" If the Secretary proceeds with any administrative or judicial action based upon information brought to the Secretary’s attention by an individual, the individual shall receive as an award at least 15 percent but not more than 30 percent of the collected proceeds (including penalties, interest, additions to tax, and additional amounts resulting from the action), or from any settlement in response to such action... ."

There are interesting limitations, however, on this apparent government largess. The good news was the large increase in IRS whistleblower awards, from 15 to a possible 30% maximum. There were some compromises, however. For example, the whistleblower award is predicated upon a claim against someone whose annual income exceeds $200,000, AND when the total amount in taxes, penalties, and interest owed is more than $2,000,000. In fact, revisions to the whistleblower statute suggest there may be more limits than many whistleblowers anticipate.

Courts have recently weighed in on saying how low can attorney fees in whistle blowing go. The answer is...quiet a tweet: the First US Circuit Court of Appeals lowered an attorney's contingency-based recovery from $292,000 to $50,000. The court noted that government officials did the bulk of the work, and that the attorney was able to 'piggy back' on their efforts. Most importantly, the court reasoned the rationale of whistleblower laws was to protect and serve the interests of the public...and to a large extent, the whistle blower's interests in an award are indistinguishable.

"The whole purpose of the discretionary award to whistleblowers under this statute is to create incentives for the whistleblower to take risks that may disadvantage the whistleblower in his relationship to his employer....The amount of the fee that will be siphoned off by the lawyer significantly affects the size of that award and the power of the incentive. The court in administering this statute is obligated to ensure his excessive legal fees will not diminish the statutory incentive." Judge Dyk, U.S. v. Hawthorn, entered 10/18/2010.

The importance of any potential limitations, or even reductions in anticipated awards, is that whistleblowers, without adequately motivated legal counsel, frequently have no means to deal with the costly and career debilitating efforts to maintain a whistleblower case. Since first introduced in 1863, qui tam laws have routinely allowed up to 30% awards.

At the end of the process, however, government may always reduce a Whistleblower award the good old fashioned way: by collecting taxes on it. Happily, the IRS allows legal fees to be deducted. (Campbell  v. Commissioner of Internal Revenue, January 21, 2010).

Acting with unusual speed, federal officials went from closing a prominent New York City bank (March 12, 2010) to arresting its CEO and President at his home (March 15, 2010). The president and CEO of New York's Park Avenue Bank, Charles J. Antonucci (59), this fall took a plea agreement with federal prosecutors. Antonucci admitted to taking more than $11 million illegally from TARP.

Antonucci's guilty plea was the conclusion of the first prosecution of misappropriated TARP funds.

As with TARP's national premises, Antonucci's offenses also crossed state lines...literally and figuratively. What remains shrouded, however, is the extent to which federal prosecutors will use their discretion to pursue a potential slew of unindicted co-conspirators. Count Three in the complaint gives an inkling to the potential breadth of this problem, given recent revelations into how high flying banks have cozied up with influential customers:

Antonucci accepted bribes from customers of the Bank, including but not limited to over $250,000 in cash bribes, free use of a customer's airplane, and free use of another customer's luxury automobile, in exchange for Antonucci's approval of various banking transactions. Indeed, on more than ten occasions in 2008 and 2009, Antonucci used a private plane owned by a co-conspirator ("CC-1") to fly to, among other places, Florida, Panama, Arizona (so that Antonucci could attend the Super Bowl), and Augusta, Georgia (so that Antonucci could attend the Masters Golf Tournament). All the while, Antonucci approved over $8 million in overdrafts on accounts for entities controlled by CC-1 at Park Avenue Bank.

One sophisticated and potentially aggressive component of the TARP program utilizes classic whistle blower techniques...meet the sleuth next door, SIGTARP. Though not a law enforcement agency, SITARP relies extensively on public input: and SIGTARP's inspector has shown a  willingness to confront his peers at Treasury.

But critics have argued the enabling language of TARP may be  as guilty as Antonucci. Though in Antonucci's case, obtaining a plea agreement was likely seen as being of the highest priority, subsequent prosecutions of TARP offenses may look toward fleshing out intent offenses under the legislation...making insider information, typically obtained best by whistle blowing, ever more vital. Whistle blowing for enforcing "intent" of TARP's vague regulation will complicate the tasks of those given the responsibility of managing the language. And the police powers under TARP are already vague.

"Residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before March 14, 2008, the purchase of which the Treasury Secretary determines promotes financial market stability. And any other financial instrument that the Treasury Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress."

The vagueness of TARP's language has led one important voice to attack the intention of TARP: and by implication, similar bailouts. According to Neil Barofsky, who serves as the Special Inspector General for TARP:

"Inadequate oversight and insufficient information about what companies are doing with the money leaves the program open to fraud, including conflicts of interest facing fund managers, collusion between participants and vulnerabilities to money laundering."

The Washington Post has reported (July 20, 2009) the Treasury Department refused to implement Barofsky's recommendations to Congress for TARP reform. Instead, Treasury official insist, tracking TARP funds to banks is akin to tracking "water poured into the ocean."

Source:
"TARP  and the Acronym of Trouble:  Good Rap, Bad Rap"  http://www.examiner.com/law-enforcement-in-national/tarp-fraud-uncovered-bank-ceo-pleads-guilty-new-york-city

This article is brought to you by the QTT, the epicenter for whistleblowers and people interested in the False Claims Act, Qui Tam Provisions, and Medicare and Medicaid fraud. To discuss a potential case, please call Eric Young at 1 (800) 590-4116.

Scott is a Republican candidate running for Governor of Florida. A native of Illinois with no former experience in the government, Scott joined the gubernatorial race on April 9. The primary election for the Republican candidate for governor will take place on August 24. Scott is running against Bill McCollum, Attorney General of Florida, and Florida Senator Paula Dockery for the Republican candidacy. Due to Scott’s personal commitment of $4.7 million to his own campaign (more than McCollum has raised in a year), he has been able to buy advertising slots. Thanks to his ads, he is becoming increasingly popular as reflected in polls. Scott, in his few months in the race, only trails McCollum by 14 percentage points. The most recent Mason-Dixon poll, places McCollum at 38 percent and Scott at 24 percent. However, this 14 percent lead is not a good sign for McCollum according to Brad Coker, a Mason-Dixon pollster. He stated, “’McCollum’s 38-24 lead over Scott doesn’t look impressive given his long tenure and high visibility as a Republican office holder.’” McCollum’s place as the front-runner is not secure as Scott’s campaign gains more momentum and support.

Despite the fact that the author of this article has droned on about the race, the question remains, “why would this entry characterize Grasso of the NYSE, Hurd of HP, and new-to-the-political scene Scott, as similar to one another?” The key: the past will always be questioned in the future, and fraud will follow you in future endeavors. While Grasso and Hurd have left their respective companies, they have not decided to run for office. Scott, fraudulent company CEO on one hand, and self-proclaimed honest-politician on the other, is running. The largest Health Care Fraud case in U.S. History took place against Columbia/Hospital Corporation of America (HCA). Rick Scott was CEO of Columbia/HCA when the company committed fraud and during the time of the investigations.

Scott helped to found the Columbia Hospital Corporation in 1987, which merged with HCA in 1989. During Scott’s time as CEO, Columbia/HCA committed fraud against the government by improperly billing Medicare, Medicaid, and Tricare. The cases included evidence that Columbia/HCA overbilled, paid kickbacks, billed for treatments and drugs that weren’t covered and billed for hospitality costs not related to healthcare costs (sports tickets, country club dues, etc.) Scott resigned in 1997 after it was proven that the company kept two books: one that was shown to the government, and one that had listed the actual truthful expenses of the company. Columbia/HCA paid $1.7 billion to settle the case. According to the “Rick Scott for Governor” website when Scott left Columbia/HCA it was revered as “one of the most admired companies in America.” It is unknown how much the average American buys this statement, but then again, the website says nothing about the fraud committed.

Despite Scott’s position as CEO of a fraudulent company, he left with $10 million in severance, $300 million in stock options, spent $5 million to oppose President Obama’s healthcare plan, and it looks as through he will spend $25 in the governor’s race, according to Caputo. Scott was not charged or interviewed in the investigation of Columbia/HCA and claims that he “’denies the chain committed any criminal acts that he was aware of.” To be fair, it is possible that Scott did not know of the fraud committed when he was CEO. However, he has made it known that, “Mistakes were made at the company, and as CEO I have to accept responsibility for those mistakes.’”

