By law, insurance companies must offer plans that cover a minimum required portion of drug costs, with the government and Medicare beneficiaries covering the rest, according to the release. Insurance companies are then required to submit bids in which they report the benefits they propose to cover and confirm the ones that meet Part D’s minimum coverage, the release states.

The lawsuit arose out of allegations made by whistleblower and  former actuary for Humana, Steven Scott. Scott’s complaint claims that the insurance giant inflated its bids to the government on an unsupported basis solely for the purpose of generating profit.

According to Scott, Humana accurately predicted the costs for the Walmart Plan but instead decided to base its bids off of unreasonable assumptions. “Although Humana asserted in court documents that the predictions underlying its bids were merely estimates about future behavior, they worked in Humana’s favor 100% of the time over seven years and for 245 bids,” Edward Arens of Phillips & Cohen, one of Scott’s attorneys, said in a statement. “The odds that a big insurer would ‘miss’ on an important assumption in the same way that many times in a row are too small to measure.”

According to Scott, Humana kept two sets of books for the purpose of valuing its drug plan. One was used to report the actuarial value of the Walmart Plan to CMS and “justify the award of the contract, “while the other was used to set Humana’s own internal operating budget, Scott alleged. Scott’s attorneys stated that Humana’s internal assumptions proved accurate every year while the underlying bids were “wildly off and always in Humana’s favor, benefiting the insurance company by hundreds of millions of dollars.”

Humana’s alleged illegal practice ranged from 2011 to 2017 in which the company reportedly generated $84 million in additional profit. “The Part D program depends on insurance companies paying their minimum share of drug costs. … Humana shirked its responsibility by telling the government that its plan would cover drug costs that Humana did not actually plan to cover. Our complaint detailed how the government and beneficiaries were left with paying tens of millions of dollars more than Congress intended for years, while Humana pocketed the money as ‘savings,’” Claire Sylvia, a whistleblower attorney who filed the case, said in the release.

In a statement, Humana says it “firmly believes that the actuarial assumptions in its prescription drug plan were reasonable and in full compliance with all laws and regulatory requirements, and that the plaintiff’s claims in the case are without merit. After a thorough investigation into the allegations, the US Department of Justice chose not to intervene in the case. While we are confident in our position and expected to prevail at trial, we have decided to enter into a settlement agreement without admitting any wrongdoing to avoid the uncertainty, distraction, inconvenience, and expense of a lengthy jury trial.”  

Jacob Horowitz is a contributing editor at Compliance Chief 360°

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The company said that it expects an administrative order from the SEC to resolve previously disclosed criminal and civil investigations into “improper payments made by Raytheon Company and its joint venture, Thales-Raytheon Systems, in connection with certain Middle East contracts since 2012.”

The company also expects to enter into the deferred agreement and False Claims Act settlement with the DoJ to resolve investigations regarding defective pricing claims for “specific legacy Raytheon Company contracts from 2011 to 2013 and in 2017.”

“The charge also includes the impact of certain voluntarily disclosed export controls violations primarily identified in connection with the integration of Rockwell Collins and, to a lesser extent, Raytheon Company into RTX, including certain violations expected to be resolved pursuant to a consent agreement with the Department of State,” according to RTX’s financial disclosure.

It was reported in 2021 that the U.S. was investigating whether payments made by Raytheon to a consultant for the Qatar Armed Forces were actually bribes intended for a member of the ruling royal family.

“While the financial impact of these items is above what we had previously reserved, we believe the provisions we have taken put these issues behind us financially, and we will continue to cooperate with the government and external monitors as we move forward,” Neil Mitchill Jr., RTX’s chief financial officer, said on an earnings call. The company has described the bribery and contract pricing matters as legacy issues as it merged with United Technologies in 2020.

RTX said that prosecutors will seek to dismiss charges if the company adheres to the deferred prosecution agreements for a three-year period. These agreement mandates the company to enhance its compliance programs and implement other measures to prevent future violations.  

