims Act. A former employee of the company turned whistleblower to alert the government of the fraud.

Under the settlement agreement announced last week, the company stipulates that it caused health care providers to submit false claims to Medicare for spine surgeries by marketing the company’s “coflex-F” device for surgical uses that were not approved by the U.S. Food and Drug Administration (FDA).

The United States government and whistleblower Chris Coyle, a former Paradigm Spine sales representative, claimed that the company caused physicians and hospitals to submit false claims to federal health care programs for certain spine surgeries that were not eligible for reimbursement.  In receiving reimbursements from Medicare, a medical device manufacturer must scrupulously follow CMS, FDA, and other federal and state government regulations.

dollar-billThe U.S. Attorney for the Central District of California recently settled a False Claims Act (“FCA”) lawsuit with the information technology company En Pointe Gov. for $5.8 million dollars.

The lawsuit alleged that En Pointe Gov. fraudulently represented itself as a small business in order to bid on government contracts that were specifically set-aside for small businesses.  En Pointe Gov. did not meet small business qualifications.

The case was filed in 2014 in the Central District of California by Minburn Technology Group, LLC and whistleblower Anthony Colangelo, who is the managing member of Minburn. Minburn subcontracted with EnPointe to provide database IT-services.

Supreme-Court-PillarsFalse Claims Act (“FCA”) penalties will double. Last week, the Department of Justice announced that an obscure agency dubbed the Railroad Retirement Board updated FCA penalties as prescribed by Congress. Under the rule, minimum per-claim penalties will jump to $10,781 from $5,500, and maximum per-claim penalties will rise to $21,563 from $11,000. The development has been expected since May.

The DOJ may choose to pursue a smaller penalty if the full amount due under the FCA will produce “a negative economic impact.” In an unusually terse statement, the DOJ said, without explanation, that it “is not invoking that authority in this rule.” The increase takes effect Aug. 1 and applies to violations after Nov. 2, 2015.

Last week’s regulation also updated penalties in more than 50 other categories affecting a wide range of enterprises. Fines under the Financial Institutions Reform, Recovery and Enforcement Act will soar to $9.5 million from $5.5 million, and penalties related to improper disclosure of bids on government contracts would boost to $1 million from $500,000.

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