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IRS To Pay Whistleblower $104 Million

WASHINGTON (AP) — First, the government threw Bradley Birkenfeld in prison for helping a former client at UBS AG hide his wealth from the Internal Revenue Service. Now, as part of the same case, the IRS has awarded the former banker $104 million — yes, million — for helping expose the widespread tax evasion scheme by the Swiss banking behemoth.

The dizzyingly abrupt turnabout in Birkenfeld’s life leaves him with the largest government whistleblower award ever to an individual, said Stephen M. Kohn, one of Birkenfeld’s attorneys and executive director of the National Whistleblowers Center. The center is a nonpartisan group that defends employees’ disclosures of wrongdoing and waste.

The size of the award, announced Tuesday by Birkenfeld’s lawyers and confirmed by the IRS, reflects an investigation that resulted in UBS being fined $780 million. It also led to an unprecedented agreement requiring UBS to give the U.S. government the names of 4,700 Americans who held secret overseas accounts and the recovery by the IRS of $5 billion in back taxes and penalties from other taxpayers with overseas accounts under agency amnesty programs, Kohn said.

More broadly, the award is a resounding signal to other financiers with information about tax wrongdoing that the IRS’ program will treat them properly, said Kohn, who in an interview called Birkenfeld “the Babe Ruth of whistleblowers.”

“It’s not about Brad,” Kohn said. “It’s about how other sources of information, other bankers view the U.S. whistleblower program.”

Birkenfeld has become something of a cause celebre among whistleblowers because of the magnitude of his case and the fact that he was jailed after cooperating with authorities. His lawyers say he discovered UBS’ illegal activities in 2005, and after the company failed to change them he went to U.S. authorities with the information in 2007.

Birkenfeld, 47, served 31 months of a 40 month prison sentence after pleading guilty in 2008 to a count of conspiracy to defraud the U.S. related to his work for UBS. The Justice Department said Birkenfeld did not reveal his own misconduct in helping a client, a charge his attorneys say is not true.

As Birkenfeld entered prison in 2010, he called his treatment an injustice, saying, “I’m a proud American who did the best I could for my country and this is how they reward me.”

His time was cut short for good behavior in prison and “they did not take one minute off his sentence” for his cooperation with the IRS on the UBS case, Kohn said.

Kohn said Birkenfeld left prison in August and is now confined to a house in a New Hampshire conference center — he did not say where — and works as a groundskeeper to satisfy his release requirement for a job. He said his home confinement ends in November, when he will begin three years on parole.

“This is the day I thought would never come,” said a statement issued by Douglas Birkenfeld on his brother’s behalf. “This is a monumental day not only for me, but for every whistleblower worldwide.”

Bradley Birkenfeld did not appear at a Washington news conference held by his lawyers, who said their client did not have government permission to talk to reporters.

Kohn said Birkenfeld has already received his check — from which the IRS has already withheld taxes. He would not how much was withheld.

Gordon Schnell, a New York lawyer who has handled whistleblower work and is not involved in Birkenfeld’s case, said the huge award signaled a possible turnabout by the IRS whistleblower office, which he said has had a reputation for doing very little. The agency’s latest annual report said that in 2011, its whistleblower office received nearly 7,500 cases and had a staff of 18 people.

“It’s sending out a message to whistleblowers, ‘Don’t stop coming. Our doors are now open for real and we will listen to you,'” said Schnell.

Still, Schnell said he wondered why the IRS said so little about the award and failed to publicize it energetically to attract more whistleblowers. The agency acknowledged Birkenfeld’s award in terse written remarks by a spokeswoman, Michelle Eldridge.

She said privacy laws bar the agency from saying much about the case. She said Birkenfeld signed a disclosure waiver allowing them to confirm his award.

“The IRS believes that the whistleblower statute provides a valuable tool to combat tax non-compliance, and this award reflects our commitment to the law,” Eldridge said.

The Justice Department said it would let the IRS comment on the Birkenfeld case.

In a summary of the award provided by Birkenfeld’s lawyers, the IRS wrote, “Birkenfeld provided information on taxpayer behavior that the IRS had been unable to detect,” including methods used by UBS AG and relationships between people involved in transactions.

“The information provided by the whistleblower formed the basis for unprecedented actions against UBS AG, with collateral impact on other enforcement activities,” the agency wrote.

The IRS whistleblower program was strengthened by Congress in 2006 to focus on high-earning tax dodgers, guaranteeing awards for whistleblowers whose information leads to collections of at least $2 million in unpaid taxes, interest and penalties. The agency is allowed to pay an award of up to 30 percent of the collected taxes, interest and penalties.

In its annual report on the whistleblower program, the IRS said it collected $48 million from scofflaws under the program last year and handed out $8 million in awards. That’s down from $465 million collected and $19 million in awards in 2010. The report did not explain why the amounts had decreased.

Members of Congress including Sen. Charles Grassley, R-Iowa, who helped write the stronger law, have complained that the agency has not been aggressive enough in paying awards.

