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

By the��91pornWhistleblower Team

Delta Air Lines will pay $8,100,000 to settle allegations that it violated the False Claims Act by giving compensation to corporate officers and employees that surpassed monetary limits the company agreed to in 2020. This was part of the Department of the Treasury’s Payroll Support Program (PSP) that placed compensation caps for employees of participating companies.[1]

Pandemic Relief – The Department of the Treasury’s Payroll Support Program (PSP)

The PSP was created by Congress in March 2020 under the Coronavirus Aid, Relief and Economic Security Act (CARES). This provided payroll support to passenger and cargo air carriers and contractors to continue payments of employee wages, salaries, and benefits.[2]

Participating Air Carriers Were Required to Follow Conditions

The program was administered by the Department of Treasury (Treasury). Participating air carriers were required to enter into written agreements with the Treasury that detailed conditions to follow in exchange for the PSP funds. Requirements included limitations on the compensation that PSP participants could pay to employees that earned over $425,000 annually in 2019.[3]

Delta’s PSP Agreements in 2020 and 2021

In 2020 and 2021, Delta entered into PSP agreements with the Treasury and agreed to the compensation limits. Delta received roughly $11.9 billion in PSP funds, including at least $8.2 billion from grants that did not have to be repaid.[4]

How Delta Allegedly Violated the False Claims Act

By falsely certifying compliance with PSP requirements in quarterly reports submitted to the Treasury, and failing to notify of a breach when discovered by Delta, the company allegedly violated the False Claims Act.

The case settles charges that from March 2020 to April 2023, Delta allegedly awarded compensation to certain corporate officers and employees that far exceeded the limits set by the PSP agreements.

“The PSP was intended to provide critical assistance to the airline industry during the pandemic,” commented Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “The department is committed to holding accountable those who failed to abide by the terms and conditions governing their receipt and use of federal funds.”

Case Brought by a Whistleblower

This case was brought under the qui tam (or whistleblower provisions) of the False Claims Act by H. Remidez LLC. Under those provisions, private parties (called relators) can file lawsuits on behalf of the government and earn up to 30% of the recovery. In this case, the whistleblower will receive $850,500.

COVID-19 Fraud

COVID-19 fraud has taken many forms. Here are just some types of pandemic-related fraud:

• Fraud in Government Spending and Government Programs
• Medicare Fraud that Targets Regulatory Changes in Response to COVID-19
• Financial and Investment Fraud
• Other Fraud Schemes Arising from the COVID-19 Pandemic

Our Firm Helps COVID-19 Fraud Whistleblowers

According to 91pornpartner Marlene Koury, “Years later, COVID-19 related fraud is still being exposed. Whistleblowers are essential to bringing such fraud to light and aiding government enforcement efforts to hold bad actors accountable.”

If you blow the whistle on a company or individuals who committed fraud in applying for COVID-19 relief funds, spending those funds, or other fraud, you may be eligible for a reward under the��False Claims Act��or other��whistleblower reward programs. If you would like more information, believe you have a case, or would like to speak to a member of Constantine Cannon’s whistleblower lawyer team, please contact us for a confidential consultation.

Speak Confidentially With Our Whistleblower Attorneys

Sources:

[1]

[2] Id at 1

[3]

[4]

Read Delta Air Lines Agrees to Pay $8.1M For Alleged False Claims Act Violations Related to Misuse of Pandemic Relief Funds at constantinecannon.com

By the 91pornWhistleblower Team

Last Monday (July 28), the Department of Justice (DOJ) announced that Florida-based telecommunications provider Q Link Wireless and its owner Issa Asad agreed to pay roughly $110 million to settle criminal and civil charges of violating the False Claims Act by defrauding the FCC’s Lifeline Program.¹

Q Link’s Fraud Against the Lifeline Program

The Lifeline Program provides nearly $2 billion each year to assist low-income consumers with their telecommunications needs.�� Under the program, the Government provides carriers with monthly payments for providing discounted phone services to qualified consumers.�� To be eligible to receive these Government funds, participating carriers — such as Q Link — must certify their compliance with the governing Lifeline rules, which include the requirement that they stop subsidizing customers who are not using their Lifeline phones at least once a month.

