Human blockade by Japanese pharma company shouldn’t stop FDA efforts to ensure safe medications

Human chain FDA Japan Nippon

The FDA said it had received complaints that Nippon’s drugs contained glass, hair, cardboard, metal, product discoloration and a black spider.

Pharmaceutical companies defrauding the government by manufacturing adulterated pharmaceuticals have often gone to great lengths to thwart FDA inspections of their sites.

But Japanese drug maker Nippon Fine Chemical took those efforts to a new level last December when a supervisor ordered employees to physically block an FDA agent from inspecting its plant in Takasago City, Japan.

The FDA said it had received complaints that Nippon’s drugs contained glass, hair, cardboard, metal, product discoloration and a black spider.

Customs fraud whistleblower cases receive a boost from appeals court

customs fraud whistleblower false claims act

A court ruled that a global pipe fittings manufacturer’s faliure to self-report the customs duties it owed could make it liable under the current version of the False Claims Act. (Photo via Flickr)

A federal appeals court last week issued a ruling that will make it easier for whistleblowers to hold companies accountable for violations of customs laws.

The Third Circuit Court of Appeals held that companies that knowingly avoid paying the government import duties may be liable under the False Claims Act.

The “qui tam” whistleblower lawsuit alleged that Victaulic, a global pipe fittings manufacturer and distributor, imported millions of pounds of pipe fittings that did not indicate their country of origin as required by law. Importers that distribute unmarked or improperly marked goods must pay a 10 percent duty, known as a marking duty.

Tenet hospital chain to pay $513 million for kickback scheme

Tenet healthcare prenatal kickback scheme

Whistleblowers and their attorneys worked alongside several government agencies to help put an end to this kickback scheme.

Tenet Healthcare’s recent settlement was the latest of several instances in which it has paid millions to settle a lawsuit for defrauding government healthcare programs.

The Dallas-based hospital chain agreed this week to pay over $513 million to settle charges stemming from a whistleblower case alleging two of its former subsidiaries used bribes to funnel undocumented pregnant women to their hospitals.

In 2002, Tenet paid more than $55 million to settle a whistleblower lawsuit alleging a Tenet-owned hospital engaged in a scheme to overbill Medicare. And in 2006, Tenet paid another $900 million to settle allegations of a separate overbilling scheme.

HHS’s anti-arbitration in nursing homes rule is a win for elderly patients

nursing home arbitration rule

The new rule prohibits nursing homes that participate in Medicare and Medicaid from requiring patients to sign contracts that include pre-dispute arbitration clauses.

The Department of Health and Human Services (HHS) recently issued a rule that will go a long way toward holding long-term care facilities accountable for substandard care of vulnerable patients.

The new rule prohibits federally-funded long-term care facilities from requiring patients to work out disputes with a facility through arbitration. Mandatory arbitration agreements prevent patients from challenging abusive and negligent care in court and deprive the public of information about such charges.

The False Claims Act: It’s about more than just money

False Claims Act social justice

A recent development in a whistleblower case serves as a reminder that lawsuits brought under the False Claims Act can do more than just return funds to the federal Treasury.

The value of the False Claims Act is not always measured in dollars and cents.

In a filing in federal court last week, the Department of Justice argued that discrimination by persons who receive federal grants can violate the False Claims Act, demonstrating the law’s potential for advancing social justice as well as recovering money for the federal Treasury.

The case is a reminder to any individual who sees wrongdoing related to programs supported by the federal government that the False Claims Act and its “qui tam” whistleblower provision are not limited to healthcare and defense industry fraud. The law ensures that important government policies, like protection for civil rights, cannot be ignored by persons who obtain government funding.

CFTC seeks money laundering info from whistleblowers

CFTC money laundering whistleblower

A CFTC enforcement official said the agency wants whistleblowers to help it fight money laundering.

The Commodity Futures Trading Commission is encouraging whistleblowers with information about money laundering to come forward, according to remarks by an agency enforcement official at a conference last week in Washington, D.C.

The CFTC is pursuing money laundering under its authority to fight fraud involving the commodity futures markets. Commodity futures take a wide number of forms, ranging from contracts on tangible items such as oil and gas to contracts on financial products, including foreign exchange benchmarks and LIBOR.

One item that is sometimes overlooked as a commodity, however, is money. Because money laundering amounts to an unlawful use of a commodity, it falls squarely within the CFTC’s authority.

Outcome of AseraCare hospice case could hurt patients and other Medicare fraud cases

Aseracare Medicare fraud case

Taxpayers Against Fraud Education Fund’s amicus brief to the court says the court’s view of what the False Claims Act requires is too narrow.

A whistleblower group is asking a federal appeals court to reverse a trial court’s decision in a Medicare fraud case involving hospice provider AseraCare that could have troubling implications for future False Claims Act cases.

The nonprofit group, Taxpayers Against Fraud Education Fund (TAFEF), last week filed a friend of the court brief in support of the Justice Department’s efforts challenging a trial court’s decision in Alabama dismissing the “qui tam” (whistleblower) case alleging unnecessary medical treatment of Medicare patients by AseraCare.

Ex-SEC Whistleblower Office chief joins Phillips & Cohen

Former SEC whistleblower chief Sean McKessy, now a partner at Phillips & Cohen LLP

Sean X. McKessy joins Phillips & Cohen as a partner after five years as chief of the SEC’s Office of the Whistleblower.

Sean X. McKessy, who served as chief of the Security and Exchange Commission Office of the Whistleblower for five years, has joined Phillips & Cohen LLP as a partner to represent whistleblowers.

McKessy helped build the SEC whistleblower program from its inception under the Dodd-Frank Act into such a success that SEC officials call it a “game-changer” in their enforcement efforts. Under McKessy’s five-year tenure as chief, the SEC levied more than $500 million in sanctions as a result of whistleblower information and assistance and paid out more than $100 million in whistleblower rewards.

US Tax Court rules in favor of IRS whistleblowers with broad definition of ‘collected proceeds’

IRS whistleblower collected proceeds

A recent Tax Court decision could help IRS whistleblowers become eligible for greater rewards. (Photo via Flickr)

A recent US Tax Court opinion that adopted a broad definition of what counts as “collected proceeds” in a case — a key factor in determining IRS whistleblower rewards — will be a major boon for future tax whistleblowers.

The decision from US Tax Court Judge Julian Jacobs should help assure IRS tax whistleblowers that their information will have a greater potential for bringing in rewards.

Before this decision, while taxes collected under Title 26 were clearly part of the “collected proceeds” of a case, it was unclear whether criminal penalties and civil forfeitures were counted as well.

More states should consider creating reward programs for securities whistleblowers

state securities whistleblower reward

Just two states have implemented their own securities whistleblower reward programs.

Despite the rousing success of the Securities and Exchange Commission’s whistleblower reward program, just two states — Indiana and Utah — have created their own laws to pay whistleblowers who uncover securities fraud in their state. But now that Indiana has finally paid out its first whistleblower award earlier this month — $95,000 to a whistleblower who reported a violation of the state’s securities laws — states may start to think harder about the value of creating their own securities whistleblower reward programs.

The Indiana reward relates to a $950,000 settlement against JP Morgan for violation of Indiana securities laws. According to the state’s press release, the whistleblower brought forward “executive level information” that showed that JP Morgan was putting its own interests ahead of its clients.