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SteriCycle Agrees to Settle False Claims Act Allegations for $26 Million

Stericycle False Claims Act settlement

Medical waste company SteriCycle has agreed to settle allegations it defrauded the federal government and 14 states pursuant to contracts for waste disposal.
Image source: Wikimedia Commons

A company known as SteriCycle, which specializes in compliant disposal of biological waste, has agreed to settle a qui tam lawsuit launched by a former employee in 2009.1 The case, which also involved 14 states, began after an observant whistleblower took notice of potentially unlawful price increases implemented by the company in violation of the terms of its government contracts. In her position in the collections department, the whistleblower soon realized that SteriCycle was regularly overcharging government entities by as much as 18 percent above what they charged their private clients.

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  1.  Koenigsberg, David & Menz, John. “Stericycle to Pay $26.75 Million to Settle False Claims Act Case.” PRNewsWire.com, October 9, 2015. http://www.prnewswire.com/news-releases/stericycle-to-pay-2675-million-to-settle-false-claims-act-case-300157412.html

Fourth Circuit Set to Consider Controversial ‘Statistical Sampling’ Issue in Pivotal FCA Case

The Fourth Circuit has been asked to unravel two pivotal issues under the False Claims Act involving potential overbilling claims against a South Carolina nursing home facility.
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In a case of first impression, the False Claims Act-heavy Fourth Circuit has agreed to review an interlocutory appeal over whether the use of statistical sampling is sufficient to establish liability under the Act, or whether plaintiff-relators must actually submit evidence to support each and every allegation.

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Military Contractor PoleZero Settles False Claims Act Allegations for $2.8 Million

A military communications contractor has agreed to settle claims it defrauded the Department of Defense pursuant to a contract for the provision of radio communication devices.
Image source: Wikimedia Commons

Aside from healthcare fraud, defense contractor fraud remains the most costly form of financial abuse faced by the U.S. government. The False Claims Act, which was originally enacted to defend against wartime fraud and false claims, allows relators to recover up to 30 percent of any settlement or verdict recovered pursuant to a defense contract whistleblower case.

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Anonymous IRS Whistleblower to Receive $11.6 Million in Tax Fraud Case

tax fraud

An anonymous IRS whistleblower will receive $11.6 million for his willingness to report rampant tax fraud.
Image source: Wikimedia Commons

In yesterday’s post, we went over the basics of filing a whistleblower claim with the Internal Revenue Service. While the IRS’ whistleblower program has not historically seen the same volume of cases as the False Claims Act, recent years have seen an increase in claims filed to the IRS.

In today’s post, we examine the recent $11.6 million award to an anonymous whistleblower. This corporate tax fraud case has left interested parties in disagreement on whether it’s a sign that the IRS is stepping up its game or if it will continue to lag in processing the increasing number of whistleblower claims.

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Combatting Tax Fraud: The IRS Whistleblower Program

tax fraud

The IRS maintains a whistleblower program to address both individual and corporate tax fraud.
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Much like the whistleblower procedure under the False Claims Act, the Internal Revenue Service maintains a whistleblower program whereby relators can relay information concerning possible tax fraud in exchange for the opportunity to receive a percentage of the ultimate recovery. While it is utilized less than the False Claims Act— due in part to additional requirements—the IRS whistleblower program has gained considerable notoriety in recent years for major settlements, including the most recent $11.6 million settlement concerning a corporate tax fraud scheme.

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Optometry and Cardiology Fraud: Recently Unsealed Whistleblower Cases

Once the Department of Justice has an opportunity to investigate whistleblower allegations, it will unseal the contents of the relator’s original complaint – and may file a Complaint in Intervention.
Image source: Wikimedia Commons

In yesterday’s post, we examined some of the trends in recently unsealed qui tam lawsuits as surveyed by the National Law Review.1 Of the 39 unsealed cases that were surveyed, many involve allegations of wasteful, and even dangerous, healthcare fraud.

Today we will review the underlying facts of two of these cases. As always, if the facts of any of these recently unsealed matters seem familiar or you recognize similar ongoing fraud at your place of employment, contact Berger & Montague, P.C. right away.

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  1.   “September Health Care Qui Tam Update,” The National Law Review, September 21, 2015, http://www.natlawreview.com/article/september-health-care-qui-tam-update

Healthcare Fraud Unsealed: Recently-Unsealed Whistleblower Lawsuits Show Variety of Fraudulent Medical Claims

The most recently-unsealed whistleblower lawsuits reveal that the ongoing trend of healthcare fraud remains one of the government’s top priorities.Image source: Pixabay.com

The most recently-unsealed whistleblower lawsuits reveal that the ongoing trend of healthcare fraud remains one of the government’s top priorities.
Image source: Pixabay.com

Under the terms of the False Claims Act, an original whistleblower complaint must be filed confidentially under seal within a federal district court. From there, the Department of Justice receives notice of the lawsuit and is afforded an opportunity to investigate the allegations on its own. In about 20 percent of the cases, the DOJ opts to intervene in the lawsuit and will file its own Complaint in Intervention. However, even if the DOJ opts not to intervene, the court will unseal the lawsuit and allow the defendant the opportunity to review the allegations and file its own response in the matter.1

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  1.  “September Health Care Qui Tam Update,” The National Law Review, September 21, 2015, http://www.natlawreview.com/article/september-health-care-qui-tam-update

Adventist Health System Pays Massive $118 Million False Claims Act Settlement

Adventist Health System is accused of offering inflated salaries and incentives to physicians in exchange for patient referrals.
Image source: Wikimedia Commons

In yet another case of illegal kickbacks and unlawful referrals, Florida-based Adventist Health System has agreed to pay $118 million to the federal government pursuant to several successful whistleblower actions filed by former employees of the corporation.

Adventist is a non-for-profit healthcare corporation that manages facilities in ten states. According to the Department of Justice, its practices included not only illegal kickback schemes, but also the increasingly common practice of upcoding and inflated billing for medical services.1

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  1.  Department of Justice Press Release: “Adventist Health System Agrees to Pay $115 Million to Settle False Claims Act Allegations.” September 21, 2015. http://www.justice.gov/opa/pr/adventist-health-system-agrees-pay-115-million-settle-false-claims-act-allegations

Aluminum Importer Agrees to Settle False Claims Act Allegations Over Import Duties

In a lesser-known area of False Claims Act liability, importers can face exposure for failing to adequately report the value of goods arriving in the U.S. from abroad.

In a recent settlement under the False Claims Act, two individuals have agreed to pay $435,000 to resolve allegations they “skirted” their obligation to pay duties on aluminum extrusions imported from Chinese aluminum manufacturer Tai Shan Golden Gain Aluminum Products. The defendants, who hail from New Jersey and Texas, will split liability in the matter, with one paying $385,000 and the other paying just $50,000.

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4 Common Defenses Raised in False Claims Act Lawsuits

As a potential whistleblower, it is important to recognize the common defenses raised by defendants as they attempt to avoid massive penalties, fines, and negative publicity.Image source: Pixabay.com

As a potential whistleblower, it is important to recognize the common defenses raised by defendants as they attempt to avoid massive penalties, fines, and negative publicity.
Image source: Pixabay.com

If you are considering a whistleblower lawsuit, you may be concerned by the prospect of taking on a large, multi-national conglomerate as an individual plaintiff. You may also be thinking that you might not have understood what you saw, or that your allegations will prove unfounded. In extreme cases, you may even be fearful of losing your job or facing threats by the alleged perpetrators of fraud (both of which are illegal).

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