Whistleblower Law Blog

WellCare Health Plans, Inc. Pays $137.5 Million to Resolve Allegations that it Committed Medicare and Medicaid Fraud

April 16, 2012

On April 3, 2012, U.S. Attorney Robert O’Neill announced that WellCare Health Plans, Inc. agreed to settle four lawsuits alleging violations of the federal False Claims Act (FCA).  WellCare is a Tampa, Florida-based company that provides managed health care services for 2.6 million Medicare and Medicaid beneficiaries nationwide.  In all four lawsuits, whistleblowers filed suit under the qui tam provisions of the False Claims Act and the U.S. Department of Justice (DOJ) intervened, investigated, and negotiated the settlements of the suits.

The lawsuits alleged that WellCare inflated the amount it claimed to spend on medical care to avoid returning money to Medicaid, and it retained overpayments it received from the Florida Health Kids program. In addition, the DOJ claimed that WellCare falsified data to misrepresent the medical conditions of patients and the treatments they received, abused the market by “cherry picking” healthy patients to avoid higher costs, manipulated performance metrics at its call center, and operated a sham Special Investigations Unit.

The settlement resolves these allegations and more and requires that Wellcare pay the U.S. and nine states — Connecticut, Florida, Georgia, Hawaii, Illinois, Indiana, Missouri, New York and Ohio — a total of $137.5 million plus interest over three years. In the event that the company is sold or undergoes a change in control, WellCare may be required to pay $35 million in contingency
fees.

“In an era of decreasing federal and state budgets, and increasing healthcare costs, we must pursue all available civil remedies to recover losses suffered by government healthcare programs. This settlement should serve as notice to those defrauding state and federal healthcare programs that, in addition to appropriate criminal prosecutions, we will utilize civil suits to root out their conduct and recover their ill-gotten gains,” said U.S. Attorney O’Neill.

The Employment Law Group® law firm has an extensive nationwide whistleblower practice representing employees who have been victims of retaliation.

Managing Principal of The Employment Law Group®, R. Scott Oswald, Discusses the Importance of “Robust and Responsive Internal Compliance Programs” with Workforce Management Magazine

April 11, 2012

R. Scott Oswald, managing principal of The Employment Law Group®, was recently interviewed and quoted by Workforce Management Magazine on the subject of expanded whistleblower protection under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

In 2010, Dodd-Frank amended the Sarbanes-Oxley Act (SOX) and expanded whistleblower protections to include “nationally recognized statistical rating organizations” which include credit rating agencies.  Additionally, the new laws provide various financial incentives for whistleblowers who report fraud and provide protection for whistleblowers against employer retaliation.

Commenting on these expanded protections for whistleblowers, Mr. Oswald told Workforce Management Magazine, that it is necessary for employers to have a “robust and responsive internal compliance program” to ensure that employers do not violate the laws designed to protect workers who report fraudulent or illegal practices.

Additionally, Mr. Oswald notes that “employees don’t want to become whistleblowers,” rather they typically “have families to support and careers to maintain” but come forward in order to protect themselves from retaliation by their employers.

The article, “Whistling While You Work”, appeared in the April 1, 2012 edition of Workforce Management Magazine.

The Employment Law Group® law firm has a nationwide whistleblower practice representing employees who have been the victims of retaliation.

R. Scott Oswald, Managing Principal of The Employment Law Group®, Publishes Article in The Washington Post on Recent Expansions of Employee Rights

April 11, 2012

R. Scott Oswald, managing principal of The Employment Law Group® recently published an article in The Washington Post discussing new expansions of employee rights in the areas of whistleblower protection and wage and hour law.

In the piece, Mr. Oswald discussed recent developments in employee protection law that, if ignored, could result in penalties and other sanctions for employers, including: the miscategorization of workers as independent contractors; expansions in the protection afforded by whistleblower laws; and new wage and overtime protection for home healthcare workers.

On the subject of employee misclassification, Mr. Oswald wrote that:

 “in this tough economy, employers may be tempted to miscategorize an employee as an independent contractor in order to skirt requirements to pay unemployment insurance, Social Security, workers compensation and other employee benefits.”

However, employers could face stiff penalties for misclassifying workers, according to Oswald.  Specifically, in Maryland, employers found to be in violation of the law can be liable to pay both restitution to the misclassified worker and a $1,000 civil penalty.  Other states’ protections provide even more protection to employees, for example, according to a recently enacted law in California, employers can be subject to a fine of up to $15,000 for each violation and even up to $20,000 if the employer is found to have engaged in a “pattern or practice of these violations”.

