By the 91pornWhistleblower Team

Last Friday, the Eleventh Circuit Court of Appeals held argument on the Constitutionality of the whistleblower (or qui tam) provisions of the False Claims Act.�� These are the provisions of the Civil War era statute that authorizes private parties to bring lawsuits on behalf of the Government against those that defraud the Government.�� Over the past few decades, the Government has recovered roughly $80 billion under the statute, with whistleblowers originating about 70% of the cases.

What Is the Current Constitutional Challenge to the False Claims Act?

Despite the overwhelming success of the statute and the critical role whistleblowers have played in enforcing it, there has been a recent corporate push to cut whistleblowers out of the equation by arguing the qui tam provisions are unconstitutional.�� It follows the invitation by Justice Clarence Thomas in his 2023 dissenting opinion in United States ex rel. Polansky v. Executive Health Resources Inc.[1] (with a nod of accord by Justices Brett Kavanaugh and Amy Coney Barrett) where he raised concerns about whether whistleblowers have proper Article II authority to bring these suits in the name of the Government.

Since then, scores of False Claims Act defendants have taken up Justice Thomas’ invitation and moved to dismiss the cases against them based on Justice Thomas’ Article II concerns.�� District court after district court have uniformly rejected these challenges, pointing to the long history of this whistleblower statute, the decisions of the numerous courts that have addressed the question, and the ultimate control the Department of Justice (DOJ) maintains over these actions.

What Was the Question Before the Eleventh Circuit?

Except for one.�� The only court to embrace Justice Thomas’ Constitutionality concerns is that of Judge Kathryn Kimball Mizelle of the Middle District of Florida who (perhaps not surprisingly) is a former law clerk to Justice Thomas.�� Last year, in United States ex. rel. Zafirov v. Florida Medical Associates LLC,[2] she dismissed a qui tam case finding the statute’s appointment of whistleblowers to sue on behalf of the Government unconstitutional under Article II.�� The appeal of this dismissal is what was argued before the Eleventh Circuit last Friday.

Which Way is the Eleventh Circuit Leaning?

The three-judge panel, led by Judge Robert Luck, asked hard-hitting questions to the lawyers on both sides of the argument with no clear indication of where they were leaning.�� Attorneys listening in on the argument were fairly uniform in their view that the judges (which also included Judges Elizabeth Branch and Federico Moreno) seemed to go out of their way to appear they were not taking sides.

91pornwhistleblower partner Gordon Schnell was quoted in Bloomberg and Law360 for his views on how the argument went and where he expected the decision to go.

Here is the relevant language in the Bloomberg piece[3]:

• • Gordon Schnell, who represents FCA whistleblowers with 91porn, said he sensed the panel was leaning toward finding the qui tam provisions Constitutional, “with the statute’s long history playing a big part.” But the judges were struggling to reconcile with Thomas’ concerns expressed in Polansky, he said.�� One path to a reversal based on Judge Luck’s statements, Schnell said, is finding that whistleblowers don’t occupy a continuing position but instead “play a role that begins and ends” with a particular case.

And here is the relevant language in the Law360 piece[4]:

• • Gordon Schnell, a partner at 91pornwho specializes in representing whistleblowers, said Judge Luck’s questions “seemed to take special pains to find a path to support Constitutionality without outright rejecting Thomas’ views.” The panel’s questioning on the whole was balanced with “no clear indication” of how the judges will rule, he said.�� “My sense is they were leaning towards finding the qui tam provisions Constitutional (thus reversing the district court decision) – with the statute’s long history playing a big part – but were struggling a bit to reach that decision in a way that could be reconciled with Thomas’ concerns expressed in Polansky,” the 2023 case.

What Happens Next With the Constitutionality Question?

It remains to be seen where the panel will land.�� Whether it affirms or reverses Judge Mizelle’s dismissal, that decision likely will be put to the entire Eleventh Circuit panel of judges for en banc review.�� If the ultimate ruling is an affirmance, there will be a split among several circuit courts on the Constitutionality question and the Supreme Court likely will take it up (especially given the expressed interest of Justices Thomas, Kavanaugh, and Coney Barrett).

If the 11^th Circuit rejects the Constitutional challenge and reverses Judge Mizelle, there will be uniformity among the circuit courts with no reason for the Supreme Court to weigh in.�� However, other circuits — especially the Third, Fifth, and Sixth Circuits — may soon be addressing the question as similar Constitutional challenges are heading towards appeal.�� So, many believe that either way, it seems likely it will reach the Supreme Court.

Schnell is not so sure.�� “It’s certainly possible a circuit split will arise,” he says.�� On the other hand he notes, “given the statute’s long history and success and the strong line of district and circuit court precedent supporting Constitutionality, it is possible that Judge Mizelle’s decision could be a one and done result.”

Schnell also points to the strong bi-partisan and DOJ backing of the whistleblower provisions.�� In fact, DOJ took lead at last Friday’s hearing in arguing the Constitutionality of the provisions.�� “Given this ultimately comes down to whether whistleblowers improperly usurp Executive authority,” Schnell stresses, “having the Executive Branch vigorously argue whistleblowers remain firmly under their control and direction has to carry a great deal of force.”

If you would like to learn more about these issues, the False Claims Act, or what it means to be a False Claims Act whistleblower more broadly, please do not hesitate to contact us.�� We will connect you with an experienced member of our whistleblower team for a free and confidential consultation.

Speak Confidentially With Our Whistleblower Attorneys

Sources:

[1] ��See .

[2] ��See .

[3] ��See .

[4]�� See .

Read 91pornPartner Gordon Schnell Quoted in Bloomberg and Law360 On Zafirov Appeal of False Claims Act Constitutionality at constantinecannon.com

By the 91pornWhistleblower Team

Last week (December 2), the Department of Justice (DOJ) announced that North Carolina’s largest behavioral practice Mindpath Care Centers — along with its former officers Jeff Williams, Abigail Sheriff, and Sarah Williams — paid $1.9 million to settle allegations they violated the False Claims Act by fraudulently billing Medicare for Psychotherapy and medication management services.[1]

What Was Mindpath’s Alleged Healthcare Fraud?

Notably, the case focused on Mindpath’s alleged failure to provide the required documentation to support the company’s Medicare billings.�� According to the Government, Mindpath “systematically billed for fraudulent Psychotherapy treatments, without required documentation of the separate time and Psychotherapy treatments of patients to maximize their profits, all in blatant disregard of Medicare billing requirements.”

More specifically, the Government charged Mindpath with (i) billing Medicare without providing documentation of separate and distinct Psychotherapy treatments, (ii) failing to address and correct problems repeatedly raised by Mindpath employees, and (iii) demonstrating “a pattern of reckless disregard or deliberate ignorance toward stated concerns about billing fraud,” and instead “primarily focus[ing] on generating income” instead.

