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�����Ի���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�����Ի���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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² Id at 1

³ Id at 1

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:

¹ See

² See

³ See

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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

By the 91pornWhistleblower Team

On Tuesday (September 16), the Department of Justice (DOJ) announced that Florida-based medical device maker Exactech Inc. agreed to pay $8��million to settle charges of violating the False Claims Act by billing the Government for defective knee implants.¹�� The settlement was approved as part of the company’s Chapter 11 bankruptcy proceedings and would have been significantly higher but for the company’s financial condition.

Exactech’s Knee Implants Allegedly Failed Prematurely

The Government’s charges centered around two components of Exactech’s total-knee replacement systems that allegedly “failed prematurely at a higher than acceptable rate.”�� One was the finned tibial tray — a metal piece that fits into a patient’s tibia — which allegedly was defective during the 2008-2018 period.�� The other was the polyethylene component in certain Exactech systems which allegedly was defective for the 2019-2022 period.

According to the Government, because of these high premature failure rates, these two components were “not reasonable and necessary for use during total-knee replacement surgeries” on Medicare, Medicaid, and VA beneficiaries.�� These Government programs only reimburse for products and services that are both medically reasonable and necessary.

DOJ Insists on Safe and Effective Medical Devices

In announcing the settlement, the Government stressed the importance of medical device makers selling safe and effective products and being fully transparent when issues arise:

“Medical device manufacturers must ensure their medical devices . . . meet the necessary standards of safety and effectiveness at all times. . . .�� When a manufacturer learns that its device is defective, it must promptly and transparently address the problem. . . .�� We will hold companies accountable who knowingly sell defective devices.”

How the Government framed the fraud in this action is notable.�� The Government did not claim the knee implants did not work or that all of them were defective.�� Rather, the Government alleged too many of them failed too soon and that because of this, the products could not satisfy the “medically reasonable and necessary” prerequisite for Government reimbursement.

DOJ Uses “Reasonable and Necessary” Standard as a Basis for False Claims Act Fraud

91pornwhistleblower partner Gordon Schnell finds this case to be “a good example of how broadly the Government is willing to use the False Claims Act to go after companies selling medical goods and services not up to snuff.”�� Schnell specifically points to the Government’s use of the “reasonable and necessary” reimbursement requirement as a basis to find healthcare fraud.

“It was not that the implants at issue were unreasonable and unnecessary because the patients did not need them,” Schnell says.�� That is how the standard is typically applied in the False Claims Act context.�� “Rather, the Government found the implants did not meet this standard because many of them simply failed too soon.”

Schnell believes this is a more expansive enforcement approach than the Government is often willing to take and may signal a more hard-hitting DOJ in certain enforcement areas of high priority, especially when it comes to healthcare fraud that risks serious patient harm.

Whistleblowers Are Key to Bringing False Claims Act Cases For Healthcare Fraud

Unsurprisingly, the allegations underlying this enforcement matter originated in two whistleblower lawsuits filed under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the Government.�� In return, successful whistleblowers can receive up to 30% of the Government’s recovery.�� The vast majority of False Claims Act matters are originated by whistleblowers under these provisions.

One of these actions was filed in Alabama by Brooks Wallace, Robert Farley and Dr. Manuel Fuentes.�� The other was filed in Maryland by Dr. Pasquale Petrera.�� The Alabama whistleblowers will receive a whistleblower award of roughly $1.3 million from the proceeds of the settlement.�� The Maryland whistleblower will receive an award of roughly $565,000.

91pornHas Substantial Experience Representing False Claims Act Whistleblowers

91pornhas substantial experience representing whistleblowers under the False Claims Act, recovering more than one billion dollars for the Government and our whistleblower clients.�� If you would like to learn more about the False Claims Act, our 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 the 91pornwhistleblower team for a free and confidential consultation.

Speak Confidentially With Our Whistleblower Attorneys

Sources:

¹ See

Read Exactech Pays $8M to Settle False Claims Act Charges of Selling Defective Knee Implants at constantinecannon.com

By the 91pornWhistleblower Team

The Department of Justice recently announced a $6 million settlement from a laboratory CEO, physicians, and marketers who allegedly used management services organizations (“MSOs”) as vehicles for illegal kickback payments.¹�� MSOs are business entities that provide administrative and other services to healthcare providers, but in this case they were allegedly used to disguise kickback payments as investment distributions. Former True Health Diagnostics CEO Christopher Grottenthaler agreed to pay $4.25 million for his role in the scheme, and two physicians and seven marketers also agreed to pay $1.82 million to resolve the case.

