Business

A settlement has been reached to resolve False Claims Act allegations against Cisco Systems and Westcon Group North America (formerly d.b.a. Comstor). They are accused of making misrepresentations to the General Services Administration (GSA) and other federal agencies.

Under the terms of this agreement, the United States has agreed to dismiss a whistleblower case filed in 2004.

The United States alleged that Cisco and Westcon knowingly provided incomplete information to GSA contracting officers during negotiations in regard to Westcon's contract with the GSA, which resulted in defective pricing of Cisco products and submission of false claims to the United States.

A settlement has been reached in a whistleblower class action lawsuit brought against St. Jude Medical Inc, Parma Community General Hospital, and Norton Healthcare. They are accused of violating the False Claims Act in relation to certain illegal kickbacks to secure heart-device business.

Under the terms of the settlement, St. Jude, headquartered in St. Paul, Minn., will pay $3,725,000. Parma Community General Hospital, located in Parma, Ohio, will pay $40,000, and Norton Healthcare in Louisville, Ky., will pay $133,300. The government asserted that Parma and Norton were recipients of improper rebates from St. Jude.  The reward for the whistleblower will be $640,050.

The whistleblower case was originally filed in 2006. The United States alleged that St. Jude paid illegal kickbacks to two hospitals to secure heart-device business and that these kickbacks caused false claims to be submitted to federal health care programs in violation of the False Claims Act. The kickbacks included alleged rebates that were "retroactive" and paid based on a hospital’s previous purchases of St. Jude heart-device equipment and rebates that St. Jude paid for purchases of heart-device equipment sold by its competitors to induce purchases of similar equipment from St. Jude in the future.

A settlement has been reached in a whistleblower class action lawsuit brought against Ciena Capital LLC and a subsidiary, Business Loan Center (BLC).  They are accused of submitting false claims for payment on loans made through the Small Business Administration (SBA).

The settlement for $26.3 million, which includes a credit for $18.1 million previously negotiated by andpaid to the SBA. The whistleblowers will receive $4.3 million as their share of the government’s recovery. 

The original case was filed in 2004.  The United States alleged Ciena and BLC falsely certified that they complied with SBA regulations when they submitted claims for payment on loans they originated, underwrote, and serviced.  Some of these loans defaulted shortly after they were made as a result of Ciena’s and BLC’s disregard of SBA rules, regulations, and underwriting requirements.  Other loans were originated by former BLC Executive Vice President Patrick Harrington, or his office, during his tenure.  Harrington pleaded guilty to conspiracy to defraud the United States and was sentenced to 10 years in prison for his prominent role in the fraudulent loan scheme, which included falsifying loan documents, inflating property appraisals, and using straw purchasers to engage in sham transactions.  This settlement also resolves allegations that the defendants’ parent company, Allied Capital Corporation, is liable for the acts of its subsidiaries.     

A settlement has been reached in a whistleblower class action lawsuit brought against The Health Alliance of Greater Cincinnati and one of its former member hospitals, The Christ Hospital. They are acused of paying unlawful remuneration to doctors in exchange for patient referrals.

The whistleblower will receive $23.5 million.

The original case was filed in March 2003. The United States complaint alleged that The Christ Hospital limited the opportunity to work at the Heart Station to those cardiologists who referred cardiac business to The Christ Hospital. The government further alleged that cardiologists whose referrals contributed at least two percent of the hospital’s yearly gross revenues were rewarded with a corresponding percentage of time at the Heart Station, where they had the opportunity to generate additional income by billing for the patients they treated at the unit and for any follow-up procedures that these patients required.

The government asserted that The Christ Hospital’s use of Heart Station panel time to induce lucrative cardiac referrals violated the federal Anti-Kickback Statute, which prohibits a hospital from offering or paying, or a physician from soliciting or receiving, anything of value in return for patient referrals. The United States also alleged that the claims The Christ Hospital submitted to Medicare and Medicaid as a result of this illegal kickback scheme constituted a violation of the False Claims Act.

A settlement has been reached in a whistleblower class action lawsuit brought against EMC Corporation who is accused of violating both the False Claims Act and the federal Anti-kickback Act.

The whistleblower reward for this settlement was not disclosed.

The original whistleblower case was filed in September 2004. The United States complaint alleged that, by misrepresenting its commercial pricing practices, EMC fraudulently induced the General Services Administration (GSA) to enter into a contract with prices that were higher than they would have been had the information technology company not made false misrepresentations. Specifically, the United States alleged that the Hopkinton, Mass.-based company represented during contract negotiations that, for each government order under the contract, EMC would conduct a price comparison to ensure that the government received the lowest price provided to any of the company’s commercial customers making a comparable purchase. According to the government’s complaint, EMC knew that it was not capable of conducting such a comparison, and so EMC’s representations during the negotiations – as well as its subsequent representations to GSA that it was conducting the comparisons – were false or fraudulent.

