whistleblower act

The Boeing Company has agreed to pay the federal government $18 million to settle allegations that the company knowingly submitted or caused the submission of false claims for labor charges on maintenance contracts with the U.S. Air Force for the C-17 Globemaster aircraft, the U.S. Department of Justice announced earlier this week.

The government alleged that Boeing improperly charged labor costs under contracts with the Air Force for the maintenance and repair of C-17 Globemaster aircraft at Boeing’s Long Beach Depot Center in Long Beach, California.  The C-17 Globemaster aircraft, which is both manufactured and maintained by Boeing, is one of the military’s major systems for transporting troops and cargo throughout the world.  The government alleged that the company knowingly charged the United States for time its mechanics spent on extended breaks and lunch hours, and not on maintenance and repair work properly chargeable to the contracts.

The allegations resolved by the settlement announced today were originally brought by former Boeing employee James Thomas Webb under the qui tam, or whistleblower, provisions of the False Claims Act.  The act permits private individuals to sue on behalf of the government those who falsely claim federal funds, and to share in the recovery.  Mr. Webb’s share of the settlement has not yet been determined. 

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.

PharMerica Corp., the United States’ second-largest nursing home pharmacy, has agreed to pay $9.25 million to resolve allegations that the company knowingly submitted or caused the submission of false claims to state and federal health care programs, the U.S. Department of Justice announced last week.  PharMerica allegedly solicited and received kickbacks from pharmaceutical manager Abbott Laboratories in exchange for promoting the prescription drug Depakote for nursing home patients.  

Nursing homes rely on consultant pharmacists, such as those employed by PharMerica, to review their residents’ medical charts at least monthly and make recommendations to their physicians about what drugs should be prescribed for those residents.  The settlement announced today resolves allegations that in exchange for recommending that physicians prescribe Depakote, an anti-epileptic drug manufactured by Abbott, to nursing home residents, PharMerica solicited and received kickbacks from Abbott.  The government alleges that the kickbacks were disguised as rebates, educational grants and other financial support.

In May 2012, the United States, numerous individual states and Abbott entered into a $1.5 billion global civil and criminal resolution that, among other things, resolved Abbott’s liability under the False Claims Act for alleged kickbacks to nursing home pharmacies, including PharMerica.  The settlement announced last week resolves PharMerica’s role in that alleged kickback scheme.

Approximately $6.75 million of the settlement will go to the United States, while $2.5 million has been allocated to cover Medicaid program claims by states that elect to participate in the settlement.  The Medicaid program is jointly funded by the federal and state governments.

The settlement partially resolves allegations in two lawsuits filed in federal court in the Western District of Virginia by Richard Spetter and Meredith McCoyd, former Abbott employees.  The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.  The act also allows the government to intervene and take over the action, as it did in part in this case.  As part of today’s resolution, Ms. McCoyd will receive $1 million from the federal share of the settlement amount.

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.

L-3 Communications Corporation, Vertex Aerospace LLC, and L-3 Communications Integrated Systems LP (collectively, “L-3”) have agreed to pay $4.63 million to resolve allegations that they knowingly submitted or caused the submission of false claims for time spent by independent contractors at the military’s Continental U.S. Replacement Centers (CRC) in Fort Benning, Georgia, and Fort Bliss, Texas, the U.S. Department of Justice announced last week.  The CRCs prepare individuals for deployment by providing orientation briefings, training, health screenings, payroll processing and addressing other administrative matters.   

L-3 performed rotary aviation maintenance and support services for the U.S. Army in Afghanistan, Iraq, Egypt and Kuwait under contracts with the U.S. Air Force.  The United States alleges that L-3 knowingly overcharged the government for time their independent contractors spent at the CRCs by billing for each individual not based on the actual time that individual spent at the CRC, but based instead on the earliest arrival or latest departure time of any other individual who also processed through the center that same day. 

The allegations settled today arose from a lawsuit filed by a whistleblower, Robert A. Martin, a former L-3 independent contractor, under the qui tam provisions of the False Claims Act.  Under the act, private citizens can bring suit on behalf of the government for false claims and share in any recovery.  Mr. Martin will receive $798,675 from the recovery announced today.

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.