So thirteen years after his resignation, Scott returns to the limelight, this time as an “honest-politician” instead of a “fraudulent company’s CEO.” However, Scott’s return certainly has not been easy, as his opponents (McCollum and Democratic frontrunner Alex Sink) have used the lawsuit against Columbia/HCA against him in attack ads. McCollum’s campaign stated that, “’The fact that Rick Scott is running for Governor as a ‘reformer’ would be funny if it wasn’t so outrageous…Rick Scott not only oversaw fraud, Rick Scott is fraud.’” However, when McCollum was in Congress during the investigation of Columbia/HCA, he noted that the crackdown on health care providers was overzealous, and sponsored the Health Care Claims Guidance Act, which tried to cut back on the investigations.

The company’s fraudulent activity aside, Scott thinks that his background prepares him for governor. While he may have a prestigious business background and be quite the entrepreneur, the fraud committed by Columbia/HCA will draw negative attention to his campaign. When asked why he’s running for governor when never holding a political position before, Scott answered, “‘I’m an outsider, I’m a business person, I know how to create private sector jobs, I know how to balance a budget.’” To Scott’s credit, he did create jobs as CEO of Columbia/HCA by employing 285,000 workers, making it the seventh largest employer in the U.S. at the time. But Scott’s budget-balancing skills may be in question when looking at Columbia/HCA’s budget under his watch. Scott responded further to the initial question stating, “‘I know how to get results by holding people accountable.’” This was probably not his best choice of words, considering those who hold him accountable for defrauding Medicare.

The most ironic part of the former-CEO-turned-politician’s campaign must be the type of fraud committed by Columbia/HCA with respect to the state that Scott is running in. William March of the Tampa Tribune was likely half serious, half joking, when he questioned, “Can the man who ran the company that committed the biggest Medicare fraud in history get elected governor in a state full of retirees?” This is an ironic possibility.

NOTE: This blog is meant to inform viewers of fraudulent activity and qui tam laws and lawsuits. The Qui Tam Team has no personal or professional feelings on Rick Scott’s campaign, nor the outcome of the election. This entry was written with the intention to educate, not to state an opinion.

Sources:
Appleby, Julie. “HCA to settle more allegations for $631M.” USA Today. 18 December 2002. http://www.usatoday.com/money/industries/health/2002-12-18-hca-settlement-_x.htm.
Caputo, Marc. “Poll: Former healthcare exec Rick Scott trails Bill McCollum in GOP primary.” The Miami Herald. 5 August 2010. http://www.miamiherald.com/2010/05/08/1620055/poll-former-healthcare-exec-rick.html.
March, William. “Rick Scott criticized for heading company that committed fraud.” The Tampa Tribune. 28 May 2010. http://www2.tbo.com/content/2010/may/28/281228/gop-candidate-scott-criticized-heading-company-com/news-politics/.
“Meet Rick.” Republican Rick Scott For Governor. 2010. http://www.rickscottforflorida.com/home/meet-rick/.

This article is brought to you by the QTT, the epicenter for whistleblowers and people interested in the False Claims Act, Qui Tam Provisions, and Medicare and Medicaid fraud. To discuss a potential case, please call Eric Young at 1 (800) 590-4116.

Whistleblowing is a time commitment.  It requires gathering first-hand specific information about fraudulent activity, working with lawyers, spending time in negotiations or court, etc.  Many qui tam cases take years to settle.

Whistleblowing also requires money as hiring lawyers is necessary.  However, the money used to pay lawyers may be reimbursed to you after winning a case.  In our recent article on quitamteam.com, “Jury: College & Faculty Member Committed Fraud,” the whistleblower in the case, Dr. Daniel Feldman, is likely to be reimbursed.  Dr. Feldman filed the case in 2003, and it has taken 7 years for the final ruling to be issued.  Dr. Feldman’s fees and costs to his lawyers cost several hundred thousand dollars, which may be reimbursed to him in full!