Jacob Horowitz is a contributing editor at Compliance Chief 360° 

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The Texas-based company has agreed to a proposed settlement that would require the company to pay $1 million to refund consumers harmed by the company’s actions and prohibit the company from further misleading consumers and failing to provide required disclosures.

“Vroom promised the fast deliveries of thoroughly inspected cars, but sped right past compliance,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Online car dealers and other Internet sellers must provide required disclosures just like any brick-and-mortar businesses that comply with the law.”

In its complaint against Vroom, the FTC alleges that the company failed to follow the Used Car Rule, the Pre-Sale Availability Rule and the Mail, Internet, and Telephone Order Rule (MITOR).

Since 2019, Vroom has sold more than 170,000 vehicles to consumers through its website. In its advertising, Vroom said that its cars underwent “multiple inspections” to ensure they were in good condition to ease consumers’ concerns about buying a used car without being able to inspect it before purchasing. Vroom’s website even listed 184 points of inspection that were checked on every car they sold.

Customers Complain about Delivery and Quality of Vroom’s Cars

Consumer complaints about the company told a different story, according to the FTC’s complaint. Numerous customers complained about the condition of the cars they received from Vroom, with everything from loud grinding noises, bald tires, and worn brakes being reported.

The complaint also notes that Vroom told consumers that cars purchased from the company would be delivered in 14 days or less in its advertising and on its website. However, when it couldn’t meet that delivery timeline, which was often, Vroom regularly failed to give consumers the chance to either consent to a longer delivery timeline or cancel their purchase and receive a prompt refund, as required by MITOR. The complaint cites instances where consumers have had to wait as much as three months or longer before their car arrived.

As a used car dealer, Vroom also is required to follow the FTC’s Used Car Rule, which includes a requirement that the dealer properly complete and display a “Buyers Guide” on each used car it offers for sale. The Buyers Guide gives consumers important information about whether the used car comes with a warranty, or it is being sold “as is.”

If the car is sold with a dealer’s warranty, the Used Car Rule requires the Buyers Guide to list its basic terms and conditions, including the duration of coverage, the percentage of total repair costs to be paid by the dealer, and the exact systems covered by the warranty. The complaint alleges that Vroom failed to provide the Buyers Guide until late in the purchase process, and that the Guides were often missing required information.

Finally, the complaint alleges that Vroom violated the Pre-Sale Availability Rule because it did not post the terms of its warranty on its website near the warranted used vehicle. Nor did Vroom notify customers how they could obtain the warranty’s terms prior to receiving the final sale documents.

The proposed settlement prohibits the used car dealer from making misleading claims to consumers about inspections or shipping and requires Vroom to document all claims about promises it makes about shipping times to consumers, as well as requiring Vroom to follow the requirements of MITOR, the Used Car Rule, and Pre-Sale Availability Rule.

Under the terms of the settlement, Vroom will be required to pay $1 million to the FTC to be used to provide refunds to consumers who were harmed by the company’s unlawful practices.  

Jacob Horowitz is a contributing editor at Compliance Chief 360° 

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“Protecting taxpayer dollars from fraud and abuse is of paramount importance to the Department of Justice – and these enforcement figures prove it,” said Acting Associate Attorney General Benjamin Mizer. “The False Claims Act remains one of our most important tools for rooting out fraud, ensuring that public funds are spent properly, and safeguarding critical government programs.”

The False Claims Act penalizes those who knowingly and falsely claim money from the United States or knowingly fail to pay money owed to the United States. Its purpose is to safeguard government programs and operations that provide access to medical care, support our military and first responders, protect American businesses and workers, help build and repair infrastructure, offer disaster and other emergency relief, and provide many other critical services and benefits.

“As the record-breaking number of recoveries reflects, those who seek to defraud the government will pay a high price,” said Assistant Attorney General Boynton, head of the DoJ’s Civil Division. “The American taxpayers deserve to know that their hard-earned dollars will be used to support the important government programs and operations for which they were intended.”