“The potential for this program is tremendous, and it’s up to the IRS to continue paying rewards and demonstrating to whistleblowers that the process will work and that they will be heard and protected,” Grassley said Tuesday.

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Associated Press writer Stephen Ohlemacher contributed to this report. http://news.yahoo.com/irs-pays-whistleblower-104-million-145933302.html

$1 Billion To Be Paid By the Bank of America to the United States

As part of the global resolution between the United States of America and the five largest mortgage servicing banks in the country, which will bring much needed relief to financially distressed homeowners nationwide, Loretta E. Lynch, United States Attorney for the Eastern District of New York, today announced that the government will also resolve its claims against the Bank of America, Countrywide Financial Corporation and certain Countrywide subsidiaries and affiliates (Countrywide) for underwriting and origination mortgage fraud.

Since 2009, the office has been investigating the Bank of America’s lending practices to determine whether the bank, through Countrywide, which the bank acquired in 2008, knowingly made loans insured by the Federal Housing Administration (FHA) to unqualified home buyers. To date, the FHA has incurred hundreds of millions of dollars in damages as a result of this conduct. The investigation also encompassed allegations that the bank and Countrywide defrauded the FHA insurance fund by originating mortgage loans that were based upon inflated appraisals. During the investigation, the office determined that the bank’s conduct provides a basis for affirmative civil enforcement under, among other legal remedies, the False Claims Act, 31 U.S.C. §§ 3729-33.

As part of the global settlement, Bank of America will pay $1 billion to resolve the wrongdoing uncovered during the office’s investigation. The settlement will entail an immediate payment of $500 million to provide a recovery for the harm done to the FHA by Countrywide’s conduct. Payment of the second $500 million will be deferred to fund a loan modification program for Countrywide borrowers across the nation with underwater mortgages. Under the terms of the program, Bank of America will solicit all potentially eligible borrowers and provide a loan modification to anyone with an eligible mortgage who accepts the offer. If, after the expiration of three years, the bank has not met its obligation to apply the full $500 million to provide such relief, any remainder will be paid directly to the United States.

 

GlaxoSmithKline to Plead Guilty and Pay $3 Billion to Resolve Fraud Allegations and Failure to Report Safety Data

Global health care giant GlaxoSmithKline LLC (GSK) agreed to plead guilty and to pay $3 billion to resolve its criminal and civil liability arising from the company’s unlawful promotion of certain prescription drugs, its failure to report certain safety data, and its civil liability for alleged false price reporting practices, the Justice Department announced today.   The resolution is the largest health care fraud settlement in U.S. history and the largest payment ever by a drug company.

GSK agreed to plead guilty to a three-count criminal information, including two counts of introducing misbranded drugs, Paxil and Wellbutrin, into interstate commerce and one count of failing to report safety data about the drug Avandia to the Food and Drug Administration (FDA).   Under the terms of the plea agreement, GSK will pay a total of $1 billion, including a criminal fine of $956,814,400 and forfeiture in the amount of $43,185,600.   The criminal plea agreement also includes certain non-monetary compliance commitments and certifications by GSK’s U.S. president and board of directors.   GSK’s guilty plea and sentence is not final until accepted by the U.S. District Court.

GSK will also pay $2 billion to resolve its civil liabilities with the federal government under the False Claims Act, as well as the states.   The civil settlement resolves claims relating to Paxil, Wellbutrin and Avandia, as well as additional drugs, and also resolves pricing fraud allegations.

This resolution marks the culmination of an extensive investigation by special agents from HHS-OIG, FDA and FBI, along with law enforcement partners across the federal government. Moving forward, GSK will be subject to stringent requirements under its corporate integrity agreement with HHS-OIG; this agreement is designed to increase accountability and transparency and prevent future fraud and abuse. Effective law enforcement partnerships and fraud prevention are hallmarks of the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which fosters government collaboration to fight fraud.

Click here to view the DOJ press release: http://www.justice.gov/opa/pr/2012/July/12-civ-842.html

Breach of Anti-Kickback Statute Proper Foundation for FCA Claim

A federal court in Massachusetts Sept. 15 allowed a whistleblower lawsuit against Amgen Inc. to continue, finding that pleadings alleging the biotech drug company violated the anti-kickback statute form a proper foundation for filing a False Claims Act lawsuit (United States ex rel. Westmoreland v. Amgen Inc., D. Mass., No. 1:06-cv-10972-WGY, 9/15/11).
The U.S. District Court for the District of Massachusetts denied Amgen’s partial motion for summary judgment against whistleblower Kassie Westmoreland, a former Amgen employee.
Amgen contended that because the Medicare statute does not mention compliance with the anti-kickback law as a precondition of payment, Congress meant to preclude it as a foundation for an FCA claim, the court said.
Further, Amgen argued that the certification of compliance, which all Medicare participants must sign to receive reimbursement, should only affect continued participation in the Medicare program, not FCA liability, the court said.
“Defendants’ argument is effectively a challenge to the validity of the contractual term making compliance with the Anti-Kickback Statute a precondition of [Medicare] payment,” the court said.

