Is McDonald’s Cheese Overcharge Suit a Tort Reformists’ Conspiracy? Florida Attorney John Uustal Is Offering a $100,000 Reward to Find Out 

You’ve probably already heard about it. Somebody is going to great lengths to turn one arguably ridiculous lawsuit into a big news story. Here’s the facts, in case you are one of the few who haven’t heard: Two burger enthusiasts with a dislike for cheese are suing McDonald’s, and looking to hit the company with a massive class action. They, and their obscure Florida attorneys, claim the fast food giant’s practice of charging the same for a Quarter Pounder after removing the cheese, is in violation of antitrust regulations and constitutes unjust enrichment.

Sounds like pure bullsh*t to us. Apparently, however, the two Floridians bringing this dubious lawsuit are outraged that they must routinely pay between 30 and 90 cents for cheese they don’t want, and didn’t receive.

Consumer protections are what I live for. When we fight greedy and corrupt corporations, we are doing so on behalf of both our individual clients and society as a whole.

In our line of work, we often fight over life and death issues. We have fought physicians that prescribe unnecessary medications. Clinics that make patients receive surgeries they don’t need.

We have fought for for thousands of people who lost their homes after the 2008 banking crisis, for the millions of people who get screwed by the system on a regular basis. This is our life’s work. That is why, when lawyers are being accused of being the soulless and greedy ones themselves, I have to take a stand.

What does this have to do with paying with a nonexistent slice of cheese? you may ask yourself. Well, unsurprisingly, a lot.

The fact is, if you do the math, the people who are benefitting the most from the so-called frivolous lawsuit against McDonald’s are not consumers, but rather, the usual suspects who lobby and fund election campaigns in the hope that Americans will be once and for all deprived of their right to receive adequate compensation when corporations destroy their lives, defraud taxpayers, and break the rules that are supposed to protect us all. I am referring to tort reformists, who have enjoyed quite the bonanza in the current political scenario.

So, pro-tort “reform” bloggers are making headlines all over the web. ‘This cannot be, greedy lawyers are a burden on justice, cap damages now!’ ‘Lawyers are ruining America with their frivolous lawsuits,’ the list is endless. I invite you to Google the case, and you will see. They are everywhere, and they are not coming after us, whistleblower attorneys, they are coming after you. They are coming to strip you of your rights, and they are bringing the big guns.

Last week the so called “tort reform” movement (big business) won an important victory in the U.S. Supreme Court when a divided court ruled 5 to 4 that companies could force workers to give up their right to sue for employment law violations. Consider the minimum wage worker being denied minimum wage or forced to work off the clock. Now it is legal for an employer to force her to give up her right to sue.

The true goal of so-called tort reform is to close the courthouse doors to ordinary working class Americans. And one Florida lawyer, John Uustal, is fighting back. And putting his money where his mouth is. He is offering a $100,000 reward to expose what he believes is the latest dirty trick foisted on the public by greedy business owners.

John Uustal, a Florida lawyer who went after Philip Morris tobacco to try to save a woman’s life, who risked the survival of his then young firm to hold Toyota and Firestone accountable for deadly accidents caused by defective parts, has an interesting theory: Is it not possible that the ‘who took my cheese’ lawsuit is a fabrication of tort reformists to incite outrage and advance their cause?

In his announcement of a $100,000 reward for any whistleblowers with information about a conspiracy, Uustal writes:

“Could the entire lawsuit be a scam? A scam to create more smoke for corporate lobbyists so they can destroy our rights to get justice when a manufacturer knowingly and intentionally refuses to fix a defective product that kills, or a bank steals money from its customers?

Look at how the tort reform lobby is already using this new McDonald’s lawsuit. They’re perpetuating the idea that lawyers are shifty scammers. They are brainwashing us to think that lawsuits in general are frivolous. “

Where a naive layman sees the ultimate frivolous lawsuit, one that is bound to lose the lawyers a significant amount of money, Uustal sees the strings of their masked intentions. The puppeteers, he suspects, are the same individuals behind tort reform bills and the constant demonization of lawyers in the media.

If Uustal is right, those conspirators even lack creativity; you can see the the top of their heads behind the curtain as the puppets play their scripted show. The choice of McDonald’s as the target of the lawsuit is very telling. After all, it is the ‘hot McDonald’s coffee’ lawsuit from the 90s that is perhaps the most remembered ‘frivolous’ lawsuit in the public’s mind.

If Uustal is right, tort reformist just thought, ‘well, it worked once, let’s try suing McDonald’s over some ridiculous issue again!’

If Uustal is right, we really need to pay attention. We can no longer take things at face value.

If Uustal is right, I really hope he catches the villains this time.

In the opening days of the Trump administration, Republicans pushed through a class action bill in Congress. We say “pushed” because the legislation was passed without any public hearing or even a committee hearing. Republican leadership, acting with the blessings of the U.S. Chamber, wanted to gut class action lawsuits. They did so by creating a catchy title, the “Class Action Fairness Act,” and insuring that no one would have the opportunity to ask any questions.

Thankfully, Senators on both sides of the aisle were not as reckless. The legislation died, at least for now. But if Uustal is right, the reformers and big business lobby will be back, this time decrying how out-of-control lawyers have become. And the McDonalds cheeseburger lawsuit will be their new rallying cry.

We agree that frivolous lawsuits should be curbed. Federal judges already have the power to sanction lawyers who bring these nonsense lawsuits. Curbing all class actions, however, is not the solution.

Why not? In smaller cases, no lawyer will take a single claim. Let’s say you have a Wells Fargo checking account. You notice that they are charging you too much in fees each month. Looking online, you see that everyone is complaining about these improper fees.

Try to find a lawyer willing to take a single case for $30 in fees. Obviously no one will. The only way a lawyer takes that case is through a class action. Take away the right to bring a class and justice for middle class America disappears. And that is exactly what groups like the Chamber and other so-called reformers want to do.

Corporate wrongdoing is rampant in America. Tort law and class actions are one of the few remaining incentives big corporations have to produce products that are safe and to behave like good corporate citizens. They now that law firms like MahanyLaw are standing watch and ready to protect consumers. We can do that because class actions give us the necessary economies of scale to take on giant companies.

Do we think the McDonalds cheeseburger lawsuit is frivolous? Absolutely! Let the court punish the lawyer that filed that suit and not simply use one frivolous claim to bar all class actions.

Is John Uuustal right in his theory? Are the lawyers who brought the McDonalds cheese lawsuit simply dumb or or were they bought? I don’t have the answers. But if John is correct, hopefully someone will step forward and expose the true wrongdoers and their motivations.

MahanyLaw is a full service national boutique law firm. We look for cases involving fraud against the government, bank fraud and class employment and consumer cases. For more information, contact us online or by email *protected email* All inquiries are protected by the attorney – client privilege.

We are also always looking for insiders. Even if you don’t qualify for a whistleblower reward, your information may be valuable to stope others from getting hurt or swindled. Since 2014 we have helped our clients collect over $100 million in cash awards. And we have also put an end to many frauds.

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Special Master Overseeing $1 Billion Restitution Fund Issues Report

[Ed. Note: This post discusses the efforts of the criminal case against Takata to secure monies for victims of defective Takata airbags. Takata filed for bankruptcy protection and its airbag business was ultimately sold off. That is the source of the nearly $1 billion restitution fund. The actions of the receiver are separate from our and other class actions against the auto makers. Despite the Takata’s bankruptcy, car companies such as Volkswagen, Audi, Honda, Toyota and other remain responsible for knowing installing defective airbags into their vehicles.]

Last summer a federal judge in Michigan appointed Eric Green as special master in the Takata airbag case. Green is a Harvard Law School professor.

Of the billion realized from the sale of Takata’s airbag business, $125 million was placed in a Department of Justice “Takata Individual Restitution Fund” and an additional $140 million in the Takata Airbag Tort Compensation Fund.

As special master, Green’s job was “to determine eligible claimants and the amount of loss eligible for compensation, developing a formula or formulas, subject to Court approval, for

distributing funds to eligible claimants, making determinations regarding allowed claims, and making a recommendation to the Court regarding allocation of funds from [the restitution fund.]”

Although tens of millions of motorists were affected by the recalls of cars equipped with Takata airbags, not everyone is eligible to share in the restitution.

According to Green, claims will be considered for injuries caused by Takata’s air bag inflator defect. “Claims related to injuries or wrongful death caused by other air bag components — such as air bag failure to deploy, spontaneous air bag deployment, crash injuries unrelated to the inflator, or economic losses unrelated to physical injuries or death — are not covered by the three types of claims.”

Because we have spoken with hundreds of Takata victims, we understand that not every airbag injury is covered. The recall of Takata airbag equipped cars was specifically due to a defect in the airbag actuator. That is the device that causes the airbag to rapidly inflate in the microseconds after a crash.

As designed, a small charge should cause the airbag to rapidly inflate and prevent occupants of the car from striking the windshield. Unfortunately, Takata used a defective propellant that became unstable when subjected to high heat and humidity. Over time, the propellant could become unstable and cause the actuator to detonate with such force that it becomes a grenade.

Instead of saving lives, the airbag casing can explode sending deadly shrapnel throughout the interior of the car.

With millions of cars equipped with Takata airbags, there is certainly the occasion for some other failure of the airbags system. Often we have heard of crashes where the airbag did not deploy.

When an airbag doesn’t properly deploy, it could be the fault of the sensor, the actuator, the wiring between the two or the bag itself. None of these defects are part of the recall and are evidently not part of any settlement funds in the Takata bankruptcy and criminal cases.

Injured persons believing they are entitled to monies from the funds can apply directly on line to TakataSpecialMaster.com and TakataAirbagInjuryTrust.com. A lawyer is not necessary.

The big question is how much each claimant will receive. Some victims have suffered horrific injuries from the airbags. And regulators believe that several drivers and passengers died as the result of the shrapnel wounds they sustained.

Another big issue is how much money should be saved for future claims. There are still millions of Takata airbag equipped cars still on the road today. Many folks don’t even know their vehicle has been recalled while others are frustrated because the automakers still don’t have replacement parts.

What To Do If You Are Injured by a Defective Airbag

Unfortunately, folks continue to be harmed by exploding airbags. If you are the victim of a defective airbag we recommend these steps:

1. PRESERVE THE VEHICLE! It is almost impossible to prove an airbag defect was the cause of injuries unless we have the vehicle. Remember, defense lawyers will argue it was your fault as driver or some other driver’s fault. Not an airbag.
2. Call us right away. Although we are involved in several of the class actions against automakers, the class is geared to economic claims such as loss of use of the vehicle or lowered resale value. Class cases are geared for the millions of vehicle owners, not the unfortunate few who have been injured or lost a loved one.
3. Don’t sign any releases. We have no problems in claiming money from the fund but the deeper pockets in these cases is the automaker. Takata is bankrupt. There won’t be any more money coming into the compensation funds.

The strength of your claim against the automaker depends on the age of the vehicle. In the earliest years, the automakers may not have known that the airbags were defective. But there is no excuse for companies like Volkswagen still using Takata airbags in 2017!

The takeaway from this post is simple. There was approximately $265 million set aside from the sale of Takata’s airbags business. That money is earmarked primarily for injury and death victims. The Takata monies is being administered by Eric Green, the court appointed special master. Mr. Green’s efforts have nothing to do with the personal injury and wrongful death lawsuits against the automakers or others who may be responsible for the defective airbags.

Need more information? Call the Takata Airbag Injury team at MahanyLaw today. We can be reached online, by email *protected email* or by phone 414-704-6731. All inquiries are protected by the attorney – client privilege and kept strictly confidential. Injury cases are handled on a contingent fee basis meaning no fees or costs unless we are able to recover money on your behalf.

We also urge everyone to visit our Takata Personal Injury and Wrongful Death Claim Center page.

The post Takata Court Restitution Fund Update appeared first on Mahany Law.

$1.6 Million Award for Information! Seeking Whistleblower with Inside Information about Price Manipulation of Fannie Mae and Freddie Mac Unsecured Bonds

The U.S. Department of Justice has opened a criminal investigation into price manipulation of Fannie Mae and Freddie Mac unsecured bonds. Media sources claim that several people have confirmed that prosecutors are looking at several bank trading desks. They believe traders may have colluded to manipulate bond prices. When that happens, the banks benefit while investors are hurt. Many of those investors are employee pension plans.

The Federal National Mortgage Association (“Fannie Mae) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”) are two government sponsored enterprises that function like private corporations. They also have authority to issue their own bonds which investors can purchase and hold.

Fannie Mae and Freddie Mac were created to facilitate home ownership. They do that by insuring residential mortgages. Those mortgages are packaged into securities. Most of debt instruments issued by Fannie Mae and Freddie Mac are mortgage pools.

The two companies also issue their own debt called “agencies.”  These bonds are unsecured and are subject of the government’s investigation. Presently there is $548 million of these unsecured bonds outstanding.

The Justice Department is investigating whether traders at some of the large money center banks are working together to fix or manipulate bond prices. Unfortunately, America’s “too big to fail” banks are no strangers to price fixing. In recent years, several large US banks including Bank of America and Citi were implicated in the Libor fixing scandal.

Short for the London Interbank Offered Rate, “Libor” is used to set interest rates in trillions of dollars of loans. Since mortgages, student loans, financial derivatives, and commercial loans often rely on Libor as a reference rate, the manipulation of those rates can significantly hurt consumers, businesses and financial markets worldwide.

Rolling Stone called the Libor scandal “the biggest price fixing scandal ever.” And now it appears that the banks may still be at it.

Why? Because they can and because they make millions doing so.

Instead of competing, banks have figured out they can make more money by colluding.

During the Libor scandal, traders were caught communicating by instant messages. Obviously they never thought they would be caught since their behavior was stunning in its arrogance.

One message said, “It’s just amazing how Libor fixing can make you that much money.” Another admitted, “Pure manipulation going on.”

The big banks ultimately paid some hefty fines but as we have long said, those fines are simply a price of doing business.  UBS paid $1.5 billion in penalties, Barclays paid $450 million and Royal Bank of Scotland paid $615 million.

The class action lawsuits by those affected by the Libor manipulation continue. And now Fannie Mae and Freddie Mac agencies manipulation may be next.

On the heels of the Libor scandal came the FOREX manipulation scandal. Short for the foreign exchange market, some $5.3 trillion is traded daily through forex.

In that scandal some of the same suspects were the targets of government investigations worldwide. Big household name banks such as Barclays, HSBC, and Goldman Sachs, Citigroup, JPMorgan Chase, Royal Bank of Scotland (RBS) Standard Chartered, Deutsche Bank, HSBC, UBS and Bank of England.

Once again, the traders were colluding through instant messaging and private chat rooms. Chat rooms with names like “The Cartel”, “The Bandits’ Club”, “One Team, One Dream” and “The Mafia.”

As a result of that investigation, several banks once again paid huge fines. On May 20, 2015 four of the banks, including Barclays, Citigroup, JP Morgan, and Royal Bank of Scotland pleaded guilty to manipulation of the foreign markets and paid $5.7 billion in fines. UBS pleaded guilty to wire fraud and agreed to a $203 million fine. Bank of America, while not convicted of crime, agreed to pay a $204 million fine for unsafe practices in foreign markets.

After each of these price fixing and manipulation settlements each of the involved banks agreed to police themselves and self report any violations. In our humble opinion, that is the equivalent of opening the doors to our prisons and simply asking the prisoners to stop committing crimes.

No one is saying who is being investigated today for the Fannie Mae and Freddie Mac unsecured bond price manipulation (price fixing) but we suspect it will be the same suspects… Bank of America, Citi, Deutche and maybe Wells Fargo and JP Morgan Chase.

FIRREA Bank Whistleblower Rewards

We are looking for traders and insiders with knowledge of these scams to step forward. A 1989 law allows the Justice Department to pay rewards of up to $1.6 million for inside information about misconduct involving US banks or banks whose accounts are insured by the FDIC. NCUA backed credit unions also qualify but we suspect that none are large enough to be able to manipulate Fannie Mae and Freddie Mac bond prices.

Called the Financial Institutions Reform Recovery and Enforcement Act of 1989 (FIRREA), this law can pay up to $1.6 million rewards to insiders. There is no need to be a US citizen or resident either.

An added benefit to FIRREA is the possible abilityto remain anonymous. (Each case is unique, but we determine your ability to remain anonymous before filing anything on your behalf.)

