New York Attorney General Sues Credit Suisse For Residential Mortgage-Backed Securities Fraud

January 2, 2013

On November 20, 2012, the New York Attorney General, Eric Schneiderman, along with the Residential Mortgage-Backed Securities (RMBS) Working Group filed a Martin Act complaint against Credit Suisse Securities LLC.  The complaint accuses Credit Suisse of deceiving investors about the quality of the mortgage loans which were part of the RMBS the company was selling.

Fraud and a general lack of oversight in the RMBS industry was a huge factor in the recent financial market crash.  RMBS are pools of mortgages deposited into trusts and then sold as securities to investors.  According to the allegations, Credit Suisse told its investors that it carefully evaluated the mortgages-backed securities and that it regularly monitored them to ensure their quality, but it allegedly did neither.  The complaint further accuses Credit Suisse of not evaluating the loans, and actively ignoring any defects that it happened to uncover.  Additionally, Credit Suisse was accused of loaning to borrowers who were incredibly likely to default on their loans.  When people defaulted on their loans, Credit Suisse’s investors lost at least $11.2 billion.

This case against Credit Suisse is one of many that have been filed and pursued against large financial institutions related to fraud in connection with the sale of RMBS in the wake of the recent financial crisis.  The attorneys at Tycko & Zavareei encourage the RMBS Working Group to continue to investigate and prosecute these types of cases and to bring to justice the individuals and institutions whose misconduct contributed to bringing the Nation’s financial system to its knees.

Please keep checking our website for more updates on the progression of this case and to learn more about fraud in connection with RMBS, as well as other types of fraud involving our financial institutions, and what you can do to help fight it.


United States Files New Lawsuit Against KBR

December 6, 2012

The United States announced a new civil complaint it filed against Kellogg, Brown & Root Services Inc. (KBR), the Army’s primary contractor for logistical support in Iraq, and a Kuwaiti subcontractor.  The complaint accused KBR and subcontractor First Kuwaiti Trading Company of submitting false and inflated claims to the government for services associated with the Army’s Logistics Civil Augmentation Program (LOGCAP) III.

KBR was awarded LOGCAP III in December of 2001.  KBR subsequently awarded a subcontract to First Kuwaiti in October of 2003 to supply, transport, and install over 2,000 trailers for house troops in Iraq.  According to the allegations, First Kuwaiti knowingly inflated some of its costs and misrepresented the causes of delays associated with its contract.  Further, KBR was accused of submitting claims for these costs to the United States, despite knowing that they were improper.

As this complaint was only recently filed, it will take some time for the facts to come out and the case to unfold.  Stay tuned for further updates!

Court Denies Motion to Dismiss in Fraud Case Against Wells Fargo and Mortgage Investors Corporation

December 6, 2012

Last month, United States District Judge Amy Totenberg denied in part a motion to dismiss in a whistleblower lawsuit that was originally filed against eight banks: Countrywide Home Loans, Inc., PNC Bank, First Tennessee Bank, SunTrust Mortgage, CitiMortgage, JP Morgan Chase, Wells Fargo Bank, and Mortgage Investors Corporation (MIC).

Prior to Judge Totenberg’s decision, six of the Defendants in the case agreed to settle the claims brought against them for a total of $161.7 million.  The remaining Defendants, Wells Fargo and MIC will now need to continue to litigate the case.

According to the complaint, the banks made false certifications to the Veterans Administration in order to receive loan guarantees from the Government.  The banks then allegedly charged military veterans hidden fees on their refinanced home loans and when the loans went into default, the banks tried to collect on the fraudulently procured government loan guarantees.  The lawsuit was filed under seal in 2006 by whistleblowers Victor Bibby and Brian Donnelly.  In 2011 the Government decided not to intervene and the case was unsealed.

To stay updated on the progress of the litigation, keep checking our website or contact us at

United States Alleges Largest Ever Fraud Scheme By Individual Doctor

December 6, 2012

Last month, the United States filed a lawsuit against Chicago psychiatrist, Dr. Michael J. Reinstein.  The complaint accused Dr. Reinstein of receiving illegal kickbacks from multiple pharmaceutical companies beginning at the latest in 1999.  The complaint further alleges that Dr. Reinstein submitted at least 140,000 false claims to Medicare and Medicaid for antipsychotic drugs he prescribed for thousands of patients.  Finally, Dr. Reinstein was accused of submitting at least 50,000 claims to Medicare and Medicaid for treatments that he allegedly never provided.  This is the largest lawsuit alleging prescription medication fraud that has ever been filed against an individual defendant.

The case has only just been filed so any resolution is likely a long way off.  Keep checking our website for updates on the case’s progress.

