Learning Tree International Charged Government for Courses That Never Occurred, Will Pay $4.5 Million

On April 7, 2010, the Department of Justice announced the settlement of a False Claims Act case involving Learning Tree International Inc. The company has agreed to pay the federal government $4.5 million to resolve allegations that it improperly invoiced federal agencies in advance for information technology training courses that were never actually provided.

Under its contract with the General Services Administration (“GSA”), Learning Tree sells information technology training courses to the federal government in multi-course packages known as “vouchers” or “passports.” To prevent the United States from paying for training services that are not actually rendered, the contract specifically requires that Learning Tree invoice the government only after services are provided.

The settlement resolves allegations that Learning Tree knowingly invoiced federal agencies in advance for multi-course training packages before employees of the purchasing agencies had attended the full number of courses available under each. The government further alleged that upon expiration of the training packages, Learning Tree retained federal funds that the company received in connection with unused courses without providing a refund or credit. As a result, Learning Tree received federal funds for training courses that were not, in fact, provided.

“Government contractors must deal fairly and honestly with the United States,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “When federal funds are being misused, we will take action to protect the taxpayers.”

If you are seeing fraud on the government, contact us by calling 800-377-1812 for strictly confidential advice from experienced counsel, with no fee obligation.

Medical Device Manufacturer Lied About Internal Heart Defibrillators, Will Pay Over $296 Million

On April 5th, 2010, the Department of Justice reported the settlement of a False Claims Act involving Guidant LLC.  The medical device manufacturer has agreed to pay over $296 million to resolve allegations that it lied to the Food & Drug Administration (FDA) to cover up fatal errors in three of its implantable cardioverter defibrillators. These lifesaving devices are used to detect and respond to abnormal hearth rhythms that, if left untreated, can result in death within minutes.

Guidant pleaded guilty to withholding information from the FDA regarding catastrophic failures in three of its devices: the Ventak Prizm 2 DR (Model 1861) and the Contak Renewal (Models H135 and H155). Specifically, Guidant admitted to: (1) making a materially false statement in a required submission to the FDA with regard to the Ventak Prizm 2DR device; and (2) failing to notify the FDA of a “correction” to the Contak Renewal devices, which the company made to reduce a risk to health caused by the devices. As a result of these offenses, the agreement calls for Guidant to pay a combined criminal penalty in excess of $296 million.

“The guilty plea today should serve as a reminder and deterrent to those who would break the laws requiring honesty and cooperation with government regulators whose mission is to protect the health and safety of the public,” said Frank J. Magill, Acting U.S. Attorney in this case for the District of Minnesota . “The health care laws are as important as ever. When medical device and pharmaceutical companies fail to live up to their legal obligations, serious criminal consequences will follow.”

Today’s entry of a guilty plea by Guidant LLC and the proposed resolution would represent the largest criminal penalty ever imposed on a device manufacturer for violating the Food Drug and Cosmetic Act,” said Commissioner of Food and Drugs Margaret A. Hamburg, M.D. “The FDA will continue to commit enforcement resources to seeking this type of criminal resolution and stiff sanctions when device manufacturers fail to adhere to the statutory and regulatory requirements that exist to ensure the safety and efficacy of their products.”

If you are seeing fraud on the government, contact us by calling 800-377-1812 for strictly confidential advice from experienced counsel, with no fee obligation.

Alpharma to Pay $42.5 Million for Kickbacks and Misinformation Campaign Over Morphine-Based Drug

On Tuesday, March 16th, the Justice Department announced the settlement of a False Claims Act case involving the pharmaceutical company Alpharma Inc. The drug manufacturer, now a subsidiary of King Pharmaceuticals Inc. of Bristol, Tennessee, agreed to pay $42.5 million to resolve allegations with its marketing of the morphine-based drug Kadian.  Between January 1, 2000 and December 29, 2008, Alpharma was found to have bribe health care providers to promote and/or prescribe Kadian, and also made false claims about the safety and efficacy of the drug.

“Health care decisions must be based solely upon what is best for the individual patient and not on which pharmaceutical company is paying the doctor the biggest kickback,” said Rod J. Rosenstein, U.S. Attorney for the District of Maryland.

The lawsuit was initiated by a whistleblower, Debra Parks, through the qui tam provisions of the False Claims Act, which allows private citizens to expose fraudulent behavior with government money and share in any recovery. Of the $42.5 million recovered in the case, Ms. Parks will receive $5.33 million.

If you are seeing fraud on the government, contact us by calling 800-377-1812 for strictly confidential advice from experienced counsel, with no fee obligation.

Texas Hospital Group Pays U.S. $27.5 Million to Settle False Claims Act Allegations

On October 30, 2009, the U.S. Department of Justice reported that McAllen Hospitals has agreed to pay $27.5 million to resolve claims that it violated the False Claims Act. Between 1999 and 2006, the Texas-based company, which conducts business as South Texas Health System, induced doctors to refer patients to their hospitals through fraudulent payments disguised as contracts.

Bruce Moilan, a former employee of McAllen Hospitals, will receive $5.5 million from the proceeds of the settlement. Under the False Claims Act, whistleblowers such as Mr. Moilan can bring suits on behalf of the government and are entitled to a share of any settlements.

As part of the agreement, South Texas Health Systems will enter into a 5-year Corporate Integrity Agreement that requires it to establish procedures for tracking and evaluating financial arrangements between its health care facilities and their referral sources. The agreement also requires specific training for South Texas Health System representatives involved with financial arrangements, an independent third-party’s annual review of the health system’s compliance with certain Corporate Integrity Agreement obligations involving financial arrangements, and a report to the Office of Inspector General by the independent third-party reflecting the results of the review.

“Improper financial arrangements like these can increase the cost of health care by shifting provider attention to the quantity of treatments, rather than keeping it focused on the quality of care,” said Department of Health and Human Services Inspector General Daniel R. Levinson. “The CIA is important because it requires South Texas Health System to put systems in place to prevent this conduct from happening in the future.”

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