CVS Settlement featured in Minnesota Lawyer

May 17, 2011 by  

Our recent False Claims settlement with CVS was covered by Minnesota Lawyer. It is reprinted here with permission:

Medicaid fraud case nets $2.6M award

Friday April 29, 2011
By Barbara L. Jones

The False Claims Act Attorney Group

A team of lawyers including James G. VanderLinden, seated, and Robert P. Christensen, Brian Wojtalewicz and Neil P. Thompson took on Big Pharma and won. (Staff photo: Bill Klotz)

Once again, a team of Minnesota lawyers has taken on Big Pharma and won.

Neil P. Thompson, Robert P. Christensen, Brian Wojtalewicz and James G. VanderLinden recently settled a qui tam case against the pharmacy chain CVS for $17.5 million. The whistleblower/relator, pharmacist Stephani LeFlore of Minnesota, alleged that CVS designed a billing software program that consistently overcharged Medicaid for prescription drugs.

LeFlore and her attorneys will receive $2,595,460 under the state and federal False Claims Acts, and are also entitled to receive attorney fees from CVS. The reward is 16 percent of the settlement, a little bit more than the national average of 15.6 percent. The amount of the attorney fee is still under negotiation.

The four lawyers also sued Walgreens in 2005 for using a billing system that cheated Medicaid. That case settled in 2008 for $9.9 million with the whistleblowers – Thompson, who is a pharmacist as well as a lawyer, and another man – receiving $1.44 million plus fees.

In the CVS case, the fraud arose in connection with customers who were on Medicaid and also had private health insurance coverage. In the 10 states involved in the lawsuit – California, Massachusetts, Michigan, Minnesota, Florida, Indiana, Alabama, Nevada, New Hampshire and Rhode Island – CVS was supposed to charge the insurance companies a certain amount for prescriptions, with a limited co-pay charged to the customers. This limited co-pay was assigned to Medicaid.

But LeFlore, who is a pharmacist at CVS, alleged that CVS consistently overcharged Medicaid for the co-pays. She claimed that overcharges occurred on hundreds of thousands of prescription sales for over five years. To support her claims, she first gathered data from CVS’s computers, Christensen said.

LeFlore was told by her attorneys to look to see how much CVS had billed Medicaid, and then contact the state and the insurance companies to see how much CVS was entitled to.

Because the same attorneys had handled the Walgreens case, it was easier to know what to look for, Thompson said.

“She … had a tip as to what to look for, because of the previous cases,” he noted.

Once LeFlore had collected the information, she and her attorneys could run the numbers and see a pattern, Wojtalewicz said.

Before filing their case, LeFlore’s attorneys wanted to make sure they were bringing good information to the table.

 

“We wanted to have some of the juice before we got to the government to build up our credibility, to prove our case,” Christensen said. “Not only do we have to sell it to ourselves, we have to sell it to the government lawyers and then it has to get sold to the defendant.”

Typically, a relator files a complaint under seal. This allows the government, if it decides to intervene, to investigate though its own channels before informing the object of the investigation. If the investigation reveals a basis for going forward, a judge partially lifts the seal and advises the defendant of the case. Then the parties may negotiate a settlement, keeping in mind that the law allows for treble damages and a penalty of $5,500 to $11,000 for each claim falsely filed, VanderLinden said.

As the case develops, the relator’s attorneys may find themselves in conflict with the government over their share.

“We often end up negotiating with the government,” Wojtalewicz said.

He said that many private lawyers who work with qui tam cases become frustrated because the federal attorneys are “smothered” in False Claim Act matters. “We think they cherry-pick. They take the biggest and most easily proven, and you can’t blame them.”

In this case, the government almost backed away because they didn’t think there were enough damages to make it worth pursing. But LeFlore’s lawyers persisted and the government eventually came around.

Qui tam cases are frustrating for the relator, noted Thompson, because he or she is generally still employed by the defendant.