MSOs as a Cover for Kickbacks

According to the DOJ, marketers, including True Health employees, allegedly offered and paid physicians kickbacks disguised as MSO “investment” distributions to induce referrals. Grottenthaler allegedly facilitated True Health’s continued participation in the scheme even after receiving warnings that the marketers “are a powder keg waiting to explode on us” and that “people are gonna go to prison.”

The settlement also resolves allegations that Grottenthaler arranged for True Health to pay additional kickbacks disguised as consulting fees, processing and handling fees, and waivers of copayments and deductibles to induce laboratory testing referrals.

The DOJ Prioritizes False Claims Act Kickback Cases

The DOJ has prioritized enforcement of the Anti-Kickback Statute and Stark Law related to purported MSOs. Classic signs that an MSO is being used to facilitate kickbacks include paying investor returns with no meaningful risk or services provided, and parallel inducements such as “consulting” fees or copay waivers made alongside MSO distributions.

With this settlement, the DOJ has secured over $59 million in civil False Claims Act recoveries for kickbacks to healthcare providers disguised as MSO investment distributions.

Marlene Koury, partner at Constantine Cannon, noted that “MSO ‘investment’ arrangements that lack genuine business risk or correlate payments with referral volume are red flags for potential AKS violations. Creative structuring cannot disguise what are fundamentally illegal inducements.”

Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division stated “The Department of Justice will continue to pursue and prioritize healthcare fraud, including redressing illegal kickbacks. Kickbacks to doctors can undermine medical decision-making, subject patients to wasteful medical treatments, and squander taxpayer money.”

The DOJ Relies on Whistleblowers to Report MSO Kickback Schemes

This case originated from a qui tam lawsuit filed by STF LLC under the False Claims Act’s whistleblower provisions. The government intervened and expanded the case, adding several additional claims and defendants. The DOJ noted in its press release that the government’s pursuit of this case “illustrates the government’s emphasis on combating healthcare fraud,” further noting that “one of the most powerful tools in this effort is the False Claims Act.” The relators in this case will receive $148,750 as a reward.

91pornHas Substantial Experience Representing Whistleblowers

If you would like to learn more about our other��whistleblower successes,��kickback cases, 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 DOJ’s MSO Kickbacks Crackdown Continues with $6M Settlement at constantinecannon.com

By the 91pornWhistleblower Team

DOJ Launches Cross-Agency Task Force with DHS

Last Friday (August 29), the Department of Justice (DOJ) launched what it describes as “a cross-agency Trade Fraud Task Force to bring robust enforcement against importers and other parties who seek to defraud the United States.”¹��More specifically, DOJ is partnering with the Department of Homeland Security (DHS) to “aggressively pursue” evading tariffs and other customs duties, and smuggling prohibited goods into the country. ��With this new Task Force, DOJ is tripling down on its crusade against customs fraud.

DOJ Continues to Ramp Up Customs Fraud Enforcement

First is DOJ’s recent expansion of the Corporate Whistleblower Awards Pilot Program.�� This is the program DOJ launched last summer to focus on criminal activity that generally falls outside the established whistleblower rewards programs such as the False Claims Act��and the��SEC and��FinCEN��whistleblower programs.����In May, DOJ announced it was broadening the program with customs and tariff fraud as one of DOJ’s key new areas of expanded focus.

Second is DOJ’s recent string of heavily promoted False Claims Act customs fraud settlements.�� Two weeks ago, Dallas-based countertop and cabinetry supplier Allied Stone agreed to pay $12.4 million to settle DOJ charges of evading customs duties by mischaracterizing the products it imported from China.�� Just a few weeks before that, DOJ extracted millions more in customs fraud settlements from MGI International and Grosfillex for similarly trying to evade customs duties on the products it imported from China.�� And in March, Evolution Flooring paid $8.1 million to settle similar DOJ charges of customs fraud.²

Third is DOJ’s new Task Force, which formally incorporates DHS into DOJ’s anti-fraud campaign, and in particular, the Customs and Border Protection and Homeland Security Investigations (HSI) units.�� As HSI Assistant Director for Global Trade Ivan Arvelo stressed: “Enforcing U.S. international trade laws is one of our agency’s top priorities, and this revitalized and expanded Trade Fraud Task Force is a significant step in the right direction.”

