News & Cases

According to a whistleblower complaint filed last November, the Church of Jesus Christ of Latter-day Saints (the Mormon church) may have defrauded U.S. taxpayers out of billions of dollars. Filed by David A. Nielsen, the lawsuit alleges the church has enriched itself, amassing a fortune of $100 billion from tax-exempt donations instead of using the funds for charitable purposes.

Nielsen was an investment manager for the church in Utah. The identity of IRS whistleblowers is usually kept confidential, but Nielsen apparently wanted to expose his employer; his twin brother sent a copy of the whistleblower lawsuit to The Washington Post.

The church has its own investment division, Ensign Peak Advisors, with offices close to the church’s headquarters in Salt Lake City. Nielsen learned about the alleged misconduct while working as a senior portfolio manager at Ensign.

Members of the church are expected to donate 10 percent of their income to it; this practice is known as ‘tithing.’ The church has about six million members in the U.S., from whom it reportedly collects about $7 billion in donations every year....

The government has just decided to intervene in a whistleblower’s False Claims Act lawsuit against Omnicare. The relator’s (whistleblower’s) complaint includes multiple allegations of Medicare and Medicaid fraud by the pharmaceutical services provider.

The whistleblower who initiated the case is an Omnicare pharmacist.

The whistleblower alleges that Omnicare used an automated prescription filling system to fulfill prescriptions that had not been authorized by a physician. Omnicare’s computer system, called Cycle Fill, allegedly allows for prescriptions to be renewed even after the cycle prescribed by the treating doctor has run out. So, if a doctor has prescribed a drug for a two-month cycle, Omnicare’s systems allow for the prescription to be renewed past that period, without requiring a re-assessment of the patient’s needs or a new prescription.

Administering medication that has not been prescribed by a physician not only triggers inappropriate and fraudulent Medicare and Medicaid reimbursements, but also it can put patients at serious risk....

On November 14, Sutter Health agreed to pay $30.5 million to settle a whistleblower lawsuit over anti-kickback violations. One day later, the California healthcare provider agreed to pay another $15.1 million to resolve a separate Medicare fraud lawsuit.

The $30.5 million settlement resolves allegations that Sutter Health paid illegal kickbacks to doctors in exchange for patient referrals. The complaint that initiated the government’s investigation was filed by a compliance officer who first attempted to raise concerns about the misconduct internally.

The additional $15.1 settlement resolved allegations that Sutter Health illegally billed Medicare for services referred by doctors who were receiving kickback payments and double-billed the government program for certain services.

“The Stark Law prohibits a hospital from billing Medicare for certain services referred by physicians with whom the hospital has a financial relationship, unless that relationship satisfies one of the law’s statutory or regulatory exceptions. . . The law is intended to ensure that medical decision-making is not influenced by improper financial incentives and is instead based on the best interests of the patient,” a spokesperson for the prosecution said....

Illinois-based Life Spine, its CEO, and its VP will pay about $6 million to resolve illegal kickback allegations involving the company’s medical devices. According to the False Claims Act lawsuit that was recently settled, the defendants paid surgeons to recommend and promote Life Spine’s implants and other products.

The company has agreed to pay $5.5 million and the two executives will complete the payout; CEO Michael Butler will pay $375,000 and Vice President Richard Greiber $115,000. The settlement agreement was announced before a New York federal judge on October 23rd.

The alleged misconduct was brought to light in a whistleblower lawsuit filed in 2018 by four former Life Spine employees. The U.S. government decided to intervene last July.

According to the DOJ, the whistleblowers will receive 20 percent of the settlement payments. Based on that percentage, the tipsters are set to share a $1.20 million award....

Back in 2017, CNN published an investigation entitled, “The little red pill being pushed on the elderly.” The red pill was Nuedexta, which is used to treat a rare condition: pseudobulbar affect, also known as PBA. Now, its maker, Avanir Pharmaceuticals, has agreed to pay $108 million to resolve allegations that it offered illegal kickbacks to physicians to boost sales of the drug.

Two False Claims Act complaints initiated the case against Avanir. The whistleblowers behind them will share a reward surpassing $17 million.

