Quest Diagnostics Whistleblower Receives Reward for Exposing Alleged Fraud

The last few days have seen several companies resolve fraud allegations, resulting in millions of dollars being returned to the government. Three of these cases involve major corporations that have found themselves in this position before. Lockheed Martin has paid millions in fines and penalties stemming from whistleblower lawsuits or fraud allegations every year since 2012. Quest Diagnostics settled a whistleblower lawsuit in 2011 for over $240 million. Amgen paid $762 million in 2012.

Apparently the adage that crime doesn’t pay doesn’t apply to these companies. Instead, it demonstrates how much they make from fraud, since these enormous penalties are merely treated as the cost of doing business. As the penalties get larger and larger, however, whistleblower lawsuits will gradually change things for the better by holding even the largest corporations accountable.

Quest Diagnostics to Pay $1.79 Million to Settle Whistleblower Allegations of Health Care Fraud

Quest DiagnosticsQuest Diagnostics Inc. is an international leader in laboratory testing with headquarters in New Jersey. Quest Diagnostics claims to have the largest clinical testing network in the U.S. and reported that its 2014 annual revenue topped $7 billion.

But this isn’t to say that Quest Diagnostics hasn’t been the subject of government scrutiny. In 2009, the company paid over $300 million to resolve whistleblower allegations that it marketed and sold misbranded lab test kits. Quest Diagnostics allegedly knew that these kits were faulty, but the company continued to market and sell them even though they caused lab results to be materially inaccurate and unreliable.

In 2011, Quest Diagnostics was the subject of another whistleblower lawsuit that claimed the company overcharged Medi-Cal, California’s healthcare program for the poor. The whistleblower lawsuit claimed that Quest Diagnostics charged Medi-Cal up to six times more for laboratory testing than it charged other customers, a violation of the California False Claims Act.

This brings us up to today’s Quest Diagnostics whistleblower news…

On August 25, Quest Diagnostics agreed to settle allegations brought forth by yet another whistleblower claiming the company performed duplicate laboratory testing, and then billed Medicare for the repeated procedure. The testing that Quest Diagnostics performed included procedures like blood draws and panel testing.

This whistleblower lawsuit was filed four years ago by a former Quest Diagnostics employee who claimed that she witnessed the alleged fraud while working in the company’s patient service centers. Whistleblower Eliza Martinez claims that Quest Diagnostics was performing tests on the same patients twice in the same day. The company would then submit requests for Medicare reimbursement based on performing two tests instead of only the one necessary test.

According to several news sources, Martinez will receive a whistleblower reward of $358,000 for her role in exposing the lab testing company’s alleged health care fraud.

Unit of Lockheed Martin Settles False Claims Allegations for $4.7 Million

Lockheed MartinLockheed Martin is one of the country’s largest benefactors of defense contracts, with a great majority of its revenue generated from military sales. Just like Quest Diagnostics, Lockheed has frequently been the subject of whistleblower lawsuits and allegations of defense contractor fraud.

These allegations could fill an entire article themselves, here are some of the most recent Lockheed Martin fraud claims:

–    In 2012, Lockheed paid $15.8 million to resolve claims that a subcontractor overcharged the company for perishable tools used to work on planes. Lockheed then passed on this cost to the government.

–    In 2013, the defense contractor settled a securities fraud lawsuit claiming the company lied to investors about the prospects for its information technology division. Lockheed paid nearly $20 million to settle the allegations.

–    In December of 2014, Lockheed paid $27.5 million to resolve allegations that one of its subsidiaries violated the False Claims Act by overcharging the government for work performed by employees that lacked required job qualifications.

Last week, the news media reported that Lockheed agreed to pay $4,790,042 to resolve allegations that a subsidiary (Sandia Corporation) violated the False Claims Act and the Byrd Amendment by appropriating federal funds for lobbying purposes. Sandia allegedly used government money in an effort to renew a Management and Operating (M&O) contract with the Department of Energy’s National Nuclear Security Administration (NNSA).

For over 20 years, Congress has allocated funding for Sandia National Laboratories, a government-owned laboratory operated by Sandia as part of the NNSA’s nuclear weapons complex. According to the Justice Department, Sandia allegedly used federal funding between 2008 and 2012 to lobby Congress and other government officials to obtain a noncompetitive extension on its NNSA contract. The Byrd Amendment prohibits the use of government money for lobbying purposes.

Department of Energy Inspector General Gregory H. Friedman said he applauded the Justice Department’s work last week, saying in a statement that the use of public funds for lobbying is “simply unacceptable.”

Amgen Settles State Attorney General Fraud Charges for $71 Million

diversity-ssrp-amgen_logoAmgen claims on its website that it is the world’s largest independent biopharmaceutical company. The company generated over $20 billion in revenue in 2014, largely on the backs of a several key products.

