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:

¹ See

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

A New Jersey construction supply company, Ulma Form Works, Inc. (Ulma), agreed to pay nearly $2.9 million to resolve allegations that it violated the False Claims Act by applying for and receiving a COVID-19 era Paycheck Protection Program (PPP) loan for which it was not eligible.¹

Ulma Did Not Meet PPP Loan Eligibility Requirements

Ulma, a Fair Lawn, New Jersey-based manufacturer and supplier of concrete formwork, shoring, and temporary scaffolding systems, applied for and received a $2 million PPP loan in January 2021 despite not meeting the program’s eligibility requirements.

Loan Eligibility Requirements

At the time, businesses with more than 300 employees, including affiliates and foreign-based staff, were ineligible to receive PPP loans.

What Ulma Certified in the Application

Ulma certified on its application that it employed fewer than 300 workers, even though its total workforce including affiliates and overseas employees exceeded that threshold. Ulma received the PPP loan and then received forgiveness for the total loan amount plus accrued interest.

Ulma agreed to the terms of the settlement and will pay the United States $2,902,795. ²

Case Initiated by a Whistleblower

Many pandemic fraud cases, including this one, were originated by whistleblowers under the��qui tam��(or whistleblower provision) of the��False Claims Act, allowing private parties to file an action on behalf of the government and receive a portion of any recovery.

Whistleblower Will Receive $290,279

The relator (or whistleblower), Verity Investigations, LLC, will receive $290,279 for its role in exposing the misconduct. This qui tam case is captioned United States ex rel. Verity Investigations, LLC v. Ulma Form Works, Inc., 25-890 (D.N.J.).³

The Role Whistleblowers Play in Exposing COVID-19 Fraud

Whistleblowers play a vital role in uncovering pandemic-related misconduct from falsely certifying eligibility for PPP loans and misusing relief funds to procurement fraud. These cases remain a major focus of federal enforcement.

91pornpartner Marlene Koury commented: “The government remains dedicated to protecting emergency relief funds and ensuring accountability for those who attempted to exploit pandemic-related assistance for personal gain. The government relies on whistleblowers to come forward with information about this type of misconduct.”

Our Firm Helps COVID-19 Fraud Whistleblowers

Our firm handles cases related to COVID-19 fraud. If you think you have a case, please��contact us��and we will connect you with an experienced whistleblower attorney.

Speak Confidentially With Our Whistleblower Attorneys

Sources:

¹ See

² Id at 1

³ Id at 1

Read New Jersey Company Settles False Claims Act Allegations Over Ineligible COVID-19 Era PPP Loans at constantinecannon.com

By the 91pornWhistleblower Team

On Tuesday (September 30), the Department of Justice (DOJ) announced that Georgia Tech Research Corporation has agreed to pay $875,000 to settle charges of violating the False Claims Act by failing to comply with the cybersecurity requirements of certain Department of Defense (DoD) contracts.¹�� It is just the latest in a string of recent False Claims Act settlements involving cybersecurity failures demonstrating this remains a high-priority enforcement area for the Trump-led DOJ.

Georgia Tech Allegedly Engaged in Cybersecurity Fraud

According to the Government, Georgia Tech and the affiliated Georgia Institute of Technology engaged in three key cybersecurity failures:

• • First, they allegedly failed to use anti-virus or anti-malware tools on desktops, laptops, servers and networks at the university’s Astrolavos Lab while it was conducting sensitive cyber-defense research for DoD.

• • Second, they allegedly had no system security plan for the cybersecurity controls the DoD contracts required.

• • Third, they allegedly submitted a false cybersecurity assessment score (of 98) to DoD, which (i) was supposed to apply campus-wide despite the absence of any campus-wide IT system at Georgia Tech, (ii) was premised on a “fictitious” or “virtual” environment, not an actual system at Georgia Tech, and (iii) was a condition of DoD’s award of the Georgia Tech Research contracts at issue.

A String of Cybersecurity Fraud Settlements This Year

As we reported in early August, DOJ has been on a False Claims Act crusade against cybersecurity violations, with this latest settlement coming on the heels of numerous other cybersecurity fraud settlements DOJ has secured this year. ��These include:

Illumina.�� On July 1, Illumina Inc. agreed to pay $9.8 million to settle allegations it sold Government agencies genomic sequencing systems with software containing numerous cybersecurity vulnerabilities without adequate protections to identify and address them.²

Aero Turbine.�� On July 1, Aero Turbine Inc. and its private equity partner Gallant Capital Partners agreed to pay $1.75 million to settle allegations it failed to implement certain mandated cybersecurity controls in its Air Force contract that “could lead to significant exploitation of the system or exfiltration of sensitive defense information.”³

Raytheon.�� On May 1, RTX subsidiary Raytheon Company and Nightwing Group agreed to pay $8.4 million to settle allegations of violating key cybersecurity requirements in various DoD contracts.