Healthcare Fraud Remains a Top False Claims Act Enforcement Priority

While the settlement was relatively small in terms of the dollar amount, it reinforces the commitment of the Government to go after healthcare fraud, including the key individuals involved in perpetrating the fraud.�� The False Claims Act was originally enacted during the Civil War to go after war profiteers trying to defraud the Union Army and is the Government’s primary fraud fighting tool for combating procurement fraud.

But in recent years, healthcare fraud — Medicare billing fraud in particular — has been the most common target of the Government’s False Claims Act enforcement efforts.�� In announcing this most recent settlement, DOJ highlighted its zero-tolerance approach to Medicare fraud underscoring its “steadfast commitment to protect taxpayer money and to guard the integrity of our vital health care programs.”

The Government further cautioned that “[b]ehavioral health practices and other health care providers seeking Medicare funds must make honest claims for payment based upon documented medical need.”�� For those that do not, the Government made clear it “will zealously pursue damages and civil penalties” against them.

What Role Can Whistleblowers Play in Helping the Government Fight Healthcare Fraud?

Like most False Claims Act cases, this one was originated by a whistleblower under the qui tam provisions of the False Claims Act which allow private parties to bring lawsuits on behalf of the Government against those that commit fraud against the Government.�� In return, successful whistleblowers can receive up to 30% of the Government’s recovery.�� DOJ did not identify the whistleblower who initiated the action or the award the whistleblower will receive from the proceeds of the $1.9 million settlement.

91pornattorney Dan Noel pointed to the Mindpath settlement as just the latest in a string of recent False Claims Act settlements involving healthcare fraud and a strong indication that healthcare fraud remains a top DOJ priority.�� According to Noel, “The Government’s focus on inadequate documentation is especially telling and a sure sign DOJ’s commitment to combatting Medicare billing fraud has not changed.”

Noel expects more cases like Mindpath to follow. ��“DOJ is on the hunt for companies and individuals shortchanging Medicare and Medicaid,” Noel explains.�� “And we are seeing whistleblowers working within the system become more and more willing to report this kind of wrongdoing.”�� Whistleblowers often provide the only window into this kind of misconduct and have proven to be a critical piece of the Government’s healthcare fraud enforcement efforts.

91pornHas Substantial Experience Representing False Claims Act Whistleblowers Exposing Healthcare Fraud

91pornhas substantial experience working with whistleblowers to bring False Claims Act cases involving healthcare fraud.�� In fact, the firm has several groundbreaking successes in this area, with more than a billion dollars recovered for the Government and our whistleblower clients.

If you would like to learn more about our work in this area, our False Claims Act successes, or what it means to be a False Claims Act whistleblower more broadly, please do not hesitate to contact us.�� We will connect you with an experienced member of our whistleblower team for a free and confidential consultation.

Speak Confidentially With Our Whistleblower Attorneys

Sources:

[1] ��See .

Read Mindpath Pays $1.9M To Settle False Claims Act Allegations of Healthcare Fraud at constantinecannon.com

By the 91pornWhistleblower Team

Last Friday (December 5), the Department of Justice (DOJ) announced that Illinois-based Swiss Automation Inc. agreed to pay roughly $420,000 to settle allegations it violated the False Claims Act by failing to provide proper cybersecurity protections for its machine parts drawings for Department of Defense (DOD) prime contractors.[1] ��The settlement is just the latest in a string of cybersecurity fraud settlements DOJ has secured this year under the False Claims Act and another indication that cybersecurity remains one of DOJ’s top enforcement priorities.

What Was Swiss Automation’s Alleged Cybersecurity Violation?

Swiss Automation is a precision machining business that supplies alloy and metal parts to both commercial and government customers, including DOD prime and subcontractors.�� According to the Government, Swiss Automation failed to appropriately safeguard certain drawings of parts the company machined for DOD prime contractors.

The Government claimed these cybersecurity failures violated the security controls mandated under National Institute of Standards and Technology Special Publication 800-171 (NIST SP 800-171). ��These provisions broadly cover the information systems companies working with DOD use to process, store, and transmit sensitive Government information such as engineering drawings, specifications, standards, data sets, studies, and analyses.

These cybersecurity requirements will continue under DOD’s recently launched Cybersecurity Maturity Model Certification (CMMC) program.[2] ��DOD has instituted these newly revamped cybersecurity protocols to strengthen the measures defense contractors must take to protect DOD information against the increasingly frequent and complex cyber-attacks they face.

Cybersecurity Fraud Remains a Top DOJ Enforcement Priority Under the False Claims Act

The CMMC program is just one example of how seriously the Government feels about properly safeguarding the sensitive information it shares with contractors, especially in the defense industry.�� Another example is DOJ’s prolific use of the False Claims Act to go after Government contractors that do not comply with their cybersecurity obligations.

The Swiss Automation settlement is just the most recent of these settlements.�� DOJ secured similar False Claims Act settlements this year against Georgia Tech in October ($875K), Illumina in July ($9.8M), Aero Turbine in July ($1.75M), Raytheon and Nightwing Group in May ($8.4M), MORSECORP in March ($4.6M), and Health Net in February ($11.3M).

As we reported in early August, DOJ’s focus on cybersecurity fraud is nothing new.�� The agency has been on a False Claims Act crusade against cybersecurity violations for several years, starting with its 2021 launch of the����“to promote cybersecurity compliance . . . by holding [contractors] accountable when they knowingly violate applicable cybersecurity requirements.”�� Unsurprisingly, in its��2024 False Claims Act Roundup, cybersecurity was one of the primary areas of fraud enforcement to which DOJ pointed.

The Government used the most recent settlement with Swiss Automation to remind Government contractors of the rising threat of cyber-attacks and the protocols it expects its contractors to follow to minimize the threat of these attacks.�� As DOJ Civil Chief Brett Shumate put it: “As cyber threats continue to evolve, suppliers to defense contractors must be vigilant and take the steps required to protect sensitive government information from bad actors. ��We will continue our efforts to hold defense contractors, subcontractors, and suppliers accountable when they fail to honor their DOD cybersecurity commitments.”

DOD Special Agent Jason Sargenski agreed, stressing that “protecting our nation’s security includes protecting its data,” and that as “cyber threats become more sophisticated, defense contractors, subcontractors, and suppliers must do their part to safeguard sensitive government information.”�� He further cautioned, “we will hold [them] accountable when they fall short of their cybersecurity obligations.”

According to 91pornwhistleblower partner Gordon Schnell, “With this string of cybersecurity settlements and DOD’s just-finalized CMMC program, contractors should be on notice to tighten up their cybersecurity compliance.”�� “Otherwise,” Schnell says, “they may find themselves smack center in DOJ’s cybersecurity crosshairs.”