We are looking for insider information in order to stop these illegal practices. Our goal is also to help secure our whistleblowing clients the largest cash rewards possible. Your information may also be useful in class actions against the banks. Just like the previous FOREX and Libor manipulation scandals, manipulating Freddie Mac’s and Fannie Mae’s unsecured bond prices hurts investors and destroys the public’s faith in our capital markets.

About Mahany Law. We are a national boutique law firm that represents whistleblowers, protects consumers and fights fraud. We helped secure the largest recovery against a single defendant in U.S. history, the 2014 victory against Bank of America that recovered $16.67 billion.

To learn more, visit our FIRREA whistleblower page. Want to see if you qualify for an award or help in our fraud investigation? Contact us online, by email *protected email* or by phone 414-704-6731 (direct). All inquiries are protected by the attorney – client privilege and kept strictly confidential.

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$24 Million Dollar Refrigerators…Seeking Defense Spending Whistleblowers

It wasn’t too many years ago we were reading about defense contractors charging $900 for a hammer and $2000 for a toilet seat. While government contractors are notorious for ripping off taxpayers, we may have just witnessed a new low.  The Air Force just announced that it was cancelling a contract with Boeing for new refrigerators on Air Force One.

The bill for these new units? $24 million but wait, that’s only for two. Air Force One is apparently equipped with five of the little refrigerators.

Sole source contracts have always been a vehicle for fraud. When government doesn’t bid a project and simply awards a contract to a vendor, there is always the risk that the contract will be seriously overpriced. Without competitive bids, there is no incentive to keep prices reasonable.

Boeing was the lucky vendor who was awarded the contract. But after the terms of the contract leaked out and Congress began asking questions, the contract was cancelled by the Air Force and White House Military Office.

Unfortunately, simply because a contractor overcharges doesn’t make the contract illegal. Ridiculous prices if not justified may violate the Truth in Negotiation Act, however.

We have seen many illegal behaviors in the defense industry and Boeing is not immune from getting caught in some of those schemes.

Whistleblower Awards – Defense Contractor Fraud

A Civil War era law allows private individuals with inside information about fraud to claim large cash awards. If you have information about fraud involving government contracts, you may be eligible for awards of 10% to 30% of whatever we or the government collects from the wrongdoers.

Typical defense schemes include:

• Billing for parts or services never provided or delivered
• Falsification of invoices
• Providing substandard, defective or recycled parts or goods
• On “cost plus” contracts, billing for too many hours or shifting fixed price work to cost plus contracts (“cross charging”)
• Relabeling foreign made goods as “Made in the USA”
• Bid rigging
• Failing to comply with Truth in Negotiations Act (TINA) requirements

Fraud on our military is unconscionable. Often these schemes endanger our fighting men and women. Recent cases have involved armored personnel carriers that won’t stop bullets, defective flak jackets and body armor, gun sights that are inaccurate and using recycled parts in air force jets when new parts are required for safety reasons.

Taxpayers will spend $700 billion this year on defense. With that much money, the temptation is just too much for some contractors. In our opinion, that includes Boeing and their $23.8 billion contract for two small refrigerators.

When the military gets ripped off, so do taxpayers. The False Claims Act allows us to help level the playing field, stop corporate greed and cooperation and earn our clients large cash awards.

Special Note on Middle Eastern Defense Contractor Fraud

Since 9/11, Americans have spent about $7 trillion dollars to fight the war on terror. That money has gone to our military and to defend our borders. Leaving aside proposals for a new border wall, we spend billions domestically and beefing up our allies in the Middle East. Iraq, Israel, Afghanistan…

It’s hard enough to fight defense contractor fraud in the United States. Add a war zone into the mix and it becomes even more difficult. We have spoken with embassy personnel in Afghanistan and Pakistan and with the inspector general’s office for the Afghanistan Reconstruction. There is fraud everywhere. Even in the contracts for drinking water for our military.

A 2013 report suggested that we have lost $60 billion to waste and fraud in Iraq. That figure is over $100 billion in Afghanistan. And remember, these were 2013 figures!

With almost 2 million open contracts, the Department of Defense can’t police everyone. And policing contractors in war zones is even more difficult.

Last summer while attending a conference I met with the Special Inspector General of the Afghanistan Reconstruction, John Sopko. He is a civilian in his 60’s. With just 197 employees – most in the United States – he is responsible for policing billions of dollars in US spending in Afghanistan.

After speaking with him, I began to understand just how difficult the problems are in policing contracts and contractors. If one of his auditors wants to inspect a facility, they can’t just hop in a car and drive over for a surprise inspection. Instead, they have to coordinate with the military, make advance preparations, arrange for helicopter gunship escorts and hop in an armored personnel carrier and even then, they can’t stay long.

Try being an auditor in 115 degree heat wearing heavy body armor and not speaking the local language. And don’t forget, while always waiting for someone to shoot at you.

Contractors, Military – the Eyes and Ears of Uncle Sam

The best folks at identifying fraud are those on the inside. It could be a soldier, foreign worker or employee of a defense contractor. And all are eligible for awards.

Congress passed the False Claims Act during the Civil War. It was passed when defense contractors were ripping off the Union Army. Back then it was lame mules. Gunpowder laced with sawdust and uniforms filled with moth holes.

Over 150 years later the law is still on the books. Why? Because it is effective at routing out fraud. Congress knew that the best way to fight fraud was to pay whistleblowers an incentive for stepping forward.

Whether you are an American or Iraqi national, it doesn’t matter. What does matter is that you have inside information about fraud involving tax dollars or government contracting programs.

Can military and government officials qualify? Maybe. We can help you figure that out. The short (and oversimplified) answer is that if your job is ferreting out fraud, don’t expect to get an award for doing your job.

What Happened with the $24 Million Air Force One Refrigerator?

We couldn’t end this post without a bit of laughter. We are not big fans of the military industrial complex that pumps millions of dollars in campaign coffers.

One of the ways they get away with their fraudulent scheme is by developing their own lingo. The mini fridges on Air Force One? They aren’t refrigerators. The public would get incensed if they knew Boeing was charging taxpayers $24 million for mini fridges. (Igloo has a pretty nice one on sale at Walmart for $105.00.)

Instead of calling them a refrigerator, we call them a custom “cold chiller units” for a VC-25 aircraft. Suddenly we are fooled and think that this is some necessary part to keep our military planes in the air!

And what does the Airforce say about the broken presidential refrigerators? They are exploring “mitigation options… to ensure food security.” In other words, they plan to just call the refrigerator repairman and fix them.

And we wonder why taxes are so high!

How to Claim Your Defense Contractor Whistleblower Reward

The False Claims Act has a very strict protocol that must be filed to obtain a reward. Simply calling a government toll free hotline is not enough. You must actually file a lawsuit under seal in federal court. Unfortunately, that scares away hundreds of people – and it shouldn’t.

Because you are prosecuting a case in the government’s name, you must have a lawyer.

Many lawyers see big dollar signs when they hear that you have a potential False Claims Act case against a defense contractor. They file the case hoping that the Justice Department will swoop in, do all the work and mail a big check. That happens in a small percentage of the cases.

Hiring a lawyer means finding one that handles False Claims Act cases for a living. And a law firm that has the experience to take on huge, powerful corporations when the government doesn’t intervene. It also means finding a law firm that understands how to investigate and with experience in whistleblower anti-retaliation laws.

And it means being quick when time counts. Generally only the first person to file gets the award.

The whistleblower lawyers at Mahany Law have years of experience that we are ready to put to work for you. For more information, contact us online, by email *protected email* or phone at 414-704-6731 (direct). All inquiries are protected by the attorney – client privilege and kept completely confidential. You can also visit our defense contractor fraud page for general information about defense contracting fraud and whistleblower awards.

MahanyLaw – Dedicated to Defending Our Defense Contractor Whistleblowers and Freedom Fighters

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Feds Want Answers Why Automakers Stalling with Replacement Airbags

The National Highway Transportation Safety Administration (NHTSA) is asking tough questions of automakers and why they are dragging their feet in replacing dangerous Takata airbags. It’s about time. How many more motorists must die or suffer horrific injuries before the big automakers replace defective airbags?

The government originally gave car makers until December of last year to replace defective airbags. We were astonished last year that some companies like Volkswagen were still installing defective Takata airbags. Even with a looming deadline to take out and replace Takata airbags, a few automakers were still putting them in new cars.

We believe that the car companies have known about the defective airbags for years. That is why we brought so many class action complaints against automakers. Takata is broke and out of business but the automakers are still responsible for defective parts used in the manufacture of their automobiles. They have an obligation to replace them at their cost.

There are now about 37 million cars in the United States subject to the recall. Although it takes time to replace that many airbags, we have little sympathy for the automakers. Some of them have known for many years that the airbags they were putting into their cars were defective yet they continued using them in the hopes of saving a few bucks.

Now with dozens of deaths and catastrophic injuries, we are learning just how defective those airbags are. They are not only defective, they are dangerous and deadly.

Since 2015, the NHTSA has been telling car companies to quickly replace the bad airbags. Each day that goes by, tens of millions of motorists take their lives into their own hands when they start their car and drive down the highway. (We have spoken with hundreds of owners of Takata airbag equipped vehicles – many of those drivers won’t drive them meaning they are paying for a car that sits in a garage.)

According to the NHTSA, none of the twelve automakers affected by the Takata airbag recall met the December 2017 deadlines to replace the dangerous airbags.

According to a letter sent by NHTSA Deputy Administrator Heidi King to the automakers last month, “The National Highway Traffic Safety Administration’s number one priority is public safety, and the agency is concerned that certain higher risk vehicles with defective Takata air bags remain unrepaired.”

The response from the car companies? We imagine it will likely be more whining or near deafening silence.

Are You at Risk from a Defective Takata Airbag?

The cars most at risk are those that were driven or presently are driven in high heat, high humidity environments. Heat and humidity causes the ammonium nitrate propellant used to inflate the airbags to degrade. When that happens, the airbag can deploy with such explosive force that components in the airbag actuator and steering column can become razor sharp shrapnel.

It’s not just the driver’s side airbags. Some front passenger airbags are also equipped with defective Takata airbag actuators.

NHTSA says cars in the following states are most at risk: Alabama, California, Florida, Georgia, Hawaii, Louisiana, Mississippi, South Carolina, Texas, Puerto Rico, American Samoa, Guam, and the U.S. Virgin Islands. The agency says that approximately 7 million vehicles in high risk areas have yet to have their airbags replaced.

A complete list of cars subject to the recall can be found on our Takata Airbag Claim Center page. That page also has extensive information on the recall and what to do if you own one of the recalled vehicles.

Injured by an Exploding Airbag?

Despite the automakers knowing about these dangerous airbags for years, innocent motorists continue to get hurt. With summer heat and humidity here, it is only a matter of time before someone else gets killed.

Just two weeks ago we were contacted by a gentleman that was hurt when his airbag exploded. He is lucky to be alive but is today facing extensive surgery. His doctors tell him that he has permanent nerve damage and paralysis.

Had the car companies not been so greedy, this gentleman would not be facing a life of pain and uncertainty. (The car companies liked Takata airbags because they were cheaper than the alternatives.)

Had the car companies listened to the NHTSA back in 2015, once again, this gentleman would not be spending his days with lawyers, surgeons and therapists.

If you were hurt by an exploding airbag, make sure you save the car! Even if it is totaled, have the car towed to a safe location. Without the airbag system, it is hard to prove that the Takata airbag actuator was the cause of the injuries.

Next, make sure you call us right away. Whether or not the accident was your fault or someone else’s, no one should have their face torn apart by shrapnel from a defective airbag. There is an enormous amount of work to be done, however, in an airbag case and it is important to preserve evidence immediately. The quicker we can get to work, the better your chances of financial recovery.

If Takata Made the Defective Airbag, Why Sue the Automakers?

Takata’s bankruptcy filing listed over a billion dollars  owed various creditors. What they actually owe is probably $5 billion or more. Those creditors include very person injured by an airbag, every dealer that gives out a loaner car to someone waiting for parts, an $825 million fine owed the feds and every automaker that is forced to find and fund replacement airbags. Recalling 37 million cars is no cheap undertaking.

With so many claims, Takata simply filed bankruptcy last year. Their business and assets have been sold. And just $265 million is available to pay claims. The fact that Takata has very little money left to pay claims is one reason to look to the automakers.

Another reason is that the automakers are responsible for the parts they put in their cars. And most automakers knew or suspected for years that the ammonium nitrate airbag propellant used by Takata was dangerous, yet they continued installing Takata airbags in their vehicles. They are every bit as responsible as Takata and unlike Takata, the auto companies have the money to pay claims.

If you were injured by a defective airbag, contact us immediately online, by email at *protected email* or by phone at 414-704-6731 (direct). It doesn’t matter if the airbag exploded or didn’t deploy or even if the airbag wasn’t made by Takata or subject to the recall… we can help. Want to learn more about exploding Takata airbags? Visit our Takata airbag injury claim center.

The post Takata Airbag Recall Update – Do More People Have to Die? appeared first on Mahany Law.

Many years ago, I worked as a sheriff’s deputy and K9 handler in the north Maine woods. If you were severely injured, the nearest level one trauma center was hours away. For a logger severely injured in the backwoods, a lobsterman living on one of Maine’s hundreds of islands or a motorist badly hurt in a crash hours from Portland, Bangor or Lewiston, helicopter EMS (air ambulance) makes sense. In Maine, that service is provided by LifeFlight of Maine, a not for profit company.

I have been on a LifeFlight chopper and fully appreciate that the medical crews manning those airframes are heroes.

I begin this post praising the crews of Helicopter Emergency Medical Services (HEMS) because my beef is not with them. In the many years since I served in uniform, HEMS has exploded. In many areas of the country it is now a for-profit service or is operated by hospitals that treat it like a profit center.

At the heart of the HEMS debate is utilization. When is it appropriate to call for a helicopter? If you are on an island in Maine where it might take hours to get a boat to take someone to a hospital, it is a lifesaver and medically necessary.

Fast forward to 2012 when I was parked on I-94 20 miles from Milwaukee. I was “parked” because troopers shut down the interstate after a horrific collision. A chopper was called in to take one of the victims 17 miles to the trauma center. Would it have been faster to take an ambulance? Probably much faster.

EMS World reports a 2002 study in the Silicon Valley area of California. A review of 947 helicopter EMS flights found that very few patients benefitted from having a helicopter instead of an ambulance. In fact, over one third of the patients were treated and released by the emergency room and never even admitted!

That study was in 2002. We think the situation is actually worse today!

The University of Texas hospital in Galveston elected to terminate their air EMS service. Many were fearful that transport times would increase or more lives would be lost. Those fears were thankfully never realized. There was no increase in transport times or increase in mortality rates.

Since the 2002 study, the U.S. air ambulance fleet has doubled in size. There are now 1,515 helicopters making 300,000 flights per year. Worse, many of those new helicopters are owned by for profit companies. Bloomberg reports that several of those for-profits are owned by private equity firms.

Is that illegal? No, but it certainly raises red flags. Private equity and hedge fund managers are looking for quick and huge profits. And in our experience, we often see fraud, false billing and overutilization occur when private equity gets involved in healthcare.

Although the number of helicopters has doubled, the number of medevac flights per helicopter has decreased. That means the cost of each ride is going up.

How much? Bloomberg says the average charge for a patient transport is approximately $50,000! Ten years ago, it was $13,000.

Unfortunately for consumers, health insurance won’t cover these costs. In fact, Medicare pays just $6,893. Medicaid pays even less, $4,240.

Who pays the difference? Patients. Unless, of course, the bills are so overwhelming that they are forced into bankruptcy.

Despite the huge disparities between the air EMS bill and what insurance pays, these private companies are still making a profit.

We understand that even some of the non-profits are getting so squeezed that they too are participating in questionable conduct. One EMT tells us that the hospitals don’t mind losing a little bit of money on a helicopter run, especially if the patient has private insurance.

Why? Because a seriously injured patient can bring in tens of thousands of dollars in subsequent medical billings by the hospital.

States can regulate conventional ambulance bills but are powerless to force helicopter EMS companies to control costs. That’s because air ambulance companies are exempt from state rate setting. Through a quirk in the law they are considered to be an air carrier just like an airline. And that means their rates are beyond the reach of the state EMS regulators.