According to prosecutors, the doctors bribed by Avanir routinely prescribed the drug to people who didn’t need it. Medicare and other government healthcare programs were then billed for these prescriptions. Drugs.com estimates the price of Nuedexta at approximately $1,235 for a supply of 60 capsules....

Mallinckrodt Pharmaceuticals will pay $15.4 million to resolve allegations that it illegally marketed one of its most profitable drugs. Mallinckrodt became involved in the lawsuit after it acquired the drug’s original maker, Questcor, for $5.6 billion, in 2014.

Last May, we reported on the two (now consolidated) whistleblower lawsuits that were resolved by the recent settlement. The False Claims Act case was initiated by Charles Strunck, a former Questcor sales specialist, and Lisa Pratta, a former Questcor neurology specialist. Both Strunck and Pratta were involved in the marketing of Acthar, a drug used in multiple sclerosis treatments.

H.P. Acthar Gel, which is also used to treat lupus, arthritis, and seizures in infants, experienced a spectacular price increase in 2007, going from $1,600 to $23,000. In under 20 years, the drug’s price went from $40 to $39,000 per vial. Its annual sales currently surpass $1 billion....

The CEO of Amity Home Health Care, Ridhima Singh, 13 doctors, five nurses, a social worker, and 10 others have been charged with participating in a massive kickback scheme created by Singh. According to prosecutors, the CEO paid about $115 million in bribes to the other defendants in exchange for referrals of Medicare beneficiaries.

Allegedly, the defendants systematically referred patients for hospice care to both Amity and Advent Care Inc., instead of referring them to appropriate facilities based on their particular situation. In some cases, Medicare beneficiaries were referred to hospice in exchange for kickbacks that included a ‘longevity’ bonus (as long as the patient was alive, the referring doctor would benefit financially).

According to its website, Amity “is a home health agency that is committed to providing the best quality of skilled care to [their] patients in the comforts of their own home.” ...

Blowing the Whistle About Fraud in The Finance Sector

In spite of a legal framework that vows to encourage transparency, securities and commodities trading fraud are rampant in the U.S. In order to deter fraudsters and protect investors, the Securities and Exchange Commission and the Commodity Futures Trading Commission have both established whistleblower programs.

In the wake of the 2008 crisis, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act enhancing the CFTC’s “regulatory authority to oversee the more than $400 trillion swaps market,” and allowing the SEC to exert more control over financial products and corporate governance and disclosure, improving consumer protections and transparency.

Dodd-Frank also gave rise to the above-mentioned whistleblower programs. The 2010 Act established that the CFTC would pay an award to eligible whistleblowers “who voluntarily provide the Commission with original information about a violation of the CEA that leads to the successful enforcement of a covered judicial or administrative action, or a related action.” On the other hand, retaliation against tipsters who provide information about potential violations is strictly forbidden....

What Makes a Successful Whistleblower? The SEC and CFTC whistleblower programs were created to encourage insiders to come forward with original information that can lead to enforcement actions against unethical financial industry players.
By offering rewards to tipsters, the programs help protect investors and other potential victims of financial fraud. The agency’s whistleblower provisions, the SEC states, help “better preserve the integrity of the United States' capital...

In November 2017 a Bloomberg headline ironically advised, “Want to turn that pain clinic into a real moneymaker? Open your own urine-testing lab and start billing Medicare.”

Back in July of 2016, when neither the public nor the authorities were aware that certain pain clinics executives were referring to these pricey urine tests as “liquid gold,” the CEO of Tennessee’s Comprehensive Pain Specialists (“CPS”) said in a press release, “Since January, CPS has seen a 19% increase in referrals from Primary Care Physicians. . . . By taking a seat on a patient’s care team, CPS is able to work with their physicians to address both the cause and the treatment of their pain. Putting patients on long term pain medication certainly isn’t the goal.”

While the press release included ‘politically correct’ statements about “treating the epidemic of chronic pain without escalating the epidemic of opioid misuse,” it didn’t shy away from boasting of the potential for large profits resulting from the passing of the Comprehensive Addiction and Recovery Act (“CARA”).

Prosecutors now believe CPS, which operated its own lab, did exactly what Bloomberg advertised, and with the help of a senator....