Many think whistleblowing is a risky business.  But, contrary to popular belief, the risks are not very high as whistleblowers are protected by law.  For instance, many people think that whistleblowing involves the risk of losing your job, but under the False Claims Act (FCA), the Occupational Safety and Health Act (OSH Act), and other laws that protect whistleblowers, whistleblowers cannot be fired for whistleblowing.  According to the Department of Labor website, “Whistleblowers may not be transferred, denied a raise, have their hours reduced, or be fired or punished in any other way because they have exercised any right afforded to them under one of the laws that protect whistleblowers.”  So while whistleblowing may seem risky, the law is on the whistleblower’s side to protect him/her from any punishment as a result of whistleblowing.

So whistleblowing takes time, can take money, but is not very risky.  But still “why do it?”  “Is it worth it?” “What good will it bring you?”  The reward of being a whistleblower is not only self-satisfaction, but a heavy pay-off if you win the case.  In order to receive a reward for being a whistleblower, the government must recover at least $1 million in the case. Whistleblowers receive a mandatory minimum of 10 percent, to a maximum of 30 percent of what is recovered.  Therefore, if whistleblowers are awarded in cases recovering $1 million or more, a whistleblower will make between $100,000 and $300,000 at least.  For larger cases, a whistleblower must still receive at least 10 percent of the claim, and can make more than $100,000 to $300,000.  In the HCA case in 2003, the numerous whistleblowers received $151,591,500.  The largest Healthcare fraud settlement in U.S. history, against Pfizer Inc., paid six whistleblowers more than $102 million.  So while whistleblowing may take time, it is worth it. Overall, you can be reimbursed for payments to attorneys, you will not incur much risk, and you will make at least $100,000 if your case wins.

Dr. Feldman sums up why it’s worth being a whistleblower.  He stated that, “being a whistleblower is not something you undertake without tremendous sacrifice,” because of the time and risk involved.  However, he agreed that “In the end, prevailing certainty feels great and worth the cost to do the right thing” (Source: Salmanson Goldshaw).

Sources:
Henning, Peter J. “Come Blow Your Horn for the S.E.C.” The New York Times DealBook Blog. 26 July 2010. http://dealbook.blogs.nytimes.com/2010/07/26/come-blow-your-horn-to-the-s-e-c/.
Montopoli, Brian. “Obama Signs Sweeping Financial Reform Into Law.” CBSNews. 21 July 2010. http://www.cbsnews.com/8301-503544_162-20011201-503544.html Salmanson Goldshaw, P.C. as per PR Newswire. PR Newswire. “Federal Jury Finds Cornell University’s Medical College Committed Fraud.” 29 July 2010. http://www.prnewswire.com/news-releases/federal-jury-finds-cornell-universitys-medical-college-committed-fraud-99538899.html.
Savage, David. “Financial reform law includes big cash incentives for whistle-blowers.” Los Angeles Times. 23 July 2010.http://www.latimes.com/business/la-fi-reform-whistleblower-20100723,0,6099636.story.
United States Department of Health & Human Services. News Release. “Justice Department Announces Largest Health Care Fraud Settlement in its History.” 2 September 2009. http://www.hhs.gov/news/press/2009pres/09/20090902a.html.
United States Department of Justice. “Largest Health Care Fraud Case In U.S. History Settled HCA Investigation News Record Total of $1.7 Billion.” 26 June 2003. http://www.justice.gov/opa/pr/2003/June/03_civ_386.htm.
United States Department of Labor. “Whistleblower Protections.” http://www.dol.gov/compliance/laws/comp-whistleblower.htm.

This article is brought to you by the QTT, the epicenter for whistleblowers and people interested in the False Claims Act, Qui Tam Provisions, and Medicare and Medicaid fraud. To discuss a potential case, please call Eric Young at 1 (800) 590-4116.

[u]nprecedented government spending, recent amendments to the FCA, increased fraud enforcement budgets and priorities, skyrocketing FCA recoveries, state legislative and enforcement activities, and the sheer volume of ongoing government investigations and pending qui tam actions suggest that the FCA will remain the fastest growing area of federal litigation.