Kickback Investigation – Air Ambulance / HEMS

And that brings us to our investigation. We are currently investigating whether any of the air ambulance companies or hospitals that operate a helicopter EMS service are paying illegal kickbacks.

The federal Anti Kickback Statute makes it illegal for a healthcare company to give anything of value in exchange for obtaining patients. The kickback doesn’t have to be in cash, either.

A hospital that gives free medical supplies, for example, in return for first responders calling for a helicopter transport would be one form of a kickback.

Kickbacks are illegal because Congress believes that medical decisions should be based on the best interests of the patient. Not on who pays the most.

In 2003, CMS issued an advisory opinion that said in very special circumstances, a hospital could provide a landing pad and crew quarters at no cost to a for profit helicopter EMS service. In issuing the opinion, the agency found that the state had a statewide mandated trauma care plan that would prevent the arrangement from steering patients to the hospital.

On paper that sounds great. We are aware of a recent case in Chicago, however, where EMTs were being given cash to say a patient requested transport to a specific hospital. That lead to critical care patients driven miles away to the hospital paying the kickback even though there were closer trauma care facilities.

We are aware of no case yet where a helicopter EMS service has been prosecuted for kickback but there was a related case in Georgia.

In Hospital Authority of Gwinnett County v. Jones, a Georgia state court jury found that the transport of a patient who had sustained serious burn injuries was dictated by “consideration of potential economic gains for the receiving hospital”. In other words, kickbacks. The jury awarded the plaintiff $1.3 million against the hospital and $5,000 against the ambulance service.

In that case, a trauma center with a dedicated burn unit was located approximately 15 to 20 minutes away by helicopter. But the defendant hospital was closer by ground. Even though there was an air ambulance already en route, the patient was first transported by ambulance to the other hospital only to be sent on anyway to the trauma center. The jury was evidently furious that the decision to bring the patient to the first hospital was motivated by money instead of the best interests of the patient.

We believe that the influx of hedge fund and private equity money into the helicopter EMS world will or has caused some folks to pay bribes or kickbacks. We have seen it over and over in the ground EMS industry.

False Claims Act – Whistleblower Awards and Helicopter EMS

We already discussed why kickbacks are bad. It hurts taxpayers and can endanger patients.

Congress knew that many folks might be reluctant in reporting these illegal kickback schemes. That is why they passed the False Claims Act.

Under the Act, the Justice Department and courts can issue monetary rewards for people who step forward with information about Medicare fraud, Medicaid fraud and kickback / patient referral schemes.

Under the law, awards of 15% to 30% of whatever is collected from the wrongdoers is given to whistleblowers. But you must have inside information about the scheme and generally be the first person to step forward.

Congress also knew that retaliation might sometimes be a problem. Under the Act it is illegal for an employer to fire or demote whistleblowers. The law has some real teeth, too.

Employees who are the victims of illegal whistleblower retaliation can collect damages, double lost pay, lost future pay and even attorneys’ fees.

To see if you may qualify, visit our kickback whistleblower information page. Have questions or think you qualify? Contact us online by email *protected email* or by phone at 414-704-6731. All inquiries are protected by the attorney – client privilege and kept strictly confidential.

List of Air Ambulance – Helicopter EMS Providers in the United States

• AC Global Medical Transports (fixed wing) San Diego
• Acadian Ambulance & Air Med Services- Louisiana and Mississippi

• Air Care – University of Cincinnati Medical Center – Ohio, Indiana, Kentucky
• AirCare – University of Mississippi Medical Center, Mississippi. CAMTS certified with bases in Jackson, Meridian, Columbus, and Greenwood. Covers the entire state and transports all age groups. AirCare flight teams consist of a MS-CCP and a Flight Nurse.
• AirCare – CHI Health Good Samaritan – Nebraska
• Air Evac – (fixed wing) Arizona, United States, Canada, and Mexico.
• Air Evac Lifeteam –  Alabama, Arkansas, Georgia, Illinois, Indiana, Iowa, Kentucky, Mississippi, Missouri, Ohio, Oklahoma, Tennessee, Texas and West Virginia.
• AirLife Denver – Denver, Colorado
• AirLife Georgia (Air Methods Corporation) for profit – serving Georgia, Florida Tennessee, Alabama and South Carolina.
• AirLink Critical Care Transport – Oregon.
• AirMed International – (fixed wing) Alabama
• Air Methods – large US for profit
• Alia MedFlight – (fixed wing)
• AMR Air Ambulance (fixed wing) National for profit
• Angel MedFlight – No details available.
• Angel One – Arkansas Children’s Hospital, (formerly known as Arkansas Newborn Transport Service ANTS) (Arkansas)
• ARCH Air Medical Service – Missouri, Illinois
• Boston MedFlight – Bedford, Massachusetts
• Calstar (California Shock Trauma Air Rescue) nonprofit serving California and northern Nevada.
• CareFlite (Baylor Scott & White Hospitals, Parkland Hospital, THR hospitals, JPS Hospital, and Methodist Hospitals) – Texas.
• CareFlight – Ohio
• Critical Air Medicine –  San Diego, California
• Critical Care Medflight (fixed wing) – Georgia and Florida.
• DHART – Dartmouth-Hitchcock Advanced Response Team (New Hampshire and Maine)
• EagleMed – Based out of Wichita, Kansas and has multiple operations located in the midwest.
• EastCare – University Health Systems of Eastern Carolina – North Carolina
• Enloe FlightCare –  Enloe Medical Center – California.
• Flight for Life (fixed wing and helicopter) – Colorado
• Guardian Flight – Alaska, Utah and Wyoming
• HALO-Flight – non profit serving South Texas
• Hospital Wing-Memphis Medical Center Air Ambulance Service –  not for profit serving Tennessee, Mississippi and Arkansas
• Life Flight – Memorial Hermann Hospital- Texas Medical Center – Houston, Texas.
• LifeFlight of Maine (non profit) – Maine & New Hampshire
• LifeFlight – University of Massachusetts – Massachusetts.
• LifeFlight Eagle – Kansas City, Missouri
• Life Flight Network – Largest non-profit air ambulance in the US – Oregon, Washington, Idaho, and Montana.
• LifeForce – Erlanger Health System – Tennessee, Georgia and North Carolina
• Lifeguard Aeromed  (fixed-wing) Fort Worth, Texas serving the United States, Mexico, and Canada.
• LifeLine – Indiana
• Life Link III – Minnesota and Wisconsin.
• LifeLion Critical Care – Penn State Hershey Medical Center – serving Central Pennsylvania
• LifeNet, Inc. – Texarkana, Texas and Arkansas
• LifeNet for profit owned by Air Methods. Serves Kansas, Missouri, Iowa and Nebraska, South Dakota and Minnesota.
• Life Star – Based out of Hartford (CT) Hospital.
• Life Star of Kansas – Topeka, Kansas
• LifeTeam – (fixed wing and helicopter) – Kansas, Nebraska, Texas, Nevada, and Hawaii.

• Maryland State Police Aviation Command – State owned

• MedAir – – Midwest Medical Transport company – Nebraska and Iowa.
• Medflight – Columbus, Ohio.
• Medway Air Ambulance (fixed wing) national coverage
• Mercy Flight Central – Non-profit – central New York
• Mercy Flight – Western – Non-profit – western New York
• Mercy Flights -Oregon and northern California.
• Metro Life Flight – operated by MetroHealth – Ohio.
• Omniflight Charleston – South Carolina and Georgia.
• PennSTAR Flight – Eastern Pennsylvania and parts of New Jersey.
• REVA, Inc. – (fixed wing) national coverage.
• ShandsCair Critical Care Transport Program –  UF Health Shands Hospital (fixed wing and helicopter) – serves central and north Florida.
• SkyHealth – Air ambulance service of Yale New Haven Health in Connecticut.
• STAT Medevac – based in Pittsburgh, Pennsylvania
• Texas LifeStar in Central Texas.
• Trauma Hawk Aero-Medical Program – Palm Beach County, Florida – taxpayer funded.
• Trauma Star Air Ambulance – Key West, Florida (public funded)
• TraumaOne Flight Services –  UF Health Jacksonville Trauma Center – serves Florida and Georgia
• Travis County STAR Flight – Austin, Texas –
• Trinity Air Ambulance International, LLC – (fixed wing) Worldwide service.
• UCAN, University of Chicago Aeromedical Network – Illinois
• US Air Ambulance – (fixed wing) Worldwide service.

Photo in post from US Coast Guard blog

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Updated June 2018. Healthcare fraud is a spectator sport in south Florida. We literally can’t keep up with the number of indictments, convictions and False Claims Act whistleblower cases involving healthcare in Dade and Broward Counties, Florida. Nothing surprises us anymore. But as jaded as we have become, the allegations swirling against Broward Health CEO Beverly Capasso caused our jaws to drop.

Broward Health is a publicly funded and operated hospital system serving the greater Ft. Lauderdale area. With 1529 beds and 1800 physicians, it is one of the ten largest public healthcare systems in the nation. We think it is also one of the most corrupt. We understand (but don’t condone) why for profit hospitals often go astray but there are simply no excuses for hospitals owned by taxpayers.

Until recently, Broward Health was known as the North Broward Hospital District. After a series of fraud related scandals, the system changed names. A simple name change didn’t do much for the culture of fraud, greed and corruption within the hospital’s top management, however.

2015 Prosecution of Broward Health for Illegal Kickbacks

Less than 2 years ago, Broward Health (then North Broward Hospital District) agreed to pay the Justice Department $69.5 million to settle charges that the hospital was paying kickbacks to doctors. The more patients referred to North Broward, the more referring physicians could expect in kickbacks.

The federal Anti-Kickback Statute makes it a crime to pay, offer to pay or receive anything of value in return for patient referrals. Congress believes that patient care decisions should be based on the best interests of the patient and medical necessity. Never should those decisions be based on who pays the most in kickbacks or bribes.

In announcing the prosecution of Broward Health, the Justice Department’s chief civil prosecutor said, “The Department of Justice has long-standing concerns about improper financial relationships between health care providers and their referral sources, because those relationships can alter a physician’s judgment about the patient’s true health care needs and drive up health care costs for everybody. In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”

Deter similar conduct? Keep reading, old habits die hard!

Violations of the Anti-Kickback Statute and the related Stark Act are also violations of the False Claims Act, a Civil War era whistleblower law that allows whistleblowers with inside information about publically funded healthcare fraud to earn large cash awards for their information.

North Broward Hospital Whistleblower Receives $12,045,655.51

The 2015 case against Broward Health was filed by a concerned physician, Dr. Michael Reilly. For coming forward and reporting the fraud, Reilly received over $12 million in award monies.

Reilly came forward after seeing that certain physicians who referred certain types of profitable patients to the hospital were also paid more.

Broward Health Problems Continue

Six months after Broward Health settled with the Justice Department, the State of Florida demanded the healthcare system turn over $5.3 million to settle related Medicaid fraud charges. That settlement was in March of 2016. Despite being a public agency, Broward Health wouldn’t discuss the settlement with the press.

In March of 2016, Broward Health’s CEO, Nabil El Sanadi, MD, was found dead from a self-inflicted gunshot wound. Media reports say that a private investigator had come forward and claimed that Dr. Sanadi had hired him to examine improprieties at the hospital.

Since the death of Dr. Sanadi last year, there have been at least two interim CEOs. Both left after a short period.

Broward Health’s Newest Scandal – CEO Beverly Capasso

The newest CEO was appointed in May of this year. Beverly Capasso had served on the Board of Directors of the hospital. She had just been appointed to the board by Florida Governor Rick Scott and was soon appointed as the newest interim CEO.

In a job that pays up to $955,000 per year, Capasso’s appointment was quite an accomplishment. Maybe too much of an accomplishment.

At the time of her appointment, the Florida Sun Sentinel questioned why Capasso was never fully vetted for the job. “Board members engaged in virtually no questioning of her background, her work experience or her likely approach to the job. No one asked whether anyone at Broward Health had talked with her previous health care industry employers about the quality of her work.”

The paper had good reason to be suspicious.

Capasso was apparently friends with Lynn Barrett, the general counsel of Broward Health. It is unknown if that connection helped her land her appointment by Governor Scott to the board of directors or her subsequent appointment as interim CEO. When questioned about the friendship, Barrett said, “I have a constitutional right not to answer.”

That’s not the kind of answer one would expect from a friend. And not the answer the public deserves.

Just eight weeks later, the New York Post and the Sun Sentinel today report that Capasso received her masters degree from an unaccredited and now defunct university identified by the feds as a diploma mill.

Does the hospital care? Apparently not. The board’s HR representative told reporters that her capabilities were more important than “a piece of paper”.

We disagree. A phony or worthless degree is evidence of extreme dishonesty. The board shouldn’t trust someone that clearly lacks the credentials to run one of the largest healthcare systems in the nation. And anyone that lies or misleads the public isn’t fit for any public position, especially CEO.

When we hear a story like this, it puts the 2015 and 2016 fraud settlements into context. Broward Health is diseased. It may have great physicians, nurses and other professionals but its management is corrupt. That’s our opinion, of course, but the facts don’t lead to any other conclusion.

June 2018 Update:

Broward Health Indictments – The Drama Doesn’t End

Do you know that popular saying, “Just when you think it can’t get any worse?” Well at Broward Health things do get worse.

Since our last post, Hospital CEO Beverly Capasso was indicted for her activities at the hospital. An appointee of Governor Rick Scott, we were waiting to see if she stepped down. She didn’t.

The board, now down several members, looked at hiring a new CEO. Instead they gave a vote of confidence to Capasso. According to the Sun Sentinel, her indictment was not even discussed at the meeting. Phony degree, pending indictment and apparently unqualified didn’t deter the board. Her appointment was confirmed just days ago by a 4 to 1 vote.

Former board member Joseph Cobo said, “I have never, ever, in the 40 years I’ve been around this place, seen a staff more scared from the retaliation that has been occurring. You need a change. Yes, there are some very good people in this organization. But a lot of people have been hurt.”

Since we last wrote, Capasso wasn’t the only Broward Health insider indicted. Earlier in this post we described how board attorney Lisa Barrett invoked her 5th Amendment rights against incrimination when asked a question about her friendship with Capasso. She apparently had good reason to not answer questions as she was also indicted.

In addition to Capasso and Barrett, criminal charges are also pending against two of the board members and a former board member.

Barrett may have other problems as well. Allegedly an investigator hired to ferret out corruption within the hospital district accused her of obstructing an FBI investigation into the hospital by not turning over evidence.

So what happens now? Capasso’s $650,000 salary is likely to increase to as high as $1,125,000.00. It’s hard to calculate her salary as the hospital district, which receives tens of millions of tax dollars, told the Florida Bulldog, a public watchdog media outlet, that it was not obligated to respond to their public records request.

Seeking Broward Health Whistleblowers

Unfortunately, struggling taxpayers shouldn’t have to worry about indicted public officials getting bonuses. Why would we even pay an indicted public official with a phony degree three quarters of a million dollars per year. Capasso makes more in one day than most Broward County residents make in a month. The patients, taxpayers and employees of Broward Health deserve better. And fortunately, you may be able to make a difference.

We have extensive experience with healthcare fraud. Our whistleblower clients have received over $100 million in awards over the last several years. In our experience, the kickbacks and illegal referral arrangements are indicative of a much larger fraud. And it doesn’t appear that the current board is capable of cleaning house. At this point, they appear to be the center of the problem.

If you have evidence of fraud at Broward Health, give us a call. All inquiries are protected by the attorney – client privilege and kept confidential. Working with our local Florida partners, we stand ready to prosecute Broward Health and stop the fraud. We can also help protect you against illegal retaliation.

Dr. Reilly was brave to stand up against the North Broward Hospital District. He received over $12 million for his efforts. Let’s continue his efforts and finish cleaning the mess. It isn’t a question of when the mess will get cleaned up, just who will be next to collect an award. (The awards are generally only available to the first to file.) If you have information about current Medicare or Medicaid fraud at Broward Health, call us today.

For more information, contact attorney Brian Mahany at *protected email* or by phone at (414) 704-6731 (direct). Please also visit our healthcare fraud information pages

MahanyLaw – America’s Medicare Fraud Lawyers

WPLG Video Coverage of Broward Health Corruption Allegations

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TBM Consulting Workers Sue Lubbock National Bank for ERISA Fraud

TBM Consulting bills itself as experts in supply chain technology. Based in Morrisville, North Carolina, the company was founded in 1991. In 2003, the company created an Employee Stock Ownership Plan or “ESOP.” These plans are regulated like pensions and are subject to ERISA, the Employee Retirement Income Security Act of 1974.
ERISA is a powerful law designed to protect employees and pension plan recipients. Two of its provisions prevent certain insider transactions and acts that are imprudent or “disloyal” to plan participants.

