Friday, March 9, 2012

Forbes reports the IRS Whistleblower Program is broken

The problem with the IRS whistleblower program isn’t the 2006 law or the quality of whistleblower information that the IRS is receiving.  The IRS Whistleblower Office reports that it has received dozens of whistleblower submissions concerning matters involving tax losses greater than $100 million and thousands involving tax underpayments that exceed $2 million. The real problems are the IRS itself and institutional resistance to whistleblowers within the IRS that is hobbling the whistleblower program and draining its enormous promise.
The anti-whistleblower attitude was succinctly expressed by former IRS Chief Counsel Donald Korb shortly after he left the IRS and joined a white collar law firm that defends companies against the IRS. In a 2010 interview with the publication Tax Notes, he said:
“The new whistleblower provisions Congress enacted a couple of years ago have the potential to be a real disaster for the tax system. I believe that it is unseemly in this country to encourage people to turn in their neighbors and employers to the IRS as contemplated by this particular program. The IRS didn’t ask for these rules; they were forced on it by the Congress.”

Thursday, March 8, 2012

REVERENTIA LEGUM--Army Lawyers getting serious about medical business ethics.

Is the Army Medical Command finally getting serious about business ethics.  Looks like the lawyers have been busy.  See the Journal below, which appears well done.  Obviously a lot of thinking and late nights were required to produce this product. God bless the JAG Corps.  REVERENTIA LEGUM!

World wide pharma trying to clean up its act -- good luck with that!

The global pharmaceutical industry changed up its code of practice Thursday, but not before some high-profile settlements in the U.S. for breaking its foreign-bribery law.
The Geneva-based International Federation of Pharmaceutical Manufacturers and Associations said Thursday it expanded its practice code to cover all interactions with health-care professionals, medical institutions and patient organizations, including a ban on doctors from receiving payments to attend conferences.
This comes at a time when the association’s members are trying to drum up business in developing countries, some of which have state-run health systems. Employees of such systems, including doctors and nurses, can be considered foreign officials under the U.S. Foreign Corrupt Practices Act, a 1977 law that bars bribing foreign officials for business purposes.
To that end, the Securities and Exchange Commission and the Justice Department are in the midst of a sweep of the industry. In April 2011, Johnson & Johnson agreed to pay $70 million to resolve violations, and The Wall Street Journal reported in November 2011 that Pfizer Inc. will pay more than $60 million when its settlement gets finalized.
Both companies, the Journal reported, ratted on their competitors.  Those competitors included AstraZeneca, Merck & Co., Bristol-Myers Squibb Co., GlaxoSmithKline PLC and others that have disclosed investigations for possible FCPA breaches. Eli Lilly & Co. was in advanced talks in April 2011 with the Justice Department, and the company said Feb. 24 in its annual results it’s at the same level with the SEC.
Letters of inquiry to several of the companies, dating back more than a year, laid out several types of of possible violations: bribing government-employed doctors to purchase drugs; paying company sales agents commissions that are passed along to government doctors; paying hospital committees to approve drug purchases; and paying regulators to win drug approvals.
And the companies aren’t just facing charges in the U.S.: AstraZeneca said in November 2011 it was indicted in Serbia over employees allegedly making improper payments to physicians at Institute of Oncology and Radiology of Serbia. A spokesman said at the time the company had filed motions to dismiss the charges.
The federation, which goes by the acronym IFPMA, is led by David Brennan, an American who is also chief executive of AstraZeneca.
Brennan announced in May 2011 that AstraZeneca would no longer pay for doctors to attend conferences, something he said to Dow Jones Newswires caused him “to take it to the IFPMA, to have them consider what the next level of agreement should be, from an industry perspective.”
He acknowledged in the interview with Newswires that as health-care costs have risen worldwide, so too have concerns about financial ties between doctors and drug makers.
The non-profit investigative news outlet ProPublica has been running stories since October 2010 in a series called “Dollars for Docs” about how industry money makes it into the hands of physicians.
“We’re trying to earn society’s trust in doing what we’re doing, because I think that trust has been broken,” Brennan said in the Newswires interview. “So when you put it into the context of how society perceives us and what can we do about it, I think a lot of companies recognize that we shouldn’t have a minimum standard but have something that goes above that.”
More from the interview with Newswires is here. Read the new code of practice below:
IFPMA Code of Practice 2012                                                           

Wednesday, March 7, 2012

Update on Major (Dr.) Jason Davis - - US Army - Boston Scientific health care fraud

I've blogged in the past about U.S. Army Major (Dr.) Davis -- who is a convicted criminal yet remains on active duty with the Army.   

Recently, the State of Washington, Department of Health Medical Quality Assurance Commission suspended his medical license on probation for up to 24 months.  

Some of the allegations against Davis included:
In violation of federal law and Army regulations, [Major Davis] accepted a salary, meals, wine, alcohol, travel, and entertainment from a wholly-owned subsidiary of Boston Scientific, a manufacturer of cardiac rhythm management devices.  Specifically, Respondent was paid an illegal salary by Boston Scientific to conduct training during surgery that [Major Davis] performed as part of his official duties as an Army cardiologist.  