DOJ Calls on Customs Fraud Whistleblowers For Help

In announcing the new Task Force, the Government also put out the call to whistleblowers to join the fray by providing inside information under the Corporate Whistleblower Awards Pilot Program or through initiating a False Claims Act lawsuit under the qui tam provisions of the statute. ��These provisions allow private parties to bring lawsuits on behalf of the Government against those committing fraud against the Government.�� In return, successful whistleblowers can receive up to 30% of the Government’s recovery.

Given the complex nature of customs avoidance schemes and the efforts companies take to disguise them, company insiders with a direct window into the fraud may be the only way for the Government to find out about it. ��Unsurprisingly, the majority of customs fraud False Claims Act cases have been initiated by whistleblowers, including the recent Allied Stone, Grosfillex, and Evolution Flooring matters.

A Definite Uptick in Customs Fraud Whistleblowers Coming Forward

91pornwhistleblower partner Gordon Schnell was heartened by DOJ’s explicit shout out to whistleblowers and what DOJ hailed as their “vital contributions” in this area. ��According to Schnell, “This not only shows a clear recognition of the critical role whistleblowers play in reporting customs fraud, but that DOJ is counting on them to be a major part of this priority enforcement area.”

Schnell has noticed a definite uptick in the number of customs fraud intakes 91pornhas received over the last few months and encourages those with information on potential violations to come forward.�� The classic customs avoidance schemes to look out for, he advises, include: underreporting the value of the imports; mischaracterizing the nature or quantity of the goods; or misidentifying their country of origin.

91pornHas Substantial Experience Representing Customs Fraud Whistleblowers

Schnell says, “The Government has made it very clear that if you have information on potential customs violations, it wants to hear from you, and is willing to reward you for bringing information that leads to a successful enforcement action.”

91pornhas substantial experience representing customs fraud whistleblowers under the False Claims Act. ��In one of the firm’s more recent cases, we 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 the firm’s 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 Attorneys

Sources:

¹ See

² See

Read DOJ Triples Down on Crusade Against Customs Fraud — Calling All Whistleblowers at constantinecannon.com

By the 91pornWhistleblower Team

The Latest Customs Fraud False Claims Act Case

Last Tuesday (August 19), Dallas-based countertop and cabinetry supplier Allied Stone Inc. (and its president Jia Lim) agreed to pay $12.4 million to settle Department of Justice (DOJ) charges of violating the False Claims Act by evading customs duties on quartz surface products from China.¹ It is just the latest in a recent string of customs fraud settlements the Government has reached.

As we recently reported, DOJ settled two customs fraud cases just a few weeks ago.�� On July 23, MGI International subsidiaries Global Plastics and Marco Polo International agreed to pay $6.8 million to settle DOJ charges that they failed to pay customs duties on plastic resin imported from China.²�� And on July 24, Pennsylvania patio furniture company Grosfillex Inc. agreed to pay $4.9 million to settle DOJ charges of evading antidumping and countervailing duties on items made of extruded aluminum originating from China.³

DOJ Alleged Stone Schemed to Evade Customs Duties on Chinese Imports

With its latest customs fraud action, DOJ similarly alleged Allied Stone evaded the antidumping and countervailing duties it owed for its quartz surface imports from China.�� These duties are designed to protect American companies from foreign suppliers seeking to gain an unfair pricing advantage through foreign government subsidies or dumping products at below-cost rates.

According to the Government, Allied Stone mischaracterized its quartz surface products as marble or crystallized glass, which are subject to lesser duties, so it could significantly reduce what it owed CBP.�� DOJ and CBP have repeatedly stressed their commitment to go after this kind of customs misbehavior.

Customs Fraud is a False Claims Act Enforcement Priority

In announcing this most recent settlement, DOJ Civil Chief Brett Shumate specifically declared the agency’s “commitment to hold accountable those who evade or conspire to evade duties owed on imported goods, including antidumping and countervailing duties that level the playing field for American manufacturers.”�� He underscored that DOJ “will zealously pursue those who seek an unfair advantage in U.S. markets by evading or conspiring with others to evade duties owed.”

Executive Assistant Commissioner Susan Thomas of CBP’s Office of Trade echoed this sentiment, stating that “providing false information to CBP violates the law, and it is imperative that violators face consequences,” and that “CBP will always work alongside [DOJ] to ensure a level playing field for U.S. businesses.”

The Government was equally emphatic with its recent Global Plastics/Marco Polo and Grosfillex settlements that going after customs fraud is an enforcement priority, promoting the settlements as a warning for would-be violators going forward.�� 91pornwhistleblower partner Gordon Schnell points to this trio of customs fraud settlements as “a strong indication that DOJ and the Trump Administration have zeroed in on customs fraud as a key focus of their False Claims Act enforcement.”

