Posternak Blankstein & Lund LLP is now Arent Fox. Read the press release

Defense Vehicle Manufacturer Accused of Defrauding the Government by $1.2 Billion

Headlines that Matter for Companies and Executives in Regulated Industries

Defense Vehicle Manufacturer Accused of Defrauding the Government by $1.2 Billion

On Tuesday, December 3, the United States District Court for the District of Columbia unsealed a six-year-old False Claims Act complaint against Navistar Defense LLC, a defense vehicle manufacturer, and its parent company, Navistar International Corp. The qui tam complaint was filed by a former employee of Navistar who worked as a member of Navistar’s Contract Management Department, where he negotiated a variety of contracts and worked to ensure Navistar’s Program Management, Operations, Logistics, Quality Accounting, Financing, and Engineering teams were in full compliance with legal and governmental regulations.

The complaint accuses the Navistar entities of charging the government inflated prices for Mine-Resistant Ambush-Protected (MRAP) vehicle components used by the government in Iraq and Afghanistan. According to the complaint, the Navistar entities knowingly presented false and misleading documents to induce the government to award it a multi-billion dollar contract and subsequent contracts. These allegedly false documents included forged invoices and fabricated catalogues to support Navistar’s commercial pricing for various MRAP components, such as the vehicles’ chassis, engines, and suspension systems, despite the fact that many of the MRAP vehicle components actually had no commercial sales history at all or were sold to the government for twice as much as the historical commercial price. The complaint estimates the government suffered approximately $1.28 billion in damages. Navistar denies any wrongdoing and disputes the whistleblower’s complaint.

The Court also recently unsealed the government’s notice of its intention to intervene in the part of the action that alleges Navistar Defense inflated the government prices for the suspension system through the submission of fraudulent sales history.

The case is Burgess v. Navistar International LLC et al., Case No. 1:13-cv-01463 (D.D.C.).

Massachusetts Lab to Pay $26.7 Million to Settle False Claims Act Lawsuit

Laboratory Boston Heart Diagnostics Corp., a Massachusetts-based diagnostic laboratory, agreed to pay $26.67 million to resolve False Claims Act allegations involving payments for patient referrals in violation of the Anti-Kickback Statute and the Stark Law.

This settlement resolves allegations that Boston Heart conspired with others to pay doctors kickbacks disguised as investment returns. Boston Heart agreed to provide advanced lipid laboratory testing services to small hospitals in Texas in exchange for per-test payments. To increase referrals, Boston Heart worked with the hospitals’ independent marketers to pay referring physicians in exchange for physician referrals, all cloaked as investment returns through management service organizations set up by the independent marketers. The physicians then referred patients to the Texas Hospitals and Boston Hospital, and the laboratory tests performed by Boston Hospital were billed to Medicare, Medicaid, and TRICARE. According to the government’s press release, this settlement also resolves allegations that Boston Heart conspired to submit claims for outpatient laboratory testing for patients who were not hospital outpatients, and in exchange for physician referrals, waived fees for its specialized dietary services. The settlement resolves the allegations against Boston Heart without making a determination of liability.

The whistleblowers will receive approximately $4.36 million of the settlement.

The DOJ press release is here.

Three Individuals Plead Guilty to Healthcare Fraud Scheme Involving UAW’s Health Care Fund

Dr. April Tyler, a Michigan doctor, pled guilty to violating the anti-kickback statute, joining co-conspirators – Jeffrey Fillmore and Patrick Wittbrodt – who pled guilty to healthcare fraud earlier this year.

According to the government’s press release, Dr. Tyler, Fillmore, and Wittbrodt attended United Automobile Worker’s (UAW) meetings to promote pain cream, scar cream, pain patches, and vitamins to UAW members and informed UAW members that they could receive these prescriptions for free. Unbeknownst to the UAW members, the acceptance of allegedly free medications would cost their health care fund millions of dollars. At these meetings, the co-conspirators would also collect insurance information from the UAW members. Dr. Tyler would use this information to authorize prescriptions for pain cream, scar cream, pain patches and/or vitamins without performing a physical exam or determining medical necessity, thus failing to establish a valid doctor-patient relationship. Wittbrodt then directed the submission of prescriptions to various pharmacies that would bill the UAW members’ insurance and pay a monetary kickback to Wittbrodt, who would then share the kickback with Dr. Tyler and Fillmore.

According to the government, Medicare and BCBS insurance plans were targeted due to the high reimbursement rates paid for a prescription pain cream, scar cream, pain patches and/or vitamins. The trio caused approximately $8 million in loss to Medicare and BCBS, some of which were stolen from the UAW members’ prescription insurance accounts. All three individuals await sentencing.

The DOJ press release is here.


Continue Reading