Justice Muse

On Saturday, the DOJ announced a settlement with Cigna Group (“Cigna”), where Cigna agreed to pay $172 Million to resolve allegations that it violated the False Claims Act (“FCA”) by submitting and failing to withdraw inaccurate diagnosis codes for its Medicare Advantage Plan enrollees in order to increase reimbursements from Medicare.

On Monday, the DOJ announced a settlement with Verizon Business Network Services LLC (“Verizon”), where Verizon agreed to pay $4.1 M to settle allegations that it failed to completely satisfy certain cybersecurity controls in connection with an information technology service provided to federal agencies. The settlement resolves allegations that Verizon’s Managed Trusted Internet Protocol Service (“MTIPS”), which was designed to provide federal agencies with secure connections to the public internet and other networks, did not completely satisfy three required cybersecurity controls related to its General Services Administration (“GSA”) contracts from 2017 through 2021.

Yesterday, the Department of Justice announced a settlement with Martin’s Point Health Care Inc. (“Martin’s Point”) where Martin’s Point agreed to pay $22,485,000 to resolve allegations that it violated the False Claims Act by submitting inaccurate diagnosis codes for its Medicare Advantage Plan enrollees in order to increase reimbursements from Medicare.

On Friday, the DOJ announced that Booz Allen Hamilton Holding Corporation (“Booz Allen”) agreed to pay the United States $377,453,150 to resolve allegations that it violated the False Claims Act by improperly billing commercial and international costs to its government contracts. Notably, the settlement resolves allegations that for ten years, from 2011 to 2021, Booz Allen improperly charged indirect costs to its government contracts and subcontracts that should have been billed to commercial and international contracts under cost accounting standards. 

On Monday, the DOJ announced its settlement with L3 Technologies, Inc., Communication Systems West (“L3 Tech”), a manufacturer of communications for military systems.  L3 Tech paid $21.8 Million to resolve allegations that it violated the False Claims Act (“FCA”) by knowingly submitting false claims to the Department of Defense by double counting materials.  DOJ alleged that from 2008 through 2011, L3 Tech submitted dozens of contract proposals that double-charged the Government for low-cost common stock items like nuts and bolts.  Notably, this resolution includes a few interesting points.

Yesterday, the Department of Justice announced a settlement between Genotox Laboratories (“Genotox”) and the Department of Justice involving allegations that Genotox paid volume based commissions to third party marketers in violation of the Anti-Kickback Statute (“AKS”) and submitted claims to the federal health care programs for unnecessary drug tests.

Last week, the Department of Justice announced that DePuy Synthes, Inc. (“DePuy”), a subsidiary of Johnson & Johnson, agreed to pay $9.75 Million to resolve allegations that it violated the False Claims Act by paying kickbacks to an orthopedic surgeon based in Massachusetts to induce his use of DePuy products.

Yesterday, the Department of Justice announced that Akorn Operating Company, a pharmaceutical company, (“Akorn”) agreed to pay $7.9 Million to resolve allegations that it caused certain submissions of false claims to Medicare Part D in violation of the False Claims Act (“FCA”). 

This settlement is notable because it relates to disclosure in the settlement context.  Based on the information provided in the press release, it appears that Akorn admitted to certain facts in cooperation with the FCA investigation and, as a result, the Department considered that cooperation in determining the settlement amount and resolution of the allegations.

Last week, the DOJ announced a settlement between Aerojet Rocketdyne Inc. (“Aerojet”) and, relator, Brian Markus, related to allegations that Aerojet violated the False Claims Act (“FCA”) by misrepresenting its compliance with cybersecurity requirements in certain federal government contracts. There a few interesting things to note here. 

First, despite the Government’s clear interest in this area evidenced by the Department’s Civil Cyber-Fraud Initiative, the DOJ declined to intervene in the matter.  Second, the parties settled this matter only after the Court declined to dismiss this case at the Summary Judgment stage. Notably, it appears that Aerojet disclosed its noncompliance to the Government. The Court considered this fact, but also noted that “these disclosures hold less weight when they are incomplete.” Memorandum and Order Re: Cross-Motions For Summary Judgement, U.S. ex rel. Markus v. Aerojet Rocketdyne Holdings, Inc., No. 2:15-cv-02245 (E.D. Cal.), at 11. As such, the Court held that there was a “[a] genuine dispute of material fact . . . as to the sufficiency of the disclosures about the 2013 breaches and information gathered in audits done by outside firms.”  See id. at 14. 

The Department of Justice continues to demonstrate its commitment to holding both testing facilities and hospitals accountable for kickback schemes involving laboratory testing.  In the alleged kickback scheme referenced in the link below, DOJ alleges that the relevant hospitals paid a portion of their laboratory profits to recruiters who then paid a portion of the profits to the physicians. DOJ’s complaint sets forth allegations against the laboratory executives and employees, hospitals and, now, the physicians involved. This suit demonstrates DOJ's commitment to targeting individual corporate bad actors when the evidence supports those allegations. 

The information that companies provide to the Government when entering into agreements and maintaining those contractual relationships, matters. Contracting officers rely upon that information in determining whether to contract with your company. You can avoid False Claims Act and other liability by creating a culture of transparency both within your company and with Government partners.