If structured properly, an ESOP can be a win-win for both the company and its employees. Workers gain ownership in the company. In return, those workers are generally more productive and vested in the success of the company since they are considered owners.

There are also valuable tax breaks associated with ESOP plans.

In 2011, just 4 years into the ESOP plan, TBM Consulting’s president and CEO, Anand Sharma, decided to sell most of his 78 million shares of the company. Because there was no ready market for these shares, Sharma thought the ESOP would be the ideal buyer.

While not technically illegal, such insider transactions are fraught with peril.

Just before the sale was to take place, Sharma allegedly convinced the company’s board to name Lubbock Bank as the ESOP’s trustee. Under federal law, that means that no matter what the relationship between Sharma and the bank, the bank as trustee took on a fiduciary duty to the plan and its participants.

A fiduciary duty is the highest duty of loyalty recognized by law.

Lubbock National Bank, as the trustee for the plan, needed to value the shares being sold by Sharma and purchased by the employees. Unlike publicly traded securities where market values are established by the market and listed on stock exchanges, privately held shares can be difficult to value.

Lubbock National hired a company called Stout Risius Ross (SRR) to serve as an independent financial advisor. But just how “independent” was SRR? A group of TBM Consulting employees think that SRR was in Sharma’s pocket.

The workers say that SRR relied on projections by Sharma when setting the value of his shares. They say the projections were grossly inflated. That meant Sharma made a windfall profit and his workers paid the price.

Hindsight is a wonderful thing. In 2016, several TBM workers realized that Lubbock National Bank was being sued with respect to another company’s ESOP. The allegations were that the plan paid far too much for shares being sold by company insiders. The workers also realized that the revenue projections made with respect to TBM were overly optimistic.

They quickly concluded that they had been duped, that their shares were worth much less than they had paid and that Lubbock as trustee had been accused by at least one other company with being asleep at the switch.

Remember that even though Lubbock hired SRR to value the stock, Lubbock National had the fiduciary duty to act in the best interests of the plan participants.

According to the employees, “Lubbock owed the ESOP the highest duty of loyalty and was required to act solely with the interests of the ESOP in mind in insuring that that the price paid by the ESOP for the shares owned by parties-in-interest constituted adequate consideration.” This is especially true when the shares being sold to the ESOP come from a company insider.

Ultimately, four members of the TBM Consulting ESOP filed suit. Lawsuits filed under ERISA are filed on behalf of the plan.

The four filing the complaint say that “Despite Lubbock’s unfamiliarity with TBM, its knowledge that the future projections were heavily influenced by Sharma (whose obvious interest was to maximize the amount paid by the ESOP) and its knowledge that the actual historical performance of TBM was dramatically different from the projections, Lubbock rushed to close the ESOP transaction within a month of its appointment, ignoring the multiple red flags before it.”

Lubbock National Bank Seeks to Dismiss ERISA Claims

Like most banks, Lubbock National appears to be gearing up for a procedural war. In our experience, banks don’t want to litigate in front of a jury. They instead engage in active motion practice with the hope of either winning on a technicality or simply wearing down the other side.

Their first salvo was to seek to dismiss the workers’ complaint because those workers don’t “adequately” represent the other workers in the plan.

In throwing out the bank’s motion to dismiss, the court noted that the bank cited to no legal authority to support its position. Last month the bank tossed the bank’s motion and ruled the workers’ ERISA claims can proceed.

ERISA Fraud Involving Company Stock

Many recent ERISA fraud cases involve companies that encourage or require their employees to invest their pension or 401(k) plan monies in shares of the company.  Often these inside involve accounting fraud, improper valuation or other shenanigans.

The risk is even higher when it is a company insider that is the one selling the shares. In fact. these insider transactions are so risky that they are considered a prohibited transaction. ERISA prohibits a fiduciary from causing a plan to engage in a transaction if it knows or should know that the transaction constitutes a “direct or indirect sale or exchange”, or leasing, of any property between the plan and a party in interest; or transfer to, or use by or for the benefit of, a party in interest, of any assets of the plan.

As noted in the TBM case, however, there is an exception when there is an independent valuation of the insider’s shares.

Victim of ERISA Fraud? Did Your Employer Steal Your Money?

No matter how large or small the company you work for, you are trusting your money and retirement plans to someone else. ERISA says that many of the people associated with the plan have a fiduciary duty to both the plan and the employees who rely on that plan.

Large or small, suing your employer is not easy. If the fiduciary is a bank or accounting firm, the odds can seem daunting. Our fraud recovery lawyers can help you flip those odds in your favor. We have helped recover billions of dollars and from some of the biggest and most powerful companies in the world.

If you think you have been cheated or that your employer has withheld funds from an ESOP, pension plan, 401(k) or the like or engaged in illegal insider transactions, call us. We handle ERISA claims on a contingent fee basis meaning you don’t owe us anything for our services unless we recover money on your behalf.

For more information, visit our ERISA fraud page. Want to know if you have a case? Contact us online, by email *protected email* or by phone 414-704-6731. All inquiries are protected by the attorney – client privilege and kept confidential.

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This post may seem a bit off topic at first but it reveals how corruptly much of this world operates. And where there is corruption, there are often corporate players involved. Corrupt politicians only have two ways of getting their illicit gains. The first involves ripping off citizens and residents. The second involves bribes from businesses that do business there. In many instances, the second method is far more lucrative.

Dutch Government Takes Over Sint Eustatius (Statia)

Citing reports of widespread financial misappropriation, discrimination, intimidation and insults, the Dutch government elected to take control of the tiny Caribbean Island. Statia gained its partial independence from the Netherlands in 2010 but remained a “special municipality.”

Earlier this year the Netherlands Secretary of Home Affairs and Kingdom Relations announced the Dutch government was dissolving the island’s governing body and relieving local officials of their positions. The move was said to be necessary to restore public order.

Prior to the takeover, a government committee found the local government was plagued by “lawlessness and financial mismanagement.” The committee also found that, “Citizens and entrepreneurs experience legal inequality. No administration is in order and the island is neglected in a physical sense.”

In announcing the takeover of Sint Eustatius, the Dutch Home Affairs Secretary, Raymond Knops, said, “Since other measures have not brought the island council to repentance, there is only one thing left to do: governing intervention. It is the harshest measure, but now that everything else has failed, it is the only possibility that remains. The people of Sint Eustatius deserve better.”

There is no word on how long the takeover will last or when new elections will be held.

Foreign Corrupt Practice Act and Corporate Misbehavior

Sint Eustatius is a tiny island nation with about 3500 residents. Although once it was a large trading outpost, modern shipping methods have left the island’s warehouses and harbor largely abandoned.

While we don’t know what financial mismanagement and corruption Dutch officials found, we suspect that it wasn’t that big. The island’s economy simply isn’t that big.

We do know, however, that corruption runs rampant in many areas of the Caribbean and in other areas of the world as well. A recent article in Face 2 Face Africa says that trillions of dollars were stolen by African despots and hidden in Western banks.

That level of corruption can only occur when the business community supplies the cash. Mining companies paying for mineral rights, oil companies paying for special tax breaks and businesses paying foreign regulators to look the other way at flagrant human rights violations or worker mistreatment.

These aren’t victimless crimes. Inevitably the taxpayers and citizens of the country whose officials are accepting bribes suffer.

Sani Abacha, the former Nigerian despot, is believed to have stolen over $5 billion. The average Nigerian makes about $5,000 per year.

Most of the developed nations have passed statutes that outlaw the bribery or attempted bribery of foreign government officials. Those laws are actively enforced.

Under the U.S. Foreign Corrupt Practices Act, the Justice Department and SEC can prosecute businesses that pay bribes or attempt to pay bribes to foreign government officials.

Many companies have gotten wise and now try to disguise bribes by using third parties or consultants as intermediaries. One company was recently caught offering the children of foreign diplomats high paying, no show jobs.

Knowing that it is sometimes impossible to prove the actual payment of a bribe, the SEC will prosecute a company if it fails to keep adequate books and records.

The SEC and Cash Whistleblower Rewards for Foreign Bribery Info

The SEC understands that catching foreign bribery is tough to do. Most of the acts of bribery frequently take place outside of the United States and rarely will a company’s books label payments to foreign officials as “bribes”!

To encourage people to come forward and report foreign bribery, Congress authorized the SEC to pay cash rewards to whistleblowers. If you have inside information about these bribery schemes or phony books and records, you could receive anywhere between 15% and 30% of whatever the government recovers from the wrongdoers. Rewards are often millions of dollars. (Our whistleblower clients have received over $100 million in rewards.)

The Company I Wish to Report Is Not a US Company, Can I Still Get a Reward?

The SEC has jurisdiction over any company that is registered with the SEC or sells shares of its stock on a US exchange. We will gladly help you determine if the company you wish to report makes you eligible for an award.

I Am Not a US Citizen, Can I Claim a Reward?

Again, the answer is yes!

Often whistleblowers with information about foreign bribery are located outside the United States. As long as you have inside information and are not the mastermind of the illegal corruption scheme, you are eligible for an award. In fact, millions of dollars have already been paid to foreign nationals.

Use of Banks to Launder Corruption Money

Some whistleblowers don’t have direct knowledge of a bribery scheme involving the business community but know that foreign and U.S. banks are being used to launder the ill-gotten gains.

The Justice Department can prosecute banks if the bank knows or should know the money coming through the bank is illegally sourced. Banks have a legal obligation to know their customers and perform due diligence on certain government officials or large depositors. If that bank has a branch in the United States (most do), there may be the opportunity to earn an award of up to $1.6 million under the federal FIRREA statute (Financial Institutions Reform, Recovery and Enforcement Act).

Special rewards are also available for people with knowledge of companies or banks doing business with Iran and Syria.

Takeaways and Next Steps for Potential Whistleblowers

We know that foreign corruption bribery exists all over the world. The takeover of tiny Sint Eustatius (Statia) by the Dutch government is unique. But the alleged corruption there is common throughout the Caribbean and the world. We even have it in some U.S cities.

Congress knows that corporate bribery is often behind these corruption scandals. Some might argue that the United States has no business policing crime that occurs outside our borders. (We have seen foreign bribery that actually takes place or is facilitated within our borders.)

There is more to the story, however. When foreign bribery occurs, legitimate US companies are hurt and U.S. jobs jeopardized. Honest companies can’t compete when corrupt ones have free reign to stack the deck. Inevitably, these schemes also mean higher prices for Americans as well.

If you have inside information about foreign bribery schemes or phony books and records, call us. All information is protected by the attorney – client privilege and kept confidential.

For more information visit our Foreign Corrupt Practices foreign bribery page. Ready to see if you have a case? Contact us online, by email *protected email* or by phone 414-704-6731 (direct).

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SEC, DOJ Continue to Hit Financial Services Sector with Record Fines for Foreign Bribery

Will the Foreign Corrupt Practices Act (FCPA) survive Donald Trump? We worried about that during the early days of the new administration. Even before President Trump took office, he appeared to be strongly opposed to the powerful anti-bribery law.

As far back as 2012, Trump said the FCPA was a “horrible” law that hurts American businesses. After the election, he allegedly told Rex Tillerson, then Secretary of State, that American companies were being unfairly hurt by laws prohibiting them from bribing foreign officials.

The Attorney General, however, says that America remains committed to prosecuting companies that offer bribes to government officials.

So who is right?

Looking back over the last 17 months since Trump took office, it appears that Jeff Sessions is right. The government remains committed to enforcing the FCPA. And that is great news to honest companies and whistleblowers.

Telia Company AB Pays Billion Dollar Penalty!

Last year, companies paid a record $2 billion dollars in penalties for violating the Foreign Corrupt Practices Act. Much of that $2 billion came from Swedish telecom giant Telia Company AB. Prosecutors say that Telia and its Uzbek subsidiary, Coscom, paid approximately $331 million to an Uzbek government official to influence the government and how it awarded mobile phone licenses in Uzbekistan.

The case was investigated by the SEC, IRS and Homeland Security in the United States and the Public Prosecution Service of the Netherlands. In announcing the resolution last year, an IRS spokesperson said, “Today marks the second resolution of proceedings against corporate entities who have engaged in a global bribery scheme of government officials. It also further demonstrates the dedication we have to identifying illegal financial transactions being used for bribery in the international community.  It is important that the global economy remain on a fair playing field and IRS will remain committed in our efforts to dismantle these kinds of corrupt financial schemes.”

Foreign Bribery Prosecutions Continue in 2018

If there was any doubt that the $965 million fine levied on Telia Company AB, earlier this month the Justice Department announced that French bank Societe Generale would pay $585 million for bribing Libyan officials during the dictatorship of Muammar Qaddafi.

Prosecutors say that Société Générale paid bribes to a Libyan “broker” between 2004 and 2009.   These payments were used in part to influence the Libyan government to “steer” investments to Société Générale.

The bank allegedly paid the broker a commission of 1.5 to 3 percent based on the amounts invested by Libya. Part of that commission was kicked back to senior government officials. Court documents say that the bank paid over $90 million in commissions. At least one of the investments made in return exceeded $3 billion. Prosecutors say that the bank made over one half billion dollars in profits.

And who facilitated this illegal scheme? Prosecutors say that U.S. brokerage firm Legg Mason. They were separately fined $64 million.

In addition to the size of the fines, this case is also notable in that involved financial institutions. Banks have historically not been targets of foreign bribery schemes. Despite their many failings, we often don’t see bribes paid to foreign government officials.

Recent settlements against Societe Generale and Legg Mason and others may signal that the SEC and Justice Department have a new focus.

Financial Services and Foreign Corruption Prosecutions

Societe Generale and Legg Mason are the newest prosecutions against financial services for firms for allegedly bribing foreign government officials. But there have been others.

In 2016 America’s largest bank, JPMorgan Chase, agreed to pay $264 million to settle charges that it violated the Foreign Corrupt Practices Act. Prosecutors say that over a seven year period, the bank hired approximately 100 people at the request of government officials in China and elsewhere in Asia. The program was internally dubbed as the “Sons and Daughters Program.”

Instead of traditional cash or monetary bribes, the consideration “paid” was giving a government official’s son or daughter a lucrative bank job in return for being allowed to expand or generate new revenues in that area of the world. Prosecutors believe that Chase made $100 million in revenues by hiring the kids of dignitaries and officials.

A senior official at the SEC said, “JPMorgan engaged in a systematic bribery scheme by hiring children of government officials and other favored referrals who were typically unqualified for the positions on their own merit. JPMorgan employees knew the firm was potentially violating the FCPA yet persisted with the improper hiring program because the business rewards and new deals were deemed too lucrative.”

Another SEC official said that no child of a foreign official referred to the program was ever denied a job.

The SEC took aim at Bank of New York Mellon for a similar scheme in 2015. The SEC accused the bank of hiring three interns during the summer of 2010 in return for getting $71 million in assets to manage for a Middle Eastern sovereign wealth firm. The three interns were relatives of government officials. A New York Times story claims an internal email at the bank acknowledged the scheme, “I am working on an expensive ‘favor’ for [Official X] — an internship for his son and cousin (don’t mention to him as this is not official).”

FCPA and Whistleblower Rewards

The United States is the only country in the world that routinely pays rewards to whistleblowers who step forward with inside information about misconduct involving foreign government officials.

Under the SEC’s whistleblower program, people with inside information about foreign official bribery can earn huge whistleblower rewards. These rewards are a percentage of how much money the government recovers from the wrongdoers. With rewards of up to 30%, it is easy to see how a reward in the Societe Generale or Telia case could be worth tens of millions of dollars.

The SEC issues tens of millions of dollars of awards but getting one can be tricky. That’s because the SEC doesn’t have the resources to investigate every one of the thousands of tips received each year. The trick to getting an SEC whistleblower award is proper preparation and presentation. Our whistleblower legal team includes the former SEC chief investigator, former enforcement counsel from the FDIC and Office of the Comptroller of the Currency. We know how to prepare bank and financial services whistleblower claims so that they receive the attention they deserve.

