Florida Securities Fraud Lawyer Blog

The United States Attorney for the Southern District of New York and the General Counsel of the U.S. Department of Housing and Urban Development ("HUD") announced that CitiMortgage, Inc. ("CitiMortgage"), a subsidiary of Citibank, N.A., has agreed to settle a qui tam lawsuit for $158.3 million. The government joined the whistleblower lawsuit filed in August 2011 by relator Sherry Hunt, CitiMortgage's vice president of quality assurance.

The Complaint, filed under the False Claims Act, alleged that for more than six years beginning in 2004, CitiMortgage failed to comply with the Federal Housing Administration ("FHA") Direct Endorsement Lender Program. According to the Justice Department, in the settlement, CitiMortgage admitted its failure to comply with HUD-FHA requirements by submitting certifications stating that certain loans were eligible for FHA mortgage insurance when they were not and, as a result, HUD incurred losses when the loans, that should never have been endorsed, defaulted.

If a Direct Endorsement Lender approves a mortgage for FHA insurance and the borrower later defaults on the mortgage, the mortgage holder may submit an insurance claim to HUD for the costs associated with the defaulted mortgage, which HUD must pay. Neither the FHA nor HUD reviews a mortgage prior to its approval for FHA insurance. As such, CitiMortgage, as a Direct Endorsement Lender, was required to follow program rules to endure it was properly underwriting and endorsing mortgages for FHA insurance.

The whistleblower alleged that since 2004, CitiMortgage has endorsed nearly 30,000 mortgages with a value of $4.8 billion for FHA insurance, but repeatedly submitted knowingly or recklessly false certifications regarding their eligibility for FHA insurance. The Complaint further alleged that CitiMortgage failed to perform basic due diligence; failed to verify information in the loan file regarding the borrower's ability to repay the mortgage; and repeatedly endorsed mortgage loans that contained serious defects, did not comply with HUD's underwriting standards, and were not eligible for FHA insurance.

The Complaint also stated that almost one-third of the mortgages originated or underwritten by CitiMortgage since 2004 have gone into default, resulting in insurance claim payments by HUD of nearly $200 million.

Of the $158.3 million settlement amount, the whistleblower will receive $31 million as a reward.

If you have any firsthand knowledge, information, or evidence related to any federal, state, county or city government fraud, you should speak with an experienced qui tam lawyer who can help you understand your legal rights and help you obtain the compensation you deserve.

If you have a claim, contact the Florida whistleblower attorneys at McCabe Rabin, P.A. for a free and confidential consultation by calling toll free at 877.915.4040 or e-mail kelly@mccaberabin.com.

The Department of Justice announced that Gunnison Energy Corporation ("GEC"), an affiliate of Oxbow Corporation, and SG Interests I Ltd. and SG Interests VII Ltd. (collectively "SGI") have agreed to settle antitrust and False Claims Act allegations for $550,000, with each firm to pay $275,000. The claims relate to an alleged agreement by the companies not to compete in bidding for four natural gas leases sold at auction by the U.S. Department of Interior's Bureau of Land Management ("BLM").

According to the Justice Department, the investigation resulted from a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by whistleblower Anthony Gale. The federal government partially intervened in the whistleblower's suit.

The BLM issues leases for oil and gas exploration on land owned or controlled by the federal government. In order to obtain fair and competitive prices for its leases, BLM auctions off the leases to the highest bidder. The winning bidder is required to certify that its bid was not the product of collusion with another bidder.

According to the qui tam complaint filed in the U.S. District Court for the District of Colorado, GEC and SGI were separately developing natural gas resources in Western Colorado. The Complaint alleges that in 2005, GEC and SGI agreed, in writing, that only SGI would bid at the BLM auctions and then assign an interest in all of the acquired leases to GEC. The government claims that the agreement was not part of any procompetitive or efficiency-enhancing collaboration. The government also claims it would have received more revenue for the four leases if GEC and SCI had competed at the auctions.

If you have any firsthand knowledge, information, or evidence related to any federal, state, county or city government fraud, you should speak with an experienced qui tam lawyer who can help you understand your legal rights and help you obtain the compensation you deserve.

If you have a claim, contact the Florida whistleblower attorneys at McCabe Rabin, P.A. for a free and confidential consultation by calling toll free at 877.915.4040 or e-mail kelly@mccaberabin.com.

TriWest Healthcare Alliance Corporation, a contractor for TRICARE, has agreed to resolve a qui tam, or whistleblower, lawsuit for $10 million. TRICARE is the medical benefit plan for the U.S. military, retirees, their dependents and reserve components.

