Wednesday, June 29, 2005

Pharmacy Benefits Giant Caremark is Target of Two Whistleblower Suits

Pharmacy benefits giant Caremark Inc. is facing pressure from two whistleblower lawsuits that represent hundreds of millions of dollars in fines and damages, attorneys say. One suit, filed in U.S. District Court in San Antonio several years ago, was recently unsealed as the federal government and several states pushed toward prosecution of Caremark on charges of Medicaid fraud. The other lawsuit, filed a year ago in a California state court, was unsealed this week and alleges several fraudulent practices including restocking and reselling returned prescriptions — even those that needed to be kept refrigerated.

Read the full story in mysanantonio.com here.

Medicaid Told to Do More to Stop Fraud

The agency that oversees the nation’s $261 billion health insurance program for the poor places too little emphasis on helping states prevent waste and fraud, government investigators and some lawmakers said Tuesday in testimony in Washington.

States are primarily responsible for ensuring that Medicaid providers bill the program for legitimate services. Yet the federal government, through the Centers for Medicare and Medicaid Services, should do more to help, said Leslie Aronovitz, director of health care for the Government Accountability Office.  Read the entire Associated Press report in SFGate.com here.

Tuesday, June 14, 2005

Submarine valves may be flawed

A former quality control official who pleaded guilty to criminal fraud charges on June 2 told a judge that the U.S. Navy never will have full assurance that crucial valves installed on its submarines were built correctly, according to an account in Hampton Roads (VA) Daily Press.

The statement by Wayne Aldrich, a former quality assurance manager at Hunt Valve - and a central figure in a Justice Department investigation into practices at Hunt - runs counter to the Navy’s confident assessment of the valves in their fleet. Hunt Valve, based in Salem, Ohio, sold thousands of valves to General Dynamics Electric Boat and Northrop Grumman Newport News for installation into Los-Angeles-class, Virginia-class and Seawolf-class submarines and other ships. Hunt also sold valves to the Department of Energy to contain spent uranium.

“There will always be the uncertainty that there could someday be a problem with this material,” Aldrich said in an apology to U.S. District Court Judge Lesley Wells, of the Northern District of Ohio. He wrote the letter last July, and Wells read it aloud at the June 2 hearing. For the full story, click here. (Registration required.)

Illinois Justices raise fence for taxpayer lawsuits

The Illinois Supreme Court clarified when private citizens can sue on behalf of governments in Illinois with a pair of decisions released Friday.  The justices, without dissent, reaffirmed a recent decision that prohibited taxpayers from suing on behalf of the state without the attorney general’s consent.

The Chicago Daily Law Journal reported that the judges ruled that the same principle barred private citizens from suing on behalf of a county without the state’s attorney’s involvement. But the court also held that taxpayers who had a stake in the outcome of a suit could bring a qui tam action on behalf of the state, because a state whistleblower statute authorizing those suits ensures that the attorney general can control the litigation.

“The qui tam provisions of the Whistleblower Reward and Protection Act impose significant restrictions on qui tam plaintiffs,” Justice Thomas L. Kilbride wrote for the court.

“Although the qui tam plaintiffs may ‘conduct’ the litigation on the state’s behalf, the attorney general retains the authority to ‘control’ the litigation,” he added.

Kilbride, who authored both decisions issued Friday as well as the ruling in the 2002 case that they expanded on, noted that the whistleblower law allowed the attorney general to step in and take control of the qui tam case at any time.

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Monday, June 13, 2005

Judge lets I-15 whistleblower suit go forward

A federal judge in Nevada has ruled that two whistleblowers have provided adequate proof of substandard materials and workmanship on a massive highway reconstruction project to allow the allegations to go forward, according to an account in the Las Vegas Deseret News.

U.S. District Judge Paul Cassell ruled Friday that Steven K. Maxfield and John Peterson have alleged “sufficient facts regarding compromised concrete, bridge construction defects and inadequate compaction of fill materials in the project” to keep the claims in a lawsuit alleging major problems in the $1.59 billion I-15 highway project.

Maxfield and Peterson sued Wasatch Constructors, the consortium of construction companies that worked on the 17-mile corridor between 1997 and 2001, alleging the company violated the federal False Claims Act throughout the project.

Maxfield, chief executive officer of Mighty Max Truck Parts Inc., was hired to transport dirt and fill materials to and from the construction site. Maxfield hired Peterson, an independent contractor, to assist with the job.

In his Friday order, Cassell dismissed claims alleging that contractors failed to properly weigh trucks carrying the material, instead relying on verbal reports from truck drivers to dispatchers. According to the lawsuit, the practice allegedly resulted in $4.8 million in overpayments. The judge also dismissed allegations that Wasatch diverted materials from an ongoing railroad project to the freeway construction.

The suit was first filed in January 1999, at the height of the four-year interstate project, but was sealed until October 2002 when Cassell ordered that it be made public. The suit was filed with Maxfield and Peterson in whistle-blower status, which allows the government to either bring its own criminal charges or join the civil lawsuit, if it so wishes. In this case, the federal government filed a friend-of-the-court brief with regard to one specific claim, but has opted otherwise not to become involved.

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