The United States also alleged that EMC engaged in an illegal kickback scheme designed to influence the government to purchase the company’s products. EMC maintained agreements whereby it paid consulting companies fees each time the companies recommended that a government agency purchase an EMC product.

A settlement has been reached to resolve False Claims Act allegations against Learning Tree International Inc who is accused of knowingly invoicing federal agencies for training courses that were not provided.

The settlement resolves allegations that Learning Tree knowingly invoiced federal agencies in advance for multi-course training packages before employees of the purchasing agencies had attended the full number of courses available under each. The government further alleged that upon expiration of the training packages, Learning Tree retained federal funds that the company received in connection with unused courses without providing a refund or credit. As a result, Learning Tree received federal funds for training courses that were not, in fact, provided.

A settlement has been reached in a whistleblower class action lawsuit brought against Alpharma Inc who is accused of paing health care providers to induce them to promote or prescribe their drug, Kadian.

According to the settllement, the United States will receive $33.6 million to resolve the federal claims and the states will receive approximately $8.9 million to settle their respective claims. The whistleblower will receive $5.33 million out of the federal share of the recovery.

The original case was filed in September of 2006.  The United States alleged that, between January 1, 2000 and December 29, 2008, Alpharma paid health care providers to induce them to promote or prescribe Kadian, and made misrepresentations about the safety and efficacy of the drug, which is used to treat chronic moderate to severe pain. A

A settlement has been reached in a whistleblower class action lawsuit brought against Atlanta-based Mariner Health Care Inc. and SavaSeniorCare Administrative Services LLC, as well as their principals, Leonard Grunstein, Murray Forman and Rubin Schron. They are accused of soliciting kickback payments from Omnicare in exchange for agreements to continue using Omnicare.

$7.84 million of the settlement proceeds will go to the United States, while $6.16 million has been allocated to certain state Medicaid programs. The whistleblower's recovery was not disclosed.

The case was originally filed in 2006.  The United States alleged the defendants conspired to arrange for Omnicare to pay Mariner and Sava $50 million in exchange for the right to continue providing pharmacy services to the nursing homes, which together constituted one of Omnicare’s largest customers. The parties allegedly attempted to disguise the $50 million kickback as a payment to acquire a small Mariner business unit that had only two employees and was worth far less than $50 million. According to the complaint, Omnicare paid $40 million of this amount prior to actually acquiring the Mariner business unit and, at the same time, Omnicare obtained new 15-year pharmacy contracts from Mariner and from Sava, a new nursing home chain that Grunstein and Forman created from the Mariner chain. The complaint alleged that Grunstein and Forman illegally tied the new pharmacy contracts to Omnicare’s agreement to purchase the small Mariner business unit, and that the total $50 million purchase price for the business unit actually was a kickback by Omnicare to keep the future business of Mariner and Sava.

The government’s complaint further alleged that, in 2006, after the government issued subpoenas concerning the transaction, the individual defendants created backdated documents in a further attempt to hide the kickback.

A settlement has been reached in a whistleblower class action lawsuit brought against FORBA Holdings LLC who is accused of causing bills to be submitted to state Medicaid programs for medically unnecessary dental services performed on children insured by Medicaid.

FORBA will pay $24 million, plus interest. The federal share of the civil settlement is $14,285,645, and the states’ Medicaid share is $9,714,355.25. Three whistleblowers will receive payments totaling more than $2.4 million from the federal share of the settlement.

The case stems from three lawsuits that were filed by individual whistleblowers. The United States alleged that FORBA was liable for causing the submission of claims for reimbursement for a wide range of dental services provided to low-income children that were either medically unnecessary or performed in a manner that failed to meet professionally-recognized standards of care. These services included performing pulpotomies (baby root canals), placing crowns, administering anesthesia (including nitrous oxide), performing extractions, and providing fillings and/or sealants.

A settlement has been reached in a whistleblower class action lawsuit brought against Harborside Healthcare and HHC Nutrition Services.  They are accused of receiving kickbacks and assistance under the guise of a sham durable medical equipment (DME) provider.

The whistleblower will receive a $275,000 share of the government's recovery.

Originally filed in October 2008 against McKesson and MediNet, the United States alleged that Harborside Healthcare and HHC Nutrition Services received kickbacks and assistance and, in return, Harborside purchased its DME, such as non-enteral supplies, from McKesson.