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Government Intervenes in Defense Company Whistleblower Lawsuit

by Diane Marger Moore on October 16, 2014

sikorsky_0The Justice Department announced today that it has intervened in a whistleblower lawsuit accusing Sikorsky Aircraft Corporation and subsidiaries Sikorsky Support Services Inc. and Derco Aerospace Inc. of overcharging the U.S. Navy on aircraft maintenance costs by using an illegal subcontract.

The lawsuit claims that Sikorsky approved an illegal subcontract called a “cost-plus-a-percentage” contract in which compensation is based on the cost of performing a service plus a percentage. These contracts are prohibited because the cost associated with the contract is unknown in advance and contractors don’t have any incentive to control costs. According to the Milwaukee Journal-Sentinel, the cost-plus-a-percentage contract caused the Navy to pay nearly $50 million in false billings for parts and materials used to maintain Navy aircraft.

The complaint was initially filed by whistleblower Mary J. Patzer, a former employee with Derco. Patzer started with the company as a financial analyst in 2002. By the time her tenure at the company ended in 2010, she was the point of contact for Derco’s defense contract audits. In her lawsuit, Patzer says she was fired shortly after reporting the alleged markups to a supervisor. The company’s reasoning for firing her: a “reduction in force.” She felt that filing her whistleblower complaint and holding her former employer accountable was simply the right thing to do.

If her case is successful, Patzer will be entitled to a whistleblower reward between 15 and 25 percent of any money the government recovers.

Organon Settles False Claims Allegations for $34 Million

by Mark Schlein on October 15, 2014

imagesOrganon, a pharmaceutical company with assets now owned by Merck, has agreed to pay $34 million to settle false claims allegations filed by two whistleblowers. The settlement resolves claims that Organon promoted the off label use of antidepressants, provided improper financial incentives to “nursing home pharmacy companies” and made misstatements about drug pricing which caused New York’s Medicaid program to overpay for drugs.

The settlement resolves four different claims:

  • Organon allegedly promoted Remeron and Remeron SolTab – both antidepressants – for uses not specifically approved by the Food and Drug Administration (FDA). According to the Corporate Crime Reporter, Organon marketed the side effects of both drugs as benefits. According to the lawsuits, the company even marketed the drugs to minors.
  • The lawsuits claim that Organon provided discounts and rebates to “nursing pharmacy companies” to entice them to prescribe Remeron and Remeron SolTab over other antidepressants.
  • Medicaid requires that drug makers provide the government with the best possible price available for a given drug. The lawsuits claim that Organon failed to include discounts and rebates the company was offering to other customers, which resulted in New York’s Medicaid program overpaying for drugs.
  • Organon allegedly used the inflated drug costs paid by the government to offset the discounts the company was offering nursing home pharmacy companies.

The whistleblower claims were filed in U.S. District Court for the Southern District of Texas and U.S. District Court for the District of Massachusetts. The allegations were made before Merck acquired Organon. Merck did not admit to any wrongdoing per the terms of the settlement.

DRS Technical Services to Pay $13.7 Million to Resolve Fraud Allegations

October 7, 2014

DRS Technical Services Inc. (DRS) will pay the government $13.7 million to settle fraud allegations, the Justice Department announced today. DRS, a Virginia-based subsidiary of DRS Defense Solutions LLC, provides a variety of wireless network solutions, security systems and telecommunication services for both the government and the private sector. The Defense Department awarded time and [...]

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Glaxo Investigating Corruption Allegations in the United Arab Emirates

October 6, 2014

Pharmaceutical giant GlaxoSmithKline (GSK) announced on Monday that they are looking into allegations of corruption in the United Arab Emirates. The announcement comes roughly a month after the drugmaker was hit with a $489 million fine for corruption charges in China. Reuters got wind of the corruption allegations through an anonymous email purportedly sent by [...]

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Caremark to Pay $6 Million to Settle Whistleblower Allegations

September 29, 2014

The pharmacy benefit management company (PBM) operated by CVS Caremark Corporation will pay $6 million to settle whistleblower allegations of fraud. Whistleblower Donald Well, a former manager at Caremark LLC, accused his former employer of knowingly failing to reimburse Medicaid for prescription drug costs paid on behalf of “dual eligible” Medicaid beneficiaries. A person is [...]

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Attorney General Eric Holder Says Bigger Rewards Needed for Financial Whistleblowers

September 23, 2014

U.S. Attorney General Eric Holder would like to see the government boost rewards given to whistleblowers in the financial sector who come forward with inside information on corporate wrongdoing. Holder gave a speech last week at New York University in which he called the current maximum payout for a financial whistleblower under the Financial Institutions [...]

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Securities and Exchange Commission Announces Largest Whistleblower Reward to Date

September 22, 2014

The Securities and Exchange Commission (SEC) announced today that a whistleblower will receive a $30 million reward for providing valuable information that led to a successful enforcement action. The action in question and the whistleblower’s identity have not been made public, though the SEC noted Monday that the reward was the fourth for an international [...]

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Detroit Doctor Admits to Administering Chemotherapy to Patients Who Didn’t Need the Treatment

September 16, 2014

A Detroit doctor is facing a statutory maximum of 175 years in jail for administering unnecessary chemotherapy to patients and submitting false claims to government health care agencies and private health insurance companies. Dr. Farid Fata of Oakland Township, Michigan today pleaded guilty before U.S. District Judge Paul Borman for his role in a health [...]

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Owner of X-Ray Company to Pay $7.5 Million in Forfeiture For Role in Health Care Fraud Scheme

September 15, 2014

The owner of an X-ray company has been accused of bilking over $7.5 million from government health care agencies. Rafael Chikvashvili, the 67-year-old owner of Alpha Diagnostics, allegedly overbilled Medicare and Medicaid by submitting false claims for services that were not performed by licensed doctors, among other illegal activities. According to a federal indictment unsealed [...]

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Owner of Shreveport Outpatient Program Faces Up to 30 Years Behind Bars Over Health Care Fraud and Wire Fraud Charges

September 11, 2014

A 43-year-old woman who owns and operates a Shreveport, Louisiana-based intensive outpatient company is facing 30 years of jail time over charges of health care fraud and wire fraud. Sharon Monroe, the owner of Monroe Medical Management LLC (MMM), pleaded guilty today before U.S. District Judge S. Maurice Hicks Jr. to charges of bilking money [...]

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