The settlement resolves a qui tam lawsuit filed by former TriWest employees, Judi Jerdee, Deborah Thornton, Linda Glassgow and Paige Fiorillo under the False Claims Act. The United States partially intervened in the lawsuit on August 29, 2011.

The whistleblower complaint alleged that from 2004 to 2010, TriWest submitted claims to TRICARE for the full amount billed by service providers, even though TriWest had negotiated discounts with the service providers pursuant to contractually binding letters of agreement.

Collectively, the whistleblowers will receive $1.7 million as their share of the government's recovery.

If you have any firsthand knowledge, information, or evidence related to any federal, state, county or city government fraud, you should speak with an experienced qui tam lawyer who can help you understand your legal rights and help you obtain the compensation you deserve.

If you have a claim, contact the Florida whistleblower attorneys at McCabe Rabin, P.A. for a free and confidential consultation by calling toll free at 877.915.4040 or e-mail kelly@mccaberabin.com.

The Justice Department announced that Dava Pharmaceuticals ("Dava") has agreed to pay $11 million to settle a qui tam, or whistleblower, suit alleging that it violated the False Claims Act.

The whistleblower, Jim Conrad, alleged that, between October 1, 2005 and September 30, 2009, Dava knowingly underpaid its drug rebate obligations under the Medicaid Prescription Drug Rebate Program ("Rebate Program"). Under the Rebate Program, drug companies are required to make quarterly rebate payments to state Medicaid programs based on whether a drug is a name brand or generic drug, and the difference between what the Medicaid program paid and the prices paid by other purchasers.

According to the complaint, in order to decrease the rebate payments due from Dava, Dava treated its versions of the drugs cefdinir, clarithromycin and methotrexate as generic rather than name brand drugs. The complaint also alleged that Dava incorrectly calculated the average manufacturer prices for these same drugs.

The settlement resolved a qui tam action that was filed in the United States District Court for the District of Maryland. Under the terms of the settlement, the United States government will receive $5.7 million and Medicaid participating states will receive over $5 million. The whistleblower will receive 15 percent of the settlement proceeds as a reward.

If you have any firsthand knowledge, information, or evidence related to any federal, state, county or city government fraud, you should speak with an experienced qui tam lawyer who can help you understand your legal rights and help you obtain the compensation you deserve.

If you have a claim, contact the Florida whistleblower attorneys at McCabe Rabin, P.A. for a free and confidential consultation by calling toll free at 877.915.4040 or e-mail kelly@mccaberabin.com.

The Department of Justice announced that 14 hospitals in New York, Mississippi, North Carolina, Washington, Indiana, Missouri and Florida have agreed to settle a False Claims Act lawsuit regarding allegations that they overbilled Medicare for kyphoplasty procedures performed between 2000 and 2008. Kyphoplasty is a procedure that is used to treat some kinds of spinal fractures usually caused by osteoporosis.

The Department of Justice said the largest portions of the $12 million settlement are being paid by four hospitals associated with Adventist Health System in Florida ($3.9 million), Plainview Hospital in New York ($2.3 million), North Mississippi Medical Center in Mississippi ($1.9 million), Mission Hospital in North Carolina ($1.5 million) and Wenatchee Valley Medical Center in Washington ($1.2 million). Six other hospitals will pay the remainder of the settlement amount.

The government's investigation began in 2008 after a qui tam action was initiated by Chuck Bates and Craig Patrick, two former employees of Kyphon, a manufacturer of products used in kyphoplasty. The qui tam complaint named Kyphon (acquired by Medtronic Spine in 2007) and numerous hospitals. The whistleblowers alleged that Kyphon suggested that hospitals do kyphoplasties as inpatient procedures to bulk up their Medicare payments even though the procedures could have often been done as outpatient procedures.

According to the Justice Department, since the initial qui tam action was filed in 2008, it has settled investigations into more than 40 hospitals related to kyphoplasty overbilling for $39 million, in addition to a $75 million settlement with Medtronic Spine. The whistleblowers will get around $2.1 million from the settlements.

If you have any firsthand knowledge, information, or evidence related to any federal, state, county or city government fraud, you should speak with an experienced qui tam lawyer who can help you understand your legal rights and help you obtain the compensation you deserve.

If you have a claim, contact the Florida whistleblower attorneys at McCabe Rabin, P.A. for a free and confidential consultation by calling toll free at 877.915.4040 or e-mail kelly@mccaberabin.com.