Of the more than $2.68 billion in False Claims Act settlements and judgments reported by the DoJ this past fiscal year, over $1.8 billion related to matters that involved the health care industry, including managed care providers, hospitals, pharmacies, laboratories, long-term acute care facilities, and physicians. The $1.8 billion only include recoveries arising from federal losses, but in many of these cases, the department was instrumental in recovering additional amounts for state Medicaid programs.

Health Care Fraud

In 2023, health care fraud remained a leading source of False Claims Act settlements and judgments. These recoveries restore funds to federal programs such as Medicare, Medicaid, and TRICARE, the health care program for service members and their families. But just as important, enforcement of the False Claims Act deters others who might try to cheat the system for their own gain, and in many cases, also protects patients from medically unnecessary or potentially harmful actions. As in years past, the act was used to pursue matters involving a wide array of health care providers, goods, and services.

In one of its largest settlements, The Cigna Group agreed to pay more than $172 million for allegations that it submitted inaccurate diagnosis codes for its Medicare Advantage Plan enrollees in order to increase its payments from Medicare. The DoJ obtained another $22.5 million from Martin’s Point Health Care for similar allegations.

The Department also received numerous settlements and judgements from companies who engaged in unnecessary services and substantial care, the opioid epidemic, and unlawful kickbacks.

Although these actions exhibit the DoJ’s focus on the healthcare industry, the recoveries in 2023 also reflect the department’s focus on key enforcement priorities, including fraud in pandemic relief programs and alleged violations of cybersecurity requirements in government contracts and grants. However, considering the trends of the past year, it is reasonable to anticipate that healthcare will continue to be a primary focus for the Department.  

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The DoJ said that H. Lee Moffitt Cancer Center & Research Institute Hospital will pay $19 million to settle the charges and that the hospital received credit for cooperating with the agency’s investigation, including self-disclosing its alleged misconduct, remediating the issues, and upgrading compliance measures around billing.

This settlement resolves Moffitt’s liability for claims that it submitted to Medicare and other federal healthcare programs during the period from 2014 to 2020 for services that were not legally reimbursable. Specifically, Moffitt billed federal healthcare programs for items and services provided as part of clinical trial research that should have been billed to non-government trial sponsors.

After learning of these issues, Moffitt began its own investigation and compliance review and voluntarily provided the government with a written disclosure of its discoveries. Moffitt cooperated fully with the government’s investigation of the conduct and implemented quick and significant corrective measures.

Improved Compliance Measures

According to the settlement, Moffit took the following steps to correct the issues with its billing system:

• Establishing a new unit within its finance department responsible for ensuring compliant billing of services provided in clinical trials;
• Updating its policies and procedures relating to the billing of services provided in clinical trials;
• Hiring additional staff to implement these new policies and procedures; and
• Placing a blanket hold on all charges associated with clinical trials until it could ensure the new policies and procedures were working effectively.

“Healthcare providers participating in federal healthcare programs must ensure that they comply with applicable rules and regulations, including those relating to the submission of claims in connection with clinical research,” said Attorney General Brian Boynton, head of the Justice Department’s Civil Division. “As today’s settlement reflects, when providers run afoul of their obligations, they can mitigate the consequences by making timely self-disclosures, cooperating with investigations and taking appropriate remedial measures.”

Roger Handberg, an attorney for the Middle District of Florida, stresses how crucial it is to protect the nation’s healthcare programs. He highlights the encouragement for those receiving funds from government healthcare to quickly disclose and cooperate when they find improper claims. “Protecting the nation’s healthcare programs is a top priority of our office,” said Handberg. “When those who receive funds from government healthcare programs discover that they have submitted improper claims, we encourage them to promptly disclose the issues and cooperate fully with investigators to reach an appropriate and swift settlement. That’s what Moffitt did here: self-reported its improper claims, cooperated with government investigators and took action to remediate its billing systems.”

“Providers participating in clinical trials funded by federal health care programs must abide by specific guidelines that safeguard these programs,” said Special Agent Fernando Porras of the Department of Health and Human Services Office of Inspector General. “Providers will be held accountable if they bill for services outside the rules governing reimbursement. Together, with our law enforcement partners, we will continue to maintain the fiscal integrity of federal healthcare programs.”  