According to the Government, Q Link and Asad orchestrated a scheme of enrolling Lifeline customers who neither needed nor used their phones, including customers who never even had activated phones.�� The Government further alleged that to conceal their scheme and continue collecting payments for ineligible customers, Q Link, Asad, and others fabricated cell phone activity on behalf of Lifeline customers who were not using their phones.�� This included manufactured cell phone usage for some cell phones still in the FCC’s possession at the time of the apparent usage.

The Government claimed the scheme resulted in roughly $38.5 million in improper Lifeline payments between February 2018 and October 2019. ��As part of a global resolution of the matter, Q Link and Asad pled guilty to conspiring to commit wire fraud and theft of Government funds and defrauding the United States, with Asad to serve up to 5 years in prison.

Government Program Fraud is a False Claims Act Enforcement Policy

In announcing the resolution of the matter, the Government stressed its commitment to go after those that defraud important Government programs like the Lifeline Program.�� DOJ Civil Chief Brett Shumate underscored how the settlement “demonstrates [DOJ’s] continuing commitment to preventing fraud against important FCC subsidy programs like Lifeline.”�� US Attorney Hayden O’Byrne added that “when individuals and corporations target programs that serve vulnerable populations to line their own pockets with millions, our office stands ready to investigate and pursue those allegations using all appropriate civil enforcement tools.”

The False Claims Act is the Civil War era statute originally enacted to go after war profiteers trying to defraud the Union Army with lame mules and defective munitions.�� It has since become the Government’s main fraud-fighting tool, bringing in billions of dollars every year from those that defraud the Government.

While Medicare/Medicaid fraud accounts for the largest number of False Claims Act enforcement actions the Government brings, Government program fraud is also a priority enforcement area.�� According to 91pornwhistleblower partner Alysia Solow, “The False Claims Act covers virtually any form of fraud that results in financial loss to the Government.”�� Solow says that “when that financial loss impacts Government programs designed to support low-income or otherwise disadvantaged individuals, the Government is particularly aggressive in its enforcement approach.”

Whistleblowers Are Critical To Uncovering Government Program Fraud

The vast majority of False Claims Act actions are originated by whistleblowers under the qui tam provisions of the statute, which allow private parties to bring these cases on behalf of the Government.�� In return, successful whistleblowers may receive up to 30% of the Government’s recovery.

The Government did not indicate whether a whistleblower was involved in initiating the Q Link matter, but it’s very possible whistleblowers were involved at some point in the Government’s investigation given the complicated nature of the scheme. ��As is the case with many of the fraudulent schemes we face today, they are extremely difficult to detect without the help of those on the inside with a front-row seat to the illicit activity.

91pornHas Substantial Experience Representing False Claims Act Whistleblowers

91pornhas substantial experience representing whistleblowers under the False Claims Act.�� If you would like to learn more about our numerous whistleblower successes in this area, the type of fraud covered by the statute, 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 Q Link Wireless Carrier To Pay $110M For Defrauding Government Program To Support Low Income Cell Phone Needs at constantinecannon.com

The government continues its efforts to enforce the False Claims Act when it comes to claims of bid rigging and government contracting fraud. ��Earlier this month, defense contractor Berg Companies, Inc. agreed to pay $3.3 million to resolve allegations it violated the False Claims Act by engaging in a bid rigging conspiracy that caused the submission of non-competitive bids and caused Department of Defense (DoD) customers to be overcharged for items Berg manufactured.[1]�� This case serves as another example of how alleged anticompetitive conduct in government contracting or procurement can form the predicate for a False Claims Act case and lead to an awards for whistleblowers.

Primer on Bid Rigging

The goal of a competitive bidding process is to achieve the highest quality and/or greatest quantity of products or services at the lowest price.�� The competitive bidding process is subverted, however, when individuals or entities engage in bid rigging.�� Bid rigging comes in many forms, but in general it involves competitors agreeing on terms of bids or the outcome of the bidding process.

The following list from a DOJ publication describes four common fact patterns for bid-rigging schemes:

• • Bid Suppression: … [O]ne or more competitors agree not to bid, or withdraw a previously submitted bid, so that a designated bidder will win. In return, the non-bidder may receive a subcontract or payoff.

• • Complementary Bidding: … [C]oconspirators submit token bids which are intentionally high or which intentionally fail to meet all of the bid requirements in order to lose a contract. “Comp bids” are designed to give the appearance of competition.

• • Bid Rotation: … [A]ll coconspirators submit bids, but by agreement, take turns being the low bidder on a series of contracts.