Amgen’s Argument an ‘Absurdity.’

Read more here.

Kentucky Physician Settles Overbilling Allegations

CINCINNATI—A Louisville, Ky., physician has paid the government $349,860 to settle a qui tam action alleging Medicare fraud, the Department of Justice announced Sept. 27.
Dr. Steven H. Stern and his practice, Kentuckiana Center for Better Bone and Joint Health, falsely billed Medicare for Infliximab infusions, according to a former KCB employee who filed the whistleblower lawsuit in 2007.
Stern and KCB were accused of splitting vials of the rheumatoid arthritis drug across multiple patients, then billing Medicare as if a whole vial was used for each patient. Overbilling occurred from December 2003 through December 2006, according to the qui tam complaint.
The whistleblower’s share of the settlement is $70,000. In addition to the government payment, the agreement directs Stern to pay $13, 635 for legal fees and expenses incurred by the whistleblower.
Although just announced, a spokeswoman for the U.S. Attorney for the Western District of Kentucky told BNA Sept. 29 that the settlement was paid August 26.
“This case illustrates the importance and value of whistleblower lawsuits under the False Claims Act,” U.S. Attorney David J. Hale said. “Because this employee stepped forward to report suspected double-billing of Medicare, we have been able to stop a practice that we believe was costing taxpayers hundreds of thousands of dollars.”

Federal Jury Awards Walgreens Pharmacist $1.2 Million in Medicare Billing Fraud Case

A federal jury in California Aug. 19 awarded a fired Walgreens pharmacist more than $1.2 million—mostly in punitive damages—after finding that his complaints the pharmacy chain was engaged in fraudulent Medicare billing practices were a “motivating factor” in his termination (Mitri v. Walgreen Co. Inc., E.D. Cal., No. 1:10-cv-538-AWI-SKO, damage award 8/19/11).
The jury, in two separate phases, awarded Sami Mitri, who began working as a pharmacist for Walgreen Co. in the Fresno, Calif., area in 1996, past and future economic losses totaling $88,000, and punitive damages of $1.16 million.
The panel also answered affirmatively that his complaints regarding the billing practices constituted a motivating factor in the company’s decision to terminate him, and decided that Walgreens would not have fired Mitri if the company had not considered those billing fraud complaints.
The jury also found that the company’s conduct constituted “malice, oppression or fraud,” and that the conduct was committed by one or more officers, directors, or managing agents of the pharmacy chain.
Read more here.

J&J Says Agreement Reached in Criminal Risperdal Promotion Case

Johnson & Johnson said in an Aug. 9 securities filing that it has reached an agreement with the government on resolving criminal charges related to the promotion of the antipsychotic drug Risperdal.
In a 10-Q filing with securities regulators, the company said that discussions “have been ongoing in an effort to resolve criminal penalties under the Food Drug and Cosmetic Act related to the promotion” of Risperdal (risperidone).
The company said an agreement in principle “on key issues relevant to a disposition of criminal charges pursuant to a single misdemeanor violation” of the food and drug law has been reached, but “certain issues remain open before a settlement can be finalized.”
Read more here.

Connecticut Hospital Settles Charges of Overbilling Medicare for Prostate Drug

A Connecticut hospital said Aug. 10 it has entered into a civil settlement agreement with the federal government under which it will pay $516,527 to resolve allegations that it improperly charged Medicare for patient injections of the drug Lupron.
Federal prosecutors allege that St. Francis Hospital and Medical Center in Hartford improperly billed Medicare in violation of the False Claims Act for injections of leuprolide acetate, known by the brand name Lupron or Lupron Depot. The Department of Justice also announced the settlement Aug. 10.
Read more here.

DOJ Intervenes in Suit Over Clinic’s Alleged Improper Billing for Sleep Disorder Tests

TAMPA, Fla.—The Department of Justice June 14 announced it has intervened in a whistleblower lawsuit alleging a Florida sleep clinic violated the False Claims Act by billing Medicare and TRICARE for tests performed by uncertified technicians
In an intervenor’s complaint filed in Tampa in U.S. District Court for the Middle District of Florida, the government named as defendants Bay Area Sleep Associates LLC, which operates as SomnoMedics LLC, and its owner, Edward Killmer Jr.
The defendants operate 10 sleep laboratories throughout central Florida, the complaint noted.
The qui tam case alleges the defendants violated the False Claims Act by hiring unlicensed technicians to perform sleep tests, knowing that Medicare reimbursement regulations required diagnostic testing services at independent diagnostic testing facilities such as SomnoMedics be performed by a technician licensed or certified by a state or national credentialing body, DOJ said in a statement.
Read more here.

Prosecutors See Case Shift From Pharma To Devices, Park Doctrine Cases Coming

Prosecutors told a conference audience June 7 that U.S. enforcement trends show a shifting from pharmaceutical drugs to biologics, biotechnology, and medical devices and that the Food and Drug Administration and the Department of Justice are actively pursuing cases involving the individual liability of executives.
Read more here.
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