Two of these products—Aranesp and Enbrel—have been the subject of a number of fraud allegations, specifically dealing with how Amgen marketed both drugs. Aranesp is an anemia drug that increases red blood cell counts. Enbrel is a drug used to treat a number of conditions, including rheumatoid arthritis and other autoimmune disorders.

These drugs were the centerpiece of a 2012 whistleblower lawsuit that claimed Amgen engaged in off label marketing of both Aranesp and Enbrel, all while paying kickbacks and engaging in price gauging. Whistleblower Jill Osiecki, a former Amgen employee, wore a wire more than a dozen times in an effort to expose the alleged fraud.

Basically, the allegations claimed that Amgen sales associates marketed Aranesp to physicians as a treatment option for cancer patients that weren’t undergoing chemotherapy. The drug was not approved by the FDA for this purpose. To make matters worse, a study later showed that the use of Aranesp by non-chemo patients actually increased their chance of death.

Other drugs mentioned in the whistleblower claims were Enbrel, Epogen, Neulasta, Neupogen, and Sensipar. The case ended up settling for $762 million.

Osiecki told the news media she didn’t believe the fraud allegations were a mistake…in fact, these people knew exactly what they were doing. She had this to say about her experience watching what went down at Amgen:

“The Amgen people who engaged in these criminal activities were no less mindful they were engaging in illegal behavior than muggers or bank robbers. They were smart, mature adults, who made conscious decisions to disobey the law to personally profit from highly incentivized pay, bonuses, awards, and international travel.”

Despite putting patient health in danger and striking a criminal plea deal that cost the company hundreds of millions of dollars, not one person at Amgen went to jail. No one paid a personal fine. Nonetheless, you might think that a drug manufacturer hit with such a huge settlement might stay on the straight and narrow. You’d be wrong.

Various news agencies reported last week that Amgen agreed to pay $71 million to settle fraud allegations connected with the illegal marketing of (surprise, surprise) Aranesp and Enbrel. The agreement settles claims brought by Massachusetts Attorney General Maura Healey and 48 attorneys general who say Amgen violated state consumer protection laws by promoting Aranesp for the treatment of anemia among cancer patients even though the application hasn’t been approved by the FDA. Additionally, Amgen allegedly promoted Enbrel for mild plaque psoriasis even though the drug has only been approved by the FDA to treat chronic moderate to severe plaque psoriasis.

As is standard in these settlement agreements, Amgen didn’t admit to any wrongdoing. Aside from the $71 million, Amgen agreed to reform its promotion and marketing practices. Not very likely!

Nursing Home Overpayments From Medicare Reaching New Heights

Jack Furumura was dehydrated and disoriented when he left his nursing home for a hospital in 2013. The 96-year-old lost five pounds during his nursing home stay, in large part because the nursing home failed to follow his nutrition plans, or the home’s very own policies for that matter.

2Mr. Furumura wasn’t able to recover from his ailments and weeks after being checked into a hospital he died at his daughter’s home. In the wake of her father’s death, Katherine Kiang was shocked to discover that Furumura was receiving over two hours of physical and occupational therapy from the nursing home before he was hospitalized.

Kiang said she couldn’t imagine why a 96-year-old dementia patient would receive that much therapy. Why would this nursing home put this man through that much therapy at that stage in his life, and in his condition?

Medicare Incentivizes ‘Ultra High’ Billing Levels

Unfortunately, there are many stories similar to Mr. Furumura’s. Worse yet, Medicare’s own rules are responsible for incentivizing nursing home facilities to bill at “ultra high” levels for services, even when it is wasteful, unnecessary, and, in some cases, harmful for patients. At first glance, the case laid out above seems like Medicare fraud, but unfortunately it appears to be business as usual for a system rife with problems.

At present, Medicare will pay for up to 100 days of a patient’s nursing home care in the aftermath of a hospital stay (in some cases, the patient pays for a portion of the care). Medicare pays nursing home facilities a daily rate for each patient, which is largely based on the duration of a patient’s therapy for a given week. For example, Medicare spent $13,468.19 on Mr. Furumura’s therapy and care. Even as he was deteriorating physically and mentally, the nursing home billed Medicare for his care at the highest possible rate.

Patients that are receiving therapy at the highest billing level generate the biggest payments that nursing homes receive from Medicare. What exactly is Medicare paying for? At least 720 minutes a week of physical therapy (helps with tasks like walking, avoiding falls), occupational therapy (helps with dressing and bathing) and speech therapy (helps patients who have had a stroke, for example, overcome language difficulties).

The ultra high rate, according to a Wall Street Journal news article, averaged out to around $560 per patient, per day in 2013. A “very high” day (between 500 and 719 minutes of therapy) averaged out to roughly $445 per patient. The “low” category (between 45 and 149 minutes of therapy) costs on average $325 per patient, per day.