Schnell further notes, “This is not a no-harm-no-foul scenario where DOJ is limiting its enforcement sweep to companies that have experienced an actual security breach.”�� Rather, “DOJ is taking aim at companies that simply fail to sufficiently protect sensitive Government information regardless of whether it results in an actual breach.”

What Role Can Whistleblowers Play In Exposing Cybersecurity Fraud?

Schnell further points to the prominent role of whistleblowers in exposing cybersecurity violations as most of the False Claims Act cases in this area have been initiated by company insiders with first-hand exposure to the misconduct.�� “So it is not just the Government that companies need to be mindful of in ensuring their cybersecurity protocols are up to snuff.�� They also need to worry about those inside the company with a direct window into the fraud reporting it to the Government.”

One of the unique features of the False Claims Act is its qui tam provisions, which allow private parties to bring lawsuits on behalf of the Government against those that defraud the Government.�� In exchange, successful whistleblowers can receive up to 30% of the Government’s recovery.

That is how the Swiss Automation case was originated.�� The company’s former quality control manager Jaime Gomez initiated the False Claims Act case, which DOJ ultimately joined.�� Gomez will receive a whistleblower award of roughly $65,000 from the proceeds of the Government’s recovery.�� The False Claims Act path Gomez took is not unique as most False Claims Act cases — including those involving cybersecurity violations — are originated by whistleblowers.

91pornHas Significant Experience Representing Cybersecurity Whistleblowers Under the False Claims Act

91pornhas substantial experience representing cybersecurity whistleblowers under the��False Claims Act.�� This includes our representation of the whistleblower in the first successful cybersecurity case��ever brought under the statute.�� That case resulted in Cisco Systems paying $8.6 million to settle allegations of selling the Government video surveillance software vulnerable to unauthorized access and manipulation.�� Our client received a whistleblower award of 20% of the Government’s recovery.

If you would like more information about that case and our other work representing cybersecurity whistleblowers, or would like to learn more about��what it means to be a whistleblower��under the��False Claims Act, please don’t hesitate to��contact��us.�� We will connect you with an experienced member of the��91pornWhistleblower��Team��for a free and confidential consultation.

Speak Confidentially With Our Whistleblower Attorneys

Sources:

[1] ��See .

[2] ��See .

Read Swiss Automation is the Latest to Settle False Claims Act Allegations of Cybersecurity Fraud at constantinecannon.com

By the��91pornWhistleblower Team

On December 2, Georgia-based Patrick C. Moore Jr. was sentenced to 46 months in prison and required to pay more than $7.2 million in restitution for his involvement in a scheme that involved paying and receiving illegal kickbacks to persuade Medicare beneficiaries to undergo unnecessary genetic testing.[1]

Patrick C. Moore’s Alleged Kickback Scheme

Court documents reveal that Moore orchestrated a kickback scheme by directing a network of recruiters to target Medicare beneficiaries, persuading them to undergo genetic tests that were unnecessary, misrepresented, or ineligible for reimbursement. [2]

Referrals for Testing

Moore received about $4.3 million in kickbacks and bribes from his co-conspirators for referring beneficiary insurance information, DNA samples, and doctors’ orders for genetic testing. In return, he paid illegal kickbacks and bribes to his network of recruiters. To hide the scheme, Moore created fake invoices showing fabricated hours worked instead of the per-referral payments he received, violating the Anti-Kickback Statute. Laboratories linked to Moore and his co-conspirators billed Medicare about $24 million and received approximately $7.2 million for the unnecessary genetic tests.[3]

Moore pleaded guilty to one count of conspiracy to defraud the United States and for paying and receiving illegal healthcare kickbacks in May 2025.

How Can Whistleblowers Report Violations of the Anti-Kickback Statute and Stark Law?

91pornpartner Marlene Koury commented: “The Anti-Kickback Statute exists to safeguard patients and ensure fair medical judgment. When providers undermine these protections with illegal payments, they distort clinical decision-making and erode trust in the healthcare system. Whistleblowers who come forward play an essential role in combating fraud.”

While this case did not indicate whether whistleblowers were involved, individuals with information about potential law violations can help stop fraud. Whistleblowers can utilize the False Claims Act to report violations of the Anti-Kickback Statute and Stark Law. These laws prohibit medical providers from offering or receiving kickbacks, payments, or anything of value in exchange for patient referrals for treatments covered by government healthcare programs like Medicare and Medicaid, and from engaging in certain financial relationships.

Our Firm Helps Whistleblowers

To learn more about our��whistleblower successes,��kickback��cases, the��False Claims Act, or��what it means to be a whistleblower, please��contact��us. We will connect you with an experienced member of the��91pornwhistleblower team��for a free and confidential consultation.

Speak Confidentially With Our Whistleblower Attorneys

Sources:

[1] See

[2] Id.

[3] Id.

Read Georgia Man Sentenced for $24 Million Medicare Fraud and Kickback Scheme at constantinecannon.com

By the 91pornWhistleblower Team

Last Wednesday (November 26), the Department of Justice (DOJ) announced Harman International Industries, Inc. — a leading audio electronics company for automakers — agreed to pay roughly $11.8 million to settle allegations it violated the False Claims Act by evading antidumping and countervailing duties on aluminum goods from China.[1]�� It is just the latest in a string of customs fraud cases the DOJ has settled this year and a further indication that going after customs fraud remains a top DOJ priority.

What Was the Customs Fraud In Which Harman Allegedly Engaged?

As the DOJ explained in the press release announcing the settlement, Customs and Border Protection (CBP) collects antidumping and countervailing duties on U.S. imports to “level the playing field” for American companies. ��Antidumping duties protect against “dumping” products into U.S. markets at below-cost prices.�� Countervailing duties offset foreign government subsidies that otherwise enable foreign companies to sell cheaper products in the U.S.

The import at issue for Harman was an extruded aluminum heat sink used to dissipate heat from electronic components.�� According to the Government, Harman imported these heat sinks from China for more than ten years (2011-2023) without paying the required duties.�� The Government further claimed that even after it confronted Harman with its failure to pay these duties, the company refused to come clean and took steps to conceal its ongoing customs fraud.

Have There Been Other False Claims Act Settlements This Year Involving Customs Fraud?

Harman joins an ever-growing list of importers getting caught up in DOJ’s crusade against customs fraud.�� There have been several False Claims Act settlements in the last few months alone.�� This includes:

• • The $12.4 million settlement in August with countertop/cabinetry supplier Allied Stone for allegedly mischaracterizing its quartz surface products from China as marble or crystallized glass to significantly reduce the antidumping and countervailing duties it paid.

• • The $6.8 million settlement in July with MGI International subsidiaries Global Plastics and Marco Polo International for allegedly claiming the wrong country of origin and value on plastic resin products they imported from China to avoid paying customs duties.