Blackstone Medical, Inc. Settles Kickback Allegations Filed Under False Claims Act for $30 Million

November 21, 2012

Earlier this month, Orthofix International, a manufacturer of spinal surgery products, settled allegations filed against the company’s subsidiary, Blackstone Medical Inc., for $30 million.  According to the complaint, filed in 2006 under the qui tam provisions of the False Claims Act, Blackstone allegedly paid illegal kickbacks to spinal surgeons to induce them into using Blackstone products.

The whistleblower in this case was Ms. Susan Hutcheson, who was a regional sales manager at Blackstone between 2004 and 2006.  In 2008, after its initial investigation, the government elected not to intervene in Ms. Hutcheson’s case.  She and her attorneys opted to continue to pursue Blackstone on their own and Ms. Hutcheson’s case was initially dismissed.  On appeal though, the United States Court of Appeals for the First Circuit reversed the dismissal and Ms. Hutcheson was able to move forward with her claims against Blackstone.  While the Department of Justice did not formally intervene in Ms. Hutcheson’s case, they took an active role in helping litigate the appeal.  Ms. Hutcheson will receive an $8 million share of the settlement with Orthofix, about 26% of the total recoveries.

Without the significant resources available to the Department of Justice, litigating qui tam cases is tough!  Tycko & Zavareei congratulate Ms. Hutcheson and her attorneys on their successful prosecution of and settlement with Blackstone and Orthofox.

For more information on whistleblower cases and the False Claims Act please visit our website at

Novartis Pharmaceutical Corporation Reaches $19.9 Million Settlement with State and Federal Governments

November 20, 2012

The Texas Attorney General’s Office announced a $19.9 million settlement it reached with international pharmaceutical company, Novartis Pharmaceutical Corporation.  The settlement resolves False Claims Act allegations that Novartis used deceptive marketing tactics to sell Elidel, a topical skin cream used to treat eczema.  Novartis allegedly promoted Elidel to treat babies without disclosing the risks and side effects of the drug.  The FDA has not approved Elidel for children under two years old.

Of the $19.9 million settlement, the Texas State government will receive about $6.6 million.  The whistleblower in this qui tam case, Donald R. Galmines, will receive between a 15 to 30% share of the settlement.  The remaining portion of the settlement will go to the federal government.

The attorneys at Tycko & Zavareei commend the collaboration between the federal and state governments to reach this successful settlement.  For more information on health care fraud and blowing the whistle on companies engaging in it, contact Tycko & Zavareei today for a free consultation.

Boehringer Ingelheim Agrees to $95 Million False Claims Act Case Settlement

November 20, 2012

Last month, the Department of Justice announced yet another health care fraud False Claims Act settlement.  This settlement was with pharmaceutical giant Boehrigner Ingelheim Pharmaceuticals Inc.  Boehringer agreed to pay $95 million to settle allegations that the company promoted “off-label” and unapproved uses of its stroke-prevention drug, Aggrenox, the chronic obstructive pulmonary disease (COPD) drugs Atrovent and Combivent, and its hypertension drug Micardis.  Boehringer was also accused of paying illegal kickbacks to healthcare professionals to promote their drugs.

The lawsuit was filed in 2005 by whistleblower Robert Heiden under the qui tam provisions of the False Claims Act.  Heiden was a Boehringer sales representative and took an active role in the government’s investigation of his former employer.  Whistleblowers can receive anywhere from 15% to 30% of the government’s recoveries from qui tam lawsuits.  Mr. Heiden will receive a 21% share of this settlement.

For more information on common health care fraud schemes and what you can do to prevent it, visit Tycko & Zavareei’s website at

RxAmerica Agrees to $5 Million Settlement Surrounding Alleged Medicare Part D Plan False Pricing

November 1, 2012

Navigating the Medicare system can unfortunately be extraordinarily complicated and difficult.  There are numerous sub-programs within Medicare and they each operate differently and frequently have different sets of rules and regulations.  One such sub-program is the Medicare Prescription Drug Program, more commonly known as Part D.  Part D participants are offered coverage for their prescription drugs, however, in order to obtain the coverage participants need to join a Medicare-approved plan or a Part D plan.  There are many different Part D plans available to participants and each varies in terms of the drugs they cover, the amount they reimburse for those drugs, and the deductibles and co-pays their participants are required to pay.  In order to help them steer through all of the various choices and find the best Part D plan for their specific needs, the Centers for Medicare & Medicaid Services (CMS) has created a Plan Finder tool for participants.  The Plan Finder uses drug pricing information submitted by the Part D plan providers to CMS in order to help participants estimate the cost of each plan based on the specific drugs they would need.