Whistleblowers Have Initiated Most Customs Fraud False Claims Act Matters

According to Schnell, “Importers should take notice and ensure they are paying what they owe, as the Government is taking a zero-tolerance approach to customs fraud.”�� Schnell also points to the risk of whistleblowers coming forward to report on those companies that do not play by the rules.�� That is what prompted both the Allied Stone and Grosfillex matters.

Under the False Claims Act, whistleblowers may bring lawsuits on behalf of the Government against those committing fraud against the Government, and 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 how difficult it is to detect this type of wrongdoing without those on the inside with first-hand knowledge of the scheme or exposure to it. ��Unsurprisingly, both the Allied Stone and Grosfillex actions were originated by whistleblowers.

Former Allied Stone employee Melinda Hemphill originated that action and will receive more than $2 million from the proceeds of the settlement.�� Former Grosfillex employee Edward Wisner originated that action and will receive roughly $1 million from the settlement.�� And while a whistleblower did not formally originate the Global Plastics/Marco Polo action, a whistleblower was likely involved in reporting the conduct internally, leading to the company’s voluntary disclosure to DOJ and CBP.

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.

91pornwhistleblower intake partner Alysia Solow notes the increase in customs fraud intakes over the past several months.�� “We have seen an increasing number of insiders reach out to us to report customs fraud schemes,” Solow says.�� She believes all the attention behind the Trump Tariffs is not only causing some companies to “cheat the system where they think they can,” but also is “putting a spotlight on the issue, prompting insiders to step forward when their company engages in this kind of fraud.”

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

Read DOJ Continues Crusade Against Customs Fraud With $12.4M False Claims Act Settlement Against Allied Stone at constantinecannon.com

By the Constantine Cannon��Whistleblower Team

In the United States, financial rewards for whistleblowers are offered through several government programs designed to encourage individuals to report fraud, misconduct, or violations of the law.

What Is a Whistleblower Reward?

By initiating actions under the False Claims Act and other whistleblower reward laws and programs, whistleblowers may receive a percentage of the money the government recovers as a result of their information. If the information leads to a successful enforcement action, and the monetary sanctions exceed a certain threshold for certain programs, whistleblowers can receive a portion of the recovered amount.

These financial rewards serve as the basis of a public-private partnership between whistleblowers and the government agencies charged with investigating and prosecuting fraudsters. We’re diving into how financial rewards work for each whistleblower reward program below.

But first…

What Do You Need to Be a Whistleblower?

To qualify for many programs, the information concerning fraud or misconduct must be original, credible, and significantly contribute to the case. Various programs allow whistleblowers to report anonymously through an attorney and protect them from any retaliation.

91pornpartner Alysia Solow explained: “Contacting an experienced whistleblower attorney can help you understand and navigate the complex and ever-changing landscape of whistleblower laws in the United States.”

Attorneys like the whistleblower team at Constantine Cannon can help assess the merits of potential claims, evaluate the evidence you have, and identify and collect additional evidence, all while protecting your rights. Our dedicated team will work on your behalf with the government and help you make informed decisions as your claim proceeds.

Who Can Be a Whistleblower?

In the United States, almost anyone with credible information about wrongdoing can qualify as a whistleblower. This list can include:

• Current or former employees
• Members of the public if they have useful, non-public information
• Contractors or consultants
• Investors or shareholders
• Competitors

Rewards Under Government Whistleblower Programs:

Federal False Claims Act and Whistleblowers

• The federal��False Claims Act��(FCA) is the cornerstone of the U.S.��whistleblower reward system. The FCA provides that any person who knowingly submits or causes false claims to be submitted to the government is liable for three times the government’s damages plus penalties.
• Whistleblowers can bring claims under the FCA to report fraud and misconduct involving Medicare, Medicaid, and TRICARE healthcare fraud, including kickbacks, upcoding, risk adjustment fraud, and billing for services that are not provided or are not medically necessary. The FCA also applies to fraud in federal government contracts and programs, including overcharging or selling defective products to the government, education fraud, and underpaying customs and tariffs.
• The FCA allows private persons, known as��relators, to bring qui tam lawsuits��on the government’s behalf, and can potentially receive a reward of a portion of the government’s recovery between 15% and 30%.
• Learn more about the elements of a claim under the False Claims Act here.