The current Medicare payment rules were devised in 1998 and then fully-implemented in 2002. Since the day these new rules took effect, nursing homes have continued to bill at increasingly higher therapy levels. Reports indicate that nursing homes billed at the highest rates for patients on roughly 7 percent of days in 2002. Fast forward 11 years to 2013 and the rate for ultra high billing days increased to 53 percent, nearly eight times higher than 2002 standards.

To put this into a dollars and cents, according to data compiled by the Journal, Medicare paid out roughly $28 billion to nursing homes in 2013. That total is 10% more than Medicare would have paid if the proportion of days billed at each therapy level was at 2008 billing standards and 24% more than 2002 levels.

Does More Therapy Translate to Healthier Patients? 

The short answer to this question is there simply isn’t data out there to know for certain. According to Dr. Vincent Mor, there is “clear evidence” that therapy works, but one patient receiving more services than another doesn’t guarantee that the outcomes for one will be any different than the other. “We just don’t know,” says Dr. Mor, who is a health-services professor at Brown University as well chairman of the independent quality committee at HCR ManorCare Inc., which is one of the nation’s largest nursing home operators.

But despite having no evidence to suggest that more care translates to healthier patients, providers have continued to overwhelmingly bill at the highest possible levels. More than 20 current and former rehabilitation therapists interviewed for the Wall Street Journal news piece said they felt pressure from their bosses at nursing home facilities to reach the 720-minute therapy mark for the week in order to bill at the highest level.

According to these therapists, this care was delivered even when patients were unresponsive, weren’t likely to gain anything from the services, or outright declined the services. In some cases, patients became more agitated as a result of having gone through the therapy.

Harvard professor David Grabowski studies nursing home spending. He believes that there are patients that simply aren’t being treated appropriately because the system “rewards high-intensity care.”

Nursing Homes: The Business of Caring, but Still a Business 

Billing at the highest levels is not something restricted to larger nursing facilities—from the looks of the data, nursing homes of all sizes are billing Medicare at ultra high rates.

Genesis HealthCare Corp. is one of the largest nursing home providers in the country. In 2002, it billed Medicare at the ultra high rate in 8.1 percent of days. That number skyrocketed to 58 percent of days in 2013. Kindred Healthcare Inc., which operates nursing home facilities that contract with rehabilitation clinics, billed Medicare at the ultra high rate 7.6 percent of days in 2002. This increased to 58 percent in 2013. HCR ManorCare Inc. billed at the highest rate 8.8 percent of the time in 2002. By 2013, it was billing at the highest rate 68 percent of the time…you get the idea.

HCR is the subject of a whistleblower lawsuit which claims the company committed fraud by putting pressure on employees to perform unnecessary therapy so it could bill Medicare at the highest level. HCR wouldn’t comment on the whistleblower lawsuit, but the company refuted the basic claims on its website.

Nursing Home Medicare Fraud Whistleblower 

Allegations of nursing home facilities committing Medicare fraud is nothing new. This sector of health care has been rife with fraud and abuse for decades. But as we’ve seen in the many aforementioned examples, we have reached a tipping point where it has become business as usual for corrupt nursing homes to bill Medicare for care that is medically unnecessary, unwanted, and in some cases, harmful.

We need to tip the scales back in our favor and make it more difficult for nursing home facilities to commit fraud. A whistleblower case like the HCR lawsuit discussed above is one of the best weapons available to combat Medicare fraud committed by nursing home facilities. A successful whistleblower lawsuit not only returns taxpayer dollars to Medicare, it protects the program’s integrity and ensures that our elderly citizens are receiving appropriate care.

If you work at a nursing home facility and are being asked to perform medically unnecessary services, it is in your best interest to discuss the matter with an experienced whistleblower attorney. If your whistleblower lawsuit proves successful, it could help reduce waste and fraud and earn you a sizable whistleblower reward.

Contact a whistleblower attorney today for a free consultation.

CenseoHealth Employee Alleges Medicare Advantage Fraud

A whistleblower in Texas has filed a false claims lawsuit accusing a medical consulting business and over two dozen health plans for seniors of bilking money from government health care agencies. Whistleblower Becky Ramsey-Ledesma, a medical billing coder, claims that CenseoHealth LLC. performed in-home patient exams that allegedly overstated how much health plans should be paid.

Medicare Advantage FraudCenseoHealth is a Dallas, Texas-based firm that contracts with thousands of doctors that make in-home visits for seniors and evaluate their health for Medicare Advantage plans. CenseoHealth was founded in 2009. In only four years of business, its workforce grew from four in 2009 to over 300 in 2013, with projected revenue for that year estimated to reach $120 million. Doctors under contract with the company have reportedly made over a million in-home patient visits.

Ramsey-Ledesma once worked for CenseoHealth. She claims that she was fired in 2013 for objecting to the alleged fraudulent practices. Her lawsuit represents the latest in a string of whistleblower claims filed within the last few years alleging billing fraud in connection with Medicare Advantage.

What is Medicare Advantage and How Does it Work?