• • Customer or Market Allocation: …[C]oconspirators agree to divide up customers or geographic areas. The result is that the coconspirators will not bid or will submit only complementary bids when a solicitation for bids is made by a customer or in an area not assigned to them.�� This scheme is most commonly found in the service sector and may involve quoted prices for services as opposed to bids.[2]

A common thread among these schemes is competitors in a bidding process agreeing on the terms or outcome, which undermines the competitive bidding process.�� Among other causes of action, allegations of bid rigging can form the predicate for an antitrust claim or, as in the Berg case, the predicate for a False Claims Act claim.

The FCA Allegations Against Berg and the Settlement

On July 14, the government announced that Washington-based Berg, which was acquired by Hunter Defense Technologies in 2019, agreed to pay $3.3 million to settle allegations it violated the False Claims Act by “engaging in a bid rigging conspiracy with a government prime vendor and two sub-vendors – including Albuquerque-based Improve Group, Inc. – that caused fraudulent, non-competitive bids to be submitted to the Defense Logistics Agency (DLA)” and “[a]s a result, Department of Defense (DoD) customers were overcharged for rigid wall shelters manufactured by Berg.”[3]

According to the DOJ’s allegations, “Berg conspired with the prime vendor and two sub-vendors to rig bids” on the DLA’s Maintenance, Report, and Operations (MRO) contracts for the European Command.[4]�� To obtain the best prices available, the MRO contracts require prime vendors to engage in competitive bidding and solicit bids from at least two or three independently competing vendors, depending on the amount of the transaction.[5]

In this case, the DOJ claimed that Berg “coordinated with the prime vendor and sub-vendors and submitted inflated quotes for Berg-made rigid wall shelters so that the sub-vendors would win the awards at inflated prices.”[6]�� The DOJ claims Berg admitted to two primary schemes: (i) Berg “coordinated and submitted inflated quotes on two solicitations for the sale of 10 Berg-made rigid wall shelters that were awarded to … sub-vendor Improve Group”; and (ii) Berg “coordinated and submitted inflated quotes on 26 solicitations for the purchase of 29 Berg-made rigid wall shelters that were awarded to a sub-vendor . . . .”[7]�� The DOJ claims that as a result of these bid-rigging schemes, the prime vendor did not engage in the requisite competitive bidding process and caused the prime vendor, sub-vendors, and Berg to overcharge military customers.[8]

United States Attorney Leah B. Foley remarked: “As evidenced in this settlement agreement, these contractors manipulated and undermined the fair and open bidding process designed to save our military and taxpayers money.�� …�� [N]ot only will my Office continue to use the False Claims Act to help root out fraud, waste and abuse involving taxpayer funds, but it will reward those that accept responsibility and cooperate with the government.”[9]�� Notably, Berg received cooperation credit with the DOJ.[10]

The Whistleblowers Who Initiated the Case

These claims were initially brought by two whistleblowers under the qui tam provisions of the False Claims Act.[11]�� The False Claims Act was enacted during the Civil War to go after war profiteers trying to defraud the Union Army.�� Under the statute, successful whistleblowers can receive up to 30 percent of the government recovery.�� Under the settlement in this case, the two whistleblowers will receive over $560,000 as their share of the recovery.[12]

Our Firm Helps Whistleblowers, Including Those Who Have Information On Bid Rigging Violations

This is not the first time that the government has gone after allegations of bid rigging in government contracts.�� For example, 91pornrepresented a whistleblower who brought a��False Claims Act��lawsuit against several South Korean oil companies for allegedly bid rigging fuel contracts for U.S. military bases in South Korea.

In the South Korea case, five different entities ended up paying a total of $363 million to settle the matter.�� It was the largest False Claims Act antitrust recovery as well as the largest False Claims Act settlement involving bid rigging to date. ��The whistleblower received an award of nearly $37 million, representing 23% of the False Claims Act payments. ��Read more about that case��here��and��here.

91pornattorney Daniel Vitelli commented: “Our antitrust laws protect consumers.�� Bid rigging, like other forms of anticompetitive conduct, distorts markets and can lead to higher prices, reduced quantity, or reduced quality.�� Consumers and competitors can bring civil antitrust actions to remedy such misconduct.�� When anticompetitive conduct leads to inflated payments by the government, in addition to potential antitrust liability, defendants can also be exposed to liability under the False Claims Act.�� This will continue to be an important area of enforcement to watch.”