Earlier this month, the Department of Justice announced a $5 million settlement with RxAmerica LLC, a wholly-owned subsidiary of CVS Caremark Corporation and Part D plan provider.  The False Claims Act settlement is one of the first reached involving the Part D plan.  RxAmerica was accused of submitting false prices for some of its drugs to CMS, thereby causing the Plan Finder to have inaccurate information.  As a result, Part D participants were allegedly lead to believe that the prices for RxAmerica’s drugs were lower than they actually were—often causing them to choose RxAmerica as their Part D plan provider.

RxAmerica’s settlement comes on the heels of a $5 million settlement reached between the Federal Trade Commission and CVS relating to similar allegations.  The money from the FTC settlement is being used to compensate the Part D beneficiaries for any overpayments they made as a result of CVS and RxAmerica’s alleged misconduct.

The government was alerted to RxAmerica’s alleged fraud as a result of two qui tam lawsuits that were filed against the company and were subsequently consolidated.  The three whistleblowers from the two cases were all Part D beneficiaries who selected the RxAmerica Part D plan after reviewing the Plan Finder.  The whistleblowers will receive a relators’ share of nearly $1 million from the settlement.

If you are aware of Medicare or Medicaid fraud, it is important to take action to stop it.  Contact the experienced attorneys at Tycko & Zavareei today for more information on the choices available to you.

ReadyOne Industries Agrees to Settle False Claims Allegations for $5 Million

October 31, 2012

Earlier this month, the Department of Justice announced a $5 million settlement it reached with ReadyOne Industries Inc., a non-profit organization that manufactures apparel, boxes, and other products.  ReadyOne, previously known as the National Center for Employment of the Disabled (NCED), is headquartered in El Paso, Texas.  The company was accused of violating the False Claims Act by submitting false certifications regarding the number of hours employees with severe disabilities worked on government contracts.

ReadyOne was a member of the AbilityOne Program, which is managed by the federal agency the Committee for Purchase From People Who Are Blind or Severely Disabled.  According to its website, AbilityOne is “a Federal initiative to help people who are blind or have other significant disabilities find employment by working within a national network of over 600 Nonprofit Agencies that sell products and services to the U.S. government.”  Programs like AbilityOne help frequently disadvantaged individuals to procure stable employment, which in today’s economy is extraordinarily important.

For non-profit organizations to participate in the AbilityOne Program, they are required to ensure that their blind or severely disabled employees perform 75% of their annual direct labor hours on some government contracts.  ReadyOne was accused of employing numerous non-disabled employees on government contracts and falsely reporting their labor hours in order to comply with AbilityOne’s requirements.

Whistleblower Michael Ahumada filed his qui-tam lawsuit against ReadyOne in 2006 and alerted the government to their alleged fraud.  As a former ReadyOne employee, Ahumada was able to provide insider information that helped the government investigate the case.  As the whistleblower, Ahumada may receive anywhere between a 15% to 30% share of the government’s recoveries from the settlement.

For more information on how to file a qui tam lawsuit, and for a free and confidential consultation, contact the experienced attorneys at Tycko & Zavareei today.

HCA Inc. Agrees to Pay $16.5 Million to Settle False Claims Act Allegations

September 27, 2012

Last week, the Department of Justice announced a settlement it reached with HCA Inc., one of the country’s largest for-profit hospital chains.  The $16.5 million settlement marks the end of a case brought against HCA alleging violations of the False Claims Act and the Stark Statute.

According to the complaint, HCA entered into numerous financial transactions with a physician group, Diagnostic Associates through its subsidiaries Parkridge Medical Center and HCA Physician Services.  HCA was accused of providing financial benefits to Diagnostic Associates in order to induce the physicians there to refer patients to HCA facilities.  Some of these benefits included rental payments for office space leased from Diagnostic and a release of Diagnostic members from separate lease obligations.  These transactions violated the False Claims Act as well as the Stark Statute which restricts the types of financial relationships hospitals and physicians can enter into.  In addition to the monetary settlement, Parkrdige Medical Center has agreed to enter into a five year Corporate Integrity Agreement with the Office of the Inspector General of the US Department of Health and Human Services.

Whistleblower Thomas Bingham brought HCA’s alleged fraud to the government’s attention in 2008.  Bingham is a real estate appraiser in Tennessee where Parkridge, HCA Physician Services, and Diagnostic Associates all operate.  He will be receiving an 18.5% share of the settlement recoveries for the role he played in the case.  The remainder of the settlement will be divided between the federal government and the state of Tennessee with the United States getting about $15.6 million.

For more information on unlawful kickbacks and other illegal financial arrangements, visit our website at

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