Swiss-based Novartis Pharmaceuticals has been subjected to possible liability under the False Claims Act – and a federal judge in New York recently concluded the case may continue. In U.S. ex rel. Bilotti v. Novartis Pharmaceuticals Corp., a whistleblower brought to light several issues involving the drug maker, most notably its business model involving exorbitant and blatant kickbacks offered to doctors in exchange for the promise to use its products. Despite years of procedural wrangling by the defendant – particularly since it is facing two separate lawsuits for misconduct pertaining to various pharmaceutical drugs – U.S. District Judge Paul Gardephe in Manhattan issued a 90-page ruling allowing the case, and the subsequent intervention by the Department of Justice, to continue. The government is seeking reimbursement for money expended due to false claims, as well as treble damages.
Earlier this month, Virginia Attorney General Mark R. Herring announced a record $1.15 billion lawsuit against several major banking institutions. The lawsuit stems from the rampant misconduct that eventually gave rise to the 2008 housing bubble, and includes the following defendants:
Contractor fraud is an unfortunately common type of False Claims Act litigation, and it is not unheard of for a government contractor to rip off American taxpayers for hundreds of millions of dollars – particularly in the defense sector. However, not all acts of alleged misconduct are actionable under the False Claims Act, and some errors or breaches are considered mere accident. Under the False Claims Act, a liable defendant must actually intend to or recklessly defraud taxpayers. Accidentally or negligently breaching the terms of a GSA schedule contract only amounts to a simple breach of contract claim.
Earlier this month, U.S. Attorney General Eric Holder spoke – along with several top DOJ colleagues – regarding the administration’s goals to identify, isolate, and eliminate costly and wasteful corporate fraud. In a speech to the New York University School of Law, Holder reiterated that he hopes to see an increase in cases filed under the 1989 Financial Institutions Reform, Recovery and Enforcement Act – as well as an increase in its current whistleblower payout cap of $1.6 million.
In a recent False Claims Act settlement, the makers of military-grade batteries for use in Humvee vehicles agreed to settle claims each provided inferior batteries to the Department of Defense for a period spanning several years. The settlement resolves extensive allegations by a former employee-whistleblower, including the assertion that the sub-par batteries could have actually caused injury or death to American servicemen and women. The defendants, which include M.K. Battery, Inc., East Penn Manufacturing Company, NPC Robotics, Inc., BAE Systems, Inc., and BAE Systems Tactical Vehicle Systems LP., have not admitted any liability in the matter, which was originated by a former employee of M.K. Battery, Inc.
Federal grant money can be a wonderful resource for non-profits, charities, start-ups, and educational organizations in need of capital to advance their stated mission or purpose. However, federal grants are accompanied by lengthy and detailed agreements that impose conditions on the recipient with regard to permissible uses for the funds. Failure to abide by the terms of the grant can lead to exposure to liability for the organization, including possible liability under the False Claims Act.
In today’s post, we examine a recent settlement involving popular radio show host Ira Flatow and his affiliated Science Friday, Inc. – an organization named after his radio program “Science Friday,” which airs on National Public Radio and features weekly discussions about the environment, biology, outer space, and any other science-related topic.
A Maryland-based, not-for-profit skilled nursing corporation, known as Episcopal Ministries to the Aging, Inc. (EMA), has agreed to pay $1.3 million to the federal government to settle allegations it defrauded Medicare by making false claims for reimbursement on behalf of patients within several of its facilities. EMA, a nursing home management organization, is responsible for the oversight and management of several nursing homes and rehabilitation centers. Its liability in the matter is tied to its role in the oversight of daily operations and financial management of the centers; however, it has not admitted any wrongdoing in conjunction with the settlement.
Brentwood, Tennessee-area surgical center management company Meridian Surgical Partners has agreed to pay a total of $5.12 million to settle allegations of healthcare fraud. Healthcare fraud continues to reign as the top-grossing area of recovery under the False Claims Act, and the Department of Health and Human Services – in concert with the Department of Justice – continues to work tirelessly to combat this form of intentional fraud. If you work in the healthcare industry or are otherwise aware of fraud involving Medicare or Medicaid patients, we encourage you to contact a whistleblower attorney right away.
We recently reported on the government’s decision to intervene in a False Claims Act lawsuit against spinal surgeon Aria Sabit, which involved allegations of medically unnecessary spinal fusion operations in exchange for kickbacks from the Reliance Medical Group.
In a simultaneous and related event, the Department of Justice filed its own False Claims Act lawsuit against Reliance Medical Systems, several of its investors, and two affiliated distributors. The lawsuit alleges an extensive number of violations under the Anti-Kickback Statute and the Stark Law – both of which seek to eliminate financial self-interest by doctors and medical professionals when advising patients and choosing a course of treatment.
If you’ve been following along, you’ll know that the federal Courts of Appeal are engaged in a near-even split with regard to the applicability of Federal Rule of Civil Procedure 9(b) in the False Claims Act context. In general, a civil plaintiff must set forth general facts in a complaint that tend to give rise to an actionable claim under a recognized civil law. However, Rule 9(b) imposes a concept known as “heightened pleading requirements” with regard to certain civil matters, including fraud. The same heightened pleading requirement is not mentioned in the language of the False Claims Act itself, resulting in a conflict between the courts as to the requisite specificity with which a plaintiff must describe the fraud they have witnessed.