To learn more, visit our foreign official bribery whistleblower (FCPA) reward page. Ready to see if you qualify for a reward? Contact us online, by telephone 414-704-6731 (direct) or by email at *protected email*

All inquiries protected by the attorney – client privilege and kept completely confidential.

MahanyLaw – America’s SEC Whistleblower Lawyers

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Court Imposes Full Measure of Wage Theft Damages in Tele Pay Phone Sex Case

When we think of professional phone sex workers, we think of those last night infomercials. Beautiful women (men too), wearing sexy clothes and smiling while talking on the phone. It’s an illusion designed to get folks to pay as much as $5.00 per minute for a phone conversation.

Do the math… that is $300 per hour! Before you run off and sign up to be a phone sex operator, don’t expect to become rich. The same companies that exploit their customers also exploit their workers.

Recently we took a case against one of the big phone sex operators, Tele Pay, and its owner Juan Soto a/k/a Juan Ortiz. We teamed up with two other national lawyers, Joseph Tully and Bruse Loyd, to bring a class action against the company. (Bruse is currently representing a class of cheerleaders for the Texans NFL team.)

Although not the type case we typically take, we hate to see anyone take advantage of hard working people.

Individual workers often are overwhelmed by the prospect of filing a lawsuit on their own for unpaid wages or illegal working conditions. Prosecuting a company located in a distant state and with deep pockets can be intimidating. A class action, however, lets them join together with dozens or hundreds of other workers suffering a similar fate.

After a hearing last month, U.S. District Court Judge Andre Birotte Jr. ruled that Tele Pay was paying its phone sex operators just $4.20 per hour. A company that can make $300 an hour but only pay workers a couple bucks. That didn’t sound fair to us and thankfully the court agreed.

The court also ruled that the company failed to pay for “off the clock” work and to pay overtime pay for hours worked in excess of 40 hours.

Tele Pay’s website suggested that it was simply acting as a booking agent for the operators. Fortunately, courts don’t have to listen to a company’s simple explanations or labels. Whether or not your employer says you are an independent contractor or employee, courts must look to the actual facts and not mere labels. If you are an employee, you are entitled to minimum wage, pay for all hours worked and time and one half pay for all hours worked in excess of 40 hours a week.

Tele Pay says that it is a “booking agent offering its services to actors who seek to provide entertainment services.” The “services” it offers was allegedly “negotiating and booking engagements for the actors.” There was no negotiation. We claimed the operators were employees of Tele Pay hired to field calls on Tele Pay’s phone lines and engage in explicit chat for a fee paid directly to Tele Pay.

The operators also claimed that they were required to participate in training calls, company meetings and sit by their phone during their shift even if there were no incoming calls. Despite the company’s claim that it was a mere agent, the court felt otherwise.

Operators were paid just 7¢ per minute. Seven cents! If an operator could keep a caller on the phone for longer than 6 minutes, he or she could theoretically earn as much as 15¢ per minute. In reality, however, the operators believe that the company would place hang up calls to operators who were making “too much money”. The hang up would bring down the average call time ad keep the operator at 7 cents per minute.

As if fifteen cents ($0.15) per minute for a company billing $5.00 per minute could ever be “too much money.”

The court ruled in our client’s favor and awarded full damages and attorney’s fees.

Fair Labor Standards Act and Damage Claims

How Much Can I Get if my Employer Steals My Pay?

Under the federal Fair Labor Standards Act and similar state laws, workers are entitled to double lost wages, court costs and legal fees if they fail to pay overtime, minimum wage or pay for all hours worked. There are some exemptions for salaried workers, managers and certain professionals.

Wage theft has become a big problem nationwide. Companies often don’t pay workers for the time they spend booting up computers, attending training, or doing side work. Other companies falsely tell workers they are contractors or exempt so that they don’t have to pay overtime.

Under the Fair Labor Standards Act, these activities are illegal. Ditto for companies that don’t pay minimum wage.

If you believe you are the victim of wage theft, give us a call. We don’t take individual cases but if others are being treated the same way you are, we will consider the case. We take cases across the United States.

For more information, contact us online or by email at *protected email* We are unable to take every phone call but everyone who contacts us online or by email will get a prompt reply. We also suggest you visit our Fair Labor Standards Act wage theft information page.

Post Script on Tele Pay

As the result of our action, Tele Pay has closed its doors. Hopefully no one else will be exploited by them. Companies that steal from workers and refuse to pay a poverty wage get no sympathy from us. After closing their doors, Tele Pay filed for bankruptcy protection. We are working with the court appointed bankruptcy trustee to better insure that all its claims are paid. The owner of Tele Pay, Juan Soto a/ka/a Juan Ortiz, has been ordered to personally pay the full measure of damages.

Getting paid by fly-by-night companies remains a challenge. If we can’t get every penny owed, we can at least try and force them out of business before others are hurt. It’s not just fringe businesses like Tele Pay that don’t pay workers properly. We are shocked to continuously find that multi-billion dollar companies like Wells Fargo also cheat their employees out of proper pay.

We haven’t printed the name of our client, the named class representative, to better protect her privacy. She is our hero, however, for stepping forward not only for herself but on behalf of all exploited women who worked for this despicable company.

Mahany Law – America’s Wage Theft Lawyers – Proudly Protecting Workers Nationwide

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Most people feel vindicated when they are found to be right about something. We hate, however, being right about the dangers of cryptocurrency investments. Now that many cryptos have lost more than half their value, our phones are ringing. Investors have lost millions.

Worse, there is often nothing we can do.

As of this writing, bitcoin is down of its high by almost 70%. Today it is hovering at $6,530. Very recently it had fallen below $5,900. Just six months ago a bitcoin was worth about $20,000.

It isn’t just Bitcoin that has fallen. Ethereum is off its high by 68%. Ripple fell from $3.84 to just 45¢. Litecoin? Well it is living up to its name by falling nearly 80% in just 6 months. Litecoin’s founder reportedly admitted cashing out of all of his holdings leaving everyone else holding the bag.

Despite these losses, we still can’t keep track of the number of new ICO’s today. Incredibly, investors don’t seem to be deterred by the massive frauds going on everywhere.

Are all cryptocurrency offerings fraudulent? We have our suspicions but aren’t prepared to make such a bold statement just yet. But they are unsuitable for most investors.

If you want to engage in a bit of speculation and invest a few thousand dollars of crypto, have fun! If you are counting on that money to live on or worse – for retirement – you are probably in a world of hurt.

Incredibly, the more the crypto market sinks, the more the true believers claim that cryptocurrencies are a great deal. That’s like booking a room on the Titanic while it is sinking. Why would anybody do such a foolish thing? Because the ship’s owner reportedly said, “God himself could not sink this ship”?

What does that have to do with cryptocurrency investments? Some “believers” are still saying that the value of Bitcoin could rise above $1 million by next year.

Cryptocurrencies are mined out of thin air. If you think fiat currencies have no real backing, what supports the price of a bitcoin? Nothing. Just the belief that someone else will want in so bad that they will bid up the price.

Last November, John McAfee said, “I know predict Bitcoin at $1 million by the end of 2020. I will still eat my dick if wrong.”  We are sorry John… but you backed yourself into a rather nasty corner.

Many crypto investors are now calling us hoping to get back their hard earned money. Were they victim of a scam or their own greed? Probably a bit of both.

It’s hard to stand on the sidelines when all your buddies are making millions and for doing very little. But now those friends have lost millions of dollars in equity.

If you invested online, your money is probably gone. Assuming there are legitimate actors in the crypto space, the marketplace has been overrun by fraudsters. It is hard to know what is real.

Did Your Broker Help You Invest in Bitcoin or Ethereum?

Many brokerage firms forbid allowing their sales staff to offer or recommend cryptocurrency investments. As the market has demonstrated, these investments are simply too risky and volatile for most investors. Brokerage firms and investment advisory firms also know that the SEC, CFTC and the states take a dim view of the current public offering marketplace for ICOs. (An ICO is an Initial Coin Offering.)

That hasn’t stopped rogue brokers from “trading away” and hiding cryptocurrency from their employers. Why would they do this? Brokers know that many clients, particularly millennials, are going to invest in cryptocurrencies. If they are going to do it anyway, why not make a commission? The alternative is to lose commission revenues.

And a few brokerage firms are actually exploring the crypto market.

Market giant Fidelity Investments is quietly gearing up to make a big foray into the cryptocurrency world. Last May, Fidelity CEO Abigail Johnson said, “I’m a believer. I’m one of the few standing before you today from a large financial services company that has not given up on digital currencies.”

On the opposite side of the spectrum Merrill Lynch earlier this year banned its advisers from buying or recommending bitcoin or related investments.

Charles Schwab began allowing select customers to trade CBOE Bitcoin Futures (symbol XBT) but with a gazillion required warnings to customers. Those warnings include high risk, volatility, cybercrime, fraud, cyberattack, theft, loss and lack of regulation.

TD Ameritrade doesn’t permit direct cryptocurrency investing but does permit investing in cryptocurrency futures contracts (XBT).

Even if your broker isn’t allowed to help you invest directly in cryptocurrencies, many do so through the backdoor. There are plenty of bitcoin related stocks, ETF’s and Bitcoin Investment Trust (GBTC). The latter had a value of $38.05 in December. Today it is $10.

Brokerage firms are responsible for the actions of their advisors and brokers. Whether or not a broker was authorized to sell or recommend a crypto investment really doesn’t matter. If you invested in cryptos through a broker and thought your broker was acting within the scope of his or her authority, then the chances are good that the brokerage firm is on the hook assuming you were given bad advice.

The SEC and CFTC require firms to properly supervise their employees.

Assuming the broker did have authority to facilitate crypto currency investing, that broker also has a legal duty to only recommend suitable investments.

If you are a true believer with money burning a hole in your pocket, you and not the broker is responsible for any losses. But if the broker recommended or solicited the investment, he or she has a legal duty to recommend suitable investments. And because cryptos are so volatile and subject to fraud, they are only suitable for the most sophisticated and aggressive investors.

Did a Stockbroker Sell You a Worthless Cryptocurrency?

If a stockbroker or investment advisor facilitated your cryptocurrency investment and that investment wasn’t suitable, we may be able to help you recover your money.

For more information, visit our cryptocurrency investment fraud page. Ready to find out if you have a case? Contact us online, by email *protected email* or by phone at 202.800.9791. All inquiries are kept confidential. Legal services are provided on a contingent fee basis meaning you owe us nothing unless we recover money for you. Minimum investment loss is $1 million but we may still be able to assist with smaller losses.

Mahany Law – America’s Cryptocurrency – SEC Whistleblower Lawyers

The post New Low for Bitcoin and the Phones Are Ringing – Crypto Post appeared first on Mahany Law.

Bank of Montreal (BMO) and CIBC say up to 90,000 Accounts May be Affected

In late May, two Canadian banks revealed that they may have been hacked. Stories of cyberhacking are unfortunately common place these days but we still take notice when a bank is hit.

Banks have a responsibility to safeguard our money. Once upon a time, that meant locking it all up in a giant vault. Remember the old Bonnie and Clyde movies? If you wanted to rob a bank you went in guns blazing and with sticks of dynamite. Today cyberhackers can do far more damage and all it takes is a few keystrokes.

Banks do a better job than most businesses in maintaining good firewalls and keeping customer data safe from attack. Like the federal government has discovered, however, no one is ever completely safe.

Two weeks ago, I attended the Certified Fraud Examiners conference in Las Vegas. Many of the folks there are employed by banks and other financial institutions. One security professional told me a story about their success in fighting off daily hacking attempts.

His efforts were all for naught, however. A hacker simply just dropped a bunch of infected thumb drives outside one of the company’s offices. The unsophisticated trick worked. An employee picked up one of the drives and plugged it into his computer simply because he couldn’t contain his curiosity. The company was hacked.

In May, the Canadian Imperial Bank of Commerce (CIBC) disclosed that hackers claimed to have accessed 40,000 customer records. Although banks usually disclose very few details about cybersecurity breaches, they did notify the affected customers.

Bank of Montreal (BMO) also disclosed being contacted by hackers. Apparently less than 50,000 customers were affected. The bank has 8 million customers in Canada alone.

Canadian Banks and United States Whistleblower Awards

Many are probably wondering why the United States would care about hacking attempts involving Canadian banks. The answer is simple, both banks have many U.S. customers.

In the United States, Bank of Montreal operates as BMO Harris. BMO has 600 branches in the United States over 14,000 employees here. That means millions of U.S. customers.

Accounts in the United States are insured by the FDIC. These foreign banks are also typically regulated by the Office of the Comptroller of the Currency (OCC) and the Federal Reserve. A Canadian bank operating in the United States must also follow U.S. laws. And the three big bank regulators – OCC, Federal Reserve and the FDIC – all require stringent cyber security measures.

We aren’t claiming that BMO or CIBC failed to follow those regulations. Cyberhacking and cybersecurity is an ever evolving field. We understand that as quick as security professionals uncover one scheme, hackers invent another.

According to ccn.com, the hackers reportedly demanded $1 million . If BMO didn’t pay, the hackers threatened to publish the information on the dark web.

An email from the hackers reportedly contained actual account data so that the bank could verify that the threats were real. “These … profile will be leaked on fraud forum and fraud community as well as the 90,000 left if we don’t get the payment before May 28 2018 11:59PM.”

The email claimed that BMO and CIBC had sub-par security.  “They were giving too much permission to half-authenticated account which enabled us to grab all these information… [the system] was not checking if a password was valid until the security question were input correctly.”

The email allegedly came from Russia. The hackers demanded payment in cryptocurrency.

Obviously, we don’t know whether either bank truly had “sub-par” security. We do believe, however, that if a bank has a widespread cyber security breach or fails to follow cybersecurity measures, there could be a violation of FIRREA. Mere negligence is probably not enough but a bank that doesn’t do enough to maintain security or covers up a breach or lies to regulators about their compliance could trigger a prosecution.

FIRREA – short for the Financial Institutions Reform Recovery and Enforcement Act – has become the Justice Department’s favorite tool for going after misbehaving banks.

When originally passed by Congress in 1989, the law was used to prosecute bank officers and outsiders who pilfered savings and loan and caused hundreds of banks to fail. Today the law has expanded to cover a bank’s own misconduct.

Postscript – Banks and law enforcement rarely comment much on cyberhacking incidents. Bank of Montreal, however, said in a release that it wasn’t going to pay. In recent incidents we have seen hospitals, banks and retailers successfully hacked. Many pay but others like BMO believe it is better to send a strong message to hackers.

Inside Knowledge about Bank Fraud? See if You Qualify for a Whistleblower Award

To qualify for a FIRREA award, one needs original source information about the wrongdoing. That means customers whose data was leaked probably don’t qualify. But bank insiders do qualify.

Despite billions of dollars in cyberhacking losses, many companies still don’t take cybersecurity seriously. We hear horror stories weekly from concerned insiders who are tired of being ignored.

If you have inside information about wrongdoing by a bank, give us a call. We can help you determine if the Justice Department or bank regulators are interested in your information. Credit unions qualify as well – the NCUA has their own cybersecurity regulations.

It doesn’t matter if the bank is based here or offshore or whether you are a US resident or not. The bank does have to be subject to US jurisdiction, however. That usually occurs when there are accounts or branches in the United States.

Rewards are based as a percentage of any fines or recovery. Rewards cap at $1.6 million and maximum rewards are common.

For more information, visit our FIRREA bank whistleblower page. Ready to find out today if you may be entitled to a reward? Contact us online, by email at *protected email* or by phone 414-704-6731. All inquiries are strictly confidential and protected by the attorney – client privilege.

MahanyLaw – America’s Bank Whistleblower Lawyers

The post BMO, CIBC Hacked? – Bank Cyberhacker Whistleblower Reward Post appeared first on Mahany Law.

Almost everyone does a favor for their boss at some point. Maybe it is working a few minutes late to help her get ready for a big presentation. Legally, most workers are entitled to be paid for all hours worked and overtime for working more than 40 hours in a 7 day period. We usually do these occasional “favors”, however, without seeking pay simply because we may need a favor someday.

But what happens when your boss expects you to work an extra 20 minutes a day, five days a week? That can really add up. Let’s say that you get paid $18 per hour. In a year’s time you have racked up $1500 of unpaid time. At conventional overtime rates that is $2250!

Earlier this month, an employee of Sally Beauty Supply filed a class action against her employer for not paying her to make bank runs for her boss.