State False Claims Act and Whistleblowers

• Whistleblowers with information that a state or local government has been defrauded may be able to bring a��qui tam suit under a state False Claims Act or a local False Claims Act. Many of these acts are modeled after the federal False Claims Act, with the same structure and elements, including awards provisions.�� Several states limit their FCA statutes to Medicaid fraud only and certain states have added tax fraud as an additional program feature.
• Successful suits have been brought against telecommunications companies, financial firms, charter schools, construction companies, Medicaid providers, and others.
• To learn more, review our additional info on state False Claims Acts with qui tam provisions and state False Claims Acts with no qui tam provisions.

The Securities and Exchange Commission (SEC) Whistleblower Reward Program

• The SEC Whistleblower Reward Program is for cases involving violations of securities laws, including market manipulation, false statements regarding a company’s financial condition, and insider trading.
• Under the��SEC Whistleblower Program, eligible whistleblowers are entitled to an award of up to 30% of the monetary sanctions collected in successful actions brought by the government.
• In determining the award percentage, the SEC considers various factors such as the significance of the whistleblower’s information and the extent of the whistleblower’s assistance.
• If the information provided by the whistleblower leads to a successful SEC action with monetary sanctions��exceeding $1 million, the whistleblower may then apply for a whistleblower reward.
• To learn more and to read examples of the types of fraudulent activity that can give rise to an SEC enforcement action, review our Financial & Investment Fraud page.

Anti-Money Laundering and Sanctions Whistleblower Program

• Whistleblowers can receive awards for reporting violations of the Bank Secrecy Act and sanctions laws, including banks failing to institute sufficient AML compliance programs or failing to file Suspicious Activity Reports, financing terrorist or criminal enterprises, and conducting business with sanctioned entities or countries.
• The Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) is charged with administering the Bank Secrecy Act. It has broad investigative powers and can bring enforcement actions seeking monetary penalties and other civil remedies through actions in federal court or administrative proceedings. FinCEN regularly works with other federal regulators, including the SEC and CFTC, as well as with the Department of Justice, which can bring criminal, civil, and forfeiture actions for violations of AML rules.
• Eligible whistleblowers can receive a reward of up to 30% of monetary sanctions over $1,000,000 that the government imposes based on the information the whistleblower provides.
• To learn more about the components of a sanctions violation claim under the AML Whistleblower Program, review our informational page.

DOJ Pilot Whistleblower Rewards Program

• In August 2024, the DOJ launched its Corporate Whistleblower Awards Pilot Program. It is designed to fill some of the gaps among the existing whistleblower rewards programs, including healthcare fraud against private insurers, bribery, and certain types of money laundering.
• Under the new pilot program, “A whistleblower who provides the Criminal Division with original and truthful information about corporate misconduct that results in a successful forfeiture may be eligible for an award.”
• The total amount of any award under the program for a particular matter, whether going to one or multiple whistleblowers, is as follows:
  • (i) up to 30% of the first $100 million in net proceeds forfeited (with a presumption of 30% for the first $10 million);
  • (ii) up to 5% of any net proceeds forfeited between $100 million and $500 million;
  • and (iii) no award on net proceeds forfeited over $500 million.
• Factors that may increase the size of the award include: the significance of the information the whistleblower provided, the level of assistance the whistleblower provided, and whether the whistleblower reported the information internally before going to the DOJ.
• Factors that may decrease the award include whether the whistleblower participated in or benefitted from the wrongdoing, the amount of any delay in reporting internally and to the DOJ, and whether the whistleblower served in a management role over those involved in the misconduct.

The DOJ Antitrust Whistleblower Rewards Program

• In July 2025, the DOJ Antitrust Division announced the Antitrust Whistleblower Rewards Program, which “will offer rewards for individuals who report antitrust crimes and related offenses that harm consumers, taxpayers, and free market competition across industries from healthcare to agriculture,” which may include horizontal per se��unlawful agreements such as price fixing, bid rigging, and market allocation schemes.
• DOJ is partnering with the Postal Service on this new initiative.
• We are especially thrilled about this new program since 91pornis an internationally renowned Antitrust and Whistleblower law firm.
• DOJ Antitrust Whistleblower Rewards Program largely follows the��SEC Whistleblower Program, which provides awards for those reporting violations of the securities laws.��That program has been very successful, with thousands of whistleblower tips annually, leading to billions of dollars of SEC recoveries.
• The amount of any award will be in DOJ’s sole discretion but presumptively between 15-30% of the criminal fine recovered.