Medicare Advantage has become increasingly popular among the elderly. The latest statistics indicate that it now covers over 17 million Americans. Since the 1980’s, those eligible for Medicare have been able to choose between a regular fee-for-service plan (what we think of as ‘traditional Medicare’), in which the government pays an agreed-to fee to health care providers for each service provided, and a Medicare Advantage plan, where the government pays private insurers a flat fee per month for any individual enrolled.

The flat fee is based on what is called a risk score.

Here’s how risk scores are tabulated:

  • A doctor reviews a patient’s chart.
  • The doctor records any complaints and documents diseases.
  • That information is handed over to a private insurer, which then submits the diagnoses to Medicare.
  • Medicare boils down the diagnoses and predicts how much the cost of care will be for the patient.
  • After a complex process, Medicare pays the private insurer a set monthly fee per patient. If patients are sicker, the insurance company makes more because they require more care. If patients are healthier, the company makes less because they require less care.
  • The insurers can further analyze diagnoses and sponsor further checkups to see if the first doctor missed anything, then increase the patient’s risk score if necessary.

CenseoHealth Whistleblower Lawsuit

Ramsey-Ledesma claims that CenseoHealth used a complex algorithm in an attempt to find patients with undetected medical issues that could be used to boost their risk score and collect more money. CenseoHealth allegedly employed marketers to reach out to patients and schedule in-home patient visits. During these visits, doctors allegedly collected patient data, which could then be used to increase a risk score.

According to the CenseoHealth whistleblower lawsuit, the doctors never actually provided any medical treatment during these visits. Instead, physicians would test vitals, reflexes and listen to patients’ hearts and lungs. No physical was ever provided, nor was any blood work done.

The CenseoHealth whistleblower suit further claims that doctors often didn’t have medical licenses. Others were allegedly scheduled with as many as 10 home visits in a day and were paid a flat fee of $100 per visit. Some doctors simply made up test results, according to whistleblower allegations.

In one example cited in a story by NPR, patients were asked to draw the hands on a clock to show what time of day it was. The whistleblower allegations state that in some cases it was “obvious” that the same person was drawing the hands on the clocks for multiple forms.

The diagnoses, according to whistleblower claims, weren’t obtained from a medical examination, rather, they were self-reported from the patients themselves. Some simply couldn’t have been made in an in-home examination. Others were made based on what medications a patient was taken, though this didn’t take into account that medications can be prescribed for a wide variety of different treatments.

The false claims, according to the whistleblower lawsuit, inflated the cost Medicare paid for patient care. In total, 30 Medicare Advantage plans across 15 states are named, including Blue Cross, Humana, and a number of other significant industry names.

Ramsey-Ledesma’s whistleblower lawsuit is one of many targeting Medicare Advantage home home visits. Another was filed last year by a former compliance officer for Santa Ana, California-based Mobile Medical Examination Services Inc. Other Medicare Advantage whistleblower  lawsuits within the last five years have been filed in Florida and South Carolina.

In addition to the false billing accusations, all of the aforementioned whistleblower lawsuits claim that poor government oversight of Medicare Advantage has contributed to millions lost due to fraudulent charges.

What Are the Downsides?

The government trusts firms like CenseoHealth to report their own risk scores based on the honor system. When you factor in the last step listed above—the home patient visits—these checkups can (and according to the latest whistleblower allegations, do) result in providers jacking up the risk scores for patients, simply because there is no oversight.

According to the Center for Public Integrity, Medicare made nearly $70 billion in “improper” payments to Medicare Advantage plans between 2008 and 2013. According to government estimates, these payments were for the most part the result of overbilling based on inflated risk scores.

The Centers for Medicare and Medicaid Services (CMS) has said in-home health exams can have “significant value,” an opinion shared by America’s Health Insurance Plans, the health insurance industry trade group, which has said home visits are “an important component of disease management activities.”

At this moment, Medicare Advantage is in the midst of strong growth and continues to receive widespread political support from Congress. The House of Representatives recently passed a bill that appears to prevent federal officials from putting an end to in-home health assessments.

At the same time, CMS is drawing scrutiny because its head Andy Slavitt has ties to UnitedHealth Group, which runs the nation’s biggest Medicare Advantage plan. Senator Orrin Hatch (R-UT) was critical of Slavitt’s “conflicted history” after he was nominated for the top CMS job in July.

In other words, the fox is guarding the henhouse.

Make no mistake, these private health firms are in the business of making money. Take CenseoHealth as an example: one of the company’s largest investors is private equity firm Health Evolution Partners, which is headed by David Brailer, a former “health information czar” under President George W. Bush. Brailer was named chairman of CenseoHealth’s board of directors in March.

If companies like CenseoHealth don’t make profit for investors like Health Evolution Partners, investment firms simply take their business elsewhere, and you can bet that until there is reform in the system, there will always be companies that are willing to bend the rules to make more money.