In a lawsuit filed in Ft. Myers, Florida, Rosie Nance said her boss frequently made her take the retailer’s bank deposits to the bank during her lunch hour. She also claims that these banks runs frequently made her exceed 40 hours during the week.

Under the Fair Labor Standards Act (FLSA), nonexempt workers are required to be paid for all hours worked. They also must be paid time and one half for all hours worked in excess of 40 during a seven day period.

Nance says she is not an exempt worker yet never received proper pay or overtime. If successful in her lawsuit, she is eligible for double lost wages, lawsuit costs and legal fees.

Depending on whether the violation was intentional or accidental, employees can receive double damages for unpaid back wages or overtime for two or three years.

In our opening example, we discussed the worker that puts in an extra 20 minutes a day. When you factor in 3 years and double damages, the damages become $13,500. Twenty minutes a day really adds up!

Recent Overtime Cases Involving Bank Runs

Nance is not the only worker who claims her employer failed to pay for banks runs. In 2013, retailer Children’s Place paid $1.5 million to settle claims that their workers were not paid for afterhours bank runs.

Three former employees say they were frequently required to go to the bank to make deposits even though they had clocked out for the day. In a court filing, Children’s Place agreed to pay workers $1.5 million but did so without admitting to any wrongdoing. “Despite reaching this agreement, [Children’s Place] reiterates that its sole purpose in settling this lawsuit was to avoid disruptions to its business and the costs associated with prolonged litigation of collective and class actions. [Children’s Place] denies any liability and wrongdoing.”

Dollar Tree settled a similar case in 2015. Once again, the company required employees to make bank runs while off the time clock. The Dollar Tree case was significant because the company operates 5000 stores in 48 states.

T-Mobile fought a similar Fair Labor Standards Act for a variety of unpaid work including not paying for afterhours bank runs. Before the case could go to trial, the parties settled. The two employees who filed the case received $5,000 a piece and a $400,000 pool of money was established to pay claims of other T-Mobile retail store workers in Illinois.

Often companies will send a manager or shift supervisor to the bank. Simply because the company labels you a manager doesn’t mean you are exempt from federal overtime rules. Employers will often falsely tell workers they are not eligible for overtime or that they are exempt.

Not true! The law looks to one’s duties and how they are paid. Labels or titles are meaningless. While there is an exemption for management, most line managers, supervisors, and team leads are nonexempt meaning they are eligible for overtime and full pay for time worked.

Safety in Numbers – Wage Theft Cases Are Often Prosecuted as Class Actions

In recent years, class action cases have gotten a little bit of a bad rap. Many people associate class actions with a notice they received in the mail saying they are entitled to a twenty dollar voucher or other trivial amount. That often happens in consumer class actions where it is impossible to determine who purchased the 8 ounce bag of chips that only contained 7 ounces of product.

In an employment class case, settlements tend to be more reflective of losses and must be approved by the court as reasonable.

Using the Dollar Tree store example (above), the company tried to toss the case as a class action in 2014. They argued that the circumstances for each worker asked to do bank runs was “entirely disparate and lack[ed] any commonality.” I other words they wanted the court to say that each worker was on his or her own.

Although Dollar Tree said that each worker should have to file their own lawsuit if they felt cheated by not getting paid for going to the bank on the clock, the court disagreed. The court correctly noted that, “Each individual plaintiff would be unlikely to pursue his or her claim alone due to the costs involved relative to the damages sought.”

For individual workers, trying to sue a multi-million dollar company for a couple thousand dollars in unpaid wages or overtime simply is not realistic.

Not Getting Paid for Making Bank Runs? Don’t be a Victim of Wage Theft

Failure to pay workers is against the law. Doing a favor for your boss is one thing but doing bank runs day after day after clocking out or taking twenty minutes a day to put on uniforms or safety gear is unacceptable. If you are working, you are entitled to get paid for that work.

If you believe you were the victim of wage theft, give us a call. Contact us online or by telephone 202-800-9791. Looking for general information? Visit our Fair Labor Standards Act Wage Theft page or our FLSA FAQ page for more details.

There is never a fee for our service unless we first recover money on your behalf.

MahanyLaw – America’s Overtime Lawyers – Proudly Protecting America’s Workers

The post Making Bank Runs for Your Boss? Make Sure You Get Paid – Wage Theft Post appeared first on Mahany Law.

MahanyLaw Investigating Illegal Balance Billing Practices by Healthcare Providers

Most Americans enjoy great healthcare. Our trauma centers and EMS programs are world class. That’s because of the efforts of millions of dedicated nurses, EMTs, paramedics physicians and technicians. They certainly deserve our respect. Unfortunately, the people who employ them sometimes get a bit too greedy.

At some point in life, many of us will need emergency medical care. If you are suffering from a stroke and unable to communicate, you certainly don’t have much say in who transports you to the hospital or to which hospital you go.

A few unscrupulous healthcare providers have figured that out and are trying to gouge patients in their hour of need. In every state, such behavior is immoral. In some states it is also illegal.

We are investigating claims that some companies are illegally billing Medicare patients for the balance of bills after Medicare has already paid. Those practices may also be illegal in approximately 21 states. The states with some of the strongest balance billing protections states include California, Connecticut, Maryland, Illinois, Florida, and New York.

Healthcare billing is complex. A hospital or ambulance service may have rates set by the state or may have negotiated dozens of different reimbursement rates with private insurers. Under federal law, however, if the provider accepts Medicare, it should not try to collect anything other than a small co-pay.

Recently we wrote about billing by air ambulance companies. Some folks get billed $50,000 for a five minute ride. And most of that is not reimbursable by insurance.

After we posted our air EMS story we were asked by a reader to investigate ground ambulance service and hospital Emergency Room billing. That makes sense since so many more people are treated in ER’s and transported by traditional ambulances.

We were shocked by what we found.

A recent Bloomberg article discussed a Seattle man who received a $1056 bill from American Medical Response (AMR). The bill was for a five mile ambulance ride taken by his late wife. She died shortly after the transport. Medicare paid $276 for the ride but two years later AMR started billing the man for the balance. Because she was insured by Medicare, we believe those collection attempts are illegal.

Balance Billing and Medicare

The practice of chasing patients after first collecting from insurance companies is known as balance billing. Depending on the state, the practice may be illegal. If Medicare is the primary insurance, balance billing probably is illegal.

Medicare, California, Maryland, Connecticut New York, Florida, and Illinois have comprehensive restrictions on balance billing. Fifteen other states have some restrictions: Colorado, Delaware, Indiana, Iowa, Massachusetts, Mississippi, New Hampshire, New Jersey, New Mexico, North Carolina, Pennsylvania, Rhode Island, Texas, Vermont and West Virginia all have some restrictions.

These regulations don’t stop the practice. In some states, state law restrictions are pre-empted by the federal ERISA law. Because there are so many loopholes, the bad healthcare companies think they know how to push the limits without getting caught.

And who is the main culprit? We are focusing on Envision Healthcare, its subsidiary EmCare and American Medical Response (AMR). Those are the ones we know about but there are probably hundreds of copycat schemes out there. That means many other bad actors.

[Until recently, Envision owned American Medical Response. In March, AMR was acquired by KKR, a private equity company. Now KKR plans on purchasing the rest of Envision.]

Envision Healthcare and EmCare

Envision Healthcare is quietly gaining a foothold in many hospitals. It does so through its staffing subsidiary called EmCare.

Patients needing treatment will often go to a hospital identified as a network provider. It is common for insurance companies to have contracts with some hospitals but not others. That doesn’t stop the patient from going to a hospital of their choice. If the hospital is out-of-network, however, they might get socked with a huge bill.

According to a recent New York Times article, when EmCare takes over a hospital’s emergency room, it doesn’t always agree to the pre-negotiated rates and fee schedules worked out between the hospital and the insurance companies.

Patients think they are going to an in-network hospital only to be shocked when they start receiving huge bills from EmCare. Several states – including California and New York – have legislation to stop these “surprise bills.” They are surprised because even though the hospital is in network, the ER doctors are not.

Washington state tried to pass surprise billing legislation earlier this year but it was defeated by lobbyists.

We hear that not only does EmCare not honor existing agreements with insurance companies, they also jack up their rates. Dramatically.

The New York Times looked at the ER physician rates charged at Newport Hospital and Health Services, a rural Washington state hospital. Rates jumped from $469 to $1649. That is the difference between what the hospital’s ER doctors charged versus what was charged for those same services once EmCare took over. Considering little may be covered by insurance, that can result in a huge surprise or balance bill.

Healthcare insurance giant United Healthcare has become so incensed over these surprise billing practices that they put up a website directly attacking Envision’s billing practices.

It’s not just patients and insurance companies that are angry. EmCare and Envision Healthcare last year paid the federal government $31 million to settle charges that EmCare was maximizing profits by admitting patients to hospitals even if those admissions were not medically necessary.

Now the company is facing class action lawsuits in several states.

Seeking Patients Who Received Balance Bills or Surprise Bills for EMS, ER Services Out-of-Network

Envision and EmCare have already been tagged by the federal government for their billing and treatment practices. They are facing lawsuits in several states as well.

Despite the existing suits, we wish to speak with patients of Envision Healthcare or EmCare that received collection attempts on the balance of their bills after Medicare had paid for the service. We are also looking for people with private insurance. If you received an unexpected balance billing, please contact us.

Our investigation also includes AMR and any other healthcare provider engaged in surprise or balance billing.

As noted, there are several class action lawsuits pending. With so many different laws and states, however, we know that there are probably cases yet to be discovered against these companies.

Please remember, our investigation includes any companies engaged in illegal balance billing or surprise billing.

In our years of experience, once one fraudster has figured out a vulnerability in the system, so have others. This scheme is particularly onerous because it prays on people who are often in critical condition and have no say in their care.

Why a Class Action?

Suing a huge healthcare company is a David vs. Goliath battle. The battle can be won but it is expensive and hard to do alone. In a class action case, the court allows the case to be filed on behalf of all patients with similar claims.

Let’s be blunt. It just isn’t cost effective for 99.9% of patients to sue on their own. In a class action, you have the clout of hundreds or thousands of other patients and there is no requirement to advance fees or costs. As class action lawyers, we don’t get paid unless we first collect money on behalf of the class.

If you are a patient and need more information or want to help us with our investigation – there is no obligation or charge for a consultation – contact us online or by email at *protected email*

Seeking Envision, EmCare, AMR and Other Whistleblowers

Unlike other class action firms, we are also a whistleblower law firm. The best way of exposing fraud and helping taxpayers and patients is with the help of an insider. And in some cases, we can help that insider collect a large reward for stepping forward.

We are looking for healthcare professionals with any inside knowledge about surprise billing or balance billing. Even if you are not sure if the process is legal in your state, we are happy to do that research free of charge.

Very often unscrupulous businesses will tell workers that the company’s actions are legal. What else can the say? But simply because HR or the billing department says the healthcare provider’s billing practices are legal doesn’t make that so.

As whistleblower lawyers, our mission is to help you collect the maximum reward possible, fight fraud and put an end to the illegal behavior. Like those signs on public transportation and airports say, “If you see something, say something.”

Need more information? Visit our healthcare whistleblower page. If you think you may qualify or wish to help, contact us online, by email *protected email* or by phone 202-800-9791. (We apologize in advance, we can only take calls from healthcare providers seeking to be whistleblowers. All other inquiries should be online or by email – see the links above.)

The post “Balance Billing”, Envision Healthcare & American Medical Response Investigation appeared first on Mahany Law.

[Post Updated July 2018 – original written Dec. 2014] The U.S. Department of Justice says that Medicare fraud is on the rise in Michigan and one particular area of concern is physician house calls.  Years ago, doctors routinely made house calls. Now many physicians are employed by hospital owned medical groups or clinics. Finding a doctor willing to make a house call has been tough in recent decades but that trend is starting to change. The Centers for Medicare and Medicaid Services say that Medicare spending on physician house calls has increased by 40% over the last 6 years.

While overall Medicare spending for house calls is still relatively low, the numbers have been growing each year and so has fraud. USA Today quotes U.S. Assistant Attorney General Leslie Caldwell as saying, “It’s bad. And it’s just an easier thing to do in Michigan than in other states.” Almost 20% of all Medicare spending for house calls occurs in Michigan.

As our population ages, more house calls are expected. Visiting a patient at home in many cases lowers health care costs as home visits are much less expensive than hospital stays. Patients appreciate it too. Unfortunately a few unscrupulous providers have found a new way of making a fast buck. The Justice Department claims that in recent years almost 20 physicians have been indicted in Michigan for Medicare fraud related to house calls.

Why such so much Medicare fraud in Michigan? Prosecutors say the state is just one of five that doesn’t regulate home health care. To obtain reimbursement for home healthcare under federal Medicare regulations, however, a doctor must certify a patient’s need for home care. A booming new cottage industry was created by shady doctors who make these need determinations and shady home health care agencies that bill Medicare for services never provided or are provided by unlicensed or unqualified providers.

The victims in these scams? Patients and taxpayers, of course. Because Medicare is a federally funded healthcare program, providers that rip off the Medicare system are really ripping off the public.

Senior citizens and other home bound patients are also put at risk. While some Medicare fraud scams involve billing for services never performed, other providers subject patients to unnecessary treatments or medications. Since the medical services are provided in the home, there is little oversight and that makes it much easier to conceal the scam.

Many doctors still won’t make house calls, especially for Medicare patients. The reimbursement rates are low and the government does not pay for travel time. That means a doctor can literally see a dozen patients in the time it takes to drive even a few miles to see just one patient.

While clearly concerned about the huge surge in Medicare fraud tied to house calls, Medicare officials are testing a pilot project that allows doctors to get paid more if they can show the number of hospitalizations associated with their patients decreases.

Examples of Michigan Medicare Fraud Involving Home Care

In January 2018 a Detroit area physician was sentenced to 24 months in federal prison for his involvement in a $1.7 million Medicare fraud scheme. Prosecutors say that Gerald Daneshvar M.D of Bloomfield Hills was convicted after a jury trial of conspiracy to commit healthcare fraud.

Daneshvar and two other physicians worked for a company called Lake MI Mobile Doctors. The company provided doctor’s visits to purportedly homebound Medicare patients. A jury found that while working for Mobile Doctors,  Daneshvar billed Medicare for house calls that did not qualify for payment because the patients either were not sick or were not homebound.

Prosecutors also said that he would often bill Medicare for the highest paying codes for these visits, even though the visits were short or were not even necessary. Additionally, Daneshvar also referred these patients for other home health services that were unnecessary.

His co-conspirator Dr. Stephen Mason pleaded guilty to his role in the conspiracy and was given a lesser 18 month sentence. Judges will frequently give lighter sentences to those who step forward and accept responsibility for their actions. A third doctor, Leonard Van Gelder, had not yet been sentenced.

In December 2017, a Detroit jury convicted the owner of a different home healthcare agency for Michigan Medicare fraud related charges. Sixty nine year old Editha Manzano of Troy, Michigan, was convicted of one count of conspiracy to commit health care and wire fraud, one count of conspiracy to pay and receive kickbacks in connection with Medicare beneficiaries, and one count of healthcare fraud. She was the owner of Anointed Care Services, a Detroit area home health care agency.

Prosecutors convinced a jury that Manzano

“paid illegal kickbacks for patients to sign up for home health care with Anointed. The evidence further showed that Manzano conspired with physicians to admit patients for home health care with Anointed when they did not qualify for such services. To make it appear that these patients did qualify, Manzano and her co-conspirators falsified medical records and signed false documents.”

As of July, 2018, Manzano has not yet been sentenced. She faces decades in prison. (Prosecutors are asking for a sentence of 25 years. Given her age, it is tantamount to a life sentence.)

Unlike many Medicare fraud schemes, prosecutors say that patients were also victims. (Taxpayers are always victims since Medicare is financed with tax dollars.) According to a government sentencing memo,

This offense is not only about loss to a government health care program. Manzano fueled the opioid epidemic that is ravaging this community and the country by inducing addicted Medicare beneficiaries to sign-up for home health services in exchange for medically unnecessary opioids. These opioids were then either sold on the street or traded for crack cocaine. Manzano did not respect the shared humanity of all members of our society; instead, she exploited the addicted for profit.