The Commodity Futures Trading Commission (CFTC)��Whistleblower Program

• The Commodity Futures Trading Commission (CFTC) Whistleblower Program��encourages those with knowledge of��violations of the U.S. Commodity Exchange Act (CEA) to share this information with the CFTC. Violations may include manipulating the price of commodities or fraud or deceit in connection with the sale of commodities or futures contracts.
• Under the CFTC Whistleblower Program, eligible whistleblowers are entitled to an award of between��10% and 30% of the monetary sanctions collected in actions brought by the government.
• If the information provided by the whistleblower leads to a successful CFTC action resulting in an order of monetary sanctions��exceeding $1 million, the whistleblower may then apply for a��whistleblower reward.

The IRS Whistleblower Program

• The Internal Revenue Service’s Whistleblower Office incentivizes people to report tax evasion and other tax law violations.
• The IRS Whistleblower Program guarantees the whistleblower at least 15% and up to 30% of government tax collections that result from the whistleblower’s reporting to the IRS, to the extent those recoveries exceed $2 million.
• No reward is paid to the whistleblower until the IRS collects the taxes, penalties and interest owed, and all the statutory periods for a taxpayer to file a claim for a refund have expired.
• Previously successful claims have involved corporate tax fraud, vast tax avoidance schemes, and fraud by high-net-worth individuals. For example, in our Top 10 Whistleblower Awards for 2024��round-up, we discussed the $74 million awarded to three whistleblowers for reporting an offshore tax evasion scheme that led the agency to collect $263 million from an unidentified individual.

Motor Vehicle Safety Whistleblower Act

• In December 2015, Congress created the��Motor Vehicle Safety Whistleblower Act��to give current and former industry employees and contractors��a financial incentive to bring to light automobile safety-related problems.
• Under the Motor Vehicle Safety Whistleblower Act, a whistleblower can receive a reward of��up to 30% of any monetary sanctions��over $1,000,000 the government imposes based on the information the whistleblower provides. Existing law also offers vehicle-safety whistleblowers��protection against employer retaliation.
• A whistleblower can receive an award even if the safety violations that the whistleblower provided information about occurred before December 2015.
• Awards are based on the significance of a whistleblower’s information, the extent of the whistleblower’s assistance, and, in some cases, whether the whistleblower reported the information internally.
• Federal law protects a vehicle-safety whistleblower from employer retaliation.
• A whistleblower’s identity generally remains confidential.
• An eligible whistleblower is a current or former employee or contractor of a motor vehicle manufacturer, parts supplier (i.e., manufacturer of motor vehicle equipment), or dealership.
• A whistleblower does not have to be a U.S. citizen or resident, and violations he or she reports on don’t have to occur in the U.S. Whistleblowers can come from any country and can seek to expose actions occurring outside of the U.S. so long as some of the vehicles (or components) at issue are sold or otherwise distributed to the U.S. market.

Ocean Dumping Whistleblowers – The Act to Prevent Pollution from Ships (APPS)

• The Act to Prevent Pollution from Ships (APPS) whistleblower provision allows reporting of unlawful ocean dumping.
• Under the APPS, whistleblowers, even if they are not U.S. nationals, might receive up to one-half of collected fines or civil penalties.
• The APPS has generated over $33 million in whistleblower rewards to individuals and groups.
• APPS whistleblower awards recognize that numerous incidents of ocean pollution remain undetected unless witnesses come forward.��
• Conscientious mariners and others in the industry can help to fight against harm to ocean wildlife, fragile coral reefs, and ecosystems.

Examples of Other Whistleblower Programs for Specific Industries or Types of Wrongdoing:

• Acts in California and Illinois for whistleblowers reporting��fraud against private insurers.
  • California Insurance Fraud Prevention Act
    • The California Insurance Fraud Prevention Act (California Insurance Code sections 1871-1871.9) has a broad reach.
    • Examples of California Insurance Fraud Prevention Act violations include but are not limited to inflating the amount of a claimed loss, billing an insurance company for services that were not performed, paying kickbacks to doctors to get them to prescribe certain drugs, and presenting multiple claims for the same loss.
    • In a successful intervened action, the whistleblower will receive between 30% and 40% of the proceeds. A successful plaintiff in a non-intervened action will receive between 40% and 50% of the proceeds.
  • Illinois Insurance Claims Fraud Prevention Act
    • The Illinois Insurance Claims Fraud Prevention Act is similar to the California law which allows claims against private insurance companies.
    • Examples of the Illinois Insurance Claims Fraud Prevention Act violations include submitting a false claim to an insurer to obtain compensation, using deception to obtain health care benefits, and employing recruiters to procure clients or patients who will submit insurance claims.
    • If the state intervenes, a successful plaintiff will receive not less than 30% of the proceeds. If the state does not intervene, a successful plaintiff will receive not less than 40%.
  • FIRREA, the Financial Institutions Reform, Recovery, and Enforcement Act, for whistleblowers reporting frauds involving federally insured financial institutions.