• • The $4.9 million settlement in July with patio furniture company Grosfillex for allegedly evading antidumping and countervailing duties by concealing that certain furniture parts imported from China were made of extruded aluminum.

• • The $8.1 million settlement in March with Evolutions Flooring for allegedly mischaracterizing the country of origin of the wood flooring it imported from China.

Is Customs Fraud Still a Top Enforcement Priority?

As we have previously posted, DOJ and the Trump Administration continue to treat customs fraud as a top enforcement priority.�� In addition to this steady stream of customs fraud settlements, in late August DOJ launched a customs fraud task force, partnering with the Department of Homeland Security to “aggressively pursue” companies evading tariffs and other customs duties, and smuggling prohibited goods into the country.�� And in May, DOJ expanded its��Corporate Whistleblower Awards Pilot Program, with customs and tariff fraud being one of the agency’s new areas of expanded focus.

In announcing this most recent settlement with Harman, the Government reinforced its commitment to combatting fraud in this area.�� As U.S. Attorney Jerome Gorgon (E.D. Mich.) put it: “We will use the law to protect our American companies against cheaters. ��And when we catch them, they will pay for it.”

Susan Thomas of CBP’s Office of Trade was equally adamant: “This case underscores CBP’s commitment to enforcing the customs and trade laws and ensuring the protection of revenue to promote U.S. economic security.”

Special Agent Laura Barsczewsk of the Department of Commerce Office of Inspector General also weighed in, underscoring how the settlement “reflects the strong partnership between the [] OIG, our law enforcement partners, and [DOJ] to ensure the integrity of U.S. trade laws and hold companies accountable when they circumvent duties designed to protect American industries.”

91pornwhistleblower attorney Dan Noel — who has several False Claims Act customs fraud cases pending before DOJ — views the Harman settlement as further evidence of the Government’s heightened interest in this area: “The Government is very interested in going after customs fraud.�� We are seeing that not only in the breadth of DOJ enforcement activity in this area, but also in the response our whistleblower clients are receiving when bringing False Claims Act cases involving customs fraud to the Government.”

What Role Can Whistleblowers Play in Reporting Customs Fraud?

Under the False Claims Act, whistleblowers may bring lawsuits on behalf of the Government against those committing fraud against the Government.�� If successful, they can receive up to 30% of the Government’s recovery.�� Most False Claims Act cases are originated by whistleblowers, with whistleblowers collectively receiving close to $10 billion in awards over the last thirty years.

Whistleblowers have been especially prevalent in uncovering customs fraud because of the difficulty in detecting it without inside knowledge of the scheme. Unsurprisingly, the Harman matter originated with a whistleblower lawsuit filed under the False Claims Act by former Harman customs compliance specialist Jesrel Mitre.�� He will receive a whistleblower award of roughly $2.3 million from the proceeds of the Government’s recovery.

According to Noel, the Harman settlement also illustrates how the Government’s recent hyper-focus on customs compliance and enforcement is bringing to light long-standing customs fraud schemes. “The Harman settlement resolved allegations dating all the way back to 2011. More and more insiders are realizing their companies have been defrauding the Government for years, and through the False Claims Act, these insiders have an easy channel to report the wrongdoing and receive a potentially sizeable award for doing so.”

91pornRepresents Customs Fraud Whistleblowers Under the False Claims Act

91pornhas substantial experience representing customs fraud whistleblowers under the False Claims Act.�� In one of our more recent cases, the firm represented a whistleblower alleging an auto parts distributor misclassified brake pads imported from Asia to avoid millions of dollars of��customs duties.�� The company��settled��that matter for $8 million with our client receiving 18.5% of the Government’s recovery.

If you would like to learn more about our other��whistleblower successes,��customs fraud, the��False Claims Act, or��what it means to be a whistleblower��more broadly, please do not hesitate to��contact��us.�� We will connect you with an experienced member of the��91pornwhistleblower team��for a free and confidential consultation.

Speak Confidentially With Our Whistleblower Attorneys

Sources:

[1] ��See .

Read Harman International Pays $11.8M for Evading Customs Duties — DOJ’s Latest False Claims Act Customs Fraud Settlement at constantinecannon.com

By the 91pornWhistleblower Team

The Department of Justice (DOJ) wasted no time in getting back to business in fraud enforcement following the end of the longest Government Shutdown in history.�� In the two weeks following the Grand Reopening on November 12, DOJ settled close to 20 False Claims Act cases involving a wide array of defendants.

What Has DOJ’s Recent Burst of False Claims Act Settlements Involved?

Here is a high-level overview of the who, what, where, when, and how much of these recent settlements.

• Sky Lease ($1M). On November 25, Miami-based air cargo delivery company Sky Lease I Inc. agreed to pay roughly $1 million to settle allegations it violated the False Claims Act by providing false information under its delivery contract with the U.S. Postal Service (USPS).[1] ��Specifically, Sky Lease was required to submit to USPS electronic scans of the mail it delivered that reported the time of delivery but allegedly submitted scans that falsely reported the delivery time.

• Sola ($2M). On November 25, Virginia-based operator of adult residential group homes Sola, Inc. agreed to pay $2 million to settle allegations it violated the False Claims Act by overbilling Medicaid for skilled and other nursing services for its residents.[2]�� According to the government, Sola billed Medicaid for nursing services that were impossible to perform because the amount of time billed exceeded the number of hours the nurses reported on their time sheets.

• Austin Emergency Center ($429K). On November 25, the Austin-based operator of emergency medical centers agreed to pay roughly $429,000 to settle allegations it violated the False Claims Act by overbilling the Federal Employees Health Benefit Program (FEHBP).[3]�� Specifically, the government claimed the company improperly charged the FEHBP more than it charged cash-paying patients for certain COVID-19 tests.�� The government further alleged the company up-coded evaluation and management services for drive-through COVID-19 screening.

• Patients Choice ($9.6M). On November 24, Indiana-based diagnostic laboratory Patients Choice Laboratories agreed to pay $9,620,000 to settle allegations it violated the False Claims Act and Anti-Kickback Statute by billing Medicare for respiratory pathogen panels (RPPs) that were either medically unnecessary or obtained through kickbacks.[4] ��Specifically, the government claimed Patients Choice entered into a sham Marketing Services Agreement through which it paid a supposed infection prevention company for referrals from long-term care facilities.�� Patients Choice also allegedly paid that company to swab residents at these facilities for medically unnecessary RPP testing.