Mr. Oswald also discussed new federal protections for whistleblowers under the Dodd-Frank Act which “has created a national whistleblower standard that applies not only to employees at publicly traded corporations but also to corporations that are regulated by the Consumer Financial Protection Bureau (CFPB).”  Among the industries now affected by the new whistleblower protections include, according to Oswald, “payday lenders, private education lenders, and mortgage finance companies.”

Also highlighted in the article were recent regulatory changes by the Department of Labor which will assist in “reigning in wage abuses in certain industries not traditionally covered by protections, including the home healthcare industry.”   As a result, more home healthcare workers will soon be protected by federal minimum wage and overtime laws, whereas currently there are nearly 30 states that do not offer such workers minimum wage or overtime protections.

As a result of these new laws and regulations, Mr. Oswald commented that “employers must be more careful in how they pay their workers and must be more rigorous in their human resources compliance.”

The Employment Law Group® law firm has a nationwide whistleblower practice representing employees who have been the victims of retaliation, as well as and extensive wage and hour practice representing employees whose rights have been violated, including nonpayment of wages and denial of overtime pay.

Hawthorn Pharmaceuticals Agrees to Settle False Claims Act Lawsuit for Marketing Prescription Drugs That Were Not Approved by the FDA

April 04, 2012

Hawthorn Pharmaceuticals Inc., a subsidiary of Cypress Pharmaceutical Inc., has agreed to pay the federal government and eleven states $2.8 million to settle a qui tam lawsuit filed in 2007 under seal in the U.S. District Court for the Eastern District of Texas.

Robert Heiden, who worked for Hawthorn in Florida from October 2005 to October 2006 as a district sales manager, filed a qui tam lawsuit under the False Claims Act alleging that between 2003 and 2009 Hawthorn and its CEO, Max Draughn, illegally marketed three prescription drugs that were not approved by the Food and Drug Administration (FDA) as eligible for reimbursement by Medicaid and other government healthcare programs. Heiden also alleged that he was terminated for refusing to offer “illegal inducements to pharmacies and pharmacists.”

Heiden states:

“My case and the government’s response mean that children, from infants to adolescents, now are protected from the dangers of certain drugs whose safety and effectiveness haven’t been determined. With the removal of the drugs from government reimbursement lists, doctors are shielded from prescribing drugs they had been misled to believe were FDA-approved, and parents will no longer be giving their children drugs they didn’t realize hadn’t been approved by the FDA.”

As a whistleblower under the False Claims Act, Heiden will receive 21 percent of the settlement for the information he provided.

The Employment Law Group® law firm has an extensive nationwide whistleblower practice  representing employees who have been victims of retaliation.

Department of Labor Thanks The Employment Law Group® for its Input on the OSHA’s Whistleblower Program Restructuring Project

March 29, 2012

In detailing its recent announcement of a major restructuring of the Occupational Safety and Health Administration’s (OSHA) Office of the Whistleblower Protection Program, the U.S. Department of Labor thanked The Employment Law Group® for its input in the program restructuring project.

The acknowledgement came in a Department of Labor report entitled “OSHA’s Whistleblower Protection Program Review: Findings and Recommendations”. In the Acknowledgements section of the report, OSHA thanked The Employment Law Group® for “providing its thoughts and ideas on how to improve the program”.

The Department of Labor consulted with The Employment Law Group® and other outside stakeholders and requested their views on OSHA’s administration of its whistleblower program. The Department of Labor’s team assigned to the restructuring project met with R. Scott Oswald, managing principal of The Employment Law Group® on September 16, 2010 and Mr. Oswald shared his opinions regarding the state of the OSHA whistleblower program.

Among the observations and suggestions Oswald offered to the Department of Labor and listed in the restructuring report were the following:

• Whistleblower investigators need to be trained and held accountable for their work
• There is a level of hostility by some investigators
• In some whistleblower investigations, decisions are made before the complainant or witness interviews take place. When interviews do take place, there are no probing questions
• Within the whistleblower program and during investigations there is a lack of transparency within OSHA
• Investigators are not fully testing the evidence
• OSHA is not affording witnesses and employees the opportunity to speak with OSHA without the presence of management. This step would help keep interviews confidential
• OSHA needs to form a greater partnership with the complainant’s attorneys
• OSHA should emphasize early resolution of whistleblower complaints
• Believe in mediation. Mediation should be mandatory
• OSHA should create a national mediation office
• OSHA creates roadblocks to access of information obtained during the investigation
• General attitude by whistleblower investigators is how can they get the case off their desk
• Investigators need training on conflict resolution
• During the course of an investigation, if there are additional claims of adverse action, OSHA must amend the complaint and notify the respondent of the amendment
• Under all the new statutes the burden of proof was changed from motivating to contributing, we find that investigators are either not trained on the difference, have not applied the difference or refuse to accept the difference
• OSHA should provide investigators with annual legal training

The Employment Law Group® law firm has an extensive nationwide whistleblower practice  representing employees who have been the victims of retaliation.