• Wildlife protection laws��providing for whistleblower rewards.
• Colorado’s��Public Health Emergency Whistleblower (PHEW) Act��provides protections to essential workers and individuals who act to further workplace safety and health. In addition, the PHEW Act allows for whistleblowers to file��qui tam��actions��and receive a share of any government recovery.
• Some��states also provide awards for whistleblowers who disclose��securities��law violations to��state��authorities.�� State��securities��whistleblower laws have been enacted in��Indiana, Montana, and��Utah.

Our Firm Helps Whistleblowers

91pornhas extensive experience representing whistleblowers. Please��contact��us if you believe you have a case.��We will connect you with an experienced member of the 91pornwhistleblower��team��for a free and confidential consultation.

Speak Confidentially With Our Whistleblower Attorneys

Read Whistleblower Question of the Week: How Do Financial Rewards Work for Whistleblowers? at constantinecannon.com

In March 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and offered forgivable Paycheck Protection Program (PPP) loans to small businesses. This emergency relief was intended to help businesses with applicable expenses during the pandemic.

How Businesses Attempted to Defraud the Government During COVID-19

Many businesses used this time as an opportunity to defraud the government and failed to comply with the loan requirements. This included falsely certifying eligibility in terms of employee numbers, misrepresenting their income, and business size, among other requirements.

As per the two recent enforcement actions detailed below related to pandemic-era fraud, the government continues its commitment to enforcing laws that protect against COVID-19 fraud. Both were initiated by whistleblowers, underscoring the importance of reporting any knowledge of misconduct.

Convicted Felon and His Demolition Company to Pay $2.01M to Resolve Allegations Regarding False Applications for Pandemic Relief Loans

On August 9, the government announced that Charles Smith, Jr. and SMI Demolition, Inc., of Massachusetts agreed to pay $2.01 million to settle False Claims Act allegations that the company falsely certified its eligibility for two PPP loans and an Economic Injury Disaster Loan (EIDL) to the United States Small Business Administration (SBA) during the pandemic.[1]

Smith Falsely Certified His Company’s Eligibility

In April 2020, Smith owned 51% of SMI Demolition. On April 7, 2020, SMI Demolition applied for a PPP loan and certified that no owner had previously pleaded guilty to a felony involving fraud. However, Smith previously pleaded guilty to two counts of mail fraud in January 2018.[2]

Around the time the application was in progress, Smith and his associates prepared an agreement that claimed part of his ownership would be transferred to another person. The agreement was never finalized.[3]

SMI Demolition Received SBA Loans, An EIDL, and PPP Loans

SMI Demolition applied for and received two additional loans from SBA, an EIDL and a second PPP loan. The total amount of loans equaled $1,448,402. All but $150,000 was forgiven by the SBA.

Since the company was ineligible for PPP loans and the EIDL due to Smith’s felony convictions and ownership status, Smith and SMI Demolition caused false claims for payment to SBA, according to the government. Smith and SMI Demolition admitted to the aforementioned allegations.[4]

Case Initiated by a Whistleblower

As with many recent pandemic fraud cases, this complaint was originated by a whistleblower under the��qui tam��(or whistleblower provision) of the��False Claims Act, which allow private parties to file an action on behalf of the United States and receive a portion of any recovery.

Whistleblower Will Receive $200,000

The qui tam case is captioned United States ex rel. Forsyth v. SMI Demolition, Inc. and Charles Smith, Jr., No. 23-cv-10091-NMG (D. Mass.). The relator (or whistleblower) will receive approximately $200,000 from the resolution.[5]

More PPP Fraud – Three Chinese-Owned Companies, BWI Entities, Falsely Submitted for PPP Loans

In other PPP fraud news, on August 12, the government announced that three Chinese-owned companies agreed to pay $21,660,983 to resolve False Claims Act allegations relating to PPP loans for which they were not eligible.