The United States has filed suit against Universal Imaging, Inc. ("Universal") and its current and former owners, Phillip J. Young ("Young") and Mark Lauhoff ("Lauhoff"), under the False Claims Act seeking $150 million in damages and penalties. According to the U.S. Department of Justice, many of the facts in the case were first brought to the government's attention when whistleblowers, Dr. Richard Chesbrough, a radiologist, and his wife Kim Chesbrough, a former employee of Universal, filed a qui tam action against Universal.

The government's complaint alleges that Universal, Young and Lauhoff, violated numerous Medicare rules relating to adequate supervision of diagnostic tests and generated 90% of their business by paying illegal kickbacks to numerous physicians. The U.S. Attorney announced that fourteen physicians, who were paid by Universal for referrals, reached a settlement with the government and will return $1.56 million in kickbacks.

The government's complaint also names Dr. Gwendolyn Washington, a primary care physician, as a defendant. According to the complaint, Dr. Washington is alleged to have ordered dangerously high levels of tests involving the injection of radioactive material into patients in order to increase the amount of kickbacks she received. Dr. Washington was also named in related criminal proceeding which resulted in her sentence of 120 months in prison on charges of public corruption, health care fraud and conspiring to illegally distribute prescription drugs.

If you have any firsthand knowledge, information, or evidence related to any federal, state, county or city government fraud, you should speak with an experienced qui tam lawyer who can help you understand your legal rights and help you obtain the compensation you deserve.

If you have a claim, contact the Florida whistleblower attorneys at McCabe Rabin, P.A. for a free and confidential consultation by calling toll free at 877.915.4040 or e-mail kelly@mccaberabin.com.

The Department of Justice announced that Cayuga Medical Center of Ithaca, New York ("Cayuga") settled a lawsuit filed under the qui tam provision of the False Claims Act regarding false claims submitted to the Medicare and Medicaid programs. The qui tam lawsuit was filed on behalf of whistleblower Daniel S. Joregenson, M.D.

According to the complaint, Cayuga recruited physicians pursuant to recruitment agreements, in violation of federal law, and submitted claims for payment to Medicare and Medicaid, certifying it was in compliance with federal law, when it was not.

Federal law prohibits a physician from referring a patient to a medical facility if that physician has a financial relationship with the facility, unless some exception applies. Medical facilities are also prohibited from billing Medicare or Medicaid for a prohibited referral. However, federal law does permit medical facilities to pay certain limited expenses of medical practices that employ physicians recruited to the area by the facility.

The qui tam complaint alleged that Cayuga paid for expenses that were not permitted by law, used improper recruitment agreements, and submitted false claims to Medicare and Medicaid, when it certified it was in compliance with federal rules and regulations when, in fact, it was not.

Of the $3,576,056 settlement amount, the whistleblower will receive $566,955.18 as a reward.

If you have any firsthand knowledge, information, or evidence related to any federal, state, county or city government fraud, you should speak with an experienced qui tam lawyer who can help you understand your legal rights and help you obtain the compensation you deserve.

If you have a claim, contact the Florida whistleblower attorneys at McCabe Rabin, P.A. for a free and confidential consultation by calling toll free at 877.915.4040 or e-mail kelly@mccaberabin.com.

The Boeing Company ("Boeing"), one of the world's largest aerospace companies, has agreed to settle a lawsuit filed under the qui tam provisions of the False Claims Act relating to bills submitted to the United States Department of Defense ("DOD") for the production and modification of Chinook helicopters.

According to the Complaint, in 2003, Boeing and the DOD entered into a contract for the production and modification of Chinook helicopters for the U.S. Army. The contract terms included a set contract price for "Basic Work" and indicated any "Over and Above" work would be paid on an hourly basis.

The qui tam action, filed in February 2010 by whistleblower Vincent A. DiMezza, Jr., alleged that Boeing employees knowingly overcharged the federal government by submitting bills for time they claimed was spent performing Over and Above work when they were actually doing Basic Work already covered in the contract price or were not working at all.

The United States Department of Justice announced that the lawsuit was settled for $4.4 million, including an $812,664 reward to the whistleblower.

If you have any firsthand knowledge, information, or evidence related to any federal, state, county or city government fraud, you should speak with an experienced qui tam lawyer who can help you understand your legal rights and help you obtain the compensation you deserve.

If you have a claim, contact the Florida whistleblower attorneys at McCabe Rabin, P.A. for a free and confidential consultation by calling toll free at 877.915.4040 or e-mail kelly@mccaberabin.com.

Johnson and Johnson ("J&J") has agreed to settle a Texas qui tam lawsuit brought by whistleblower Allen Jones for $158 million. The settlement ended the trial which had begun earlier this month.