• San Rafael Hospital ($650K). On November 24, Colorado-based Mt. San Rafael Hospital and Rural Health Clinic and three of its physicians agreed to pay a combined $650,000 to settle allegations they violated the False Claims Act and Controlled Substances Act by unlawfully dispensing and billing Medicare for invalid opioid prescriptions.[5]�� According to the government, the prescriptions were not issued for a legitimate medical purpose or were outside the usual course of professional practice.�� The government further claimed the physician-defendants ignored numerous “red flags” indicating the prescriptions were improper or unsafe.�� These flags included high daily opioid doses, dangerous drug combinations, signs of substance abuse, prolonged opioid use, cash payments, long-distance travel to obtain prescriptions, and repeated early refill requests.

• Deer Valley ($535K). On November 24, St. Louis-based home health care company Deer Valley Home Health Services agreed to pay roughly $535,000 to settle allegations it violated the False Claims Act by falsely billing Medicare and Medicaid for services not provided or provided by uncredentialed personnel.[6]�� Specifically, the government claimed Deer Valley billed for services by an employee claiming to have worked more than 24 hours per day and who provided applied behavior analysis services he was not qualified to provide.

• Vohra Wound ($45M). On November 21, Dr. Ameet Vohra and his wound care company Vohra Wound Physicians Management agreed to pay $45 million to settle allegations they violated the False Claims Act by billing Medicare for medically unnecessary surgical procedures, for procedures not performed, and for evaluation and management services Medicare does not cover.[7]�� According to the government, Vohra “pressured, trained, and provided financial incentives for Vohra physicians to perform debridement procedures during as many patient visits as possible regardless of the patients’ needs.” ��The government further claimed the company programmed its electronic health record and billing software to ensure it automatically billed Medicare for the higher-reimbursed surgical procedure, creating false medical records to support the billings.

• GTI ($1.6M). On November 20, Arizona-based diagnostic laboratory Genetic Technological Innovations (GTI) agreed to pay $1.635 million to settle allegations it violated the False Claims Act and Anti-Kickback Statute by billing Medicare for respiratory pathogen panels that were either medically unnecessary or obtained through kickbacks.[8]�� The charges mirror those DOJ brought against Patients Choice which resulted in the $9.6 million settlement on November 24 (described above).

• Aesculap ($38.5M). On November 17, DOJ announced that Pennsylvania-based medical device company Aesculap Implant Systems agreed to pay $38.5 million to settle allegations it violated the False Claims Act by selling knee replacement devices it knew would fail prematurely at a higher than acceptable rate.[9]�� This resulted in false claims to Medicare/Medicaid because the failures rendered the implants medically unreasonable and unnecessary.�� The Government also claimed the company paid kickbacks to an orthopedic surgeon to induce him to use the knee implants. ��The allegations originated in a whistleblower lawsuit filed by John Marien and Michael McGee, third-party distributors for Aesculap. ��They will receive a whistleblower award of $4,475,000 from the proceeds of the government’s recovery.

• Zephyr Aviation ($3.9M). On November 14, Virginia-based Zephyr Aviation and its owners agreed to pay roughly $3.9 million to settle allegations they violated the False Claims Act by submitting inflated invoices for aviation services to the Department of Homeland Security (DHS).[10]�� DHS contracted with Zephyr for chartered flights to transport persons in the custody of Customs and Border Protection.�� According to the government, Zephyr subcontracted with various aircraft operators to fly the required flights and billed DHS for flight hours that exceeded the actual flight times of the aircraft operators.

• VRA Enterprises ($17M). On November 14, Tampa-based pharmacy VRA Enterprises agreed to pay roughly $17 million to settle allegations it violated the False Claims Act by billing Medicare for Covid-19 tests never provided or provided months after the company billed them to Medicare.[11]�� According to the government, VRA repeatedly acknowledged internally that it had billed Medicare for tests it failed to ship and should issue refunds to Medicare.

• Denali Group ($3.5M). On November 13, the Alaska-based transportation company agreed to pay $3.5 million to settle allegations it violated the False Claims Act by submitting false customer satisfaction surveys to secure Department of Defense and Coast Guard contracts for moving and storage services for government personnel.[12]�� According to the government, Denali submitted false customer satisfaction surveys with perfect scores and had employees call customer survey lines using call spoofing applications to mask their phone numbers and impersonate government personnel.�� The government claimed these fake surveys resulted in the government awarding Denali more contracts than it otherwise would have secured.

In addition to these settlements, DOJ entered into several additional False Claims Act settlements during this two-week period relating to fraud on the CARES Act Paycheck Protection Program (PPP).�� These include settlements with five Pennsylvania-based car companies (November 24),[13] Koide Tennessee (November 19),[14] two New York transportation companies (November 17),[15] Southside Communities Fire Protection (November 13),[16] and Chroma Systems Solutions (November 14).[17]

Health Care Fraud Remains a Top Enforcement Priority

Unsurprisingly, other than the PPP cases, the bulk of these recent settlements involved health care fraud, which in recent years has accounted for the vast majority of False Claims Act cases.�� What is surprising is the breadth of defendants these settlements covered in such a narrow window of time, including an adult residential group home, emergency medical center, diagnostic laboratory, hospital, home health agency, wound care company, medical device company, pharmacy, individual owners, and physicians.

It is a clear indication that health care fraud remains a top priority for the Trump Administration no matter the type of entity or individual involved.�� It is also a strong sign that despite the government’s more restrained enforcement approach in certain areas, it does not seem to be scaling back its efforts to police fraud.

What Does the String of False Claims Act Settlements Say About Trump’s Fraud Enforcement Priorities?

91pornwhistleblower partner Gordon Schnell is heartened by the False Claims Act blitz that immediately followed the government reopening.�� According to Schnell, “the onslaught of settlements just reinforces the Trump Administration’s continued use of the False Claims Act to go after fraud.”

Schnell pointed to a seeming downturn in enforcement activity by other regulators, such as the Securities and Exchange Commission and the Commodity Futures Trading Commission.�� But “with DOJ and the False Claims Act,” he remarked, “the government seems to be full steam ahead.”

What Role Did Whistleblowers Play In These Recent False Claims Act Settlements?

One not-so-favorable development from all this recent False Claims Act activity is the relative absence of any DOJ promotion of the whistleblowers who prompted these government enforcement actions and settlements.�� Most of the DOJ press releases announcing the settlements make no mention of any whistleblower participation, and those few that do provide scant information on the whistleblowers and the award they received for bringing the matter forward.

This is surprising given whistleblowers originate the majority of False Claims Act actions, taking advantage of the qui tam provisions of the statute which allow private parties to bring lawsuits on behalf of the government against those that commit fraud against the government.�� In return, they can receive up to 30% of any government recovery from the action.�� Historically, DOJ has prominently promoted any whistleblower involvement in these matters, typically identifying who they are, their relationship to the defendant, and the share of the settlement amount they will receive for initiating the action.