After her conviction, the court revoked her bail pending sentencing. Her lawyer asked that she be released saying that she is not getting proper medical care for her vertigo and high blood pressure. In April, a federal magistrate judge denied her bid to be released pending sentencing. He noted that despite living here for 47 years, Manzano is not a U.S. citizen and likely faces deportation as well as a lengthy prison sentence. He also noted that a witness came forward and said that Manzano paid $2000 to kill a witness. (She has not been charged for those allegations.)

In May of this year, Roberto Quizon M.D., a physician affiliated with Manzano and her home healthcare agency, was sentenced to 18 months in prison. Dr. Quizon cooperated and pleaded guilty to a single criminal conspiracy count. Prosecutors said he was a star witness at Manzano’s trial. In their words,

Quizon testified at trial that Manzano paid him illegal kickbacks and bribes, referred to him beneficiaries who did not need home health services, fabricated documentation to make the beneficiaries appear homebound, and pressured him to certify beneficiaries for home health without actually seeing them.

Home Healthcare Fraud – Not Limited to Michigan

Medicare fraud is a huge problem in the United States and not just in Michigan. Miami, Philadelphia, Ft. Lauderdale, Dallas and Houston have also seen big spikes in fraudulent claims for reimbursement. The federal False Claims Act allows insiders with original source knowledge about fraud involving government programs – whistleblowers – to receive a portion of whatever monies the government collects from wrongdoers.

In 2014 year the government paid $435,000,000.00 in whistleblower awards. Medical billing clerks and honest physicians are often the best whistleblowers.

Think you have inside information about Medicare fraud? Give us a call right away. Having a good whistleblower lawyer is important.  Being first to report is also important as the courts will usually only pay a reward to the first to file.

To be eligible for a cash reward, you must have inside information about a fraud against the government or a government funded program. That includes Medicare, Medicaid, Tricare and Champus.

Obtaining a reward means filing a sealed lawsuit in federal court. While the government investigates, the case remains under seal meaning it is secret. Ultimately the Justice Department must decide if they are going to prosecute, allow the whistleblower’s lawyer to prosecute or seek to have the case dismissed.

The State of Michigan and 28 other states offer similar rewards for information about state funded Medicaid fraud.

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Need more information? Visit our Medicare fraud information page or contact attorney Brian Mahany online, by email at *protected email* or by telephone at (414) 704-6731 (direct). All inquiries kept in complete confidence and protected by the attorney – client privilege.

MahanyLaw – Michigan Medicare Fraud Lawyers (We Have Offices and Lawyers throughout the United States)

The post House Calls and Michigan Medicare Fraud (Home Healthcare Fraud) appeared first on Mahany Law.

Who says Medicare fraud has to be boring? Especially in the Motor City. When you are involved in a $112 million Medicare fraud scheme, there is apparently lots of money to throw around and that will get you noticed. If the feds are right, the main defendant in this case Frank Patino – didn’t even try to act low key.

Late last month, Dr. Frank Patino of Woodhaven, Michigan was indicted on a variety of federal healthcare fraud charges. Patino is a very public figure; he bankrolled several UFC and mixed martial arts fighters and was the sponsor / creator of his own diet scheme… called the Patino Diet, of course.

And how did he afford to do all these things? Prosecutors say that he was the biggest prescriber of a popular opioid drug in Michigan.

A day later, former MMA fighter Josh Burns was charged in the scheme. His indictment implicates a yet unnamed UFC hall of fame fighter.

After reading hundreds of pages of court records, the story that emerges is fascinating. Exotic dancers, exotic cars, threats of leg breaking, cash stashed in the Cayman Islands. And all paid by unwitting U.S. taxpayers.

The defendants, of course, deny the charges. Dr. Patino’s lawyer says his client is innocent. The Detroit News says Patino’s lawyer described him “as an award-winning physician, a humanitarian who distributed holiday hams to the hungry, who is being victimized by a

former business partner and the government’s misrepresentations.”

The story behind the story is worth telling. While the media covers the Patino’s celebrity ties and how the tens of millions in alleged fraud money was spent, there is another story here. One that repeats itself daily in Detroit, Miami, New Orleans, Houston and across the United States. It is a story of kickbacks, of over prescribing opioids and prescribing medically unnecessary treatments just to bill Medicare and private insurance companies.

US v. Francisco Frank Patino – Medicare Fraud Indictment

According to the recently unsealed indictment, Dr. Patino operated several healthcare related businesses in the metropolitan Detroit area. They included:

Global Quality Inc. (Detroit)

Renaissance Age Management Institute (Livonia)

FDRS Diagnostic (Livonia)

Patino Laboratories (Livonia)

All four entities are participating Medicare and Medicaid providers. Prosecutors claim that he controls these companies and is either a part or full owner of each.

The Justice Department says that Frank Patino obtained access to thousands of patients by being the largest prescriber of 30 mg. Oxycodone in Michigan. They say that between 2016 and 2017, he prescribed more than 2,200,000 doses of Fentanyl, Oxycodone, Oxymorphone and other controlled drugs. They also say that some of these drugs were medically unnecessary and wound up in the street.

Before dispensing opioids, Patino allegedly required many of his patients to submit to medically unnecessary (and painful) injections or procedures. Why? To make more money.

To make even more money, Frank Patino solicited and received kickbacks in exchange for referring patients to certain diagnostic labs that performed urine drug testing.

As part of the scheme,

“Francisco Patino and others falsified, fabricated, altered and caused the falsification, fabrication, and alteration of medical records, including patient files, treatment plans, diagnostic testing orders, and other records, all to support claims for office visits, injections, urine drug testing… and other services that were obtained through illegal kickbacks and bribes, medically unnecessary, not eligible for reimbursement and/or not provided as represented.”

Things were apparently so obvious that Medicare warned that 100% of the sample of injections from Patino reviewed by regulators not eligible for reimbursement.

How big was this scheme? The indictment claims that the false and fraudulent claims submitted to Medicare and Medicaid by Frank Patino and the others were approximately $112 MILLION!

To hide the kickbacks, the indictment says that Patino used intermediaries and claimed monies were being used to advertise his Patino Diet and to sponsor UFC fighters.

Kickbacks and Self-Dealing Laws

Congress prohibits healthcare providers from paying or receiving bribes or kickbacks. You can’t pay someone to gain more patients. That is a violation of the federal Anti-Kickback Statute.

Federal law also prohibits most self-dealing by healthcare providers (Stark law). Medicare and Medicaid take a dim view of the physician who send her patients to an MRI center she owns and then to a pharmacy she also owns.

As authorities were closing in, it appears that Patino knew storm clouds were brewing. The indictment details an email sent on September 10, 2017 sent by Patino to a business partner and his bookkeeper. In the email he discusses his ownership of the FDRS Diagnostic Labs. The email admits his referral arrangement with FDRS is a “violation of the Stark and Anti-Kickback Laws” and that retroactively amending FDRS’s tax returns to reflect different ownership was necessary to “hopefully keep [co-owner] & I out of federal prison & having all our assets seized to pay a 15 million dollar fine.”

After being arrested, Frank Patino was given a bail hearing earlier this month. On Independence Day (July 4^th), the court ironically ruled that he wasn’t going to see his independence or freedom anytime soon. Despite a presumption of bail in federal criminal cases, a federal magistrate judge ordered Patino held without bond.

According to the court’s own files, the court found that,

no condition or combination of conditions which will reasonably assure Defendant’s appearance; and by clear and convincing evidence that no condition or combination of conditions will reasonably assure that Defendant will refrain from obstructing justice, with the Court finding that there is a serious danger that Defendant will obstruct or attempt to obstruct justice. The evidence was discussed at length on the record in support of the Court’s reasoning, and includes, but is not limited to evidence that: (1) Defendant was dishonest in his interview with Pretrial Services in several ways, including: (a) failing to reveal assets; (b) failing to identify at least one of his businesses; and (c) grossly understating his international travel; (2) Defendant has withdrawn over a million dollars in cash in recent years, and at least $400,000 in cash in the 2017-2018 timeframe, and has reported to two independent witnesses that he has placed money in the Cayman Islands, where he has frequently visited, giving him the means to flee and to live outside the United States; (3) Defendant has attempted to mislead the Court about his knowledge of a certain “D.G.’s” involvement in one of his businesses; (4) Defendant has utilized shell companies and intermediaries to hide assets; (5) Defendant has utilized blackmail, threats and intimidation, including surveillance by private investigators and sending compromising photos to people he perceives as having double-crossed him; (6) Defendant has intimidated witnesses, made threats of violence to or towards various people and pressured people to sign false affidavits; (7) Defendant has participated in various fraudulent acts with respect to medical billing, taxes and concealment of illegal activities; and (8) Defendant has taken advantage of thousands of patients for his own personal gain, including the prescription of highly addictive and unnecessary narcotics.

During the hearing, Justice Department trial attorney Jacob Foster said,

“(Frank Patino’s) fraud was blatant and it was flagrant. This is about the thousands of patients who were taken advantage of in order for the defendant and others to line their pockets with U.S. taxpayer funds, to put himself on TV, to fund advertisements and to pay MMA fighters so they would hang out with him.”

The Justice Department said that Patino threatened to break the legs of one associate while entrapping another with exotic dancers.

If convicted of all counts the 63 year old physician is facing 40 years in prison.

Mashiyat Rashid – Michigan Medicare Fraud

Dr. Patino is reportedly tied to Mashiyat Rashid, a Michigan businessman alleged to be part of a larger $200 million Medicare fraud scheme. That scheme involved false Medicare billing and distribution of over 4.2 doses of narcotics such as oxycodone.

Prosecutors say that Rashid spent $7 million on building a house in Franklin, Michigan as well as courtside NBA tickets, a Rolls Royce Ghost, Lamborghini and a rare watch collection.

His indictment also alleges involvement by several Ohio and Michigan physicians:

• Spilios Pappas of Monclova, Ohio.
• Joseph Betro of Novi.
• Tariq Omar of West Bloomfield Township.
• Mohammed Zahoor of Novi.

All of the people mentioned in this post are presumed innocent until proven guilty. Statements by prosecutors in court or in the media are not evidence. We remind readers that an indictment is only a finding of probable cause.

Detroit Medicare Fraud – How to Claim a Cash Reward

Michigan may be the 10^th largest state by population but it ranks number two for healthcare fraud. In areas like Detroit, Flint, Saginaw and Pontiac, Medicare fraud is at record levels.

Sometimes healthcare fraudsters get so arrogant or spend so much money they are just bound to get caught. Most Medicare fraud schemes come to light, however, by whistleblowers. These are insiders tired of the fraud, greed and corruption.

Under the federal False Claims Act, insiders with information about Medicare or Medicaid fraud can obtain large cash rewards for coming forward. Those awards can be as much as 30% of whatever the government collects from the wrongdoers.

To qualify for an award, one must have inside information about a fraud involving a government funded healthcare program. (In California and Illinois, whistleblower reward programs are available for healthcare providers who defraud private insurance companies.)

In the Frank Patino case, there are many different types of Medicare fraud alleged.

First, kickbacks and self-referral arrangements are usually illegal. Not only are they illegal, they also violate the whistleblower reward statute. These schemes are frequently found in connection with diagnostic laboratories or standalone imaging centers.

Hiding or disguising kickbacks or using straw owners to hide Stark law violations is also illegal.

In some urban areas, particularly Miami, Detroit, New Orleans and Houston, we often see patient recruiter schemes. Paying a recruiter to round up homeless people is a form of kickback and it’s against the law.

Patient recruiter schemes today frequently involve opioids and other narcotics. A clinic or doctor will write large dose scripts for narcotics. At the same time, they provide services the patients don’t need such as expensive injections. Instead of paying cash – which leaves a trail -the recruiter takes the patient to the pharmacy to fill the prescription. The recruiter is then “paid” by receiving a percentage of the pills which can be consumed or sold on the street.

Providing services or drugs that are not medically necessary is also Medicare fraud. Not only are taxpayers paying for these unnecessary treatments, they are often painful or dangerous to patients.

A variation of the medical necessity scheme is billing Medicare for services that are never even provided. In other words, billing a patient for an extended follow up visit but never even seeing the patient.

Prosecutors are particularly interested in cases involving pain management clinics or doctors that prescribe huge amounts of opioids. Both are red flags indicating possible illegal activity.

Involved in the Fraud? – You May Still Qualify for a Reward

Rewards are paid to people with inside information about the Medicare fraud scheme. Sometimes the best whistleblowers are people involved in the very crimes they are reporting.

Unless you are the kingpin or mastermind behind the scheme, you qualify for a reward and probably have little to fear by coming forward. The Justice Department would rather put away the pharmacist or doctor who is knowingly dispensing thousands of doses of dangerous narcotics. Patient recruiters and billing specialists who come forward also have little to fear. (We can discuss your involvement and immunity anonymously with prosecutors before filing any case in which you are named.)

Even if your involvement in the wrongdoing is such that prosecutors want to reduce your award, coming forward and getting a small reward is better than a life spent looking over your shoulder.

For more information, visit our Medicare fraud whistleblower lawyer page. Want to know if you have a case? Contact attorney Anthony Dietz online, by email *protected email* or by phone 313.879.2070. All inquiries are protected by the attorney – client privilege and kept confidential. There is never a fee for a consultation. We only get paid if you earn a reward.

MahanyLaw – America and Detroit Whistleblower Lawyers

The post The New Face of Detroit Medicare Fraud – UFC, Exotic Dancers & Offshore Accounts appeared first on Mahany Law.

Cash Rewards Available for Information about Clinics, Radiology Practices and Hospitals Improperly Performing or Reading Obstetric Ultrasounds

State and federal rules regarding obstetrical ultrasounds may vary a bit but there are two overarching themes.

Obstetric ultrasounds generally require direct supervision by the treating provider. The operative terms are “direct supervision” and “treating provider.”

The term “direct supervision” is defined by state law but generally means being present in the room when the services are performed.

For example, Florida defines direct supervision in their Medicaid administrative regulations as follows:

‘Supervision’ means directing and being fully legally responsible for the actions of another person. ‘Direct supervision’ means face-to face supervision during the time the services are being furnished. ‘Personal supervision’ means that the services are furnished while the supervising practitioner is in the building and that the supervising practitioner is in the building and the supervising practitioner signs and dates the medical records (chart) within 24 hours of the provision of the service.

The rules also often require obstetric ultrasounds be under the direct supervision of the treating provider.

Assuming a patient is a Medicare or Medicaid recipient, obstetric ultrasounds aren’t eligible for reimbursement if the supervision rules are not followed.

Medicare Fraud Complaint – True Health

In April 2018, three former physicians from True Health filed a whistleblower lawsuit claiming the company was allowing unqualified people who were not the treating providers to perform obstetric ultrasounds.

George Chisholm, Anthony Perrin and David Teitelbaum are all Florida licensed physicians. For several months in 2015 they worked at True Health practicing in the fields of obstetrics, gynecology and prenatal services. [The full name of True Health is Central Florida Family Health Center, Inc. The company operates primarily in central Florida.]

Instead of being read by radiologists or obstetrics specialists, the three doctors say the ultrasounds were both read, and the reports signed, by unqualified providers. According to them, True Health, allowed the obstetric ultrasounds to be reviewed and signed by midwives or ultrasound technicians.

After learning of the problem, the director of nursing asked one of the doctors to sign the reports. He refused and said doing so was still illegal. According to him, there were at least 50 reports signed by a midwife as a “reading physician.” He correctly refused and reminded the clinic that improper ultrasound procedures may violate both Medicaid rules and state law.

In his words,

First, [the midwife] is not a physician. You have to be licensed to sign a report as a physician. Alleging otherwise is fraud and against the law.

2. Jessica [the midwife] is totally unqualified to ready any ultrasounds. She neither has the training nor the Board Certification to read ultrasounds – that’s also a fraud.

3. The fact that we are billing for these ultrasounds with her names on the reports, as the reading physician is fraud, and we will be legally liable. If audited, and we are found to have been paid on even one claim with her name on the scan, we will be investigated, fined and likely lose some of our insurance networks.

4. Furthermore she is not eve credentialed on any, if not all of the insurance plans of the Pts for which she has signed off on their ultrasound reports.

5. If I or any of the Obstetricians countersigns Jessica signature, we are not only condoning her actions, but we will be committing fraud as well, since there would be no way to dispute the fact that these reports were first “Read” by her and signed by her… This is a serious matter, and I will not put my license at risk for this, or any midwife, who exercises poor judgement, and refuses to seek the advice of any of the supervising Obstetricians.