MORSECORP.�� On March 26, the company agreed to pay $4.6 million to settle allegations of failing to comply with cybersecurity requirements in its Army and Air Force contracts.⁴

Health Net.�� On February 21, Health Net Federal Services agreed to pay $11.3 million to settle allegations it falsely certified compliance with the��cybersecurity requirements of certain DoD contracts.

In its 2024 False Claims Act Roundup, cybersecurity was one of the primary areas of fraud enforcement to which DOJ pointed.�� It has been that way since the agency’s 2021 launch of the����“to promote cybersecurity compliance by government contractors and grantees by holding them accountable when they knowingly violate applicable cybersecurity requirements.”

Cybersecurity Fraud Remains a Top False Claims Act Enforcement Priority

What is clear from all this is the Government’s continued focus on cybersecurity fraud as a top enforcement priority, especially when it comes to defense contractors.�� DOJ Civil Chief Brett Shumate strongly reinforced this message in the Government’s announcement of the Georgia Tech settlement:

“When contractors fail to follow the required cybersecurity standards in their DoD contracts, they leave sensitive government information vulnerable to malicious actors and cyber threats.�� Together with DoD and other agency partners, the Department of Justice will continue to pursue and litigate violations of cybersecurity requirements to hold contractors accountable when they violate their cybersecurity commitments.”

91pornwhistleblower partner��Gordon Schnell points to all these cybersecurity settlements as a clear indication of the Trump Administration’s commitment to going after contractors that fail in their cybersecurity obligations.�� Schnell says, “Those doing business with the Government, especially defense contractors, need to make sure their data protection systems are fully compliant.”�� Otherwise, he cautions, “they may find themselves next up on DOJ’s cybersecurity hit list.”

Cybersecurity Whistleblowers Are Watching

Government contractors must be especially vigilant these days.�� Not only because of the Government’s increased appetite in this enforcement space.�� But also because of the qui tam provisions of the False Claims Act, which authorize private parties to bring suit on behalf of the Government against those that defraud the Government.�� Successful whistleblowers can receive up to 30% of the Government’s recovery.

Whistleblowers are especially important in uncovering cybersecurity violations given the difficulty of detecting these violations without an inside window into the company’s cybersecurity practices.�� And as Schnell remarks, “Cybersecurity whistleblowers are on high alert these days because of all the Government activity in this space.”�� He notes a significant uptick in cybersecurity whistleblower intakes his firm has received in recent months.

Unsurprisingly, two whistleblowers — Christopher Craig and Kyle Koza — originated the Georgia Tech matter.�� They are former members of Georgia Tech’s Cybersecurity Team and will receive a whistleblower award of roughly $200,000 from the proceeds of the Government’s recovery.

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

91pornhas substantial experience representing cybersecurity whistleblowers under the��False Claims Act.�� The firm represented the whistleblower in the��first successful cybersecurity case��ever brought under the False Claims Act.�� That case resulted in Cisco Systems agreeing to pay $8.6 million to settle charges of selling the Government noncompliant 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

³ See

⁴ See

Read And Yet Another Whistleblower-Originated False Claims Act Cybersecurity Fraud Settlement 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

��

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

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

By the 91pornWhistleblower Team

Last Thursday (July 31), the Department of Justice (DOJ) announced the settlement of two False Claims Act cases involving cybersecurity fraud.�� The first, against California-based Illumina Inc., involved allegations the company sold federal agencies certain genomic sequencing systems with cybersecurity vulnerabilities.¹ ��The second, against California-based defense contractor Aero Turbine Inc. and its private equity partner Gallant Capital Partners, involved allegations Aero Turbine violated the cybersecurity requirements in a contract it had with the Air Force.²

DOJ Adds To the String of Recent Cybersecurity Fraud Settlements

Illumina agreed to pay $9.8 million to settle its False Claims Act matter.�� Aero Turbine and Gallant agreed to pay $1.75 million to settle their False Claims Act matter.�� The relatively low settlement number for Aero Turbine and Gallant is because of the “significant steps” they took in cooperating with the Government.�� These two matters are just the latest in a string of recent cybersecurity False Claims Act matters, reinforcing that going after cybersecurity fraud remains a top enforcement priority for the Trump Administration.

Government Flags Cybersecurity Vulnerabilities in Illumina’s Genomic Sequencing Systems

In the Illumina matter, the Government alleged the company sold Government agencies genomic sequencing systems with software containing numerous cybersecurity vulnerabilities without adequate protections to identify and address them. ��The Government provided the following examples:

• • A failure to incorporate product cybersecurity in its software design, development, installation, and on-market monitoring.
  • A failure to properly support and resource personnel, systems, and processes tasked with product security.
  • A failure to correct design flaws that introduced cybersecurity vulnerabilities.
  • Falsely representing the genomic sequencing system software adhered to cybersecurity standards, including standards of the International Organization for Standardization and National Institute of Standards and Technology (NIST).