Become a Medicare Advantage Whistleblower

Now more than ever, we need whistleblowers with knowledge of Medicare Advantage fraud to come forward. The CMS study, along with everything mentioned above, is a clear indication that fraud in the system isn’t going to go away on its own. The companies responsible for stealing money from the government need to be held accountable. That justice can start with you.

Whistleblower Day Raises Awareness, Honors Those Defending Our Country

The nation’s first whistleblower law was passed in 1778. Think about that for a moment. Over two hundred years ago, the country’s Founding Fathers saw the crucial role that whistleblowers play in the fight against waste, fraud and abuse. The country’s first whistleblower law, passed unanimously by the Continental Congress, said:

“…it is the duty of all persons in the service of the United States, as well as all other inhabitants thereof, to give the earliest information of wrongdoing to Congress or other proper authority of any misconduct, frauds or misdemeanors committed by any officers or persons in the service of these states, which may come to their knowledge.”

The Founding Fathers were onto something, and the concept of Americans reporting ‘misconduct’ and ‘fraud’ to Congress is just as important now as it was when our country was in its infancy.

Today we see that fraud remains a huge problems and whistleblowers are retaliated against, wrongfully terminated, or blackballed from the industry they have spent their lives working in. Anyone who has decided to speak out and expose malfeasance on the part of a corporation or a government agency knows that being a whistleblower is a long, hard and risky road.

iStock_000026526325_SmallWhistleblowers are often recognized for their public service, but too often their act of bringing the truth to light costs them their careers. Blowing the whistle shouldn’t be like that, especially since we all benefit from exposed corporate wrongdoing. It is for this reason that July 30 is recognized each year as National Whistleblower Day; to not only honor and support whistleblowers for their sacrifices and bravery, but to raise awareness and ensure that our country’s laws continue to offer them protection and incentive to expose the truth.

“I’m still trying to rebuild my life.”

That’s what former National Security Administration (NSA) executive-turned-whistleblower Thomas Drake said today addressing an audience on Capitol Hill in a speech commemorating National Whistleblower Day. You might remember Drake’s hallmark case in which he was prosecuted by the Justice Department in 2010 for discussing a decade old surveillance programs with a newspaper reporter.

Most of the charges against Drake were ultimately dropped, but he still ended up pleading guilty to a lesser charge that continues to haunt him. Today, Drake says that he is considered persona non grata and many of his friends are gone. He can’t get work in contracting, nor in the government sphere, so he now works in an Apple Store.

“Apple is fun, but it’s nowhere near who I am, where I grew up, or where I am in [wanting to] serve my nation,” Drake said in his National Whistleblower Day speech.

Whistleblowers deserve jury trials

Another former whistleblower who spoke on Thursday was Robert MacLean, the former Transportation Security Administration (TSA) air marshal who was terminated after speaking to a TV reporter in 2003 about planned cuts for in-flight air marshal operations. Upon learning about the cuts, MacLean voiced concerns to his superiors, saying that they would put lives in danger. After being told that there was nothing to be done, MacLean was told to keep quiet.

He didn’t.

MacLean turned whistleblower and leaked the news to an MSNBC reporter. After the story gained widespread media attention, Congress ended up scrapping the plans to reduce air marshal presence. Everything was fine for MacLean for a couple of years after his disclosure, but once the TSA learned that he was the source for the MSNBC report, he was promptly terminated.

After many years of struggle, MacLean did manage to secure an important Supreme Court decision earlier this year. The Justices ruled 7 to 2 in his favor that he did not violate federal law by leaking the proposed cuts to the reporter.

MacLean told the audience during his National Whistleblower Day speech that the TSA is still litigating. He added that the Merit Systems Protection Board (MSPB), an independent agency established to ensure adequate protection for federal employees against abuses by agency management, is “weak.” He cited a case in which an administrative judge has delayed a decision for almost two years, and then stated that federal whistleblowers deserve jury trials.

Essentially suicide…”

Financial whistleblowers have also found the road a difficult one.

Linda Almonte was making $100,000 annually as a division vice president at JPMorgan Chase, enough to support herself, her four kids and her stay-at-home husband. When she alerted her boss about potential fraud in a deal she was working on, she expected a pat on the back for a job well done.

Instead, her boss told her to be quiet and keep the deal moving. She refused and was later fired.

Almonte tried to find work at another bank, but none would hire her on after she stood up to Chase. She endured continued harassment and personal hardship as a result of doing the right thing. Her career, she says, will never be what it was because her name is everywhere. “I can’t live that down,” says Almonte.

Whistleblower job protection?

According to Dana Gold, senior fellow at the Government Accountability Project (GAP), the fate of Almonte and the other whistleblowers is far from unique. We still have a long way to go in terms of making all would-be whistleblowers feel comfortable enough to come forward.