BWI Entities were allegedly not eligible for the PPP loans since they were affiliated with other companies in China, Europe, and other countries around the globe. Collectively, BWI Entities employed more individuals than permitted by SBA’s size requirement. BWI Entities were also purportedly ineligible because they were owned by a government entity.[6]

Claims Originated by A Whistleblower

This settlement includes the resolution of claims brought under the qui tam provisions of the False Claims Act. The whistleblower lawsuit was filed by GNGH2 Inc., a corporate entity likely created to maintain the anonymity of the whistleblower. ��They will receive $2,166,098.30 as part of this settlement.[7]

The Role of Whistleblowers and COVID-19 Related Fraud

Whistleblowers are critical in exposing misconduct and sharing information concerning various types of fraud. This fraud can include��COVID-19��era information related to falsely certifying eligibility when applying for PPP loans, unauthorized use of funds, payment of��kickbacks��to obtain government contracts related to COVID-19, and more.

91pornpartner Dan Vitelli commented: “The government is committed to safeguarding emergency relief funds and holding accountable those who sought to exploit pandemic relief for personal gain. The government continues to bring enforcement actions against COVID-19 and pandemic-relief fraud, and it counts on whistleblowers to bring forward information they have concerning misconduct.”

Our Firm Helps COVID-19 Fraud Whistleblowers

Our firm handles cases related to COVID-19 fraud. If you have a potential case, please��contact us��to see how we can help.

Speak Confidentially With Our Whistleblower Attorneys

Sources:

[1] See

[2] Id at 1

[3] Id at 1

[4] Id at 1

[5] See

[6] See

[7] Id at 6

Read Two Recent Whistleblower-Initiated Cases Targeting Pandemic Scams Underscore the Government’s Commitment to Combat Fraud at constantinecannon.com

By the Constantine Cannon��Whistleblower Team

Forefront Dermatology S.C. (“Forefront”) and Henghold Surgery Center LLC (“Henghold Surgery Center”) will pay $847,394 to resolve allegations that they violated the False Claims Act by submitting falsely coded claims to Medicare for wound repairs.

The Dermatology Providers and the Procedures Allegedly Performed

Forefront owns and operates Henghold Dermatology, a dermatology practice in Florida. ��Dr. William B. Henghold owns an ambulatory surgery center, Henghold Surgery Center, which closed in 2023. Both facilities allegedly performed numerous wound repair procedures following skin cancer removal on patients who had undergone Mohs micrographic surgeries.¹

Submission of False Claims to Medicare

The government alleges that Henghold Dermatology and Surgery Centers caused the submission of false claims to Medicare by using inaccurate wound repair billing codes. As a result, Medicare paid more money than it normally would have for wound repairs.² This Medicare fraud scheme is known as upcoding.

According to the DOJ, Henghold Dermatology and Surgery Centers “falsely coded linear repairs as if they were flap repairs and falsely coded smaller flap repairs as if they were larger flap repairs.”³

“Schemes that cause Medicare to pay for costlier services than were actually performed waste taxpayer funding, threatening the integrity of this federal healthcare program,” said Deputy Inspector General for Investigations Christian J. Schrank of the U.S. Health and Human Services Office of Inspector General (HHS-OIG).⁴

This case bears some resemblance to a healthcare fraud settlement we blogged about earlier this year. In April, the government announced it filed a complaint under the��False Claims Act��against Vohra Wound Physicians Management LLC (Vohra), its entities, and its founder Dr. Ameet Vohra. Among other violations, the government alleged the company submitted false claims to��Medicare��for��upcoded and��medically unnecessary��wound care services.

Healthcare Fraud

Healthcare fraud can take many forms including taking��kickback��payments for services or patient referrals, billing for medically unnecessary services, upcoding, making false statements about covered services, and more. It is critical to recognize fraud and speak up against misconduct.

The Role Whistleblowers Play in Exposing Healthcare Fraud

This settlement includes the resolution of claims brought under the��qui tam��(or whistleblower) provisions of the False Claims Act by a former Forefront employee and whistleblower, Christopher Wolfe, M.D. Under the False Claims Act, private parties can file lawsuits on behalf of the government and receive up to 30% of any recovery. The whistleblower, Dr. Wolfe, will receive a $152,531 share of the settlement.

Our Firm Helps Healthcare Fraud Whistleblowers

“Holding healthcare providers accountable for fraud protects our tax dollars, ensures patients receive proper care, and upholds the integrity of federally funded programs like Medicare,” said 91pornattorney Dan Noel.

91pornhas over 15 years of experience representing healthcare fraud whistleblowers. Please��contact��us if you believe you have a case.��We will connect you with an experienced member of the 91pornwhistleblower��team��for a free and confidential consultation.

Speak Confidentially With Our Whistleblower Attorneys

Read Two Dermatology Providers To Pay $847K+ To Resolve Medicare Coding Fraud Claims For Wound Care Under the False Claims Act at constantinecannon.com