“One of the important take-aways for lawyers … is to emphasize that the whistleblower should get advice early before he or she reports inside the company,” Wojtalewicz said. Otherwise, “you’re painting a big target on your back.”

Venue is an important issue in qui tam cases. In the LeFlore case, one of the first strategic decisions the team made was to sue in federal court in Wisconsin, which is in the Seventh Circuit. “Eighth Circuit opinions on false claims really are oriented to the corporations, not the whistleblower,” Wojtalewicz explained.

Stephani LeFlore, as Relator for the United States v. CVS Pharmacy, Inc.

May 14, 2011 by  

CVS pays $17.5 Million to settle Medicaid Fraud

CVS, the giant retail pharmacy chain, has agreed to pay $17.5 Million to settle a whistleblower lawsuit accusing it of Medicaid fraud (“welfare fraud”).

THE FRAUD

According to her False Claims Acts lawsuit, CVS pharmacist Stephani LeFlore of Minnesota brought evidence to the government that CVS used a billing system for years that was designed to overbill Medicaid on prescription charges. Ms. LeFlore is represented by Minnesota attorneys Neil Thompson, Brian Wojtalewicz, Robert Christensen, and James VanderLinden, with local counsel Aaron Halstead of Madison, Wisconsin, where the case was filed in federal court.

It was done in relation to dual-eligible customers – those legitimately on Medicaid who also maintained their private health insurance coverage. The insurance coverages required CVS to charge the insurance company a smaller amount for prescriptions, and limited co-pay from the customer. When a person is allowed Medicaid coverage, the government always obtains an assignment of the person’s rights under their private health insurance coverage. The government essentially takes over the citizen’s rights under the coverage. This includes the common right to pay a smaller co-pay amount on prescriptions.

Ms. LeFlore claimed in her federal and state lawsuits that CVS should only have billed the Medicaid program the same limited co-pay on prescriptions that it would have normally billed the customer under the insurance plan. She alleged that CVS designed a billing software program for its pharmacies that consistently overcharged Medicaid on these co-pays. She claimed that these overcharges occurred on hundreds of thousands of prescription sales for well over five years.

The $17.5 Million settlement covers over-billings by CVS in the states of Minnesota, California, Massachusetts, Michigan, Florida, Indiana, Alabama, Nevada, New Hampshire and Rhode Island.

Ms. LeFlore first complained internally, but she was told by a supervisor that “corporate took care of the billing” and that she need not be concerned. She then retained her attorneys and commenced the False Claims Acts (qui tam) lawsuit in September, 2008. The lawsuit stayed under seal (non-public), according to the False Claims Acts and court orders, until the announcement of this settlement.

Ms. LeFlore and her attorneys will receive $2,595,460.00 as the reward under the federal and state False Claims Acts. They are also entitled to receive attorney fees from CVS.

STATE MEDICAID AGENCIES

Only CVS had the information necessary to reveal the correct, legal price established by the contracts of CVS with the insurance companies or related pharmacy benefit manager companies (PBMs). The states’ Medicaid agencies did not have this information. The Medicaid program is jointly financed by the Federal and State governments. It is administered by an agency in each state. Some state Medicaid agencies were aware of this wrongful billing potential, and directly addressed it in their rule making. Other states, particularly those states not included in the settlement, have missed the overbilling and are still paying it.

GOVERNMENT ATTORNEYS AND AGENTS

The government team on the investigation, negotiations and settlement was led by Leslie Herje, Assistant United States Attorney in Madison, Wisconsin, and Allie Pang, Trial Attorney in the Department of Justice, Civil Division, in Washington, D.C., with assistance from Nancy Mahoney, Assistant Attorney General in Massachusetts, and Elizabeth Valentine, Assistant Attorney General in Michigan.

Special Agents Jennifer Bowers and Gary Nelson of the federal Health and Human Services Office of Inspector General, and Joni Connell and Tom Gomach of the U.S. Attorney office in Madison, Wisconsin, provided good assistance to the lawyers for the government in the investigation.

