August Whistleblower Rewards Include $2.2 Million in Medical Fraud Case

The U.S. Department of Justice announced settlements in six large qui tam cases during August – including a medical fraud case where the whistleblower earned over a two million dollar reward.

The False Claims Act (FCA) penalizes fraud against the U.S. government.  Its qui tam provision allows whistleblowers to sue on behalf of the government, and to get up to 30% of recovered funds as a reward.

• In United States ex. rel. Sansbury, et al. v. LB&B Associates, Inc., et al., LB&B Associates, a North Carolina corporation, and its principals, Lily Brandon and F. Edward Brandon, agreed to pay the government $7.8 million to resolve allegations that they made false statements to obtain contracts through the Small Business Administration’s 8(a) Business Development Program for Small Disadvantaged Businesses. LB&B falsely represented that Lily Brandon, who satisfied the criteria under SBA’s 8(a) program, controlled the operations of LB&B.  The FCA lawsuit was filed originally by Steven Sansbury and James Buechler, former employees of LB&B.  They will receive $1.5 million for their role as whistleblowers, according to the Justice Department.

• In United States ex rel. Streck v. Allergan, Inc., et al., AstraZeneca LP, a major pharmaceutical manufacturer, agreed to pay the United States and participating states $46.5 million, plus interest, to resolve allegations that it knowingly underpaid rebates under the Medicaid Drug Rebate Program. In a separate settlement arising out of the same case, Cephalon Inc. agreed to pay the United States and participating states a total of $7.5 million, plus interest, to resolve similar allegations.  AstraZeneca and Cephalon under-reported the Average Manufacturer Price (AMP) for a number of their drugs by improperly reducing the reported AMPs for service fees they paid to wholesalers.  The FCA lawsuit was originally filed by Ronald Streck, a pharmacist.  The reward that Streck will receive has yet to be determined, said the Justice Department.

• In United States, ex rel., Vlake Percival v. U.S. Investigations Services, LLC, U.S. Investigations Services Inc. (USIS) and its parent company, Altegrity, agreed to forgo their right to collect payments by the U.S. Office of Personnel Management valued at least at $30 million, in exchange for release of liability under the FCA. USIS allegedly circumvented contractually required quality review of completed background investigations for OPM in order to increase the company’s revenue and profits.  The FCA lawsuit was originally filed by Blake Percival, a former executive at USIS.  The reward that Percival will receive has yet to be determined, according to the Justice Department.

• In United States ex rel. Granger v. PC Specialists, Inc. d/b/a/ Technology Integration Group, PC Specialists agreed to pay the government $5.9 million to resolve allegations that the company inflated the price of computers sold through Sandia Corporation to the National Nuclear Security Administration (NNSA). PC Specialists allegedly inflated the amounts it charged Sandia by failing to give contractually-required credits for rebates and discounts it received.  The FCA lawsuit was originally filed by Maverick Granger, a former PC Specialists executive.  The reward that Granger will receive has yet to be determined, said the Justice Department.

• In United States ex rel. Moore v. Mercy Health Springfield Communities f/k/a/ St. John’s Health System, Inc. et al., two southwest Missouri healthcare providers, Mercy Health Springfield Communities and Mercy Clinic Springfield Communities, agreed to pay the government $5.5 million to resolve allegations that they engaged in improper financial relationships with referring physicians. The healthcare providers allegedly gave bonuses to physicians based on the value of the physicians’ patient referrals to their clinic.  The FCA lawsuit was originally filed by Dr. Jean Moore, a physician employed by one of the defendants, who will receive $825,000 for her role as a whistleblower, according to the Justice Department.

• In United States ex rel. Kevin Ryan v. NuVasive, Inc., California-based medical device manufacturer NuVasive Inc. agreed to pay the government $13.5 million to settle allegations that NuVasive caused health care providers to submit false claims to Medicare. NuVasive allegedly paid kickbacks to induce physicians to use NuVasive’s CoRoent System for spine surgeries, even though it was not approved by the U.S. Food and Drug Administration.  The FCA lawsuit was originally filed by Kevin Ryan, a former NuVasive sales representative, who will receive $2.2 million for his role as a whistleblower, said the Justice Department.

Tagged: False Claims Act (FCA), Whistleblower Laws (Federal)