Jacob Horowitz is a contributing editor at Compliance Chief 360°

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“With this resolution, UBS will pay for its conduct related to its underwriting and issuance of residential mortgage-backed securities,” said Breon Peace, U.S. Attorney for the Eastern District of New York. “The substantial civil penalty in this case serves as a warning to other players in the financial markets who seek to unlawfully profit through fraud that we will hold them accountable no matter how long it takes.”

“The scope of this settlement should serve as a warning to other financial institutions – both large and small – of the significant penalties that can result when corporations misrepresent vital information to investors and undermine trust in our public markets,” said Ryan Buchanan, U.S. Attorney for the Northern District of Georgia.

Following an extensive investigation, the United States filed a civil action in November 2018 alleging UBS defrauded investors relating to the sale of 40 RMBS issued in 2006 and 2007. The complaint alleged UBS “knowingly made false and misleading statements to buyers of these securities relating to the characteristics of the mortgage loans underlying the RMBS,” and that the conduct allegedly violated the mail, wire, and bank fraud statutes of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA).

In its complaint, the government alleged, “contrary to UBS’ representations in publicly filed offering documents, UBS knew that significant numbers of the loans backing the RMBS did not comply with loan underwriting guidelines that were designed to assess borrowers’ ability to repay,” according to the DoJ.

The agency further alleged UBS “knew that the property values associated with a significant number of the securitized loans were unsupported, and that significant numbers of the loans had not been originated in accordance with consumer protection laws.” UBS also allegedly knew of these “significant problems because it had conducted extensive due diligence on the underlying loans prior to the RMBS being issued to determine whether the loans were consistent with representations that would be made to investors,” the DoJ said. “Ultimately, the 40 RMBS sustained substantial losses.”

Including UBS, the DoJ has collected more than $36 billion in civil penalties from 18 domestic and foreign banks, mortgage originators, and rating agencies for their alleged conduct related to mortgages securitized in failed RMBS leading up to the 2008 financial crisis. The UBS case marks the last RMBS Working Group case resolved by the U.S. Attorney’s Office of the Eastern District of New York. According to the DoJ, over $11 billion in penalties have been recovered in six cases. 

Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.

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Under government contracting rules, a contractor may not charge costs to a government contract that has no connection to it. According to the allegations in the settlement agreement, from approximately April 2011 to March 2021, Booz Allen improperly allocated indirect costs associated with its commercial and/or international businesses to government contracts and subcontracts that “should have been allocated to commercial and/or international contracts or should have been treated as unallowable costs.”

The government further alleged Booz Allen created and maintained indirect cost pools that commingled costs associated with both commercial and/or international contracts and government contracts and subcontracts. Consequently, Booz Allen allegedly allocated indirect costs “disproportionately between commercial and/or international contracts and government contracts and subcontracts,” violating Cost Accounting Standards and the Federal Acquisition Regulation, according to the settlement agreement.

“Booz Allen used costs and cost rates that included indirect costs supporting Booz Allen’s commercial and/or international businesses to seek inflated payments and reimbursements under its government contracts and subcontracts,” the settlement agreement stated. It further “failed to disclose current, accurate, and complete cost or pricing data related to such costs resulting in inflated prices for government contracts and subcontracts.”

The settlement resolved a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file a lawsuit on behalf of the United States for false claims and share in a portion of the government’s recovery. The qui tam lawsuit was filed by Sarah Feinberg, a former Booz Allen employee, who will receive approximately $70 million of the government’s recovery.

In a Form 8-K filing, Booz Allen said it entered into the settlement agreement “to avoid the delay, uncertainty, and expense of protracted litigation,” and that the agreement “contains no admission of liability by the company.” 

Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.

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DMC operates hospitals in and around Detroit, including Sinai Grace Hospital and Harper University Hospital. In October 2013, Tenet acquired Vanguard owned-and-operated hospitals and outpatient facilities, including DMC.