But the federal government and state governments have still managed to recover an estimated $55 billion from cases stemming from whistleblower lawsuits. Bold whistleblower protection provisions in the False Claims Act and the Dodd-Frank Act have certainly helped build whistleblower confidence, and the Securities Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have both recently ramped up their efforts to protect whistleblowers.

You may not know this, but the False Claims Act protects employees, contractors and agents from retaliation. A whistleblower who lawfully investigates or brings a False Claims Act claim is covered “if that employee, contractor, or agent is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment,” according to the FCA.

Furthermore, any whistleblower that was retaliated against can seek “all relief necessary to make the employee…whole.” This can include reinstatement to their former job, back pay amounting to twice their salary and the reimbursement of litigation costs.

States also offer their own whistleblower laws. California employees that have been the victims of retaliation, for example, are entitled to reinstatement with their same status, and the company that broke the law is forced to pay the whistleblower’s legal fees.

More to be done…

Still, there is plenty more that can be done to protect whistleblowers and encourage them to come forward. For example, many whistleblowers are forced to wait for years before their cases sees the light of day, putting them under tremendous financial strain, especially if they cannot find work in their industry. There should be more resources aimed at getting whistleblower claims processed in a timely fashion so relators can help serve justice and return to their lives. They aren’t the responsible party for the wrongdoing, so why should they suffer for bringing the truth to light?

National Whistleblower Day is a great idea: it can better inform the public of just how important whistleblowers are and make people take notice of how difficult it is becoming a whistleblower. We owe a debt to so many that have chosen to walk an uneasy path to justice and progress. Let’s repay it by honoring them on July 30, and by protecting them as best we can moving forward.

What Challenges Do Women Whistleblowers Face?

Cheryl Eckard received a whistleblower reward of over $100 million in 2010. But before she became a millionaire many times over, Eckard says she was the victim of retaliation.

Eckard, who worked in the compliance department of GlaxoSmithKline, filed a whistleblower lawsuit after being fired from the company in 2003. Her lawsuit claimed that she repeatedly expressed serious concerns to her superiors about compliance problems and quality assurance issues at the drugmaker’s Cidra plant in Puerto Rico prior to May 2003. Not long after sharing these concerns, Eckard allegedly received a call from GSK’s human resources department, informing her that she was to receive a redundancy package.

According to Eckard, she informed H.R. she wasn’t interested in the package, but was told that she had no choice. Even after she was fired, Eckard allegedly continued to try to get GSK to address Cidra’s quality control and compliance issues but was stonewalled. Years later, Cidra’s issues are now infamous.

In the end, GSK settled with the Justice Department for $750 million. The huge recovery would not have been possible had it not been for Eckard.

It goes without saying that whistleblowers face a difficult road in the pursuit of justice and are often the targets of retaliation. But what role does gender play in blowing the whistle? Are women whistleblowers more likely to be retaliated against?

A 2008 whistleblower study looked into these questions and more. Over 3,000 employees who participated in the study were given questionnaires that asked if they had “personally observed or had direct evidence” of any of 17 types of wrongdoing involving their organizations within the last year. The whistleblowers who reported wrongdoing (excluding those that reported anonymously) say they experienced the following types of retaliation:

  • 15% said they received poor performance appraisals.
  • 14% said they were more tightly scrutinized during daily activities by management.
  • 12% said they were verbally harassed or intimidated.
  • 11% said co-workers didn’t socialize with them.
  • 10% said information needed to successfully perform their job was withheld from them.
  • 9% said personnel and/or staff were withdrawn.
  • 9% said they were denied training opportunities.
  • 8% said they were assigned less important or less desirable tasks.
  • 7% said their professional reputation was harmed.
  • 7% said they were charged with committing an unrelated offense.
  • 7% said they were denied a promotion or award.  

What really proved interesting was the difference in treatment between male whistleblowers and female whistleblowers. According to the study, male whistleblowers were treated in accordance with their power within the organization. In other words, the higher up the company ladder a male whistleblower was, the less severe the retaliation. This proved not to be so for female whistleblowers, who received the same treatment “regardless of the amount of organizational power they held: Their status as women overrode their status as powerful or powerless organization members.”

Furthermore, the study found that when women blew the whistle on more serious misconduct or misconduct at higher levels within an organization, they were more likely to suffer retaliation. This did not prove to be the case for men.

So what is this study really saying?

  • A woman is more likely to suffer retaliation than a man.
  • A woman’s status within an organization is unrelated to retaliation. On the other hand, a male whistleblower’s status can and does, in some cases, insulate them from retaliation.
  • A woman will face greater retaliation in accordance with the seriousness of the wrongdoing they report.
  • The chance of a whistleblower being retaliated against is tied to their relationship with their boss. However, the effect of the retaliation is stronger for women than men.

