Monthly Archives: April 2015

U.S. Senate Approves Motor Vehicle Safety Whistleblower Act

Written April 30, 2015 by Robert Lu

On April 28, 2015, the U.S. Senate approved the first piece of auto safety legislation, a bill to incentivize auto industry whistleblowers, following the widespread recalls by General Motors Co. and Takata Corp. of tens of millions of vehicles and air bags, respectively.

The bill would grant the U.S. transportation secretary discretion to award up to 30% of the total monetary penalties resulting from Department of Transportation or Justice Department enforcement actions that total more than $1 million. The bill covers employees or contractors of motor vehicle manufacturers, parts suppliers and dealerships.

The full text of the bill, and the legislative history and actions taken to date, can be found here.

For additional information about whistleblower laws and the Firm’s resources and services in this area, please visit the Robbins Geller Rudman & Dowd LLP Whistleblower page.

SEC Awards Compliance Officer Approximately $1.5 Million Whistleblower Bounty

Written April 22, 2015 by Robert Lu

On April 22, 2015, the SEC announced that it would pay an unidentified compliance officer a whistleblower bounty award of between $1.4 and $1.6 million. This is the second award that the SEC has made to a whistleblower with internal audit or compliance responsibilities. According to the SEC, the recipient of the bounty award “had a reasonable basis to believe that disclosure to the SEC was necessary to prevent imminent misconduct from causing substantial financial harm to the company or investors.”

This current whistleblower bounty underscores the SEC’s position that employees who perform audit and/or compliance functions are eligible to receive bounty awards and may not be precluded from communicating with the SEC about potential securities violations. This award by the SEC sends the message that companies should effectively address internal reports of misconduct, whether from a compliance officer or other employees.

Since its inception in 2011, the SEC’s whistleblower program has paid more than $50 million to 16 whistleblowers who provided the SEC with “unique and useful information that contributed to a successful enforcement action.” In August 2014, the SEC announced its first whistleblower award to a compliance employee — a $300,000 award to an employee who performed “audit and compliance functions and reported wrongdoing to the SEC after the company failed to take action when the employee reported it internally.”

For additional information about the SEC Whistleblower program, or the Firm’s resources in this area, please visit the Robbins Geller Rudman & Dowd LLP Whistleblower page.

Two Medical Laboratories to Pay $48.5 Million to Settle False Claims Act Claims of Paying Kickbacks and Conducting Unnecessary Testing

Written April 10, 2015 by Robert Lu

On Thursday, April 9, 2015, the U.S. Department of Justice announced that Health Diagnostic Laboratory Inc. (HDL) and Singulex Inc. agreed to pay at least $47 million and $1.5 million, respectively, to settle civil allegations that they paid doctors for patient blood and billed Medicare for medically unnecessary testing. At the same time, the government also intervened in related lawsuits involving similar allegations against another laboratory, Berkeley HeartLab Inc.; a marketing company, BlueWave Healthcare Consultants Inc., and its owners, Floyd Calhoun Dent and J. Bradley Johnson; and former CEO Latonya Mallory of HDL.

As alleged in the lawsuits, HDL, Singulex and Berkeley induced physicians to refer patients to them for blood tests by paying them processing and handling fees of between $10 and $17 per referral and by routinely waiving patient co-pays and deductibles. In addition, HDL and Singulex allegedly conspired with BlueWave to offer these inducements on behalf of HDL and Singulex. As a result, physicians allegedly referred patients to HDL, Singulex and Berkeley for medically unnecessary tests, which were then billed to federal health care programs, including Medicare.

The lawsuits were filed by Dr. Michael Mayes, Scarlett Lutz, Kayla Webster and Chris Reidel under the qui tam, or whistleblower, provisions of the False Claims Act. Under the Act, private citizens can bring suit on behalf of the government for false claims and share in any recovery. The whistleblowers’ share of the settlements has yet to be determined.

For additional information about the False Claims Act, and the Firm’s resources and services for whistleblowers under the Act, please visit the Robbins Geller Rudman & Dowd LLP Whistleblower page.