According to the allegations, in a settlement announced May 31, Tenet, Vanguard, and DMC “caused the submission of false or fraudulent claims to Medicare.” Specifically, the government alleged, from 2014 through 2017, “Sinai Grace Hospital and Harper University Hospital provided the services of DMC-employed mid-level practitioners to 13 physicians at no cost or below fair market value in violation of the Anti-Kickback Statute (AKS).”

The physicians allegedly “were selected because of their large number of patient referrals to Sinai Grace Hospital and Harper University Hospital, and that the purpose of these arrangements was to induce the physicians to refer additional Medicare patients to DMC facilities,” the DoJ stated.

The allegations were brought forth by Jay Meythaler, a former employee of Wayne State University Medical School, an affiliate of DMC. Under the FCA’s whistleblower provisions, a private party may file an action on behalf of the United States and receive a portion of any recovery. In this case, Meythaler will receive $5.2 million for his portion of the settlement. 

Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.

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Since March 2020, Delta Air Lines said it will commit $1 billion over the next 10 years to become “the first carbon-neutral airline globally” on its “journey to mitigate all emissions from its global business going forward.” The airline said it is investing in “driving innovation, advancing clean air travel technologies, accelerating the reduction of carbon emissions and waste, and establishing new projects to mitigate the balance of emissions.” Over the last two years, Delta Air Lines says it has been transparent about how it is progressing on that journey.

But a proposed class-action complaint, filed May 30 in U.S. District Court for the Central District of California, accuses Delta Airlines of greenwashing. It alleges that “such representations are manifestly and provably false.” The central argument in the complaint is that “foundational issues with the voluntary carbon offset market…cannot make a company carbon neutral.”

Carbon Offsets ‘Misleading’

The voluntary carbon offset market is an initiative that aims to facilitate investment in green projects—such as renewable energy and prevention of deforestation. In exchange for their investment in these projects, companies receive “carbon offset” credits that that are supposed to verify the amount of carbon that was not released due to the company’s investments in the offset market.

However, the complaint argues that even the primary offset vendors offer offsets replete with:

• inaccurate accounting;
• non-additional effects on worldwide carbon levels due to the vendors crediting offsets for projects that would have occurred with or without offset market investment;
• non-immediate speculative emissions reductions that will at best occur over decades, despite crediting purchasers with the sum of those projected offsets; and
• impermanent projects subject to disease, natural disasters, and human intervention.

According to the complaint, such issues are specific to offsets purchased by and relied upon by Delta Air Lines, as well as many other companies, that have “grossly misstated the actual carbon reduction produced by their carbon offset portfolio.”

The complaint, filed on behalf of a California resident and other Delta Air Line customers, alleges that she and other customers “purchased Delta flights at a market premium” due to their belief that by flying Delta they engaged in “more ecologically conscious air travel.”

The lawsuit further called Delta Airlines’ carbon-neutral representations “false and misleading.” The complaint claims that customers would not have purchased Delta Airlines’ services or would have “paid substantially less for those services,” had they known Delta Airline’s carbon neutral representations were false.

The complaint alleges violations of California’s Consumers Legal Remedies Act, California’s False Advertising, Business and Professions Code; and “unlawful, unfair, and fraudulent trade practices” in violation of California’s Business and Professions Code.

As of press time, the judge had not yet approved a jury trial. 

Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.

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According to the April 13 settlement agreement, between January 2011 and December 2020, Adobe allegedly made improper payments under its Solution Partner program to companies that had a contractual relationship with the government, which allowed the company “to influence federal purchases of Adobe software,” the DoJ stated.

Adobe allegedly paid the companies a percentage of the software’s purchase price, payments that “constituted prohibited kickbacks that resulted in Adobe causing false claims for payment to be submitted to federal agencies,” the DoJ stated.

The civil settlement resolves claims brought by three former Adobe managers under the whistleblower provisions of the False Claims Act, which allow private parties to file an action on behalf of the United States and receive a portion of any recovery. As part of this resolution, the whistleblowers will receive $555,000. 

Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.

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