News & Cases

Failure to report cyberattacks among Department of Defense (DOD) contractors and subcontractors means big whistleblower opportunities for IT professionals and other defense contractor employees. Cyber hacking and cybersecurity breaches are widespread, and a whole new category of cyber whistleblower claims are cropping up around them under the federal False Claims Act.

Cybercrime Could Cost U.S. Companies $2 Trillion by 2019

Cybercrime cost U.S. companies approximately $500 billion in 2015. This number could quadruple to $2 trillion by 2019. Cyber hacks into the computer networks of private vendors that supply aircraft, ammunition, radar technology and specialized software to all areas of our U.S. defense agencies present a significant danger to national security and members of our armed forces. Because of this, federal rules and regulations on cybersecurity continue to tighten....

Financial institutions who fail to secure computer networks and sensitive customer information from cyber attacks are presenting huge whistleblower opportunities for IT professionals and other bank and investment firm employees. Failure to report weak cybersecurity systems and cyberhacks continue to pose a problem for U.S. banks, and whistleblowers are in prime position to collect big cash awards for their inside knowledge.

Cybercrime Estimated To Cost Global Economy over $500 Billion Annually

McAfee estimates the annual cost of cybercrime to the global economy could be as much as $575 billion per year and banks remain the top cybercrime targets. Not only do weak cybersecurity systems continue to expose sensitive personal information, but careless employee mishandling of sensitive data poses an equally dire threat. Attaching the wrong file to an email or downloading sensitive information to a personal device is becoming a major security issue....

Birmingham, Alabama-based Regions Bank has agreed to pay the U.S. government $52.4 million to resolve allegations that it violated the False Claims Act by knowingly underwriting mortgage loans insured by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) that did not meet applicable requirements, the Department of Justice announced Tuesday.

Due to Regions’ omissions and compliance failures, HUD insured hundreds of loans that were not eligible for FHA mortgage insurance under the DEL program and that HUD would not otherwise have insured. HUD suffered substantial losses as a result of paying the ineligible mortgage insurance claims....

Earlier this year, Lance Armstrong’s attorneys filed for Summary Judgment, which is a request for a an immediate favorable judgment to be issued without a trial. The matter at hand was a whistleblower lawsuit initiated in 2010 by one of Armstrong’s teammates, which claimed that Armstrong had defrauded the government by doping while being sponsored by the US Postal Service.

In April, Armstrong’s legal defense team claimed that, since the cyclist had not personally signed any of the sponsorship contracts, he couldn’t be held liable, and that USPS (United States Postal Service) had actually benefitted from the agreement in spite of the fallen athlete’s doping.

The saga of Lance Armstrong’s use of performance enhancing drugs has already made it into a movie by renowned director Stephen Frears (The Program, 2015), and it keeps attracting media attention. Frears, who did extensive research to make the film, has commented that doping is surprisingly common among top cyclists. But that is apparently not enough of an excuse for the US Justice Department, which joined in to prosecute the whistleblower lawsuit in 2013....

In 2014, the federal government decided to intervene against Evercare, now known as Optum Palliative and Hospice Care, in two whistleblower lawsuits which alleged that the hospice care provider had claimed Medicare reimbursements for patients who were not eligible for the type of care they received.

Two years later, a settlement has been reached, by which Optum Palliative will pay the federal government $18 million to resolve the False Claims Act allegations, which were initiated by two former Evercare employees, whistleblowers Terry Lee Fowler and Lyssa Towl. The whistleblowers will receive a reward that could go as high as 30% of the multi-million dollar recovery.

Lyssa Towl and Terry Lee Fowler Whistleblower Suit Alleged Medicare Fraud

Hospice care is covered under Medicare for patients who are terminally ill, but Evercare billed the federal program for the care of elderly patients who, albeit often incurable, did not fulfill the requirements for Medicare's hospice benefits. In order to be eligible, a patient must have a life expectancy of six months or less....

South Carolina-based Lexington Medical Center has agreed to pay $17 million to resolve allegations of participating in illegal financial arrangements with Lexington physicians, the U.S. Justice Department announced Thursday. Former Lexington physician, Dr. David Hammett filed the initial whistleblower lawsuit that led the government to investigate. Dr. Hammett will collect nearly $4.5 million for reporting the alleged False Claims Act (FCA) and Stark Law violations.

Lexington Physician Agreements Violate Stark Law per Dr. David Hammett’s Suit

The Stark Law helps ensure that physicians base their patient referrals on medical need and not on financial gain. Lexington Medical Center allegedly violated the Stark Law when they entered financial agreements with 28 physicians that met three violation criteria: the agreements (1) consider the quantity and/or quality of physician referrals, (2) compensate the physicians in excess of fair market value, or (3) are not commercially reasonable....

Irvine-headquartered Johnson & Johnson subsidiary, Acclarent Inc., has agreed to pay $18 million in a settlement over false claims healthcare fraud allegations, the US Justice Department announced Friday. Whistleblower Melayna Lokosky filed the initial qui tam lawsuit that led to government investigation. Lokosky will receive a $3.5 million cash whistleblower award for her efforts in exposing the fraud.

Sinus Spacer Marketed For Off-Label Drug Delivery Use

Johnson & Johnson acquired the California medical device manufacturer, Acclarent, in 2010. The company specializes in the development of minimally invasive ear, nose and throat (ENT) technologies. Allegations in this case surrounded the marketing and distribution of a sinus spacer known as the Relieva Stratus MicroFlow Spacer....

Healthcare fraud is becoming more problematic and intricate every day. One might tend to believe that once a case is settled, that is basically the end of the matter; the bad guys have been made somehow accountable, the government recovers moneys lost, the whistleblower becomes the hero and gets a reward.

Unfortunately, healthcare providers given to fraudulent behavior seem to have found a way to try to get back some of the money they should never have received from Medicare/Medicaid in the first place. Namely, some of them have begun to sue their legal counsel, alleging that they “didn’t know” they were breaking the law. A recent case involving Tuomey Healthcare System, a North Carolina-based hospital, has put this particular legal strategy at the forefront of whistleblower news.

Michael Drakeford, Tuomey Healthcare Whistleblower, Alleged Kickbacks

In October 2015, Tuomey had reached a $72.4 million settlement with the government in a False Claims Act lawsuit initiated by whistleblower Michael Drakeford. The case, which spanned over 10 years and included various appeals, was based on allegations that Tuomey had violated the Stark law by entering into certain employment arrangements with physicians in exchange for referrals. The DOJ eventually agreed, and Tuomey was forced to settle, as it was faced with the risk of losing over $200 million in a potential trial....

According to a recent study published on the Journal of the American Medical Association (JAMA) doctors who were offered a single free meal (often valued under $20) from pharmaceutical representatives consistently ended up prescribing certain drugs. The conclusion of the study reads,

“Receipt of industry-sponsored meals was associated with an increased rate of prescribing the brand-name medication that was being promoted.”

While the authors saw fit to clarify that the findings represented an association and not a cause-and-effect relationship, the study’s outcome is nonetheless alarming. However, it comes as no surprise given the numerous multi-million dollar settlements pharma companies have been reaching, in connection with kickback scheme allegations, over the past few years.

The problem is complex. This and many previous studies have exposed just how easy it is for companies to lure doctors into prescribing certain drugs, sometimes drugs that are not the most beneficial for their patients....