CVS PHARMACY, INC.

CVS, the nation’s largest retail pharmacy giant, operates with over 7,100 stores across America.

THE FALSE CLAIMS ACT

The original federal False Claims Act was made law by Abraham Lincoln and the Civil War Congress, to enlist citizen whistleblowers in the fight against fraudulent war industry profiteers. It empowers citizens by giving them a reward, and substantial legal rights against retaliation by employers. In its present form, the government and whistleblowers can recover up to three times the amount of the fraud, plus substantial penalties and attorney fees. Whistleblowers (who are called “relators” under the law) may recover from 15% to 30% of the amounts collected from the frauding corporation. At least 29 states have passed their own similar false claims acts, and many other states are in the process. The government has recovered over $5.5 Billion against frauding corporations just since 2009. Medicaid and Medicare fraud, along with military contracting fraud, are the largest areas for recoveries, but ethical citizens have exposed fraud in the education, environmental and transportation fields, and in other areas of federal and state spending. The new state laws will help honest citizen whistleblowers and the government bring corporations cheating state taxpayers to account. More citizens are also using the newer IRS whistleblower reward law to bring tax cheating corporations to justice.

THE LAWYERS

Ms. LeFlore’s attorneys Neil Thompson, Brian Wojtalewicz, Robert Christensen, and James VanderLinden have years of experience confidentially advising and representing citizen whistleblowers in false claims act cases.

Their website is false-claims-act.com

 

Neil P. Thompson

Law Offices of Neil P. Thompson

2249 East 38th Street

Minneapolis, MN 55407-3083

612-246-4788

nptrxlaw@gmail.com

 

Brian Wojtalewicz

Wojtalewicz Law Firm, Ltd.

139 N Miles St.

Appleton, MN 56208

1-800-377-1812

brian@wojtalewiczlawfirm.com

 

Robert P. Christensen

Robert P. Christensen, PA

670 Park Place East

5775 Wayzata Blvd.

St. Louis Park, MN 55416

612-333-7733

bob@rpcmnlaw.com

 

James G. VanderLinden

LeVander & VanderLinden, P.A.

5775 Wayzata Blvd.

670 Park Place East

St. Louis Park, MN 55416

952-767-6841

jim@vanderlindenlaw.com

 

Aaron N. Halstead, Esq.

Hawks Quindel, S.C.

222 W. Washington Ave., Suite 450

Madison, Wisconsin 53701-2155

Tel: 608-257-0040

ahalstead@hq-law.com

 

 

  • Neil P. Thompson

Neil P. Thompson is uniquely qualified to observe and analyze fraud in

the pharmaceutical industry, as a licensed attorney experienced with class

action litigation involving pharmacy pricing and the Federal and State

False Claims Acts, and a licensed pharmacist for 34 years, both as a

pharmacy owner and working for over 130 different chain pharmacy

locations.

 

  • Brian Wojtalewicz

Brian Wojtalewicz is the President-elect of the Minnesota Association for

Justice (formerly the Minnesota Trial Lawyers Association). For over a

decade he has been voted a Super Lawyer by his civil trial attorney peers

in Minnesota.

 

  • Robert P. Christensen

Robert P. Christensen, P.A. is the Plaintiff/Consumer member of the

International Society of Primerus Law Firms in the State of Minnesota.

He is currently the Dean-Elect of the Academy of Certified Trial Lawyers

of Minnesota and Member of. the American Board of Trial Advocates.

 

  • James G. VanderLinden

Jim VanderLinden has been an experienced and respected Minnesota trial

lawyer for decades. He is a member and past Dean of the Academy of

Certified Trial Lawyers of MN. He is also a member of the American

Board of Trial Advocates, an international organization of highly qualified

trial lawyers. He has been fighting corporate America for more than 3

decades.