Walter Investment Management Corp. (WIMC) has agreed to pay the federal government $29.63 million to resolve allegations that WIMC knowingly submitted or caused the submission of false claims in connection with their participation in the Department of Housing and Urban Development’s (HUD’s) Home Equity Conversion Mortgages (HECM) program, which insures “reverse” mortgage loans, the U.S. Department of Justice announced last week.  WIMC, through subsidiaries such as Reverse Mortgage Solution Inc. (RMS), REO Management Solutions LLC, RMS Asset Management Solutions LLC, and Green Tree Servicing LLC, provides business support to the residential mortgage industry, including servicing of reverse or forward mortgages on behalf of major financial institutions.

Reverse mortgage loans allow elderly people to access the equity in their homes.  To encourage reverse mortgage loans, HUD insures such loans through a program administered by HUD’s Federal Housing Administration (FHA).  Under HUD’s program, a loan becomes due and payable when the home is sold or vacant for more than 12 months or upon the death of the homeowner, whichever comes first.  The lender is repaid the amount of the loan, including the costs of servicing the loan and interest that accrues, after a loan becomes due and payable.  HUD will reimburse a lender that is unable to recoup the full amount of the loan.  In order to claim recoupment, the servicer is required to meet a number of regulatory requirements and deadlines.  Failure to meet these requirements and deadlines could result in denial of the insurance claim.

The government alleged that RMS, with the knowledge and support of its corporate parent, WIMC, submitted false claims for debenture interest from HUD by failing to properly disclose that it had not met certain deadlines and, therefore, was not entitled to such interest payments.  In order to obtain such interest, HUD requires lenders and their servicers to obtain appraisals within 30 days of the loan becoming due and payable.  The significance of the 30-day appraisal requirement is, among other things, to establish a mutual understanding between the lender and HUD as to the market value of the property so that a decision can be made as to whether to proceed with foreclosure, engage in a workout with the lender, or deal with estate rights issues.

The government also alleged that WIMC, through its subsidiaries, submitted false claims to HUD for the reimbursement of unlawful referral fees by falsely representing them to be lawful sales commissions.  As part of an insurance claim, HUD will reimburse lenders or their servicers for sales commissions paid to real estate agents as part of the liquidation of foreclosed properties.  HUD will not, however, reimburse lenders or their servicers for fees paid for the referral of liquidation business.  According to the government, RMS often used straw companies to liquidate foreclosed properties.  Upon sale of the foreclosed property, the straw companies split the six-percent sales commissions: the real estate agents shared a five-percent sales commission and the companies kept a one-percent referral fee.  These straw companies, in turn, deducted a small fee from the one-percent referral fee and kicked the remainder back to RMS.  Nonetheless, RMS submitted insurance claims to HUD that included payment for the full six-percent sales commission, when, in fact, the payment included a prohibited referral fee.

The settlement resolves allegations filed in a lawsuit by Matthew McDonald, a former executive of RMS, under the qui tam, or whistleblower, provisions of the False Claims Act.  The act permits private individuals to sue on behalf of the government for false claims and to share in any recovery.  The False Claims Act also permits the government to intervene in such lawsuits, as it did in this case.  Mr. McDonald will receive $5.15 million as his share of the recovery in this case.

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.

KMART Corporation has agreed to pay the federal government $1.4 million to resolve allegations that the company knowingly submitted or caused the submission of false claims to federal health care program Medicare, the U.S. Department of Justice announced last week.

The settlement resolves allegations that Kmart violated the False Claims Act by providing illegal inducements to beneficiaries of the Medicare program.  The government alleged that Kmart knowingly and improperly influenced the decisions of Medicare beneficiaries to bring their prescriptions to Kmart pharmacies by permitting the Medicare beneficiaries to use drug manufacturer coupons to reduce or eliminate prescription co-pays that they otherwise would be obligated to pay.  Federal law prohibits a person from offering beneficiaries of certain federal health programs, such as Medicare, remuneration that is intended to influence the beneficiary’s choice of provider.  The government alleged that Kmart’s conduct caused the Medicare beneficiaries to seek expensive, brand name drugs in lieu of cheaper generic drugs, which caused the government’s costs to increase without any medical benefit to the beneficiary.  The government also alleged that Kmart improperly encouraged Medicare beneficiaries to bring their prescriptions to Kmart pharmacies by offering them varying levels of discounts on the purchase of gasoline at participating gas stations based on the number of prescriptions that they filled at Kmart pharmacies.

The settlement resolves allegations in a lawsuit filed by Joshua Leighr, a former Kmart pharmacist, under the qui tam, or whistleblower provisions of the False Claims Act.  The act authorizes private parties, such as Mr. Leighr, to sue for fraud on behalf of the United States and to share in any recovery.  Mr. Leighr will receive approximately $248,500 of the settlement.

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.