In response to the allegations concerning [Major Davis], the Department of Defense and US Army initiated an investigation of Boston Scientific.  In October 2010, Boston Scientific's subsidiary reached a settlement with the US Attorney in which the company agreed to pay the United States $600,000.  The settlement agreement was premised on the US Attorney's allegations that Boston Scientific's subsidiary had provided gratuities and payments to Respondent "for or because of official acts that [the company] hoped [Respondent] would perform or had performed related to [Madidan's] purchase of [the company's] products."
Let me know if you have FOIAed the Army's investigation.  Let me know whether the Army has initiated involuntary separation of Major Davis?

I'll post the other documents later. 

Lesson learned: 
  • The Army must scrupulous monitor its relationships with industry.  
  • Lesson to military docs: these companies are giving you things not because you are a good doc, but because you are merely a tool that a company uses to make money, more money than you could imagine.  
  • And remember, it was a whistleblower, another Army doc, who broke this story. Without his courage, this would have never seen the light of day.
Below are pleadings from the St. of Washington Dept. of Health. 
Stmt of Allegations - St. of Wash. v. Major Davis
Stipulation to Informal Disposition -- St. of Wash. v. Major Davis

Tuesday, March 6, 2012

Just finished reading "No One Would Listen"

I just finished No One Would Listen, A True Financial Thriller by Harry Markopolos, who reported to the SEC that Bernie Madoff was running the world's largest Ponzi scheme.  The SEC blew off Markopolos' reports and failed to stop Madoff from stealing billions of dollars from investors, hence the title of the book.  Perhaps the most valuable contribution of Markopolos' book is to show that the executive branch is simply ineffective at enforcing the laws Congress passes.  Into that breach whistleblowers have a valuable role to play in protecting investors, Medicare, and other government programs.       

Monday, March 5, 2012

Health care fraud in the news again

It's fascinating to see the press finally starting to pick up on the fact that health care fraud in the U.S. is the biggest fraud play in the world.  Tens of billions of U.S. tax dollars are lost every year through fraud.  

Click here for last Thursday's episode of the Diane Rehm show discussing a recent health care fraud scam in Texas where hundreds of millions of dollars were stolen by one doctor.

Click here to listen to the show. 

One wonders when our politicians are ever going to get serious about the problem.  I've also wondered why honest doctors and health care companies are so tolerant of health care fraud.  The system is so corrupt that if things keep going we are going to end up with a government-run health care program.  You would think the AMA and various trade groups would want to avoid that.  A third-party payor system with reimbursement per procedure with no government accountability is unsustainable.  And for the fraudsters, it's low hanging fruit.  Whistleblowers can only do so much.  The industry needs to police its own . . . but don't bet the house on it. 

Saturday, March 3, 2012

The press is cathcing on -- South Texas has health care fraud is a problem

The press is finally catching on that South Texas is a hotbed of health care fraud.  Click here for a story from the The Monitor, which serves the Rio Grand Valley.  The first step to sobriety is admitting you have a problem.  It's been my observation that most of the health care providers in South Texas simply want to ignore the problem that is all around them.  They do so at their peril. 

Thursday, March 1, 2012

Health care fraud seems to have caught the attention of the media

Coach Tuberville sued for fraud

I try and keep this blog focused on fraud committed against the Government.  But yesterday I presented to the San Antonio chapter of the Construction Financial Management Association and encountered some skepticism about the merits of whistleblowing.  Too many people think that the leaders in our community can always be trusted.  And too many people think that Government agencies, such as the SEC, are vigilant in protecting investors.  It's been my experience that whistleblowers are the most effective tool to protect our free enterprise system.

One of the highest paid and respected employees of the State of Texas, Coach Tommy Tuberville, (and yes he is a public employee) has been sued for fraud, in particular, violations of the Securities Exchange Act.  Whether its true or not is for a judge and jury to decide.  At this stage, we have assume Coach Tuberville did not commit the acts alleged in the lawsuit and I hope he actually did not.   

While the investors in the case have recourse in federal court, ever since Madoff, you have to wonder whether the SEC is up to the task of protecting investors. But it looks like the National Futures Association has taken action (see below). 

Tommy Tuberville has been listed in a federal suit that alleges the former Auburn coach and his partner defrauded investors out of more than $1.7 million.  The complaint, filed Friday afternoon in the in U.S. District Court in Montgomery, claims Tuberville and TS Capital co-founder John David Stroud "employed devices, schemes, and artifices" to commit fraud. Seven plaintiffs from Alabama and Tennessee are seeking damages against the Auburn-based investment company.

Here is the lawsuit:

Is Sen. Snowe's husband the target of a qui tam case?

Originally filed in April 2007 by a pair of whistleblowers, the lawsuit alleges that the company violated a federal law that prohibits schools from paying admissions officers based on the number of students they recruit and enroll. Those numbers can affect a school’s revenues because more students mean a school is potentially eligible for more federal aid dollars. The whistleblowers alleged, and provided documents indicating, that they were paid bounties for the number of students they enrolled.
The Justice Department’s decision to intervene on Aug. 8 made the lawsuit, which had been under seal, public. In its complaint, Justice alleged that Education Management Corp. submitted “knowingly false, misrepresented, and/or improper certifications” to the Education Department, stating that it did not offer enrollment incentives to its admissions officers. Without those certifications, students enrolling at the the company’s schools, which include Argosy University, Brown Mackie College and South University, would not be eligible for federal financial aid. The complaint names Snowe’s husband, noting that in December 2006, while he was the company’s chief executive officer, McKernan personally signed certifications that Education Management Corp.’s schools complied with the ban on offering compensation to admissions officers based on the number of students they recruit.

Here is the qui tam complaint, to which the DoJ intervened.