News & Cases

Whistleblower reports are getting more rampant in the country, showing the increased incidence of fraudulent and criminal activity by some of the biggest organizations. For example, in Florida, the University of Miami was recently forced to fork out millions in fines after a whistleblower accused the educational institution of Medicare fraud.

According to an official case document from the Department of Justice (DOJ), a former senior executive at the school had raised an alarm over Medicare fraud occurring in its healthcare system. The executive had pointed out that the university’s healthcare system had engaged in three practices that violated the False Claims Act.

The False Claims Act is one of the strongest whistleblower laws in the United States. It is also the country’s first whistleblower law, being signed into law in 1863 by President Lincoln. Under the law, whistleblowers can be rewarded for disclosing fraud that results in financial losses to the federal government in a confidential manner.

Provided that the whistleblower’s information results in a prosecution, the whistleblower is awarded a reward between 15 and 30 percent of the proceeds collected....

In what is becoming more of a trend, another healthcare institution has agreed to settle a claim of defrauding the national Medicare program.

Late last month, the Department of Justice (DOJ) confirmed in a press release that it had reached a settlement agreement with SavaSeniorCare LLC - a nursing home operator based out of Atlanta, Georgia.

As explained, SavaSeniorCare LLC is a nursing home operator. The company runs several senior nursing homes, many of which have branches in the state and other surrounding states. According to the DOJ press release, the organization and several of its affiliates had been billing Medicare for several unnecessary therapy services.

Fraud to Promote the Bottom Line

The claim against SavaSeniorCare primarily stems from violating the False Claims Act (FCA) - one of the oldest - and the most powerful - of the whistleblower protection laws in the country. Under the FCA, whistleblowers will be eligible to report cases of fraudulent acts by organizations or companies in the country - especially those which result in loss of money on the part of the federal government.

If the investigation and prosecution lead to a conviction, the whistleblower is eligible for 15 to 30 percent of the proceeds collected. Since the criminal is usually liable for civil penalties and damages under the FCA, rewards can be substantial....

The SEC recently awarded one of the largest awards since the whistleblower program’s inception.

Two insiders will share a $50 million award for their assistance in uncovering securities fraud. Neither the whistleblowers’ identities nor the company’s name have been disclosed, which is customary with SEC fraud cases. Confidentiality is essential to ensure tipsters will not be retaliated against or blacklisted by the industry.

The Commission said in a press release that the two whistleblowers “alerted SEC staff to violations that involved complex transactions” which “would have been difficult to detect without their information” and provided “exemplary assistance.” The tipsters met with SEC staff several times and provided “voluminous detailed documents.” Their information was instrumental in returning tens of millions of dollars to harmed investors, the SEC said.

The SEC said a third claimant also applied for an award, but their information did not contribute to the Covered Action investigation.

SEC Chief Jane Norberg said the award is actually the second largest in the agency's whistleblower program’s history. Over the current fiscal year, the SEC has awarded over $270 million dollars to whistleblowers, including its largest award to date, $114 million awarded last October....

Boeing has agreed to pay $25 million to settle a procurement fraud lawsuit filed by a former employee.

The aircraft company’s subsidiary, Insitu, is a manufacturer of surveillance drones for the Department of Defense. According to allegations raised in the whistleblower lawsuit, the company systematically charged the government for new parts when it planned to use recycled parts to manufacture drones for the U.S. Special Operations Command and the Navy.

The fraud lawsuit against Boeing was filed by a man who dedicated nearly 40 years of his life to the company. For his role in the investigation, the insider, D R O’Hara, will receive a $4.6 million whistleblower award.

The DOJ said in a statement that between 2009 and 2017, the defendant “knowingly submitted materially false cost and pricing data” to the government, inflating prices and overbilling the DoD for Insitu surveillance drones....

A new defense bill proposes the creation of a whistleblower program to encourage reporting of anti-money laundering violations. The proposed regulations, which are part of the National Defense Authorization Act, have garnered legislators’ approval and could be signed into law before Donald Trump leaves the White House.

The new legislation would offer anti-money laundering (AML) whistleblowers a similar level of protection as the SEC's whistleblower program. Informants would be able to report violations anonymously and would enjoy anti-retaliation protections. Without this legal shield, people with information about money laundering activities are very reluctant to come forward. Many of them fear their employers might fire them in retaliation. And once out of a job, they often find themselves labeled as 'problematic' and unable to find work in the same industry.

Since its inception, the SEC whistleblower program has paid more than $720 million to securities industry insiders who came forward with tips leading to enforcement actions. Since the SEC and CFTC whistleblower programs have limited jurisdiction over AML violations, their success has not served to deter money launderers....

Kaiser Foundation Health Plan’s Washington subsidiary (formerly Group Health Cooperative) has agreed to pay $6,375,000 to resolve allegations that it claimed patients were sicker than they were and billed a government health program for nonexistent conditions.

Based in Seattle, Group Health Cooperative (GHC) was founded in 1947 and has been often characterized as a respected nonprofit health insurance plan. Kaiser Permanente acquired the company in 2015.

GHC allegedly defrauded Medicare Advantage (MA) in an attempt to reverse financial losses endured between 2008 and 2010 due to “poor business decisions by company management.”...

Implemented in 2011, the SEC's whistleblower program has received more than 22,000 tips, secured over $2.5 billion in penalties and restitution, and awarded over $523 million to successful tipsters.

The Commission has just approved a set of amendments to the whistleblower program. Commissioners voted on a collection of proposals dating back to 2018. One of the proposed rules would give the agency the discretion to award the statutory maximum of 30% whenever the final amount would not surpass $2 million. This concept garnered support from the Commission, but the threshold has been adjusted to $5 million.

Another proposed rule would have granted the SEC discretion to reduce awards whenever monetary sanctions surpassed $100 million, but the commissioners voted against it.

After the SEC opened up the proposals for public comments, it received about 150 letters. Many respondents viewed the award reduction rule as a move to impose a cap on whistleblower bounties. A letter by Senators Sherrod Brown, Jack Reed, Elisabeth Warren, Patrick Leahy, Chris Van Hollen, and Cristopher Coons warned that "Regrettably, the Proposal could deter whistleblowers."...

On September 9, the U.S. Department of Justice announced that Wheeling Hospital in West Virginia had agreed to pay $50 million to settle allegations of an unlawful physician kickback scheme that took advantage of vulnerable patients. A former executive, fired for raising concerns that the scheme violated the Physician Self-Referral (Stark) Law and the Anti-Kickback Statute, filed a qui tam lawsuit under the False Claims Act and will receive a $10 million reward.

Fired whistleblower confronts former employers

During the dates in question, 2007 to 2020, Wheeling Hospital was under the direction and control of R&V Associates, Ltd., headed by Ronald Violi. At this time, Wheeling had a policy of paying compensation to physicians that were “above fair market value” and/or “based on the volume or value of the physicians’ referrals.”

When Louis Longo, who was an Executive Vice President at the hospital, voiced opposition to the plan, Mr. Violi fired him. Mr. Longo then filed a qui tam lawsuit under the federal False Claims Act, suing on behalf of the U.S. government. The Department of Justice intervened in the case and its investigation led to the settlement....