Bid rigging, like other anticompetitive arrangements, are often secretive agreements.�� Whistleblowers can play a key role in uncovering the misconduct.�� If you have any information of potential antitrust violations that directly impact government purchases, military contracting, or Medicare/Medicaid and would like to speak to an experienced member of the 91pornwhistleblower lawyer team, please do not hesitate to reach out and��contact us��for a free and confidential consultation.

Speak Confidentially With Our Whistleblower Attorneys

Sources:

[1] .

[2] .

[3]

[4] Id.

[5] Id.

[6] Id.

[7] Id.

[8] Id.

[9] Id.

[10] Id.

[11] Id.

[12] Id.

Read Berg Companies, Inc. To Pay $3.3M To Settle False Claims Act Claims For Alleged Bid Rigging On Government Contracts at constantinecannon.com

By the 91pornWhistleblower Team

Last Thursday (July 17), the Department of Justice (DOJ) announced the final False Claims Act recovery in a cancer genetic testing kickback scheme involving the Medicaid programs of Colorado, Georgia, and South Carolina.^��1�� Kevin Murdock, former owner and CEO of the now-defunct testing lab Premier Medical, agreed to a consent judgment of roughly $27.5 million.

Defendants Allegedly Duped Medicaid Beneficiaries Into Medically Unnecessary Cancer Screenings

According to the Government, Murdock, Premier Medical, and Premier Medical’s VP of compliance Michael Conroy, paid illegal kickbacks to Freedom Medical Labs, Robert Richardson, and Edward Burch for referrals for expensive cancer genetic (CGX) testing. ��The Premier Defendants targeted Medicaid beneficiaries in Colorado, Georgia, and South Carolina because of their favorable reimbursement for this kind of genetic testing, with amounts up to $12,000 per test.

The Government alleged the Freedom defendants set up tables at bus stops, dollar stores, street corners and other public spaces in low-income areas to attract Medicaid beneficiaries.�� They paid $20 to passers-by with a Medicaid card for DNA samples, claiming they were screening for cancer.�� They then paid a telemedicine company — with no treating relationship with these individuals — for physician orders for CGX testing. ��Most patients never even received the results of the testing.

Defendants Pay Out $114.5M For Alleged False Claims Act and Anti-Kickback Violations

The Government found two key problems with this arrangement under the False Claims Act.�� First, the testing was medically unnecessary because it was not the result of a valid test ordered by a patient’s treating provider. ��Second, the patient samples and testing orders were obtained through illegal kickbacks, violating both the Anti-Kickback Statute and False Claims Act.

The settlement came the day before the start of Murdock’s two-week trial and with his apparent acknowledgment he likely was going to lose.�� This adds to the $87 million in recoveries the Government secured from other participants in the scheme — $71 million from Premier Medical, $8 million from Richardson and Freedom Medical, and $8 million from Burch — bringing the Government’s total recovery to roughly $114.5 million.

Healthcare Kickbacks Remain A Top Enforcement Priority

The settlement is just the latest in a steady stream of DOJ settlements for violations of the Anti-Kickback Statute, the strict enforcement of which remains a top Government priority. ��The Government underscored this priority in announcing this latest settlement: “The scheme perpetuated by the defendants in this case was fueled by greed and kickbacks, which have no place in health care.�� We will continue to invest all available resources . . . to protect our health care system and to hold accountable those who engage in this type of egregious fraud.”

The Government relies heavily on whistleblowers to report illegal kickback schemes.�� According to 91pornwhistleblower partner Gordon Schnell, “We are finding companies employing ever-more sophisticated approaches to disguising these schemes to escape Government notice.”�� For so many of these illicit arrangements, Schnell added, “The only way the Government will learn about them is through those on the inside, with first-hand knowledge and experience.”

That is why most False Claims Act cases involving kickbacks are originated by whistleblowers under the qui tam provisions of the False Claims Act, which allow private parties to bring lawsuits on behalf of the Government against those that defraud the Government.�� Under these provisions, successful whistleblowers can receive up to 30% of the Government’s recovery.�� Over the past three decades, whistleblowers have recovered roughly $9.5 million in awards under the statute and have helped the Government recover more than $55 billion.

Unsurprisingly, a whistleblower — former Premier Medical employee Karen Mathewson — originated the action that uncovered the Premier Medical kickback scheme.�� She will receive a whistleblower award of an undisclosed amount from the proceeds of the Government’s recovery.