AstraZeneca and Cephalon Will Pay Combined $54 Million to Settle Whistleblower Allegations

AstraZeneca and Cephalon (now owned by Teva Pharmaceuticals) have agreed to settle whistleblower claims that both knowingly underpaid rebates under the Medicaid Drug Rebate Program, which resulted in the government being overcharged for drugs. Both companies will pay a combined $54 million to settle the allegations initially brought in a 2008 whistleblower lawsuit filed by pharmacist and attorney Ronald Streck, who used to head a trade group for pharmaceutical wholesalers. Streck will receive a whistleblower reward for bringing the allegations to the government’s attention, though the amount has not yet been determined.

M_Id_473905_AstraZenecaIn order for their drugs to be covered under the Medicaid Drug Rebate Program, drug manufacturers are required to pay rebates every quarter to state Medicaid programs. The rebates are, in part, based on the average manufacturer prices (AMPs) reported to the government for each drug. Typically, a drug with a higher reported AMP amounts to a greater rebate to state Medicaid programs.

In his qui tam lawsuit, Streck claimed that AstraZeneca and Cephalon developed a scheme to underreport AMPs for a number of their drugs by improperly reducing the reported AMPs for service fees that both paid to wholesalers. Essentially, the lawsuit claims that both drug makers treated fees to pharmaceuticals wholesalers as price reductions when tabulating AMPs for their drugs. As a result of this deception, AstraZeneca and Cephalon allegedly underpaid rebates owed to the states, which in turn caused the government to be overcharged for payments to the states under the Medicaid Drug Rebate Program.

Settlement Terms

  • AstraZeneca: $46.5 million—Of that total, AstraZeneca will pay roughly $26.7 million, plus interest, to the federal government, and the remainder will go to states that participated in the settlement. The following AstraZeneca drugs were named in the whistleblower lawsuit: Crestor (cholesterol medication) and Seroquel (an antipsychotic).
  • Cephalon: $7.5 million—Of that total, Cephalon will pay roughly $4.3 million, plus interest, to the federal government, and the remainder will go to states that participated in the settlement. The following Cephalon drugs were named in the whistleblower lawsuit: Provigil (wakefulness, for people with uncontrollable sleepiness) and Actiq (pain management for cancer patients).

VMWare and Carahsoft to Pay $75.5 Million to Settle Whistleblower Allegations that Both Overcharged the Government by Concealing Commercial Pricing

VMware Inc. and Carahsoft Technology Corporation will pay $75.5 million to resolve whistleblower allegations that both companies violated the False Claims Act by misrepresenting commercial pricing practices and overcharging the government for goods and services purchased under contract. Delaware-based VMware is a company that specializes in computer virtualization software and Carahsoft, a Maryland corporation, is a distributor of information technology products.

logo_vmwareUnder the U.S. General Services Administration’s Multiple Award Schedule (MAS) Program, vendors seeking to earn government contracts are required to disclose their commercial pricing policies and practices to the GSA. During MAS contract negotiations, prospective vendors must disclose the “current, accurate and complete” discounts they offer to commercial customers so the GSA can negotiate fair pricing for government purchasers. After any MAS contract is awarded, regulations require that participating vendors continue to disclose any changes in their commercial pricing practices to the GSA. This includes any additional discounts vendors offer their commercial customers after any MAS contract is agreed to.

According to a Justice Department press release, VMware and Carahsoft submitted false statements to the government between 2007 and 2013 in connection with Carahsoft’s MAS contract for the sale of VMware products and services. The false statements allegedly hid both companies’ commercial pricing practices, which resulted in the government being overcharged for VMware’s products and services.

The agreement settles claims initially filed in a qui tam lawsuit by whistleblower Dane Smith, who was a former VMware vice president for the Americas. Smith’s share of the recovery has not been determined.

Today’s settlement shows how valuable whistleblowers are in the fight to stop fraud on the part of government contractors seeking to steal government funds at the expense of taxpayers. Our firm applauds Mr. Smith for coming forward with these allegations and bringing accountability justice to his former employer.

Community Health Network Agrees to Settle Medicare Fraud Lawsuit for $20.3 Million

Federal prosecutors announced yesterday that Community Health Network has agreed to pay $20.3 million to settle allegations that the health care provider had for years submitted false claims for Medicare and Medicaid reimbursement. Community Health operates seven hospitals in Indianapolis and has dozens of other medical facilities scattered throughout Central Indiana.

chn_vert_colorAccording to Assistant U.S. Attorney Shelese Woods, the settlement is related to contracts that Community Health had previously entered into with local ambulatory surgery centers not owned by the provider. The cost of performing surgeries at these centers was allegedly cheaper than the cost of performing the same surgeries at a Community Health hospital. The difference in price for the procedures could range from small (around $200) to quite substantial ($2,000).

The government contends that Community Health doctors would refer patients to surgery centers in an effort to cut costs. At the same time, Community Health allegedly submitted bills to Medicare and Medicaid claiming the surgeries had been performed at a Community Health hospital when, in fact, they were performed at the cheaper surgery centers. These alleged false claims resulted in the government overpaying for the surgeries.

