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Presented by Hodgson Russ, the Whistleblower Blog is written by a team of lawyers experienced in successfully guiding both whistleblowers and companies accused by whistleblowers of wrongdoing through the False Claims Act process.
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Showing 18 posts in Other Government Fraud.
Government Fraud Statistics Demonstrate the Enduring Utility of False Claims Act Litigation
The U.S. Department of Justice, Civil Division has published a substantial amount of data on the historical success of whistleblower cases and investigations. The statistics show that whistleblower litigation under the False Claims Act (often referred to as “quit tam” litigation) continues to be the government’s primary weapon in combating fraud.
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Borrower Beware: Prepare Now to Defend your Company’s Paycheck Protection Program (PPP) Loan from SBA Review or a Possible False Claims Act or Criminal Investigation
When the Coronavirus Aid, Relief, and Economic Security Act (CARES) was adopted on March 27, 2020, businesses welcomed the prospect of receiving COVID-19 financial relief through the Paycheck Protection Program (PPP). The PPP was layered atop the SBA’s existing Section 7(a) loan program, through which the federal government guarantees loans issued by qualified lenders to eligible business borrowers. The PPP program temporarily relaxed several criteria for obtaining an SBA loan, greatly expanding the availability of the lending program to a wider range of businesses. While clearly broader, the criteria for eligibility and the implications of the “necessity” certification weren’t quite so clearly defined, and left open many unanswered questions. But the prospect of “free money” by way of loan “forgiveness” induced countless businesses to submit loan applications at the earliest opportunity, beginning in early April 2020, despite the uncertainties.
Significant FCA Recoveries Reported for 2019
Fiscal Year 2019 was another banner year for False Claims Act recoveries, with the DOJ obtaining more than $3 billion in settlements and judgments under the Act. Of that amount, $2.6 billion came from the health care industry, and this is the 10th consecutive year that health care fraud settlements and judgments have exceeded $2 billion.
Supreme Court May Hear Another False Claims Act Case
The United States Supreme Court may be poised to hear another case involving the False Claims Act.
Supreme Court Finds the “Implied Certification” Theory Viable in Some Circumstances
On June 16, 2016 the United States Supreme Court issued a unanimous decision in Universal Health Services, Inc. v. United States ex rel. Escobar, 579 U.S. ___, No. 15-7 (June 16, 2016), finding the “implied certification” theory of legal falsity under the False Claims Act (“FCA”) viable in some circumstances. This controversial theory, under which courts have allowed liability in circumstances where defendants have failed to disclose noncompliance with relevant statutory, regulatory, or contractual requirements, is now still viable, albeit in more limited form.
Government Asserts Right to Final Say in FCA Settlements
A recent decision from the U,S. District Court for the District of Columbia illustrates the power of the government to block False Claims Act settlements between relators and defendants. United States ex rel. Landis v. Tailwind Sports Corp., 2015 U.S. Dist. LEXIS 46140 (D.D.C. April 9, 2015) involves former professional cyclist Floyd Landis, who brought FCA violations against Lance Armstrong and other defendants, including Armstrong’s agents and their company, called Capital Sports and Entertainment. The case was based on Landis’s allegations that defendants submitted claims for sponsorship payments to the U.S. Postal Service while knowing that the team had been using performance-enhancing drugs in violation of the sponsorship agreement.
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Research Grant Fraud Impact on False Claims Act Cases
False Claims Act practitioners at recent gatherings seem to agree that research grant fraud will be a growing area of whistleblower activity. As the government spends more on research grants related to health care, frauds are expected to increase as well. Qui tam relators will follow.
Research grant frauds can take many forms, ranging from failure to comply with regulations and grant conditions to false grant applications and fabricated results and data. The FCA bar expects increased whistleblower activity in this area in coming years.
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John Sinatra is a partner in the Business Litigation
Practice at Hodgson Russ LLP. You can reach him at jsinatra@hodgsonruss.com.
JPMorgan Chase Pays Over $600 Million in Whistleblower Case
JPMorgan Chase recently agreed to pay over $600 million in its settlement of a case brought by the federal government, including HUD, FHA, and the VA, according to a February 2014 stipulation and order of settlement and dismissal entered by the Southern District of New York. The case, originally brought by a qui tam whistleblower, alleged that JPMorgan Chase Bank, N.A. engaged in misconduct as to mortgage loans with a connection to HUD, FHA, or VA programs. In particular, the government alleged that JPMorgan Chase Bank approved improper loans, submitted false certifications, entered information into its automated system that lacked integrity, and approved ineligible loans, and, as a result of these items, the government paid claims related to defaulted loans. Among other things, the settlement requires defendants to pay the government $614 million. Defendants obtained a False Claims Act release in the settlement agreement, and the agreement recognized that a relator’s share of the government’s recovery would be forthcoming.
John Sinatra is a partner in the Business Litigation Practice at Hodgson Russ LLP. You can reach him at jsinatra@hodgsonruss.com.
Circuit Vacates Court’s Dismissal in DHL False Claims Case
The Second Circuit Court of Appeals today allowed a False Claims Act case brought by two whistleblower relators, represented by a team of Hodgson Russ attorneys led by me and my colleague Daniel C. Oliverio, and including Reetuparna Dutta, to proceed against DHL. In this case, the relators allege that DHL violated the FCA by improperly applying jet fuel surcharges to government shipments that it transported solely by ground. DHL’s motion to dismiss had been granted by the trial court on the basis of a 180-day “contest” provision in the transportation law. In vacating that dismissal, the Second Circuit ruled that the False Claims Act’s seal requirements and statute of limitations trump the contest provision, stating that “the 180-day rule cannot apply to a qui tam action under the FCA.” The action, United States ex rel. Grupp and Moll v. DHL Express (USA), Inc., will proceed in the Western District of New York.
My colleagues and I look forward to engaging in discovery to quantify DHL’s false claims and the resulting damages.
John Sinatra is a partner in the Business Litigation Practice at Hodgson Russ LLP. You can reach him at jsinatra@hodgsonruss.com.
Billions of Dollars Unreported and Lost to Fraud Every Year
In recent years, elected and appointed members of the federal government and others have estimated that seven percent—or as much as 15 percent or 20 percent—of federal spending is consumed by fraud. With the federal government spending $3.8 trillion a year, even seven percent lost to fraud equates to a quarter of a trillion dollars a year. That’s more than $800 per American, per year lost to fraud. As the government spends more and more each year, the False Claims Act and the qui tam whistleblowers it incentivizes become more and more important. In fact, the Justice Department is recovering record amounts under the False Claims Act—$5 billion alone last year. But as the scale of these recoveries demonstrates, there is still a lot of fraud left every year for whistleblowers to uncover and report.
John Sinatra is a partner in the Business Litigation Practice at Hodgson Russ LLP. You can reach him at jsinatra@hodgsonruss.com.
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