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Supreme Court Enhances Whistleblower Protections

by Diane Marger Moore on January 21, 2015

The Supreme Court voted on Wednesday in favor of enhancing protections for government whistleblowers. The 7-2 decision involved a federal air marshal who had been terminated in 2005 for disclosing planned cutbacks to air marshals on commercial flights.

u-s--supreme-court-2-1038828-mIn 2003, air marshal Robert MacLean received a text message from the Transportation Safety Administration saying the agency would be reducing the number of air marshals on certain flights in order to save money. Worried about the effect this would have on safety, MacLean approached his superiors who said nothing could be done about the planned reduction.

MacLean then contacted a reporter at MSNBC who published an article about the downsizing. The report sparked public and congressional criticism of the TSA. After it was discovered two years later that MacLean was the source for the article, he was fired.

MacLean challenged his termination by bringing suit in the U.S. Court of Appeals for the Federal Circuit. At issue was whether or not MacLean’s disclosure to the MSNBC reporter was specifically prohibited by law. According to the Orange County Register, the government argued that MacLean’s disclosure was prohibited by TSA regulation and a provision in the Homeland Security Act. The court ruled in MacLean’s favor, saying that his disclosure could only be prohibited by statute, not regulation. The relevant statute in his case, the court ruled, only provides general criteria for disclosures considered detrimental to the safety of transportation.

When the case moved to the Supreme Court, the justices disagreed with both of the government’s arguments, finding that regulations are not law, and the Homeland Security Act provision in question “does not prohibit anything.”

The MacLean decision means that government agencies will not be allowed to use regulation as a means to evade the Whistleblower Protection Act. Government whistleblowers can now come forward with claims of fraud and mismanagement without fear that the government will be able to use internal regulations as a means to deter them.

The South Florida medical supply company raided by Federal Bureau of Investigation agents this week has ties to the ‘Wolf of Wall Street’ movie, according to an FBI spokesman. Investigators raided Med-Care Diabetic and Medical Supply Inc. in Boca Raton this week in connection with a whistleblower lawsuit that claims the company defrauded government healthcare agencies of millions.

med-care-diabetic-and-medical-supplies-squarelogo-1396908860192Among Med-Care’s top executives is Daniel Porush, who served as a model for Jonah Hill’s character in the ‘Wolf of Wall Street.’ The movie was based on a book written by Jordan Belfort (played in the movie by Leonardo DiCaprio), who was business partners with Porush in a series of investment and telemarketing operations. Belfort and Porush were both imprisoned for their roles in fraud schemes depicted in the book and movie.

When the FBI came to raid Med-Care’s offices, Porush and his wife declined to answer any questions from reporters and drove away in a Rolls-Royce. An attorney for Med-Care said the company is prepared to fully cooperate with investigators.

The whistleblower lawsuit was filed by Tiffany Bumbury, a former employee with a company affiliated with Med-Care Diabetic and Medical Supply Inc. Bumbury claims that Med-Care Diabetic operated call centers where Medicare beneficiaries were contacted and asked about receiving medical equipment that was excessive, unnecessary or not requested. Occasionally, Med-Care would submit for Medicare reimbursement for equipment that never went to a beneficiary.

Bumbury further claims that workers at these call centers were told to “say whatever they needed to say” in order to get Medicare billing information from beneficiaries and secure a sale. For example, telemarketers would pronounce Med-Care to sound like Medicare, then offer free equipment. They would also claim to be from the ‘Christian Healthcare Network’ or the ‘Christian Diabetic Network’ and tell callers that any proceeds from transactions would be donated to charitable organizations.

According to Fox Business, Medicare paid Med-Care over $84 million between 2009 and 2012 through the alleged scheme.

Daiichi Sankyo Settles Whistleblower Claims For $39 Million

January 12, 2015

The Justice Department announced last week that Daiichi Sankyo Inc., a Japanese-based pharmaceutical company with U.S. headquarters in New Jersey, has agreed to pay $39 million to settle fraud allegations initially filed by a whistleblower. A former Daiichi sales representative accused the pharma company of violating the False Claims Act by paying kickbacks to induce [...]

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Federal Judge Denies Christ Hospital’s Motion to Dismiss Whistleblower Lawsuit

January 7, 2015

A federal judge in Cincinnati has rejected Christ Hospital’s motion to dismiss a whistleblower lawsuit filed by a former employee. Cincinnati-based Christ Hospital provides health services in cancer, cardiac care, major surgery, orthopedics, women’s health and behavioral medicine. Glenda Overton, a former administrator at the hospital, filed the whistleblower lawsuit after she was fired in [...]

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Justice Department to Join Whistleblower Lawsuits Accusing Florida Doctor of Fraud Worth Millions

January 5, 2015

The Justice Department announced on Monday that it will join two lawsuits filed by whistleblowers who claim that a Florida cardiologist fraudulently collected over $18 million in Medicare reimbursements in 2012; three times more than any other cardiologist in the country. The lawsuits claim that Dr. Asad Qamar and his Ocala, Florida-based medical group, the [...]

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Verizon Agrees to Pay $1.3 Million to Settle Overbilling Allegations

December 30, 2014

Telecommunications giant Verizon has agreed to pay roughly $1.3 million to resolve allegations that the company overcharged the state of Massachusetts for telecommunications services provided under the terms of a state contract. The settlement, which was announced today, requires Verizon New England (Verizon) to pay the state of Massachusetts as well as other Commonwealth cities [...]

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Pennsylvania Hospital to Pay $662,000 to Settle Whistleblower Lawsuit

December 28, 2014

The Justice Department announced last week that it had reached a settlement agreement with Easton Hospital. The Easton, Pennsylvania-based hospital agreed to pay $662,000 to settle claims filed by two whistleblowers accusing the hospital of submitting false claims for Medicare reimbursement. Two Easton Hospital employees – David Kasprzak and David Heaton – alerted the government [...]

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Records Management Company to Pay $44.5 Million to Settle Whistleblower Claims

December 22, 2014

Iron Mountain, a Boston-based information storage company, has agreed to pay $44.5 million to settle whistleblower allegations. A former Iron Mountain employee and a longtime professional in the records management industry accused the company of overcharging the federal government for record storage services. According to the Justice Department, Iron Mountain provided record storage services under [...]

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The Case of the Spoiled Spuds

December 18, 2014

Last week, jurors in North Dakota found brothers, Aaron and Derek Johnson, guilty of defrauding the government of roughly $2 million. Their crime? Conspiring to receive illegal payments and making false claims in order to collect crop insurance money. Prosecutors in the case say the Johnson brothers engaged in a scheme designed to compromise the [...]

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With Rising Fraud in the Industry, Home Healthcare Sees Increased Scrutiny

December 15, 2014

For the last five years, the government has been working to stop fraud in the home healthcare industry. Crackdown efforts recently led to a Dallas doctor being charged for his role in running a $374 million fraud scheme in which his company certified over 11,000 patients for home healthcare services that they didn’t need. Dr. [...]

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