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State Enforcement Actions

Each state enforces its laws and defends its interests, and states often work with the federal government in investigating and prosecuting corporate frauds. Whistleblowers with knowledge of fraud or wrongful conduct that involves state or local funds or programs may be able to bring a claim under a state or local False Claims Act, and may be eligible to receive a monetary reward and protection against retaliation.

Below are summaries of recent settlements, successful prosecutions, and enforcement actions by states.If you believe you have information about fraud which could give rise to a claim under a State or Local False Claims Act or other whistleblower reward provision, please contact us to speak with one of our experienced whistleblower attorneys.

August 16, 2017

New York announced a $6.5 million settlement with the owners and operators of the Manhattan Club, a timeshare building in Midtown Manhattan, over the sponsor’s repeated false promises to potential and current share owners. The settlement is the largest in recent history for the Attorney General's Real Estate Finance Bureau. Under the terms of the settlement, the operators of the Manhattan Club, at 200 West 56th Street, acknowledge that they repeatedly misled shareowners about the club’s reservation process, their ability to sell back their shares, and the details of the club’s state-approved offering plan.

August 9, 2017

Connecticut joined with 31 other states and the District of Columbia in a $5.5 million settlement with Nationwide Mutual Insurance Company and its subsidiary, Allied Property & Casualty Insurance Company, that resolves the states’ investigation into a 2012 data breach that exposed sensitive personal information of 1.2 million consumers across the country. On October 3, 2012, Nationwide and Allied (collectively, "Nationwide"), experienced a data breach when, the states’ investigation found, hackers exploited a vulnerability in the companies’ third-party Web application hosting software. The states’ investigation found that Nationwide had failed to apply a critical software patch that the third-party software company had deployed in 2009 to address the vulnerability. FL

August 4, 2017

Georgia announced a civil settlement with The Medical Center of Central Georgia, Inc., more commonly known as The Medical Center, Navicent Health (Navicent). Navicent agreed to pay to the United States and the State of Georgia $2,549,742 to resolve allegations that it violated the False Claims Act and the Georgia False Medicaid Claims Act by submitting bills for ambulance transports that were either inflated or medically unnecessary. Additionally, Navicent’s current Corporate Integrity Agreement (CIA) will be heightened and extended to cover the newly resolved conduct. A CIA is an agreement between a private provider of services and the United States whereby the provider, at its own expense, institutes and maintains a program, overseen by the OIG with reviews by an independent review organization, to insure compliance with the laws and regulations regarding participation in federally funded programs.

July 27, 2017

The largest debt collection law firm in Massachusetts and its two owners have agreed to pay $1 million in restitution and significantly change their practices after Massachusetts took action against them for widespread consumer abuses impacting thousands of Massachusetts consumers. A consent judgment – entered against Lustig, Glaser & Wilson, P.C. (Lustig) and its two principals, Ronald E. Lustig and Kenneth C. Wilson – resolves allegations they routinely sued consumers for debts they did not owe or debts that were inaccurate, and consistently violated state law and abused the court system in their pursuit of debts.

July 26, 2017

Washington recovered nearly $750,000 in Medicaid reimbursement this week from pharmaceutical company Celgene Corporation for promoting medications to treat conditions they were not approved for, including certain types of cancer. The company is also accused of paying kickbacks to doctors for prescribing the medications and helping them change billing codes to ensure Medicaid would pay for their use. Off-label marketing, fraudulent billing and providing kickbacks to doctors are all violations of the Medicaid False Claims Act.

July 24, 2017

New Jersey announced that pet shop owner Vincent LoSacco and his “Just Pups” Stores have agreed to permanently stop selling animals in New Jersey and pay $326,000 to settle allegations they misled customers about the health of the puppies they sold, failed to reimburse consumers for animals that got sick or died, and committed dozens of other acts of consumer fraud. Under a settlement with the Division of Consumer Affairs, Just Pups is permanently prohibited from conducting business in New Jersey, and LoSacco is permanently barred from advertising or selling animals in the state in any capacity, including, among other things, as an owner, employee, consultant, or independent contractor at a pet store, kennel, or breeding establishment, either in a paid or unpaid position.

July 19, 2017

New Jersey announced that a man who stole approximately $298,000 from customers of his two debt relief businesses was sentenced to prison today. Germaine Theodore promised customers of TGC Movement in Maplewood and Save My Future in Jersey City big reductions in their monthly bills, but he instead stole their money through Ponzi schemes. Theodore, 37, of Maplewood, N.J., was sentenced today to five years in state prison by Superior Court Judge John Zunic in Essex County. He pleaded guilty before Judge Zunic on April 24 to a charge of second-degree theft by failure to make required disposition of property received in connection with TGC Movement. Under the plea agreement, the state recommended a sentence of seven years in prison, but the judge imposed a sentence of five years.

July 17, 2017

Texas obtained a final judgment and permanent injunction against Samara Portfolio Management, LLC, Law Office of Joseph Onwuteaka, P.C., and Joseph O. Onwuteaka, for violations of the Texas Deceptive Trade 91Թ—Consumer Protection Act (DTPA), Texas Debt Collection Act and the Identity Theft Protection and Enforcement Act (ITPA). The defendants violated the DTPA by filing 898 consumer debt collection cases in Harris County against debtor-defendants who neither signed the underlying loan contract in Harris County or lived in Harris County at the time they were sued. In violation of the ITPA, defendants also failed to implement reasonable procedures to protect sensitive personal information in 123 of the lawsuits by filing unredacted social security numbers and driver’s license numbers. Furthermore, defendants violated the Texas Debt Collection Act by attempting to collect on 63 motor vehicle debts without a license. The jury awarded civil penalties of $25,165,500 and attorneys’ fees of $559,231.30. Assistant Attorneys General Rick Berlin and Stephanie Eberhardt represented the State of Texas.

July 17, 2017

New York-based home health care company Visiting Nurse Service of New York and its subsidiaries VNS Choice and VNS Choice Community Care agreed to pay roughly $4.4 million to settle charges of violating the False Claims Act by improperly collecting monthly Medicaid payments for 365 Medicaid beneficiaries whom VNS Choice failed to timely disenroll from the VNS Choice Managed Long-Term Care Plan. Once VNS disenrolled the members, it did not repay Medicaid for the funds it had improperly received. By knowingly retaining overpayments for many of these members for more than 60 days, the VNS entities violated both the federal and state false claim acts. As a result, New York State will receive $2.63 million as part of the settlement agreement.The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by an undisclosed whistleblower. The whistleblower will receive an undisclosed whistleblower award from the proceeds of the government's recovery.

July 13, 2017

New York announced the convictions of Kenneth Cohn and Sharon Cohn and Yellow Medi-Van and Taxi, Inc., for Medicaid fraud and related charges. Broome County residents Kenneth Cohn and Sharon Cohn owned and operated Yellow Medi-Van and Taxi, Inc., a transportation company providing transportation to medical appointments for Medicaid recipients in Broome County. During the period June 2, 2012, to January 30, 2014, the defendants knowingly operated Yellow Medi-Van and Taxi in violation of Broome County transportation regulations and the New York State Workers’ Compensation Act, by failing to have Worker’s Compensation insurance. The defendants agreed to forfeit and release $455,604.39 of the funds received from Medicaid to the New York State Medicaid Fraud Control Unit. They also entered into a settlement agreement for an additional $50,000.00.
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