DOJ Launches Corporate Whistleblower Awards Pilot Program

DOJ Launches Corporate Whistleblower Awards Pilot Program

On August 1, the US Department of Justice (DOJ) announced the details of its new Corporate Whistleblower Awards Pilot Program. According to the DOJ, the three-year program is intended to fill important gaps in existing federal whistleblower programs, such as the False Claims Act (FCA) qui tam program and other programs established by the US Securities and Exchange Commission (SEC), Commodity Futures Trading Commission, and Financial Crimes Enforcement Network (FinCEN), which do not cover the full scope of corporate crimes the DOJ investigates and prosecutes.

The pilot program seeks whistleblower information related to four subject areas:

1. Violations by financial institutions and abuse of the financial system not covered by the FinCEN’s whistleblower program, such as obstruction or defrauding of financial regulators, failure to register money transmitting businesses, and fraud against US financial institutions.

2. Foreign corruption schemes not covered by the SEC’s whistleblower program, such as schemes related to foreign corruption and bribery involving violations of money laundering statutes, as well as violations of the Foreign Corrupt Practices Act and the Foreign Extortion Prevention Act that do not involve issuers.

3. Domestic corruption schemes committed by or through companies related to the payment of bribes and kickbacks to public officials or employees.

4. Federal health care offenses not covered by the FCA, such as federal health care offenses involving private insurers, fraud against patients, and other violations that cannot be pursued via qui tam actions.

Whistleblowers may be eligible for a monetary award if they provide original and truthful information about criminal misconduct relating to one or more of the four areas listed above, and that information leads to forfeiture exceeding $1 million in net proceeds. Whistleblowers may receive up to 30% of the first $100 million in net proceeds forfeited, and up to 5% of any net proceeds forfeited between $100 million and $500 million. However, the pilot program prohibits award payments to any whistleblower who meaningfully participated in the criminal activity they reported.

To promote companies’ internal reporting systems, the pilot program states that an employee who reports misconduct internally can still seek and obtain a whistleblower award, provided they submit the report to the DOJ within 120 days of their initial internal report. Additionally, internal reporting is one consideration that could increase the employee’s award payments.

The DOJ has aligned its self-disclosure policy, the Criminal Division Corporate Enforcement and Voluntary Self-Disclosure Policy, with this new pilot program. While the three-year pilot program is in place, a company that self-reports conduct to the DOJ can still qualify for a presumption of a declination (i.e., a decision not to prosecute) even if a whistleblower made both an internal report to the company and a submission to the DOJ, so long as the company self-reports within 120 days of the whistleblower’s internal report.

The DOJ’s guidance on the pilot program is available here.

Ohio Physician to Pay $4.76 Million to Resolve Allegations of Unlawful Opioid Prescriptions

Last week, Dr. Gregory Gerber agreed to a consent judgment to settle claims that he unlawfully issued prescriptions without a legitimate medical basis for opioids and other controlled substances in violation of the Controlled Substances Act (CSA) and the FCA.

According to a civil complaint filed in August of 2018 with the District Court of the Northern District of Ohio, Dr. Gerber was a licensed physician practicing in Sandusky, Ohio, and specializing in physical medicine, rehabilitation, and anesthesiology, with a sub-specialty in pain medicine. The DOJ alleged that over a period of eight years, Dr. Gerber prescribed drugs to patients without legitimate medical reasons, including painkillers such as fentanyl, oxycodone, and oxymorphone, resulting in at least one overdose death.

The DOJ also alleged that he violated the FCA by receiving kickback payments totaling around $175,000 from a drug manufacturer to unlawfully prescribe Subsys, a fentanyl-based cancer pain treatment medication. Some of Dr. Gerber’s prescriptions for Subsys were allegedly medically unnecessary and for patients who did not have cancer pain. Dr. Gerber allegedly received compensation through the drug manufacturer’s speakers program, which paid representatives to engage other medical professionals and promote the Subsys medication.

In the consent judgment agreed to by both parties, the federal court ordered Dr. Gerber to pay $4.76 million to resolve the allegations. The court also permanently prohibited him from prescribing controlled substances, holding or applying for a US Drug Enforcement Administration certificate of registration, and managing, owning, or controlling an entity that dispenses controlled substances.

The DOJ’s press release of Dr. Gerber’s indictment is available here, and the press release of Dr. Gerber’s settlement available here.

DME Business Owner Pleads Guilty to Defrauding Anthem and Evading Taxes

Joseph Tusia, a Los Angeles-based owner of tattoo removal and durable medical equipment (DME) supply companies, pleaded guilty on August 5 to federal criminal charges for health care fraud and tax evasion.

According to the plea agreement, Tusia engaged in a scheme to defraud Anthem Blue Cross by submitting an application for Anthem’s small group health insurance plan that falsely identified paraplegic individuals as full-time employees of his tattoo removal business, when in fact those individuals were not employees. The individuals purchased medical supplies from Tusia’s DME supply companies and worked with Tusia to submit fraudulent claims to Anthem. As a result of Tusia and his associates’ fraudulent scheme, Anthem paid the DME supply companies approximately $1.73 million. In the plea agreement, Tusia also admitted to knowingly and willfully failing to report income he received from the DME supply companies, totaling more than $1.5 million.

Tusia will face a statutory maximum sentence of 10 years in prison for health care fraud and up to five years in prison for tax evasion.

The DOJ’s press release is available here.

Former University Hospital Employee Ordered to Pay $8.3 Million in Restitution for Defrauding Employer

On August 6, the District Court of the Northern District of Oklahoma sentenced Leslie Ann Ameen to serve 49 months in prison and pay $8.3 million in restitution for a scheme to defraud her employer, Oklahoma State University Medical Center. She pleaded guilty to wire fraud in September of 2023.

According to court records, Ameen worked as a telecommunications specialist at the university hospital. Over the course of nine years, Ameen arranged for her employer to purchase laptops, phones, and tablets that were not requested by or required for the operation of the medical center. Ameen falsified thousands of invoices by forging the signature of her direct supervisor, and she arranged the purchases so that she could fraudulently abscond with the devices. Once she acquired the devices, she sold them to acquaintances and other individuals for personal profit.

The DOJ’s press release of Ameen’s guilty plea is available here, and the press release of her sentencing is available here.