91pornhas substantial experience representing whistleblowers in False Claims Act cases alleging improper healthcare kickbacks.�� Two of our most recent successes in this area include a $135 million settlement against Indiana-based Community Health Network (for allegedly paying inflated salaries in exchange for referrals) and a $34.5 million settlement against Denver-based dialysis provider DaVita (for allegedly paying physicians and a competitor for referrals).

If you would like to learn more about any of these matters, illegal kickbacks more broadly, or what it means to be a whistleblower under the False Claims Act, 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.

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Read Government Secures $114.5M In False Claims Act Recoveries From Cancer Genetic Testing Kickback Scheme at constantinecannon.com

By the 91pornWhistleblower Team

On Monday (July 14), Maryland-based federal contractor Hill Associates agreed to pay at least $14.75 million to settle Department of Justice (DOJ) charges it violated the False Claims Act by violating several key provisions of its General Services Administration (GSA) contract for information technology (IT) services.�� Hill’s payout would have been higher but for the company’s ability to pay a larger penalty.

Hill Allegedly Violated Key Cybersecurity and IT Contract Provisions

Hill provided cybersecurity and other IT services to various federal agencies from 2018 to 2023 under GSA’s Multiple Award Schedule Program.�� Under this streamlined approach to Government contracting, GSA negotiates the contract terms for commonly used commercial goods and services on behalf of the purchasing agencies.

According to the Government, Hill knowingly violated several key provisions of the GSA contract, including billing federal agencies for: (i) IT personnel who did not have the required experience or education, (ii) cybersecurity and other IT services that were outside the contract scope, and (iii) generally unapproved fees.�� In addition, the Government alleged Hill failed to provide the agencies with required information about prompt payment discounts.�� The Government also charged Hill with including unallowable incentive compensation in a cost submission for a new contract proposal.

Cyber Fraud is a Top Enforcement Priority

This kind of Government procurement fraud harks back to the original design of the False Claims Act which President Lincoln enacted during the Civil War to go after war profiteers trying to dupe the Union Army.�� It has remained one of the key areas of focus (along with Medicare/Medicaid fraud) in the Government’s use of the statute to go after fraud against the Government.

Cybersecurity fraud has been a particular priority in the Government’s False Claims Act enforcement scheme.�� Indeed, DOJ specifically called out cybersecurity fraud as a priority enforcement area in its most recent False Claims Act Roundup.�� And it highlighted that focus again in its announcement of the Hill settlement.

DOJ Civil Chief Brett Shumate stressed that “information technology contractors are expected to charge the government appropriately for their services,” and that DOJ “will continue to pursue cyber fraud and hold accountable those companies that knowingly fail to meet contractual obligations to the American taxpayers.”

Treasury Deputy Inspector General Loren Sciurba echoed this sentiment, underscoring how “false claims . . . by contractors undermine the integrity of the contracting process and can result in significant adverse effects to vital security concerns,” and how the agency “is committed to . . . investigations, audits, and other work to detect and prevent these violations of the public trust.”

False Claims Act Enforcement Remains Strong Under Trump

91pornwhistleblower partner Alysia Solow pointed to this settlement as just the latest example of a very active DOJ going after federal contractors charging inflated pricing or failing to deliver the goods or services they promised.�� According to Solow, “The Trump Administration may be changing its enforcement focus in several areas, but it has continued to rigorously enforce the False Claims Act when it comes to straight out contracting fraud.”

While there is no indication a whistleblower was involved in initiating this False Claims Act case or in reporting the alleged fraud to the Government, the vast majority of False Claims Act cases are brought by whistleblowers.�� This comes from the qui tam provisions of the statute that allow private parties to bring lawsuits 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.

91pornHas Substantial Experience Representing Procurement Fraud Whistleblowers

91pornhas substantial experience representing whistleblowers under the False Claims Act in matters involving government procurement fraud.�� Several of our whistleblower successes have involved record-breaking False Claims Act settlements in this area.�� This includes our recent settlement against defense contractor KBR Services for allegedly overcharging the government for supplies for U.S. troops stationed in Iraq and Afghanistan, and our settlement against eight of the nation’s largest banks allegedly engaged in widespread municipal bond fraud.

If you would like to learn more about these matters, our other whistleblower successes, what it means to be a whistleblower, or other areas of Government contract fraud covered by the False Claims Act, 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.