Dollar Tree Stores Cited by OSHA with Repeat Workplace Safety Hazards for Allegedly Allowing Blocked Fire Exits and Unsafe Storage of Merchandise

March 23, 2012

The U.S. Department of Labor’s Occupation Safety and Health Administration (OSHA) has cited Chesapeake, Virginia-based Dollar Tree Stores with repeat workplace safety hazards at a Newark, New Jersey location and has proposed $121,000 in penalties.

OSHA found during an inspection of the Dollar Tree Store in Newark that the retailer had permitted its exit routes to be blocked by boxes and product carts and had stored materials in an unsafe manner.  Dollar Tree Stores have been cited previously for similar violations in four locations in 2008, 2010, and 2011. When, as in this case, repeat violations occurred within the last five years, OSHA assesses stiffer penalties against the responsible entity.  OSHA has given Dollar Tree Stores fifteen days from receipt of its citations to correct the violations.

Kris Hoffman, director of OSHA’s Parsippany Area Office, states:

“These violations are often found at retail stores and can pose a serious risk to workers… It is imperative that Dollar Tree Stores evaluate all of its locations for these and other potential workplace hazards, and take the appropriate steps to protect workers.”

The Employment Law Group® law firm represents employees nationally who have been exposed to hazardous work conditions.

JP Morgan Chase Pays $45 Million to Settle Whistleblower Lawsuit Alleging Fraud in Veterans’ Home Mortgage Loans, Whistleblowers to Receive $11.7 Million

March 22, 2012

On March 13, 2012, JPMorgan Chase agreed to pay the government $45 million to settle a lawsuit that alleged that the financial giant hid illegal fees in veteran’s home mortgage refinancing transactions and sought to collect on void government loan guarantees.  Two whistleblowers filed a qui tam lawsuit under the False Claims Acts in 2006 in U.S. district court in Atlanta, Georgia.

The whistleblowers, Victor Bibby and Brian Donnelly, worked as mortgage brokers for a Georgia-based mortgage brokerage firm, U.S. Financial Services Inc.  In 2005, the pair began noticing that mortgage lenders were charging veterans hidden fees on home loans refinanced under the government’s Interest Rate Reduction Refinancing Loans program.

The whistleblowers reported becoming suspicious after the lenders allegedly instructed them not to show clients a fee the companies were charging for attorneys’ fees on loan documents, but rather to include that fee as a “title examination fee”. After being ignored by the mortgage lenders, Bibby and Donnelly filed a qui tam lawsuit, which remained under seal until recently in order to allow the government time to investigate the claims.

As a result of the settlement Bibby and Donnelly are slated to receive 26% of the settlement amount, or $11.7 million.

The lawsuit sought to recover money not only from JP Morgan Chase, but also from seven other banks and mortgage companies including CitiMortgage, Bank of America, Wells Fargo Bank, PNC Bank, and Washington Mutual Bank. JPMorgan Chase is the first to settle the claims, while the lawsuit against the other financial institutions is still pending.

“Our lawsuit alleges that these lenders committed blatant fraud,” said co-lead counsel for JP Morgan Chase, Marlan Wilbanks.  “Although JPMorgan Chase has paid to settle its claims, we are looking forward to moving the case against the other defendant lenders.  These banks should be held accountable for causing the government to pay millions of dollars on void loan guarantees.”

The Employment Law Group® law firm has an extensive nationwide whistleblower practice  representing employees who have been victims of retaliation.

Washington State Legislature Passes Medicaid Fraud False Claims Act

March 22, 2012

On March 8, 2012, the Washington State Legislature passed legislation creating a Medicaid fraud false claims act with strong bipartisan support.  If signed into law, the bill (SB 5978/HB 2571) would give the state a new means of pursuing Medicaid fraud and would allow individual citizens – qui tam relators – to bring whistleblower lawsuits for Medicaid fraud on behalf of the government, as long as the individuals are the original source of the information.