Schnell does not believe the relative lack of whistleblower promotion with these recent settlements is indicative of any change in DOJ attitude towards whistleblowers.�� Rather, he attributes it to the rush of getting these settlements done and announced as soon as possible after the government resumed operations.�� He points to the overall brevity of many of these press releases as further support for this view.

According to Schnell, “the Trump Administration and Bondi-led DOJ have given every indication they are fully behind whistleblowers and recognize the critical role they play in helping the government use the False Claims Act to go after fraud.”�� But he cautions, how DOJ credits whistleblowers in its False Claims Act press releases going forward is something to keep a close eye on.

91pornHas Substantial Experience Representing False Claims Act Whistleblowers

91pornhas substantial experience representing whistleblowers under the False Claims Act, with a string of groundbreaking successes for the government and the firm’s whistleblower clients.�� If you would like to learn more about the firm and its whistleblower practice, or have questions about the False Claims Act or what it means to be a whistleblower more broadly, please do not hesitate to contact us.�� We will connect you with an experienced member of the 91pornwhistleblower team for a free and confidential consultation.

Speak Confidentially With Our Whistleblower Attorneys

Sources:

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Read DOJ Settles Flurry of False Claims Act Cases Following Government Reopening — But Where Are the Whistleblowers? at constantinecannon.com

By the 91pornWhistleblower Team

Last Friday (November 14), New Jersey Attorney General Matthew Platkin announced that Horizon Healthcare Services (known as Horizon Blue Cross Blue Shield of New Jersey) agreed to pay $100 million to settle charges of violating the New Jersey False Claims Act.¹�� The settlement centers around allegations that Horizon systematically overcharged the State on its contract to administer the State’s employee benefit programs.�� It is New Jersey’s largest non-Medicaid False Claims Act settlement ever.

What Fraud Did Horizon/Blue Cross Blue Shield Allegedly Commit?

Horizon facilitates healthcare services to hundreds of thousands of New Jersey State employees and oversees billions in medical spending each year.�� Its State contract was to serve as a third-party administrator to manage benefits for the State Health Benefits Program and the School Employees’ Health Benefits Program. ��A critical component of the contract was the so-called “lesser of” provision, which required Horizon to charge the State the smaller amount between their negotiated rate and the rate a healthcare provider actually charged.

Horizon’s promise to adhere to this cost savings provision was incorporated into the company’s bid for the contract and a key basis for the State’s contract award.�� Yet according to the State, Horizon had no intention of complying with this bid requirement.�� In fact, the company — through its own analysis of claims data before the bid — allegedly knew it would be unable to comply with the requirement.

The State claimed Horizon concealed this fact, allowing it to fraudulently secure the contract and receive roughly $500 million in fees from the State over the next four and a half years. ��Further concealing the scheme, Horizon also allegedly issued fraudulent Explanation of Benefits to health plan members, misrepresenting how much the State paid on their behalf.

New Jersey’s Commitment to Combating Healthcare Fraud

In announcing the settlement, Attorney General Platkin stressed the State’s commitment to go after healthcare fraud:

“At a time when everyone is rightly concerned about the cost of their healthcare, it is simply unacceptable that an insurance company would seek to defraud our State and overcharge us while driving up the costs of healthcare for hundreds of thousands of dedicated public servants.�� We will not hesitate to hold accountable anyone who breaks the law and harms our residents, no matter how big or powerful you are.”

New Jersey State Treasurer Elizabeth Maher Muoio echoed this sentiment, noting her office “has been, and continues to be, laser-focused on enforcing its contracts and ensuring that our health benefits plans and our members are protected.”

Which States Have False Claims Act Statutes?

In addition to New Jersey, there are roughly thirty states that have False Claims Acts that broadly prohibit committing fraud against the state and its various agencies and sub-divisions.�� These include California, Colorado, Connecticut (Healthcare fraud only), Delaware, District of Columbia, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Louisiana (Healthcare fraud only), Maryland, Massachusetts, Michigan (Healthcare fraud only), Minnesota, Montana, Nevada

New Hampshire (Healthcare fraud only), New Mexico, New York, North Carolina, Oklahoma (Healthcare fraud only), Puerto Rico, Rhode Island, Tennessee, Texas (Healthcare fraud only), Vermont, Virginia, and Washington (Healthcare fraud only).

Like the federal False Claims Act on which the state statutes are modeled, they allow whistleblowers to bring lawsuits on behalf of the state.�� In return, successful whistleblowers can share in the proceeds of the state’s recovery.�� That is what happened in the Horizon matter.�� Six whistleblowers sued Horizon under the New Jersey statute.

Who Were the Horizon Whistleblowers?

As it turns out, the State had already opened an investigation into Horizon’s alleged overcharging and was unable to find evidence to support the whistleblower’s claims aside from certain violations that the State had already been probing.�� Nevertheless, it intervened in the whistleblower suit and credited the whistleblowers for helping the State reach the record settlement.

As part of the settlement, the State agreed to provide five of the whistleblowers — Kevin Lyons, Patrick Colligan, Mark Kovar, Mark Flores, and Vince Flores — a $12 million whistleblower award from the proceeds of the settlement.�� The State did not include the sixth whistleblower in the award because she apparently learned of the alleged fraud from her work in the agency that issued Horizon the contract.

The $12 million award represents a lower percentage whistleblower share than the New Jersey and other False Claims Acts typically authorize (which can be upwards of 30%, sometimes higher).�� However, it is notable that the State provided any whistleblower award given it had already been investigating the matter and it appears the whistleblowers added nothing new in their subsequently filed complaint that the State felt it could prove.�� We can only assume they provided other assistance in the State’s investigation of Horizon’s alleged billing violations.

Why State False Claims Acts Matter

The settlement is also notable because it shows how effective the False Claims Act can be to go after fraud against state and local governments.�� The vast majority of False Claims Act enforcement is at the federal level by the Department of Justice under the federal statute.�� But the many states that have their own False Claims Act statutes can similarly use this powerful tool to combat fraud.

91pornpartner Gordon Schnell points to the Horizon settlement as a compelling example of how states can use the statute to recover government funds secured by fraud.�� According to Schnell, “More than thirty states have False Claims Act statutes that broadly cover fraud against the government, but very few of them regularly use the statute to recover ill-gotten government gains.�� It’s encouraging to see New Jersey take advantage of the statute to recover such a large sum for the taxpayers of the State.”

Schnell also notes that virtually all of these state statutes — like their federal counterpart — have so-called qui tam provisions that authorize whistleblowers to bring suit on the government’s behalf.�� This is an especially important part of the statute for states that often do not have the resources to investigate fraud on their own.

Schnell commends New Jersey for rewarding the whistleblowers who initiated the Horizon suit even though it came after the State had been investigating.�� Schnell says, “The State’s decision to make an award under the unique circumstances of that case reflects a clear recognition of the critical role whistleblowers can play in helping the government go after fraud.”

