Whistleblower News Update – June 13, 2013

The U.S. Department of Justice (DOJ) is urging a federal judge not to dismiss a whistleblower lawsuit against Merck, which was released from under seal a year ago. According to the DOJ’s statement filed in federal court in Philadelphia on May 20, “The United States remains a real party in interest in this suit under the False Claims Act, with a strong interest in the outcome, even though it has not intervened in the case.”

The lawsuit stems from allegations that Merck has known for a decade that its mumps vaccine is “far less effective” than it told the government, and that the company falsified test results in order to sell millions of doses of a mumps vaccine of “questionable efficacy.” The alleged fraud – referred to as Protocol 007 – was a multi-year effort to hide the fact that the mumps vaccine is not nearly as effective as Merck claims. The whistleblowers point to firsthand knowledge of the fraud, including a supervisor who frantically changed test results showing that the mumps vaccine wasn’t working, the destruction of garbage-bags full of evidence, and lies told to FDA regulators.


Amidst numerous other product recalls and lawsuits, pharmaceutical giant Johnson & Johnson is now recalling more than 32 million boxes of the Cilest birth control pill in 43 countries because the active ingredient dissolves too slowly and decreases the contraceptive effect. This latest product recall is just one in a long string of recalls and lawsuits involving the company, including a recall of more than 3.3 million bottles of Tylenol Drops in Brazil, possible criminal charges in South Korea, and federal fraud charges that resulted in a $2.2 million settlement.

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A federal lawsuit alleging Medicare fraud has been filed against Life Care Centers of America – the third largest nursing home chain in the country. According to this article, the lawsuit alleges that, since 2006, Life Care Centers of America has “engaged in a systematic scheme to maximize the number of days it billed to Medicare and Tricare at the Ultra High level,” the highest daily rate that Medicare will pay a nursing facility.

As we recently reported, CBS News issued a special report in May 2013 detailing allegations of Medicare fraud by Life Care Centers of America. Several former employees of Life Care have come forward to say that the company is engaged in the practice of giving patients unnecessary rehab services and then billing the government for those services.

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Halifax Health is being asked to pay between $350 million and $600 million in damages and penalties in a lawsuit accusing the hospital of committing Medicare fraud through illegal contracts with physicians. The lawsuit, which was initiated in 2009 by Elin Baklid-Kunz, a Halifax Health employee, accuses Halifax Health of paying illegal kickbacks to doctors, improperly admitting patients, and performing unnecessary spinal surgeries. The Justice Department, which joined the case in 2011, recently filed a motion for partial summary judgment, in which it asked for $102.8 million in damages and an additional $250 million to $500 million in penalties.

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TesTech, Inc. and CESO, Inc., along with their owners, have agreed to pay $2,883,947 to resolve allegations that they falsely claimed disadvantaged business status on a number of federally-funded transportation projects, including highway and airport construction projects in Ohio, Indiana, Michigan and Kentucky. The Department of Transportation’s Disadvantaged Business Enterprise (DBE) program encourages the use of woman- and minority-owned businesses on federally-funded transportation projects. In order to received DBE status, contractors must make good-faith attempts to meet DBE participation goals as a condition of federal funding.

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The operator of three “stealth’” dental clinics in Connecticut has agreed to repay the state $9.9 million to settle civil Medicaid fraud charges. The defendant Gary F. Anusavice, who goes by several aliases, admitted his involvement in a $20 million Medicaid fraud scheme. According to federal prosecutors, Anusavice was convicted of health care fraud in 1997 and was, thereafter, banned from filing Medicaid claims. Accordingly, he used a licensed “straw” dentist to run the clinics to deceive Medicaid-billing reviewers and auditors.

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Please contact us at (312) 863-7222 if you would like to learn more about any of the aforementioned whistleblower news updates or would like to schedule a free, confidential appointment with one of our nationally-recognized whistleblower attorneys.

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