Similar to the federal False Claims Act (FCA), the newly passed legislation in Washington would allow qui tam whistleblowers to receive awards based on the amount of funds recovered through lawsuits and settlements.   The bill would empower the Washington Attorney General’s office to bring such cases on behalf of the government.

Specifically, whistleblowers who report fraud will be able to receive 15% to 25% amount recovered if the attorney general intervenes and proceeds with the case, and awards of 25% to 30% if the attorney general does not proceed and the relator conducts the lawsuit alone.  Additionally, the law would create civil penalties for fraud ranging from $5,500 to $11,000 per claim, as well as treble damages.

The legislation contains several provisions that distinguish it from the federal FCA, most notably the lack of a statute of limitations, which could allow claims that extend farther back in time than current federal laws permit.

According to one of the main sponsors of the legislation, Sen. Cheryl Pflug (R), “without this tough enhancement of our False Claims Act, our state [would be] powerless against the corporate culprits who defraud taxpayers through false Medicaid claims.”

Washington governor Christine Gregoire (D) is expected to sign the legislation.  If signed, Washington would join 29 other states that have enacted similar laws.

The Employment Law Group® law firm focuses in the areas of employment law and whistleblower protection law, has helped many clients file suit against employers that fraudulently billed the U.S. government, and has established favorable precedents under the retaliation provision of the False Claims Act.

 

OSHA Announces Restructuring of Whistleblower Program to Increase Priority Status of Whistleblower Enforcement

March 15, 2012

Last week, the Department of Labor’s Occupational Safety and Health Administration (OSHA) announced a major restructuring of its Office of the Whistleblower Protection Program. As a result of the changes, the Program will now report directly to OSHA’s Office of the Assistant Secretary instead of to its Directorate of Enforcement Programs.

The result of this restructuring is that Assistant Secretary of Labor, Dr. David Michael – who heads OSHA – will directly oversee the whistleblower program. According to a press release issued by OSHA, the move indicates a “significantly elevated priority status for whistleblower enforcement.”

OSHA’s plan to restructure its whistleblower program follows a top-to-bottom review of the program that the agency completed in 2011. The review came as a response to audits by the U.S. Government Accountability Office and the Department of Labor Office of the Inspector General which found problems with the program.

As part of the improvement plan, OSHA released an updated Whistleblower Investigations Manual last year, which had not been updated since 2003. The new manual contains updated information on procedures for handling cases and information on recently enacted laws. The plan also aims to add investigators and strengthen investigator training.

In addition to the restructuring at the national level, OSHA indicated that is has initiated pilot projects to evaluate structural changes in 10 OSHA field regions in an effort to further strengthen the whistleblower program.

According to Assistant Secretary Michaels, “OSHA’s internal improvement initiatives, including this realignment, demonstrate the agency’s steadfast commitment to strengthening a program that is critically important to the protection of worker rights” as “the ability of workers to speak out and exercise their rights without fear of retaliation provides the backbone for some of American workers’ most essential legal protections.”

OSHA is responsible for enforcing the whistleblower provisions of the Occupational Safety and Health Act, as well 20 other laws that offer protection to employees who report regulatory violations

The Employment Law Group® law firm has an extensive nationwide whistleblower practice  representing employees who have been retaliated against for reporting hazardous work conditions.

SEC Whistleblower Chief Reportedly Pleased With High-Quality Leads Received Since Beginning of Whistleblower Rewards Program

March 15, 2012

According to a report this week in the Financial Times, the chief of the Securities Exchange Commission’s new Whistleblower Office, Sean McKessey, stated that the SEC has “received notes, audio recordings of conversations and simple recollections” of securities fraud and other wrongdoing since a new whistleblower reward program promising rewards for whistleblowers began last year.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 requires that the SEC pay rewards to whistleblowers who voluntarily provide the SEC with original information that leads to successful enforcement actions.  Under the new law, whistleblowers who report fraud can qualify to receive 10 to 30% of the amount that the SEC recovers through lawsuits and settlements.

McKessey noted that his office has “been very pleased with the percentage of whistleblowers tips that have [signs] of reliability either because they’re from somebody working at the company they’re complaining about or there’s a sufficient amount of specificity, or both.”

McKessey also clarified that his office accepts both electronic and paper tip submissions and, while the SEC receives a greater amount of tips electronically, in at least one case, McKessey found a paper submission to be “extraordinarily specific and credible.” One such whistleblower tip reportedly formed the basis for the SEC opening a case last week.

The Employment Law Group® law firm is a leader in the field of whistleblower law and recently published a guide on the SEC’s new rules for the Dodd-Frank whistleblower program.