The qui tam complaint filed in 2004 alleged that J&J used false marketing practices in order to influence Medicaid officials to spend millions of dollars on the drug Risperdal. According to the complaint, Risperdal was promoted as superior to other antipsychotic drugs, J&J downplayed its side effects, and promoted its use by children and the elderly, when it had not been approved by the Food and Drug Administration for such uses.

The complaint further alleged that Medicaid, and in turn taxpayers, paid millions of dollars in reimbursements for prescriptions of Risperdal for unapproved uses. Risperdal is approved to treat schizophrenia and mood disorders associated with autism.

The $158 million settlement will be split between the whistleblower, the State of Texas and the federal government. It is the largest Medicaid fraud settlement in Texas history.

If you have any firsthand knowledge, information, or evidence related to any federal, state, county or city government fraud, you should speak with an experienced qui tam lawyer who can help you understand your legal rights and help you obtain the compensation you deserve.

If you have a claim, contact the Florida whistleblower attorneys at McCabe Rabin, P.A. for a free and confidential consultation by calling toll free at 877.915.4040 or e-mail kelly@mccaberabin.com.

Maersk Line Limited, a wholly-owned subsidiary of Denmark-based A.P. Moller Maersk, has agreed to pay $31.9 million to settle a qui tam lawsuit initiated by whistleblower Jerry H. Brown II, a former industry insider, under the False Claims Act. A qui tam action is a whistleblower lawsuit brought by an individual as a "relator" on behalf of the federal government.

The whistleblower alleged that Maersk overcharged the United States in connection with contracts to transport cargo to support U.S. troops in Pakistan, Afghanistan and Iraq. The qui tam complaint alleged that Maersk knowingly billed in excess of the contractual rates for things such as late fees, maintaining the operation of refrigerated containers holding perishable cargo at a port in Pakistan, and failed to credit the U.S. government for rebates received by Maersk's subcontractor at a Kuwaiti port.

The Department of Justice announced that the lawsuit settled for $31.9 million, including a $3.6 million reward for the whistleblower.

If you have any firsthand knowledge, information, or evidence related to any federal, state, county or city government fraud, you should speak with an experienced qui tam lawyer who can help you understand your legal rights and help you obtain the compensation you deserve.

If you have a claim, contact the Florida whistleblower attorneys at McCabe Rabin, P.A. for a free and confidential consultation by calling toll free at 877.915.4040 or e-mail kelly@mccaberabin.com.

Maxim Healthcare Services Inc. ("Maxim"), one of the nation's largest providers of home healthcare services, has agreed to settle criminal and civil charges relating to a nationwide scheme to defraud Medicaid and the U.S. Department of Veterans Affairs of more than $61 million. To date, nine individuals, including two Florida residents, have pleaded guilty to felony charges arising out of the submission of fraudulent billings to the U.S. government.

The fraud was initially brought to light by whistleblower, and Maxim patient, Richard West when he filed a qui tam action alleging that Maxim had improperly billed Medicaid for 735 hours of home nursing care that he never received. West, a Vietnam veteran with muscular dystrophy, began receiving in-home care from Maxim in 2003 but in 2004, New Jersey officials suspended his Medicaid benefits claiming he had exceeded his monthly cap. West had kept good records and knew that was incorrect. After some investigating, West determined that Maxim had billed Medicaid $20,000 for care that he had never received. West complained to his social worker but she did nothing. Then he complained to New Jersey officials who ignored him. He then complained directly to Medicaid but similarly, they took no action. So, West found a qui tam lawyer who filed a whistleblower lawsuit under the False Claims Act, finally triggering an investigation of Maxim.

The investigation revealed that the fraud went far beyond just the improper billing for Richard West. The criminal complaint accused Maxim of submitting more than $61 million in fraudulent billings to government health care programs for services not rendered, or otherwise not reimbursable. The investigation revealed that from 2003 to 2009, the submission of false bills to government health care programs was a common practice at Maxim.

The Department of Justice announced that Maxim has agreed to pay $150 million to resolve the charges. Of that, whistleblower Richard West will receive $15.4 million.

If you have any firsthand knowledge, information, or evidence related to any federal, state, county or city government fraud, you should speak with an experienced qui tam lawyer who can help you understand your legal rights and help you obtain the compensation you deserve.

If you have a claim, contact the Florida whistleblower attorneys at McCabe Rabin, P.A. for a free and confidential consultation by calling toll free at 877.915.4040 or e-mail kelly@mccaberabin.com.

The Justice Department announced that the United States has intervened in a qui tam lawsuit filed by whistleblowers Dawn Richardson and Marsha Brown against Golden Gate Ancillary LLC dba AseraCare Hospice ("AseraCare") in the United States District Court for the Northern District of Alabama. A qui tam action is a whistleblower lawsuit brought by an individual as a "relator" on behalf of the federal government.