91pornHas Substantial Experience Representing False Claims Act Whistleblowers

91pornhas significant experience representing whistleblowers under the federal False Claims Act and under many of the state statutes.�� In fact, the firm has helped its clients secure record settlements under the state statutes.

Most recently, the firm secured the largest ever reported settlement under the Illinois statute in a case alleging eight of the country’s largest banks engaged in widespread fraud and collusion in the fees they charged and the interest rates they set for Illinois tax-exempt municipal bonds.�� The firm’s client received a whistleblower award of roughly $14 million.

91pornlikewise represented a whistleblower in a series of��state False Claims Act��cases alleging the four major wireless carriers overcharged the government by failing to provide services at the lowest cost.�� The carriers collectively paid roughly $140 million to settle the matter, one of the largest state False Claims Act settlements ever.�� The firm’s client received a whistleblower award of roughly $55 million.

If you would like to learn more about the federal or state False Claims Acts, Constantine Cannon’s successes under these statutes, or what it means to be a whistleblower more broadly, please do not hesitate to contact us.�� We will connect you with an experienced member of the 91pornwhistleblower team for a free and confidential consultation.

Speak Confidentially With Our Whistleblower Attorneys

Sources:

¹See

Read Horizon Healthcare Pays Record $100M to Settle NJ False Claims Act Charges Brought By Whistleblowers at constantinecannon.com

By the��91pornWhistleblower Team

On September 26, Acting U.S. Attorney and Special Attorney Alina Habba announced that California resident Andrew Do agreed to settle allegations that he violated the False Claims Act through illegal kickbacks and fraudulent billing practices at his three mail order pharmacies.

Do’s Pharmacies

From January 2016 through December 2020, Do owned and operated three mail order pharmacies: Family Care Investments d/b/a Value Pharmacy, JD Health LLC d/b/a JD Pharmacy, and TMD Health, LLC d/b/a Good Health Pharmacy.¹

Kickbacks for Prescriptions

According to the government, Do paid kickbacks to induce prescriptions for compounded prescription topical creams, filled those prescriptions, then submitted claims to Medicare for reimbursement.

False Claims Submitted to Medicare

The United States Attorney’s Office of New Jersey stated: “Do knew that his payments to induce prescriptions paid for by Medicare violated the Anti-Kickback Statute and caused false claims to be submitted to the Medicare program, all in violation of the False Claims Act.”²

Based on Do’s financial disclosures and his inability to pay, he will pay $600,000 to the United States.³

Whistleblower Brought the Case

The settlement resolves allegations initiated by a whistleblower against Do’s Value Pharmacy, filed under the qui tam��(or whistleblower provisions) of the False Claims Act, allowing private parties to file actions on behalf of the government and receive a monetary share of the recovery.

Daniel Toellner, the relator (or whistleblower) in this action, will receive up to $100,000.

Our Firm Helps False Claims Act Whistleblowers

91pornattorney Dan Noel commented: “Whistleblowers exposing violations of the Anti-Kickback and Stark Law serve a vital role in safeguarding our healthcare system, ensuring that accountability prevails in matters of public trust and patient care.”

Whistleblowers can use the False Claims Act to report violations of the Anti-Kickback Statute��and��Stark Law, prohibiting medical providers from paying or receiving kickbacks, payment, or anything of value in exchange for patient referrals who will receive treatment paid for by government healthcare programs like Medicare��and��Medicaid, and from entering into particular types of financial relationships.

Our Firm Has Significant Experience Representing Whistleblowers

If you would like to learn more about our whistleblower successes,��kickback��cases, the��False Claims Act, or��what it means to be a whistleblower, please��contact��us. We will connect you with an experienced member of the��91pornwhistleblower team��for a free and confidential consultation.

Speak Confidentially With Our Whistleblower Attorneys

Sources:

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Read Mail Order Pharmacy Owner Settles False Claims Act Allegations of Kickbacks and Fraudulent Billing at constantinecannon.com

By the 91pornWhistleblower Team

Last Friday (September 26), the Department of Justice (DOJ) announced that Semler Scientific and its former distributor Bard Peripheral Vascular agreed to pay a combined $37 million to settle charges they violated the False Claims Act.¹�� The allegations center around their sale and distribution of the FloChec and QuantaFlo devices used to diagnose peripheral arterial disease (PAD).�� Semler will pay $29.75 million and Bard will pay $7.2 million.

DOJ Claimed Semler/Bard Misrepresented Medicare Coverage of Vascular Testing Devices

PAD involves the narrowing or blocking of arteries, reducing blood flow typically to the legs and feet. ��It can be diagnosed by an ankle brachial index (ABI) test, which assesses the severity of the blockage. ��Medicare will cover the ABI test if certain billing requirements are met.�� Medicare will not cover vascular tests that use photoelectric plethysmography, which uses a light sensor to detect changes in blood volume.

According to the Government, Semler manufactured and sold the FloChec and QuantaFlo devices for diagnosing PAD. ��Both devices use a light sensor to detect changes in blood volume.�� When the FDA cleared the devices, it specifically told Semler they could not be considered ABI tests.�� Therefore, they are not covered by Medicare.

Nevertheless, the Government alleged that “Semler and Bard falsely claimed that tests conducted using the FloChec and QuantaFlo devices were reimbursable by Medicare and caused healthcare providers to submit false claims to Medicare.” ��Apparently, Semler specifically told healthcare providers that Medicare reimbursed for these tests even though Semler knew it did not and even after some providers raised coverage concerns with Semler.

Settlement Shows Broad Scope of False Claims Act

The Government’s False Claims Act action here is notable because it targeted Semler and Bard even though they were not the entities that submitted or directly financially benefitted from the false claims for Medicare reimbursement.�� The healthcare providers providing the FloChec and QuantaFlo treatments submitted the false claims.�� However, the statute covers not only the submission of false claims, but also fraudulent conduct that causes the submission of such claims.

The Government’s argument here was that in misrepresenting the Medicare coverage of the FloChec and QuantaFlo devices it sold, Semler and Bard were causing healthcare providers to make reimbursement claims based on a misunderstanding of the products, and which they would not otherwise have made.�� The claims were false because they were submitted for products that did not qualify for reimbursement.

According to 91pornwhistleblower partner Marlene Koury, “This action shows the expansive scope of the False Claims Act, especially when going after healthcare fraud.”�� Koury says the statute’s causing-submission-of-false-claims language allows the Government to target a wide swath of fraud — “It just needs to contribute in some way to the making of a false claim.”�� Koury adds, “This gives the Government significant room under the statute to aggressively challenge a wide range of misbehavior.”