One of the most important factors contributing to FCA mania is lawmakers' obsession with tweaking the Act. The FCA has already been amended twice in the first six months of 2010, and Congress is hankering to amend the FCA once again.

Congress passed the Fraud Enforcement Recovery Act ("FERA'') in May 2009. FERA made some of the most significant amendments to the FCA in 20 years.  FERA already expanded protections for agents or contractors who blow the whistle. The latest version of the Financial Reform Bill would expand the scope of protected whistleblower conduct to include not only "efforts to stop 1 or more violations"  but also lawful behavior "in furtherance of an action'' under the FCA.

Massive outlays of federal dollars combined with Congress's FCA infatuation guarantee that these types of cases will stay hot. 2010 may well be the year of titanic clashes over the FCA, so grab a front row seat as the dollars fly!

This article is brought to you by the QTT, the epicenter for whistleblowers and people interested in the False Claims Act, Qui Tam Provisions, and Medicare and Medicaid fraud. To discuss a potential case, please call Eric Young at 1 (800) 590-4116.

HEAT is a coordinated effort between DOJ and HHS, and it has a Medicare Fraud Strike Force that has been going around various cities busting health care fraud perps. It's operating in various locations, including South Florida, but no, you are not likely to see Attorney General Holder wearing a Miami Vice suit and driving a go-fast boat into a medical center.

In recent testimony given before the House Ways and Means Subcommittee on Health and Oversight, Edward Siskel, the Associate Deputy Attorney General, stated that since May 2009, the Strike Force has been putting fear in the hearts of health care fraudsters. Strike Force prosecutors have filed over 120 cases charging more than 290 defendants and have obtained 16 convictions. The Strike Force also appears to have had a deterrent effect. In the twelve months since the Strike Force was announced, the Miami area has seen an almost $2 billion reduction in durable medical equipment submissions compared to the preceding 12 month period.

Deputy AG Siskel also notes in his testimony statistics all too familiar to qui tamers: the bulk of the DOJ's civil case load comprises suits against drug and medical device makers. Qui tam suits have proved to be an important weapon in the DOJ's fraud-fighting arsenal, and have helped the government to recover $24 billion since 1986. This goes to show that the civil justice system is just as important as the swaggering Task Force in the fight against health care fraud.

This article is brought to you by the QTT, the epicenter for whistleblowers and people interested in the False Claims Act, Qui Tam Provisions, and Medicare and Medicaid fraud. To discuss a potential case, please call Eric Young at 1 (800) 590-4116.

Criticism continues to be heaped on the federal agency responsible for ''regulating'' off-shore drilling, the Minerals Management Service (MMS), and rightly so. A new report, also in the New York Times, finds yet another maddening instance of MMS' appalling failure to fulfill its mandate. A device known as a blind shear ram was in place at the Deepwater Horizon well, and was supposed to be the last line of defense in preventing a blow-out. Of course, it failed. What is particularly infuriating is that MMS ignored its own experts as to how the risk of blind shear ram failure could be minimized.

There have been some major changes at MMS, so hopefully it won't be business as usual once the country forgets about off-shore drilling again. The new director of MMS is Michael R. Bromwich, who used to be an inspector general over at DOJ (the same guys will intervene in your qui tam case, if you're lucky!). The new agency will have a quick-response, SWAT team-like unit that will supposedly be able to respond with alacrity to allegations of crooked officials or misbehaving companies. The new investigative unit will have its work cut out for it. The old MMS could not be described by any stretch of the imagination as ''ethical.'' Doing crystal meth and then going out to do inspections? Why not? Going huntin' and fishin with on the oil company's dime? Yup. Inspecting drilling platforms of the oil company with which you're simultaneously negotiating for a job? Why the heck not? (Don't forget the crystal meth!).

This is all to say that the level of corruption in this agency is absurdly hilarious, and it will likely be very difficult both to root it out and prevent it from re-occurring, fungus-like, in the future.

This article is brought to you by the QTT, the epicenter for whistleblowers and people interested in the False Claims Act, Qui Tam Provisions, and Medicare and Medicaid fraud. To discuss a potential case, please call Eric Young at 1 (800) 590-4116.

