If you work for a consultant, vendor, accountant, or other third party that you suspect may be helping another company to defraud the government, you may have a viable whistleblower case.
The Department of Justice (“DOJ”) has repeatedly demonstrated its willingness to prosecute third parties that help companies doing business with the government to commit fraud. On February 19, 2019, DOJ announced both that it was intervening in a False Claims Act kickback case against the mail-order diabetic testing supply company Arriva Medical, and that it was adding Arriva’s reimbursement consultant to the whistleblower’s case as a defendant. That case, United States ex rel. Goodman v. Arriva Medical LLC; Alere, Inc., Case No. 3:13-cv-00760 (M.D. Tenn.), is currently being handled by the United States Attorneys’ Office for the Middle District of Tennessee in Nashville.
Also this past month, the U.S. Attorneys’ Office for the District of Vermont announced a $57 million settlement against an electronic medical records (EMR) vendor for healthcare providers, Greenway Health, that the government alleged had manipulated its software code to maximize Government payments. The Greenway Health settlement was completed within two years of a $155 million FCA settlement against another EMR vendor, eClinicalWorks involving similar claims. Both cases included allegations that the vendor had paid illegal kickbacks to providers to induce them to promote their EMR product to potential new customers.
In February of last year, DOJ intervened in a FCA kickback case in Florida, United States ex. rel. Medrano v. Diabetic Care RX, LLC, No. 15-cv-62617 (S.D. Fla. Feb. 16, 2018), against both a compounding pharmacy, Diabetic Care RX, and its private equity firm sponsor. The Government alleged that the private equity firm had provided strategic guidance and approved of the pharmacy’s kickback scheme to induce government purchases of its products.
Also in February 2018, DOJ obtained a nearly $150 million settlement from Deloitte & Touche, the Big Four accounting firm. The settlement resolved DOJ’s allegations that Deloitte had “knowingly deviated” from acceptable accounting methods while auditing a mortgage lender that the accounting firm should have known was practicing fraudulent mortgage origination and other financial schemes. According to the complaint, Deloitte’s failure to detect the mortgage lender’s fraud allowed it to continue to sell sham mortgages until the lender declared bankruptcy in 2009.
These cases show that whistleblowers who pursue claims against third parties do not always have to work for the company that is the primary offender in a fraud in order to qualify as a bona fide “insider.” Nor do whistleblowers always have to work for the company that sells the main product or service that is implicated in the fraud in order to qualify. Contact a whistleblower attorney to find out whether what you know about a vendor, consultant, accountant, financial advisor or similar third party can support a whistleblower case.