Government Alleges Aero Turbine Failed to Implement NIST Cybersecurity Controls and Disclosed Defense Data Without Authorization

In the Aero Turbine matter, the Government alleged the company failed to implement certain NIST cybersecurity controls (under Special Publication 800-171 relating to confidential Government information) in its Air Force contract that “could lead to significant exploitation of the system or exfiltration of sensitive defense information.”�� The Government further alleged Aero Turbine and Gallant provided sensitive defense information to an Egyptian software company not authorized under the Air Force contract to receive it.

Cybersecurity Fraud Remains A Top DOJ Enforcement Priority

In announcing the settlements, a chorus of Government officials stressed the critical importance of maintaining proper cybersecurity controls and complying with all cybersecurity standards, and the Government’s commitment to go after federal contractors that do not play by these cybersecurity rules:

• • “This settlement underscores the importance of cybersecurity in handling genetic information and [DOJ’s] commitment to ensuring that federal contractors adhere to requirements to protect sensitive information from cyber threats.” [DOJ Civil Chief Brett Shumate]

• • “Safeguarding the validity of Department of Defense research and data is vital to supporting the warfighter.” [DoD Special Agent Christopher Silvestro]

• • “Protecting the integrity of the Department of Defense (DoD) procurement processes is a top priority for the DoD.” [DoD OIG Director Kelly Mayo]

• • “HHS-OIG and our law enforcement partners remain dedicated to ensuring that entities who do business with the Government uphold their cybersecurity obligations.”�� [HHS-OIG Special Agent Roberto Coviello]

• • “Ensuring companies adhere to robust cybersecurity safeguards is integral to maintaining the Air Force’s operational edge against adversaries.” [Air Force Special Agent Caroline Galinis]

As we noted in our May 2025 post (“Trump Administration Signals Strong Commitment to Stopping Cybersecurity Fraud”), the Government has brought several cybersecurity enforcement actions this year demonstrating its continued commitment to using the False Claims Act��to go after cybersecurity fraud.�� In that post, we reported on DOJ’s May 1 settlement with RTX subsidiary Raytheon Company and Nightwing Group where they agreed to pay $8.4 million to settle charges of violating key cybersecurity requirements in various Department of Defense contracts.

We also noted that in its 2024 False Claims Act��Roundup, DOJ highlighted cybersecurity failures as a primary focus of fraud enforcement.�� This has been a priority area since the agency’s 2021 launch of the����“to promote cybersecurity compliance by government contractors and grantees by holding them accountable when they knowingly violate applicable cybersecurity requirements.”

Whistleblowers Are Critical to Uncovering Cybersecurity Violations

91pornwhistleblower partner Gordon Schnell commented that with all these enforcement actions, “there seems little doubt the Trump Administration is committed to cracking down on contractors that fail in their cybersecurity obligations.”�� In an��article��he wrote last year for��Washington Technology, Schnell cautioned that “those doing business with the Government would be wise to get their data protection systems in order or they may find themselves next up on DOJ’s cybersecurity hit list.”

With these two most recent settlements, Schnell sees no slowing down in the Government’s focus on cybersecurity fraud.�� And as these cases make clear, the Government is willing to go after security failures even when they do not necessarily result in an actual breach.�� The risk of a security breach is enough for the Government to take action.

Like most False Claims Act cases, the Illumina action originated with a whistleblower lawsuit under the��qui tam��provisions of the statute, which allow private parties to bring lawsuits on behalf of the Government against those that defraud the Government.�� In return, successful whistleblowers can receive up to 30% of the Government’s recovery.

Illumina Whistleblower Erica Lenore to Receive $1.9 Million Award

The Illumina whistleblower was Erica Lenore, Illumina’s former Director for Platform Management.�� She will receive a whistleblower award of $1.9 million from the proceeds of the Government’s recovery.

Over the past 30 years, whistleblowers have received almost $10 billion in whistleblower awards under the False Claims Act.�� Whistleblowers play an especially critical role in uncovering cybersecurity fraud given the lack of visibility into the cybersecurity protocols most companies follow.�� While there is no indication a whistleblower originated the Aero Turbine action, given the voluntary nature of the company’s disclosure to the Government, there is a strong likelihood a whistleblower was involved internally in bringing the misconduct to the company’s attention.

91pornRepresents Cybersecurity Whistleblowers Under the False Claims Act

91pornhas substantial experience representing cybersecurity whistleblowers under the False Claims Act.�� Indeed, the firm represented the whistleblower in the��first successful cybersecurity case ever brought under the False Claims Act.�� That case resulted in Cisco Systems agreeing to pay $8.6 million to settle charges of selling the Government noncompliant 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 consult.

Speak Confidentially With Our Whistleblower Attorneys

Read DOJ Continues False Claims Act Crusade Against Cybersecurity Violations: More Cybersecurity Whistleblowers Wanted at constantinecannon.com