Less than three weeks later after all three doctors refused to sign the reports, all were allegedly terminated.

The three doctors filed a whistleblower lawsuit on April 10, 2018.

Whistleblower Rewards and Medicare Fraud Lawsuits

Why file a whistleblower lawsuit? Filing an employment claim for retaliation (whistleblower retaliation is highly illegal) may get your job back or at least double lost wages. But it doesn’t stop the fraud.

A Civil War era law, the False Claims Act, allows whistleblowers with inside information to seek a reward. Thousands of Medicare fraud complaints are made to government hotline numbers each year. Only a tiny percentage are investigated. The Centers for Medicare and Medicaid Services just don’t have enough people to investigate every claim.

File a False Claims Act lawsuit, however, and your case goes to the top of the pile. Even better, you can earn a large cash reward for your information and be better positioned for an illegal retaliation claim.

Under the Act, whistleblowers can receive between 15% and 30% of whatever the government collects from the wrongdoers. With fines of over $20,000 per false bill submitted ($10, 000 in 2015 when the doctors worked at True Health), the penalties can quickly add up. Just 50 mis-signed obstetric ultrasounds equate to over $500,000 in penalties.

Whistleblower Retaliation

Unfortunately, we were not surprised to see the doctors lost their jobs after complaining that ultrasound practices were illegal. Very often companies will try to silence whistleblowers or banish them to a position where they can’t cause any trouble. These doctors say they paid the ultimate price… they were fired.

Whistleblowers should be rewarded for stepping forward and never punished. That’s why the False Claims Act contains both cash rewards and anti-retaliation provisions.

How Many Other Improper Obstetric Ultrasound and Other Schemes Are Out There?

We suspect there are many clinics, hospitals and standalone MRI / X-Ray clinics that are falsely billing or performing these procedures. Not only are taxpayers the victims of these schemes (Medicare and Medicaid are financed through tax dollars), the scheme is dangerous.

Patients expect a high level of care. We certainly need ultrasound technicians and midwifes too. Both have an important role in our healthcare system. Congress and the state legislatures put minimum training and supervision requirements into the law for a reason, however. Unless a state law says otherwise, technicians shouldn’t be performing procedures that require a physician or the direct supervision of a physician.

We have seen a wide variety of fraud involving radiology and related fields. That some providers are forcing unqualified staff to review obstetric ultrasounds is unfortunately not surprising.

In 2016, the United States Supreme Court said violations must be material before a reward can be paid under the False Claims Act. Depending on the size of the facility and patient volume, fifty bad ultrasounds may not be enough to prove a pattern and practice of fraud. But it certainly a close, close call and retaliation is always illegal.

Every Medicare fraud whistleblower case is unique, and each have their own set of merits. Four things remain fairly constant, however.

First, you must file a sealed lawsuit in court to even be eligible for a reward. Calling a toll free hotline is a great way to remain anonymous but won’t get you a reward and is often ineffective.

Second, you must generally be the first to file – that means DON’T WAIT!

Third, you must have inside information.

And finally, the fraud must involve government healthcare dollars. (There are private insurance whistleblower rewards available in California and Illinois.)

Ready to learn more? Visit our healthcare fraud whistleblower page. Ready to see if you have a case? Contact us online, by email *protected email* or by phone (414) 704-6731. All inquiries without fee or obligation and always confidential.

The post Obstetric Ultrasounds, Direct Supervision and Medicare Fraud appeared first on Mahany Law.

In May we wrote about Applied Behavioral Analysis (ABA) and how some think that the time intensive treatment option for autism patients makes it a ripe target for Medicare fraud. One of the biggest providers of ABA and autism care is Centria Healthcare. As we noted in our prior post, Centria is mired in an investigation by the Michigan Attorney General’s Office. That investigation apparently concerns Medicaid fraud.

After doing some more digging and research, we found that Centria has been a big political donor in Michigan. No surprise there.

Recently we saw a number of US companies admit having hired an attorney tied to President Donald Trump. Money, politics and corruption often go hand in hand.

It’s not illegal to hire someone connected to a prominent political figure. In fact, despite the media furor it makes sense. According to Business Insider, Swiss pharmaceutical giant Novartis, AT&T and other paid big bucks to former Trump lawyer Michael Cohen.

Why? Perhaps it was to get some influence, but we think the main reason was simply to gain insights and access. And neither of those reasons is illegal or improper.

Making a political donation directly to a candidate or elected official is different. Again, not illegal but it certainly raises more suspicions. And that is what bothers us about Centria Healthcare.

Michigan gubernatorial candidate Brian Calley, the state’s current Lt. Governor, received approximately $62,876 from Centria related contributions according to the Detroit Free Press.

That is significant. Brian Calley helped Centria obtain an $8 million grant at about the same time the campaign contributions were made. He is also running for governor.

Bill Schuette, the current state attorney general, is also running for governor this year. In fact, he and Calley are locked in a battle for this year’s Republican nomination. (The current governor, Rick Snyder, is ineligible to run again because of term limits.)

Schuette, who is investigating Centria, reportedly received $19,600 in contributions. He wisely turned the money.

We don’t fault the candidates for accepting donations. Running for office costs big bucks these days, especially in races where clean election financing isn’t available.

Our concern is that companies that make big contributions are probably going to want a payback. Candidates and elected officials can deny the connection between money and political favors all day long, but it is hard to fool the man on the street.

Centria is run by Scott Barry. His record is clean.  One of Barry’s closest allies and big investors can’t make the same claim. Mark Mitchell previously served as the CEO of Visiting Physician’s Association. He also serves on Centria’s board of directors.

In 2009, Mitchell’s company was prosecuted by the U.S. Department of Justice for violating the False Claim Act. In announcing a settlement, the government said that “Visiting Physicians Association submitted claims to the Medicare, TRICARE and Michigan Medicaid for unnecessary home visits and care plan oversight services, for unnecessary tests and procedures, and for more complex evaluation and management services than the services that Visiting Physicians Association actually provided.”

In other words, they billed for both unnecessary services and sometimes billed for services that were not even provided. Imagine going to an auto repair shop and finding out you were billed for new brakes but actually they did nothing. Well, in both examples you are the victim.

Why? Because Medicare, Medicaid and Tricare are financed with tax dollars. Your tax dollars.

The cases against Mitchell’s company are also notable both because it was filed in Michigan and was brought by four whistleblowers. The four shared a $1.7 million reward.

A separate whistleblower action brought by a radiologist that complained of poor quality x-rays with “no diagnostic value” was dismissed by the court

Whistleblower Awards, Medicare Fraud and Centria Healthcare

Healthcare professionals with inside information about fraud involving taxpayer funded healthcare are eligible for large cash rewards. The federal False Claims Act pays whistleblowers with inside information between 15% and 30% of whatever the government collects from wrongdoers. In the successful Visiting Physicians Association case, the four whistleblowers shared approximately 18% of the recovery.

Congress knows that many people are reluctant to step forward and report fraud. Sometimes whistleblowers suffer retaliation and sometimes they are ostracized. For that reason, Congress made sure the law had both healthy reward provisions and generous anti-retaliation measures to protect would be whistleblowers.

While the case is being investigated by the government, the whistleblower’s identity is typically kept confidential making it easier for the whistleblower to find new employment if he or she chooses to do so.

In the previous cases against Mark Mitchell and Visiting Physicians Association (VPA), three of the successful whistleblowers were medical technicians working for the company. They saw the fraud and greed on a daily basis. When things didn’t improve, they filed a lawsuit on behalf of taxpayers and the government.

Part of their complaint was that many of their patients didn’t meet Medicare guidelines for house calls.

In an effort to market their services, VPA was distributing flyers that said “Help a friend! Help a neighbor!  Summer months and hot humid weather make it difficult for some seniors to seek medical care… Do you have a friend or neighbor who could use a physician’s house call?… SREAD THE WORD! Tell your friends and neighbors about Visiting Physicians CARING DOCTORS MAKING HOUSE CALLS!”

They used similar ads on napkins that were used with a local Meals on Wheels program.

What the ads didn’t say is that only homebound people qualify for Medicare funded house calls. Not that those rules stopped VPA. The whistleblowers claimed that the company would falsely certify patients as eligible and order unnecessary tests and visits.

Call for Centria Whistleblowers

The Michigan Attorney General is already looking at Centria’s operations in that state. We suspect, however, that if there is wrongdoing involving the company it is not confined to a single state. Centria currently operates in several other states including Arizona, California, New Jersey, Oregon, Texas, Ohio, Washington and New Mexico. We also know they are seeking to expand.

Whether you have information about Centria in these states, other autism therapy providers or Medicare fraud in general, we want to speak with you.

For information about possible Centria fraud and autism therapy schemes, visit our Centria investigation page. Want general information about Medicare fraud? We have that too.

Ready to see if you qualify for a reward? Contact us online, by email at *protected email* or by phone at 202-800-9791. Cases accepted nationwide. All inquiries protected by the attorney client privilege and kept confidential.

The post Centria Healthcare Fraud Update – Follow the Cash appeared first on Mahany Law.

We have accepted cases involving foreign steel used in bridges, a government hospital, an airport, even the expansion of the street car system in New Orleans. What do all these foreign steel cases have in common? The use of foreign steel is illegal in most government funded contracts. It is also often dangerous.

Separate from the legal and safety issues surrounding foreign steel used in government projects, safety issues also arise when poor quality steel is used in other products.

All of these situations can give rise whistleblower awards.

Why Country of Origin Matters with Steel

When a vendor or contractor illegally substitutes American made steel with foreign made products, it’s motivation is greed. Foreign steel costs less. Think about, is a company going to purchase more expensive steel than required by law or contract? Of course not.

We aren’t suggesting that all foreign steel is of poor quality. But a company already breaking the law with mislabeled steel is surely going to try to save as much money as possible. And that almost always means using poor quality substitutes.

To the naked eye, all steel may look alike. Subtle differences in raw materials, impurities and the tempering (heat treatment) has a huge impact on tensile strength and quality.

Commercial steel sold in the United States comes with a certification of where the steel was produced or “rolled.” That certification contains important quality data. Engineers rely on this date when designing bridges, buildings, cars and other equipment.

When a company swaps foreign made steel for American steel, the certificates no longer describe the product being used. Companies pull off these schemes by substituting certificates from US steel for the cheaper, foreign goods. And very often, they get away with it.

When the government is the purchaser, U.S. Buy America and Buy American laws apply. (We have an entire foreign steel whistleblower reward page on our website.)

Toyota, Foreign Steelmaker Accused of Using Shoddy Metal in Car Components

In this post, we discuss an auto manufacturer and its steel supplier caught using subpar steel. The story outlines the safety concerns when using cheaper metal in cars. Whether the consumer is a car buyer or the United States of America, when we pay for something of a particular quality, that is what we should get.

A group of Toyota owners filed a class action after finding steel, aluminum and copper used in the manufacture of their cars was “subpar.”

Our heroes in this story are Alejandro Nava and Shantnu Malhotra. They filed a lawsuit claiming that Toyota sold cars with defective metals manufactured by Kobe Steel Ltd. (Some may know of Kobe Steel as Kobelco.) Like Toyota, the company is also headquartered in Japan.

The lawsuit says that Kobe rewrote quality assurance documents to suggest that metals supplied to Toyota for use in Toyota automobiles met safety standards when they did not.

Both Toyota nor Kobe are fighting back against the allegations (and apparently with each other).

Toyota says that after learning of the allegations of subpar metals, they conducted their own investigation and found that the metals still met their safety guidelines. As we understand their argument Toyota says, “We may have been duped into using thinner or weaker steel by Kobe but their products still meet our standards.”

Kobe takes a different approach. They claim that only Toyota has standing to bring the lawsuit as they are Kobe’s customers. The vehicle owners are customers of Toyota and not Kobe.

If both Kobe and Toyota are successful, Toyota vehicle owners will be stuck with cars presumably made with shoddy steel. Both sides admit problems, but no one wants to take responsibility. (A familiar refrain in many lawsuits unfortunately.)

In Kobe’s words,

In October 2017, Kobe Steel, Ltd (“Kobe”), a Japanese steel manufacturer, began self-disclosing misconduct in its Aluminum & Copper Business in Japan. In particular, through self-inspections and emergency quality audits, Kobe discovered that certain products did not comply with its customers’ specifications and that certain inspection data had been improperly rewritten. Recognizing the “seriousness of the situation,” Kobe initiated further investigations and acknowledged the “overwhelming shame to the Company” brought on by the incidents. Kobe’s candid public announcements received a spate of media attention, and Kobe is the subject of ongoing criminal investigations by Japanese and United States authorities. Kobe ‘sincerely apologize[d] for the enormous worry and trouble this incident has caused to its customers and other related parties.’

Simply fudging test results doesn’t mean the vehicles using the questionable metal products are defective. If Toyota is correct, they certainly have a defense. In too many cases, however, we see the big corporate defendants simply lie to protect themselves from lawsuits. And Toyota is no stranger to massive class action lawsuits.

In September Toyota agreed to pay $278.5 million to settle claims that the company continued to use defective (and dangerous) Takata airbags even after learning of the dangers. (Injured by a defective Takata airbag? We can help.)

And who can forget the $1.5 billion Toyota paid to settle sudden acceleration claims.

Where is the truth? We don’t know. We do know, however, that shoddy steel can kill.

Since 2000, two bridges in China collapsed causing multiple fatalities. Defective steel is thought to be the culprit. But can that happen here?

In 2010, the California Department of Transportation (CalTrans) decided to outsource the steel used in the new San Francisco Bay Bridge to China. That was legal because the state elected to forego federal funds. The agency thought the savings would be greater than the lost federal highway moneys. Guess what?

A San Jose Mercury News story revealed that a CalTrans study found the steel holding up the bridge didn’t meet specs. They said it was “was weaker than Caltrans required.” The company that won the bid to supply the steel, Zhenhua Port Machinery Co of Shanghai was labeled as a high risk bidder in part because they had never built a bridge before.

The cost savings? The $1.5 billion bridge ultimately cost over $6 billion!

No one died from defective steel on the Bay Bridge but we continue to investigate the collapse of the Florida International Bridge in Miami. There several unsuspecting folks did perish. Was that collapse the fault of poor design or poor quality concrete / steel? The National Transportation Safety Board hasn’t ruled yet.

The strength of the steel used to build cars is crucial in a collision. The car’s frame or a door made from shoddy metal may crumple if hit by another driver. The difference could be bumps and bruises instead of death. (If you are severely injured in a car wreck and the injuries seem disproportionate with the severity of the accident, contact us immediately and don’t dispose of the evidence (the car). There are many great personal injury lawyers out there. But very few have the skills to bring a complex products liability case. These cases often require over $100,000 in out-of-pocket costs to bring. Few lawyers are willing to commit such resources. If you think the injuries were the fault of a defective auto part, call us.)

Foreign and Shoddy Steel Whistleblower Rewards

There are two programs that may pay whistleblower rewards for inside information about foreign made or shoddy steel.

For government contract cases, the federal False Claims Act pays whistleblower rewards based on information about fraud involving government programs. If a vendor, contractor or sub is illegally substituting American made steel with cheaper foreign made materials, there is probably a False Claims Act violation.

With triple damages and huge fines (up to $20,000 per phony invoice or certification) the rewards add up quickly.

The Act also has tough anti-retaliation provisions that can even pay your legal fees.

Much of this post discussed violations of the Buy American laws (foreign versus US steel) but rewards are available anytime a vendor supplies shoddy steel no matter where it was made. And it isn’t just limited to steel. We are beginning to see cases where contractors are charging the government for high quality cement but substituting more inferior grades.

A very recent law allows whistleblowers with inside information about defective automobiles or auto parts to also claim a reward. The defect has to relate to a safety issue. For example, two whistleblowers who reported that car makers were knowingly using defective Takata airbags were given a large cash reward.

If you have information about Buy America, Buy American or mislabeled Made in America goods, you may be eligible for a reward. To learn more, visit our Buy American whistleblower reward page.

Ready to see if you qualify for a reward? Contact us on line, by email *protected email* or by phone at 202-800-0791. All inquiries are protected by the attorney – client privilege and are kept confidential.*

MahanyLaw – America’s Buy American Whistleblower Lawyers

*Mahany Law accepts cases across the United States. There is no fee for our services unless we first recover money for you.

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