Discussed Northern District of New York’s Aggressive Civil Frauds Program
ALBANY, NEW YORK - On Wednesday, Sept. 17, 2014, United States Attorney Richard S. Hartunian and other senior Department of Justice officials addressed the membership of Taxpayers Against Fraud, a nonprofit organization dedicated to combating fraud against the government and protecting public resources through public-private partnerships. The Acting Associate Attorney General of the United States spoke about the Department of Justice’s national fraud priorities, while United States Attorney Hartunian addressed his office’s aggressive and innovative efforts to fight fraud in upstate and central New York.
Mr. Hartunian was asked to focus his remarks on the Northern District of New York’s application of the False Claims Act, which is the United States’ strongest civil tool to deter and redress fraud committed against government programs. The Act has unique qui tam provisions, which allow private citizens to file suit alleging fraud on behalf of the government. If the government prevails in the action, the whistleblower (known as a “relator") receives up to 30 percent of the recovery. The Department of Justice secured $3.8 billion in False Claims Act settlements and judgments last fiscal year alone, of which relators received $345 million. Several million of those dollars were recovered as a result of cases worked by Mr. Hartunian’s staff.
“As a United States Attorney, my responsibilities include protecting the public fisc and our people from harm. I am committed to fulfilling that responsibility aggressively and fairly, and I have instructed my staff to be both aggressive and fair in their interpretation and application of the False Claims Act," explained United States Attorney Hartunian. Mr. Hartunian highlighted the following fraud cases that his office resolved this past year:
Marketing of prescription drugs for unapproved uses: His office, in conjunction with its colleagues in the Eastern District of Pennsylvania, resolved criminal and civil investigations arising from Endo Pharmaceuticals’ marketing of the prescription drug Lidoderm for uses not approved as safe and effective by the Food and Drug Administration. In total, the company agreed to pay $192.7 million in civil damages, criminal forfeiture, and monetary penalties and to enter into a deferred prosecution agreement with enhanced compliance measures. This settlement emphasized that public health is protected by compliance with FDA’s drug approval process and requirement that product labeling be based on performance, rather than profitability.
Administering drugs outside of the presence of a qualified physician: Thanks to the assistance of a whistleblower, his office reached a $3.57 million settlement to resolve allegations that Imagimed (operating as “Open MRI"), its owners, and chief radiologist, submitted false claims to federal healthcare programs for magnetic resonance imaging services with a contrast dye without the direct supervision of a qualified physician. Since a potential adverse side effect of contrast dye is anaphylactic shock, federal regulations require that a physician supervise the administration of contrast dye when it is used for an MRI. Such a resolution stripped away the profit motive for circumventing the physician supervision requirements that safeguard patients.
Violations of the Recovery Act’s “Buy American" requirement: His office recently resolved, for $500,000, a case involving allegations that Jett Industries, a Colliersville-based general contractor, had falsely certified compliance with the American Recovery and Reinvestment Act’s “Buy American" provision. Jett purchased key project components in France, and then created and submitted paperwork in an effort to mislead the government into believing that the cheaper, French-made products were produced in the United States.
City acknowledges that it mismanaged federal funds: Another recent case that involved a seven-figure monetary recovery, an admission of wrongdoing, and other forward-looking (non-monetary) components was a settlement reached last month with the City of New York. This settlement resolved allegations, brought to our attention by a whistleblower, that the New York City Human Resources Administration (HRA) violated the False Claims Act by causing various managed care organizations to provide health care coverage to individuals that HRA knew, or should have known, were ineligible to receive benefits through New York State’s Medicaid program. As part of the settlement, HRA accepted responsibility for failing to timely review and close Medicaid cases after being provided information that the beneficiaries moved outside of New York City, and it admitted that its inaction caused one or more MCOs to receive payments to insure individuals who were ineligible for benefits through New York State’s Medicaid program. HRA also agreed as part of the settlement to establish a process to investigate and close Medicaid cases whenever it learns that a beneficiary no longer resides within its coverage area.
Unlawful physician compensation arrangements: A settlement was also reached last month with the New York Heart Center. In that case, a group of upstate New York cardiologists agreed to pay $1.34 million to resolve allegations that its physicians’ compensation was determined using a formula that took into account the volume or value of each physician’s ordering of designated health services from other physicians in the practice, in violation of the Stark Law. By pursuing such cases, physicians in Northern New York and elsewhere will think twice before entering into financial arrangements where a physician’s medical judgment may be compromised by financial incentives.
Billing the government for no-show jobs: With the assistance of another whistleblower, his office resolved allegations that Ithaca-based defense contractor Agave BioSystems and its president submitted false claims to the Department of Defense, seeking reimbursement for work that was never performed. Mr. Hartunian concluded his remarks at the conference with the following observation: “The Northern District of New York is committed to building a leading qui tam practice because the False Claims Act works. It works because it is an effective tool to fight fraud across the full spectrum of federal programs. It works because it provides powerful incentives for companies and individuals to do business honestly. And it works because it safeguards taxpayer money, protects public safety, and improves confidence in government."
Source: U.S. Department of Justice, Office of the United States Attorneys