The main reason for Senator Grassley's concerns is that the Swiss Parliament this week rejected a deal made with the U.S. last August to hand over banking information on more than 4,000 wealthy American UBS clients suspected of tax evasion. In his letter to the IRS, Senator Grassley argues that the agency should not be sitting around waiting for treaties to be ratified. The agency has the information in its hands now, and Senator Grassley is concerned that it is wasting time while the Swiss government unravels its agreements with the DOJ. (Banking secrecy has until recently been ironclad in Switzerland, so the parliament may be rattling its legislative sabers a bit in an effort to shore up the nation's reputation).

If the entire Swiss parliament does not approve the deal with DOJ by June 18th, things could get really ugly for UBS. DOJ could revive a lawsuit to turn over 52,00 names (way, way beyond the 4,450 stipulated in the original agreement). If UBS failed to turn over the 52,000 names, it could end up facing fines amounting to millions of dollars per day of refusal. Furthermore, if UBS fails to turn over any of these names, it could face indictment.

Either way, the skies look rather stormy for UBS right now. This still doesn't explain why the IRS is not taking advantage of the leads Birkenfeld provided.  Perhaps Senator Grassley's letter will be enough to get a few accountants' motors running!

This article is brought to you by the QTT, the epicenter for whistleblowers and people interested in the False Claims Act, Qui Tam Provisions, and Medicare and Medicaid fraud. To discuss a potential case, please call Eric Young at 1 (800) 590-4116.

The case is

United States ex rel. Kaplan v. Metropolitan Ambulance & First-Aid Corp. et al., Civil Action No. 00-3010 (E.D.N.Y.).

According to allegations in a qui tam suit by the former CFO of one of the companies, Metropolitan Ambulance & First Aid Corp. (now known as SEZ Metro Corp.), Metro North Ambulance Corp. (now known as SEZ North Corp.) and Big Apple Ambulance Service Inc. (formerly known as United Ambulance), and the president of the companies, Steve Zakheim, used falsified records to appeal a Medicare refund demand. The situation is a bit convoluted, but what the companies were doing essentially consisted of the old health-care fraud standby: taking patients on unnecessary and expensive ambulance trips, and billing Medicare for the services. The government determined that these trips were in fact unnecessary and demanded a refund of the tens of millions of (tax payer) dollars that had been paid out. As is customary, an extensive appeals process was available.

However, Zakheim and his ambulance armada apparently didn't have the required proof to back-up their case on appeal, so they allegedly doubled their fun/fraud by submitting hundreds of forged letters verifying that the ambulance trips were medically necessary! The ROI was not so good here: Zakheim and the companies must pay $2.5 million in settlement money, not to mention the millions of dollars to be refunded. Vigilant whistleblower Larry Kaplan will pocket $618,450.

One has to ask: was it really worth it to engage in the fraud in the first place? This is yet another case in which the business logic behind some of the decisions seems to have been seriously lacking. The next time you see an ambulance speeding along (possibly with a bunch of cash flying out the windows) keep in mind that it might be following the  road to fraud!

This article is brought to you by the QTT, the epicenter for whistleblowers and people interested in the False Claims Act, Qui Tam Provisions, and Medicare and Medicaid fraud. To discuss a potential case, please call Eric Young at 1 (800) 590-4116.

According to the Florida AG's office, here is the activity in which Office Depot engaged, prompting the investigation:

Bait and switch overcharging of state and local agencies by setting low fixed price for core items and then publishing catalog and website information that leads purchasing agents from low cost items to much higher priced alternative items.

Just as we rely on our defense contractors to provide the F-22s our tax dollars pay for, so de we rely on office supply companies to provide the staplers we contract for at the agreed price. It takes the efforts of both law enforcement as well as citizens to hold fraudsters accountable. For example, a former Lockheed  employee filed a lawsuit against his former employer alleging that it knowingly used defective materials in constructing the F-22's skin.

The point of all this is that fraud can occur whether you're talking the mundane (staplers) or the extraordinary (radar-evading jets). Fraud is fraud!

This article is brought to you by the QTT, the epicenter for whistleblowers and people interested in the False Claims Act, Qui Tam Provisions, and Medicare and Medicaid fraud. To discuss a potential case, please call Eric Young at 1 (800) 590-4116.