Woods told the media that she believes Community Health had actually been engaging in the fraud laid out in the allegations since the late 1990’s, but the statute of limitations on health care fraud prevented the allegations from going back that far. Community Health purportedly stopped submitting bills in this manner in 2009. According to the Indianapolis Star, the provider no longer  has contracts with surgery centers.

The government notified hospitals back in November of 2007 that submitting reimbursement bills to Medicare for outside procedures and falsely claiming they were done in-house was not allowed. According to Woods, the damages from Community Health’s alleged scheme after this notice had been sent out totaled $9.35 million.

For-Profit Education Company to Pay $13 Million to Settle Whistleblower Allegations of False Claims for Federal Student Aid

A for-profit education company has agreed to pay $13 million to settle whistleblower allegations that it submitted false claims to the Department of Education for federal student aid. Education Affiliates (EA) of White Marsh, Maryland provides post-secondary education training programs in several professions at the company’s 50 campuses throughout the U.S.

education-affiliatesFive whistleblowers filed suit against EA, claiming that employees at the company’s All State Career campus in Baltimore were altering admissions test results in order to admit unqualified students. These employees were also accused of creating fraudulent high school diplomas and falsifying students’ federal aid applications. These claims resulted in criminal convictions for two All State Careers admission representatives and a test proctor.

The whistleblower lawsuits further contend that multiple EA schools were referring prospective students to “diploma mills” (unaccredited higher education institutions offering illegitimate diplomas for a fee) in order to qualify for federal student aid. EA campuses in Birmingham, Houston and Cincinnati also allegedly violated bans on incentive-based compensation for their enrollment personnel, made various misrepresentations concerning graduation and job placement rates, and altered attendance records and enrollment of unqualified students.

Today’s settlement provides repayment of $1.9 million in liabilities that resulted from EA awarding federal financial aid to students with invalid high school credentials that were issued by a diploma mill. As for the five whistleblowers who filed qui tam lawsuits against EA, they will share a reward of $1.8 million.

The Department of Education has made it clear that abusive behavior on the part of for-profit education companies will not be tolerated, and that it will continue to work with the DOJ and other federal agencies to hold post-secondary institutions accountable when they break the law.

The conduct outlined in these whistleblower claims represent predatory conduct that victimizes students and bilks money from taxpayers. Unfortunately, this type of behavior has become all too common among for-profit education companies. We need more people like these whistleblowers who exposed alleged wrongdoing at EA to come forward and report fraud. It is the right thing to do, it saves taxpayer money and can result in a sizable whistleblower reward if the government recovers stolen funds.

DaVita to Pay $450 Million to Resolve Whistleblower Allegations Claiming it Sought Reimbursement for Unnecessary Drug Wastage

The nation’s largest provider of dialysis services announced yesterday that it has agreed to pay $450 million to resolve whistleblower claims that the company violated the False Claims Act by seeking reimbursement from federal health care agencies in connection with unnecessary drug wastage.

CompanyLogos_davita logoDaVita Healthcare Partners, Inc., headquartered in Denver, has dialysis clinics in 46 U.S. states and the District of Columbia. The company is accused of knowingly creating unnecessary waste in the administration of two diabetes drugs, Zemplar and Venofer. Zemplar, a Vitamin D supplement usually administered at every dialysis session, is packaged in single-use vial sizes of 2 mcg, 5 mcg, and 10 mcg. Venofer is an iron supplement packaged at the time of these allegations only in a single-use vial size of 100 mg. Occasionally, the amount of the drug in the vials didn’t match the dosage specified by a doctor, resulting in the remainder of the drug needing to be discarded.

When the alleged fraud was taking place, Medicare would reimburse dialysis providers for certain waste if the providers (acting in good faith) discarded what was left of the drug contained in single-use vials after they had administered the requisite dose to a Medicare patient.

According to the whistleblower allegations, DaVita had protocols in place specifically designed to create unnecessary waste of Zemplar and Venofer. DaVita allegedly required its employees to provide the maximum amount of Zemplar to patients. The company would then turn around and bill the government for the amount of Zemplar administered to patients plus the amount “wasted.”

With regard to Venofer, DaVita had similar protocols in place that required nurses to administer the drug in small amounts and at frequent intervals in order to maximize wastage. In an example cited in the complaint, DaVita called for a patient to receive 25 mg of Venofer per week, resulting in 300 mg of waste per month that ended up being billed to the government. But if the order had been properly filled to give the patient the entire 100 mg vial once per month, there wouldn’t have been any waste.

Medicare eventually changed its single–vial waste reimbursement policies in 2011 to mitigate this problem. Once this change was made and the single-vial waste was no longer profitable for DaVita, it changed its practices and waste produced by the vials went down.

This case hinged on the sacrifice and courage of two whistleblowers, Dr. Alon Vanier and nurse Daniel Barbir. Both will share an as yet undetermined reward based on the amount recovered by the government.