The Right Side of the Law

In an unusual move, the Sixth Circuit ordered that a Tennessee businessman’s conviction for bank fraud must be vacated.  Timothy Parkes has apparently spent more than two years in prison awaiting appeal.  The Sixth Circuit held that the jury convicted him with insufficient evidence of guilt beyond a reasonable doubt.  The Sixth Circuit also held that the Court improperly excluded motive evidence critical to the defense.

Finally, the Sixth Circuit held that the federal prosecutor committed misconduct when it implied a falsehood on an excluded issue.  The Sixth Circuit, acting through Judges Ray Kethledge, Jane Branstetter Stranch, and District Judge James Gwin, ordered that Mr. Parkes’ conviction be vacated, and that an acquittal be entered. Read more »

On December 12, 2011, the Department of Justice announced that Medtronic Inc., one of the world’s largest medical device companies, agreed to a $23.5 million settlement to resolve allegations that the company violated the False Claims Act.  Medtronic was accused of offering physicians illegal kickbacks in exchange for using the company’s pacemakers and defibrillators. Read more »

On December 8, 2011, a federal judge sentenced the owner of a fraudulent Miami-area mental health company to 35 years in prison for Medicare fraud.  The court further ordered Judith Negron, the owner of the fraudulent company, and her co-conspirators to pay $87 million in restitution.  Read more »

The Department of Justice announced last week that KV Pharmaceutical Company, a St. Louis-based drug manufacturer, will pay $17 million to resolve False Claims Act allegations that its now-defuct subsidiary had submitted false quarterly reports to the government about two of its drugs.  Under the terms of the settlement, the federal government will receive roughly $10 million and state Medicaid programs will receive roughly $6.8 million. 

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Lafarge North America Inc., one of the largest supplies of construction materials in the United States and Canada, and four of its U.S. subsidiaries have agreed to resolve allegations by the Environmental Protection Agency (“EPA”) that it committed various Clean Water Act violations.  The EPA alleges it uncovered violations at 21 stone, gravel, sand, asphalt, and ready-mix concrete facilities in Alabama, Colorado, Georgia, Maryland, and New York.  According to the EPA, Lafarge was responsible for unpermitted discharges of stormwater.  Stormwater flowing over concrete manufacturing facilities can pollute water sources and have a significant impact on water qualify because stormwater can carry debris, sediment and pollutants, including pesticides, petroleum products, and chemicals. Read more »

George Gonzalez, former chief commercial officer of Cielos Airlines, a Peruvian air cargo carrier, pleaded guilty yesterday in the Southern District of Florida to a one count charge of price fixing.  Gonzalez is one of four individuals who were indicted in this criminal antitrust case.  He was just the latest to plead guilty.  All four defendants are former airline executives.  In its Indictment, the Government alleges that between September and November 2005, following Hurricanes Katrina and Rita, the defendants conspired together to “eliminate competition by agreeing to impose an increase to their fuel surcharges” on cargo shipped between the United States and Central or South America.  The air cargo carriers transported a variety of cargo shipments, including heavy equipment, perishable commodities and consumer goods, on scheduled international flights.  Read more »

The Department of Justice announced last week that the federal government and 43 states have reached settlement of both criminal and civil charges against Merck, Sharp & Dohme, one of the world’s largest pharmaceutical companies, related to its drug Vioxx.  The settlements include a $950 million payment by Merck, as well as a guilty plea to a misdemeanor charge for illegally promoting an off-label use of Vioxx.

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On Tuesday, November 29, 2011, the Department of Justice (“DOJ”) announced that a Miami resident, Santiago Villa-Restrepo, had pleaded guilty in the United States District Court for the Eastern District of Michigan to one count of conspiracy to commit health care fraud.  According to the Government, Villa-Restrepo participated as a patient recruiter in a Medicare fraud scheme which was operated out of three Detroit-area health care clinics.  As revealed in the plea documents, Villa-Restrepo’s role in the scheme was to recruit patients who, in exchange for a cash bribe, would provide the health care clinics with their Medicare numbers and other information.  The clinics would then bill Medicare for services that were either unnecessary or that the patients never received.  All told, the Government believes that the scheme defrauded Medicare out of $5.4 million in payments for medically unnecessary diagnostic tests.  At sentencing, Villa-Restrepo will face up to ten years in prison and a maximum fine of $250,000.

 This is another in a recent string of Medicare fraud cases brought by the Medicare Fraud Strike Force. As we have previously reported, the Strike Force is operating in nine districts, including the Eastern District of Michigan.  Since 2007 the Strike Force’s efforts have lead to indictments against more than 1,140 individuals for crimes involving Medicare fraud.  Those 1,140 individuals, collectively, had billed Medicare more the $2.4 billion for services that were either never rendered or were medically unnecessary.

 For more information see the DOJ Press Release announcing the guilty plea.

On Monday, November 21, the United States Attorney’s office announced that Dr. Richard Behnan, of Clarkston, Michigan, had pleaded guilty to a federal indictment charging him with conspiracy to commit health care fraud. Behnan defrauded Medicare and Blue Cross Blue Shield of Michigan of almost $1.6 million over a ten-year span. Read more »

Last week, the Environmental Protection Agency (“EPA”) announced that Eldo W.R.M.S., Inc. (“Eldo”), a commercial goods salvage wholesale and retail business, has agreed to pay a $23,9000 civil penalty to the United States to settle allegations of hazardous waste violations at its Grandview, Missouri facility.  Eldo owns several subsidiaries, including Oddball Salvage, The Bargain Factory, and Oddball Auction. 

According to the EPA press release, these allegations stem from a compliance evaluation performed at Eldo’s an Grandview, Missouri facility in February 2010.  During the evaluation, the EPA representation allegedly found several Resource Conservation and Recovery Act (“RCRA”) violations.  This included storing hazardous wastes without a RCRA permit and offering hazardous waste for transport without a hazardous waste manifest.  At the time, the facility was storing approximately 17,750 pounds of hazardous wastes, including pails and drums of paint, adhesives, ink, and printing chemicals.  The representative also found at least seven types of waste pharmaceuticals on site.

In addition to paying this fine, Eldo has certified that it is now in compliance with all requirements of the RCRA regulations. 

For more information, please see the EPA press release.