 

  • Aaron Halstead

Aaron Halstead is the past Chair of the Wisconsin State Bar Association’s

labor & employment law section, with over 20 years of success in the

labor and employment law fields. He is also on the Board of Directors of

the Workers’ Rights Center in Madison, Wisconsin.

Chevron Will Pay Over $45 Million For Underpaying Royalties

January 27, 2010 by  

On December 23, 2009, the Department of Justice reported the settlement of a False Claims Act case involving Chevron Corporation, Texaco, Unocal Incorporated and their affiliates (the Chevron companies), for violating the False Claims Act by knowingly underpaying royalties owed on natural gas produced from federal and Indian leases. The companies have agreed to pay the United States $45,569,584.74 to resolve the allegations.

The case was initiated by whistleblower Harrold Wright under the whistleblower provisions of the False Claims Act, which allow private citizens to file actions on behalf of the United States and share in any recovery. Because Mr. Wright is deceased, his heirs will receive $12,303,787.88, plus interest, as part of this settlement.

Each month, companies are required to report to the Minerals Management Service the value of the natural gas produced from their federal and Indian leases and pay a percentage of the reported value as royalties. This settlement resolves claims by the United States that the Chevron, Texaco and Unocal companies systematically under reported the value of natural gas they took from federal and Indian leases from March 1988 to November 2008 and so paid less in royalties then they owed.

Specifically, the companies were alleged to have 1) improperly deducted the cost of boosting gas up to pipeline pressures, 2) used affiliate transactions to fraudulently reduce the reported value of gas taken from federal and Indian leases, and 3) improperly reported processed gas as unprocessed gas to reduce royalty payments.

“This settlement successfully ends long-standing litigation and ensures that taxpayers receive their fair share of royalty revenues from energy production on federal and American Indian lands,” said Interior Secretary Ken Salazar. “Most of the $45 million settlement will be disbursed to appropriate federal, state and American Indian accounts that were affected by Chevron companies’ underpayment of natural gas royalties and improper deductions.”

The suit brought by Mr. Wright alleges that a number of companies systematically underpaid royalties due for their production of natural gas from federal and Indian lands. The Justice Department previously settled with Burlington Resources Inc. for $105.3 million, Shell Oil Company for $56 million and Dominion Exploration and Production Company for $2 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.

University of Phoenix Caught Cheating Government; Will Pay $78.5 Million

December 24, 2009 by  

On December 14, 2009, Earth Times reported the $78.5 million settlement of a False Claims Act lawsuit against the University of Phoenix. The lawsuit, which was started by whistleblowers, alleged that the University used false statements to obtain an excess of federal student loans and Pell Grant monies. Reportedly, the University was making incentive payments to recruiters based on the number of students they recruited or enrolled–a direct violation of the Higher Education Act.

“The Higher Education Act prohibits colleges and universities whose students receive federal financial aid from paying their recruiters based on the number of students enrolled, which creates a risk of encouraging recruitment of unqualified students,” explained Nancy Krop, another lawyer on the trial team. “This case focused a powerful spotlight on that law, and how Congress meant it to be applied.”

“The settlement is a huge victory for taxpayers and the federal government,” according to Robert J. Nelson, lead attorney for the whistleblower plaintiffs. “This settlement sends a clear message to the for-profit education industry compliance with the Higher Education Act’s incentive compensation ban must be achieved,” said Nelson.
The University of Phoenix, which denied the whistleblowers’ allegations, previously paid $9.8 million to the Department of Education in 2004 to resolve administrative claims that it was paying improper incentive compensation to its recruiters. Those administrative proceedings were triggered by the allegations of the same whistleblowers in this case. Nearly $11 million of the $78.5 million will be allocated as statutory attorneys’ fees and costs, a portion of which will be paid to the whistleblowers who brought the case.

The False Claims Act is a federal statute that permits whistleblowers to sue on behalf of the government for fraud committed against the government and to share in the recovery if the suit is successful.

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.

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