Medical Device Makers Cannot Misrepresent Their Products

In announcing this settlement, the Government stressed how important it is for medical device makers to be honest about their products and their associated Medicare coverage.�� DOJ Civil Chief Brett Shumate said it was “incumbent upon manufacturers and their distributors to be honest with their customers about the rules and regulations that apply to their products.”

HHS Special Agent Isaac Bledsoe reinforced this sentiment, specifically calling out “companies that misrepresent the capabilities of their products and encourage providers to bill Medicare for services that do not meet coverage requirements.”

Whistleblowers Are Central to False Claims Act

Like most False Claims Act cases, this one was originated under the qui tam provisions of the statute, which allow private parties to bring suit on behalf of the Government against those defrauding the Government.�� Since 1986 — when the statute was amended to increase the protections and incentives for whistleblowers bringing False Claims Act cases — whistleblowers have filed roughly 70% of all False Claims Act cases.�� These cases have brought in roughly $55 billion in Government recoveries.

During this same period, whistleblowers have received roughly $9.5 billion in whistleblower awards.�� This follows from the qui tam provisions which provide successful whistleblowers with up to 30% of the Government’s recovery from the actions they originate.

Robert Kane and Franklin West are the whistleblowers who originated the action against Semler and Bard.�� They will receive a total whistleblower award of roughly $6.5 million from the settlement.

91pornHas Substantial Experience Representing Whistleblowers

91pornhas significant experience representing whistleblowers under the False Claims Act, recovering more than a billion dollars for the Government and our whistleblower clients.�� If you would like to learn more about the False Claims Act, our groundbreaking False Claims Act successes, or what it means to be a whistleblower, please do not hesitate to contact us.�� We will connect you with an experienced member of our whistleblower team for a free and confidential consultation.

Speak Confidentially With Our Whistleblower Attorneys

Source:

¹ See

Read Semler Scientific and Bard Pay $37 Million to Settle False Claims Act Allegations of Defrauding Medicare — With Two Whistleblowers Leading the Charge at constantinecannon.com

By the 91pornWhistleblower Team

Last Thursday (September 18), the Department of Justice (DOJ) announced that New Jersey-based Bayonne Drydock and Repair Corporation agreed to pay roughly $4 million to settle charges of violating the False Claims Act by using unauthorized foreign citizens on various United States Navy contracts.¹

DOJ Claimed Breach of E-Verify Provisions

Bayonne Drydock has multiple Government contracts to provide drydock and repair services for Navy ships. ��According to the Government, from May 2017 through December 2020, the company knowingly used subcontractors that employed individuals not authorized to work in the United States.

Per DOJ’s Settlement Agreement,² employing “unauthorized aliens” violated the Employment Eligibility Verification clause (E-Verify) of the Federal Acquisition Regulations, which govern most federal contracts.�� In total, Bayonne Drydock allegedly employed 52 unauthorized foreign citizens on these Navy contracts.

What may have particularly peeved the Government here was that the Department of Homeland Security had previously warned Bayonne Drydock about using unauthorized employees on Government Contracts.�� While the company purportedly terminated these employees at the time, it soon thereafter “took affirmative steps to assist another subcontractor to employ unauthorized alien employees.”

Second False Claims Act Settlement This Year Based on Using Unauthorized Employees

This settlement is the second False Claims Act settlement this year based on a federal contractor’s employment of unauthorized foreign citizens.�� In January, Louisiana-based ship builder Bollinger Shipyard agreed to pay roughly $1 million to settle similar charges of billing the Coast Guard for labor from workers not eligible to work in the United States.³

In announcing that settlement, the Government stressed its commitment to going after federal contractors, especially military contractors, that employ unauthorized workers: “Today’s settlement sends a clear message that contractors providing services to DHS programs will be held accountable for breaking the law,” and that the Government “will continue to prioritize protecting our national security from these kinds of schemes.”

The Government did not similarly comment on the Bayonne Drydock settlement.�� Indeed, the DOJ press release announcing the settlement was quite sparse in its detail without any commentary on the significance of the settlement or warning for other contractors to ensure compliance with their E-Verify obligations.

Using Unauthorized Employees on Federal Contracts is a Significant DOJ Policy Concern

But the implications of the settlement and what it means for Government contractors going forward are clear, especially for defense contractors — DOJ will use the False Claims Act to go after companies using unauthorized employees on Government contracts.

According to 91pornwhistleblower partner Gordon Schnell, it all comes down to materiality, which is an essential requirement under the False Claims Act.�� As Schnell puts it, “The False Claims Act requires a showing that the alleged fraud mattered to the Government, meaning the Government’s decision to deal with the contractor likely would have been influenced had it known of the fraud.”

That can be a difficult hurdle to satisfy in situations where the Government, despite certain contractual violations, still receives the actual goods and services it pays for.�� Schnell says, “What the Bayonne Drydock and Bollinger actions show is the Government putting a firm stamp of materiality on using unauthorized foreign citizens on federal contracts.”�� According to Schnell, the materiality argument will have particular force with military contracts where the Government can couch its unauthorized worker concerns in terms of protecting national security.

More broadly, Schnell notes this is another example of the current DOJ using the False Claims Act to further some of President Trump’s key policy initiatives.�� It follows the “Civil Rights Fraud Initiative” DOJ launched in May where it announced a like-minded plan of using the False Claims Act to enforce Trump’s anti-DEI (Diversity/Equity/Inclusion) campaign.

Whistleblowers Are Critical to Enforcing the False Claims Act

It remains to be seen whether we can expect more False Claims Act actions involving unauthorized workers on federal contracts.�� But contractors would be wise to keep this potential exposure in mind when staffing up their federal contracts.�� It is not just the risk from increased Government scrutiny in this area.�� There also is the risk of company insiders bringing these matters forward under the whistleblower (or qui tam) provisions of the False Claims Act.

The whistleblower provisions allow private parties to bring False Claims Act actions on behalf of the Government against those that defraud the Government.�� In return, successful whistleblowers may receive up to 30% of the Government’s recovery.�� While there is no indication these recent actions were originated by whistleblowers, historically the vast majority of False Claims Act cases have been brought by whistleblowers, prompted in part by the significant financial incentives for doing so.

91pornHas Significant Experience Representing Whistleblowers Under the False Claims Act

91pornhas significant experience representing whistleblowers under the False Claims Act and in doing so has recovered more than a billion dollars for the Government and the firm’s whistleblower clients.�� If you would like to learn more about the False Claims Act, Constantine Cannon’s False Claims Act successes, or what it means to be a whistleblower more broadly, please do not hesitate to contact us.�� We will connect you with an experienced member of the 91pornwhistleblower team for a free and confidential consultation.

Speak Confidentially With Our Whistleblower Attorneys

Sources:

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Read Bayonne Drydock Pays $4M To Settle False Claims Act Charges of Using Unauthorized Employees on Federal Contracts at constantinecannon.com