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Read Hill Associates to Pay $14.75 Million to Settle False Claims Act Charges of Cybersecurity and Other IT Contract Failures at constantinecannon.com

By the��91pornWhistleblower Team

Georgia-based Health Wealth Safe, Inc. (Health Wealth) and its owner, Dr. Subodh Agrawal, have agreed to pay $1.29 million to settle allegations that they knowingly caused the submission of false claims to Medicare.

Whistleblower Lawsuit Filed by Former Employee

This lawsuit was brought under the whistleblower or qui tam provisions of the False Claims Act (FCA) by a former Health Wealth employee in United States ex rel. Chavous v. Health Wealth Safe, Inc., No. 1:22-cv-02553. The FCA imposes liability for knowingly submitting, or causing the submission of, false claims. “Knowing” includes acting with deliberate ignorance or reckless disregard for the truth.

The FCA provides that the government may recover three times its actual losses, called “treble damages.”��A defendant may also be liable for��penalties��ranging from roughly $13,946 to $27,894 for each false claim submitted.

Reporting Fraud Under the False Claims Act

Under the qui tam provisions, whistleblowers (or relators) can file lawsuits on behalf of the United States to recover damages from parties who swindle the government out of taxpayer funds. Whistleblowers may receive up to 30% of the government’s recovery from successful enforcement actions.

In this case, the whistleblower will receive $238,650 from the settlement, in addition to attorney’s fees.^��1

False Claims Allegedly Submitted to Medicare

According to the government, from September 2019 to January 2021, Dr. Agrawal directed Health Wealth to bill Medicare for remote physiologic monitoring (RPM) services that did not meet federal reimbursement requirements. RPM tracks patients’ vital signs including weight, blood pressure, blood-sugar levels, blood-oxygen levels, and oxygen saturation.

Medicare covers RPM services only if devices automatically report readings without any human involvement. Health Wealth allegedly used non-compliant devices, and had unlicensed employees manually collect self-reported data. Health Wealth then knowingly billed for these services knowing they were ineligible for Medicare reimbursement.^��2

The government also alleged that Health Wealth implemented a kickback scheme in 2019 with physicians. Health Wealth purportedly paid doctors the Medicare reimbursements, taking a $60 monthly fee per patient. This arrangement involved physicians in Georgia, South Carolina, Texas, Hawaii, Alabama, and Tennessee.^��3

Kelly Blackmon, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG) commented: “Healthcare professionals have a sworn duty to prioritize patient health and to ensure all services billed to the federal government are fully compliant with program requirements. HHS-OIG will continue to collaborate with our law enforcement partners to safeguard the integrity of the Medicare program.”^��4

Medicare Fraud

Whistleblowers can report Medicare fraud under the qui tam provisions of the False Claims Act. Examples of Medicare fraud include kickbacks, double billing, upcoding, offering unnecessary services and products, and other kinds of misconduct. These same healthcare fraud schemes often include other programs like Medicaid and TRICARE/CHAMPUS.

Our Firm Helps Whistleblowers

91pornpartner Gordon Schnell commented: “Healthcare-related fraud remains one of the government’s top priorities. In 2024 alone, more than $1.67 billion of the $2.9 billion the government and whistleblowers recovered under the False Claims Act came from healthcare fraud cases, according to the DOJ’s annual roundup.”

Reasons Why You Need to Hire a Qui Tam Attorney

Here are four reasons why you should hire an attorney if you have information that could lead to a qui tam lawsuit.

1. Qui Tam Actions often involve Complex Facts, Laws, and Regulations
2. Qui Tam Actions are Subject to Specialized Rules
   • Qui Tam Lawsuits are Filed Under Seal
   • Evidence Must be Presented in a Disclosure Statement
   • Qui Tam Cases Must be Based on Non-Public Information
   • First-to-File Rules Require Quick Effective Action
3. A Qui Tam Attorney Understands the Consequences of Being a Whistleblower
4. A Qui Tam Lawyer Can Help You Maximize Your Reward

If you would like more information on��what it means��to be a whistleblower��or believe you have information relating to��healthcare fraud, please��contact us��so we can connect you with a member of the experienced��91pornwhistleblower lawyer��team��for a free and confidential consultation.

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Read Health Wealth Will Pay $1.29M to Resolve Whistleblower-Initiated False Claims Act Lawsuit at constantinecannon.com