The government's complaint in intervention filed on January 3, 2012, alleges that AseraCare, a for-profit company consisting of 65 hospice providers in 19 states, violated the False Claims Act by misusing millions of taxpayer dollars intended for terminally ill Medicare recipients needing hospice care.

For-profit hospice providers, such as AseraCare, are only entitled to Medicare funds for Medicare recipients with a prognosis of six months or less to live. When a Medicare recipient is admitted to hospice care, that patient is no longer entitled to receive medical treatment intended to cure his or her illness. Instead, patients in hospice receive care that is intended to relieve pain, symptoms and the stress of terminal illness.

The government alleges that AseraCare knowingly submitted false claims to Medicare reflecting that Medicare recipients who were not terminally ill received hospice care.

If the United States is successful in proving that AseraCare knowingly submitted false claims, the whistleblowers will be entitled to a percentage of the recovery.

If you have any firsthand knowledge, information, or evidence related to any federal, state, county or city government fraud, you should speak with an experienced qui tam lawyer who can help you understand your legal rights and help you obtain the compensation you deserve.

If you have a claim, contact the Florida whistleblower attorneys at McCabe Rabin, P.A. for a free and confidential consultation by calling toll free at 877.915.4040 or e-mail kelly@mccaberabin.com.

A qui tam action filed against New York City has settled for $70 million. A qui tam action is a whistleblower lawsuit brought by an individual as a "relator" on behalf of the federal government.

The whistleblower lawsuit alleged that the New York City Human Resources Administration improperly overcharged the Federal Medicaid program for the provision of 24-hour Personal Care Services (PCS). PCS is a program designed to provide housekeeping, meal preparation, bathing, toileting and grooming services to Medicaid beneficiaries who qualify for the program based upon the recommendations and assessment of health care professionals.

The qui tam action was brought on behalf of Dr. Gabriel Feldman, a New York City doctor, who was contracted by the city to make recommendations about patient treatments. Concerned with what appeared to be the alleged wasteful spending of hundreds of millions of dollars of taxpayers' money, Dr. Feldman filed his whistleblower complaint, under seal, on October 2, 2009. The complaint was unsealed on January 5, 2011. Shortly thereafter, the U.S. Attorney for the Southern District of New York moved to intervene in the qui tam lawsuit.

The complaint filed by the U.S. Attorney on January 11, 2011, alleged that between 2000 and 2010, New York City routinely renewed 24-hour home care services for applicants without the required medical re-assessment and, in some cases; city administrators overruled the doctor's assessment that 24-hour care services were inappropriate.

Between 2000 and 2010, approximately 17,500 of New York's Medicaid beneficiaries received services from the PCS program at a cost to taxpayers of between $75,000 to $150,000 per person annually or from $1 billion to more than $2 billion dollars, collectively. The complaint alleged that a substantial percentage of this amount was for improperly authorized services, resulting in damages to taxpayers of at least tens of millions of dollars.

In November, the U.S. Attorney's office announced that the lawsuit settled for $70 million, including a $14.7 million reward for the whistleblower.

If you have any firsthand knowledge, information, or evidence related to any federal, state, county or city government fraud, you should speak with an experienced qui tam lawyer who can help you understand your legal rights and help you obtain the compensation you deserve.

If you have a claim, contact the Florida whistleblower attorneys at McCabe Rabin, P.A. for a free and confidential consultation by calling toll free at 877.915.4040 or e-mail kelly@mccaberabin.com.

The SEC has charged St. Louis-based brokerage firm Stifel, Nicolaus & Co. and a former senior executive with defrauding several Wisconsin school districts by selling them unsuitably risky and complex investments funded largely with borrowed money.

The SEC is alleging that Stifel and Senior Vice President David W. Noack created a proprietary program to help the school districts fund retiree benefits by investing in notes linked to the performance of synthetic collateralized debt obligations (CDOs).

The school districts established trusts that invested $200 million in three paid for largely with borrowed funds. Stifel and Noack misrepresented the risk of the investments and failed to disclose material facts to the school districts. The investments proved a failure and generated significant fees for Stifel and Noack.

Stifel and Noack represented that it would take "15 Enrons" for the investments to fail, and that 30 of the 105 companies in the portfolio would have to default before the school districts would suffer a loss of their principal.

Stifel and Noack sold the school districts an unsuitable product that did not meet their investment needs. They also used heavy leverage and the structure of the synthetic CDOs exposed the school districts to a heightened risk of catastrophic loss.