Michael Sullivan, Author at Finch McCranie LLP

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Judges Address New State False Claims Act in Georgia

July 30, 2008
Michael Sullivan

At the annual “Continuing Judicial Education” conference in St. Simon’s Island, Georgia this week, I was honored to be invited to speak to the assembled judges about the new state False Claims Act in Georgia, the State False Medicaid Claims Act.

As this whistleblower lawyer blog has written about extensively, there is a wave of new state False Claims Acts across the country, as Congress has urged states to replicate the dramatic successes of the federal False Claims Act in stopping those
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Offshore Tax Evasion and Cayman Islands Hearing Prompts Grassley’s Call to Follow IRS Whistleblower Program with Additional IRS Tools

July 29, 2008
Michael Sullivan

At the Senate Finance Committee’s hearing on the Cayman Islands and offshore tax evasion last week, Senator Charles Grassley reiterated the importance of the new IRS Whistleblower program to combat tax evasion, but also stressed the need for Congress to provide the IRS greater tools to address offshore tax evasion.

The July 24 hearing focused on GAO’s investigation into the Ugland House, a law firm’s office building in the Cayman Islands that is the registered address of thousands of corporations. The hearing also examined
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IRS Predicts Whistleblowers Will Be Important to Efforts to Combat Offshore Tax Evasion After UBS

July 28, 2008
Michael Sullivan

This past week the IRS Commissioner of the Large and Midsized Business Division summarized the IRS’s efforts to combat offshore tax evasion. He predicted that whistleblowers will become increasingly important to the IRS’ efforts, given the existence of the new IRS Whistleblower rewards.

IRS Commissioner Frank Ng described to Congress the “critical importance to tax administration in this country — the practice of sheltering U.S. earned income in foreign jurisdictions as a means of avoiding U.S. taxation.”

He identified as “Tier I” issues the following transactions::

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Nursing Home Operators Plead Guilty to Medicaid Fraud and Abuse of Patients

July 27, 2008
Michael Sullivan

Having lunch this week with a public servant who investigates heath care fraud, I was struck once again by his descriptions of abuses that nursing home residents too often suffer, many of which our whistleblower attorneys had also encountered in past cases.

It is damnable enough to steal federal and state taxpayer funds that are supposed to pay for care of our elderly through Medicare and Medicaid. It is another level of depravity to ignore our elder citizens’ medical needs–and even to steal from
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Hospital System Settles Medicare Fraud False Claims Act Allegations for $60 Million

July 26, 2008
Michael Sullivan

The government’s announcement this week of a $60 million Medicare fraud settlement with a Missouri hospital system is yet another example of the need for ongoing deterrence of health care fraud.

According to the government, Lester E. Cox Medical Systems violated the False Claims Act, the nation’s primary tool for combating fraud against taxpayer funds. Dating back to 1995 and continuing to recent years, Cox allegedly committed various unlawful acts, including submitting fraudulent cost reports to obtain Medicare funds, entering into illegal arrangements
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Whistleblower Awards Work To Protect The Government From Fraud

July 24, 2008
Michael Sullivan

The False Claims Act provides awards of 15 to 30 percent of judgments and settlements against those individuals and companies that perpetrate schemes to defraud the federal government. In the event a whistleblower files a lawsuit in the name of the United States, “blows the whistle” on the fraud scheme and a financial recovery results, the whistleblower is entitled to a percentage of the recovery. Those cheating the government pay these rewards. Not one dime comes from taxpayers. The reason for this is that the
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Acknowledging the Integrity That Whistleblowers Stand For in Bringing Qui Tam Whistleblower Cases Under the False Claims Act

July 18, 2008
Michael Sullivan

“What motivates whistleblowers” is a question that our whistleblower attorneys are asked frequently. Basic honesty and integrity–trying to do the right thing–is what we see most.

It is deeply satisfying when a whistleblower’s courage in insisting on honesty and integrity is recognized and applauded. I just received this note that was sent to a client who had “taken a stand” for honesty and integrity in handling federal grant funds at an educational institution, and I am reprinting portions here. Its truth and eloquence speak
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Major “Qui Tam” Whistleblower Law Amendments Clear House Judiciary Committee, Which Approves “False Claims Act Correction Act of 2007”

July 16, 2008
Michael Sullivan

Very important amendments to the nation’s major whistleblower law, the False Claims Act, cleared the House Judiciary Committee today. The False Claims Act Corrections Act of 2007 is intended to restore the False Claims Act to its originally intended usefulness. It will eliminate many “loopholes” that dishonest government contractors have used to avoid liability.

Our whistleblower lawyer blog has often written about the False Claims Act, the qui tam law that empowers private citizens to report fraud as whistleblowers or “relators,” and
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Whistleblower Attorneys at NELA Conference Address “Strategic Thinking in Whistleblower Cases”

July 1, 2008
Michael Sullivan

This past week, more than 450 of the country’s best employment lawyers who represent individuals gathered in Atlanta for the National Employment Lawyers Association’s Annual Conference.

I had the pleasure of appearing with a group of excellent attorneys on a panel of that discussed “Strategic Thinking in Whistleblower Cases,” moderated by Robin Potter of Chicago (who won a major victory last week).Speakers at the 2008 NELA Conference panel on “Strategic Thinking in Whistleblower Cases” were (front row) David Marshall and Bryan J. Schwartz,
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New IRS Whistleblower Rules Are Issued by U.S. Tax Court

June 5, 2008
Michael Sullivan

One of the most meaningful improvements of the new IRS Whistleblower Program authorized by Congress in December 2006 is that IRS Whistleblowers have an enforceable right to a reward when they report significant tax violations. To enforce that right, tax whistleblowers can seek review by the U.S. Tax Court of award decisions.

This week, the United States Tax Court has proposed amendments to its Rules of Practice and Procedure regarding whistleblower award actions, which can be found at http://www.ustaxcourt.gov/press/060208.pdf. The IRS Whistleblower Office is expected to review the proposed Rules now and provide feedback to the Court.

The Tax Court also has invited public comments on the proposed amendments, to be received by July 31, 2008.

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Health Care Fraud Lawyers to Analyze Recent Amendments to False Claims Act

September 26, 2009
Michael Sullivan

At the “Advanced Health Law” seminar on October 9, attorneys prosecuting and defending cases of alleged health care fraud will discuss the important new amendments to the False Claims Act. I am honored to be the panelist who will discuss these important new provisions from the perspective of representing whistleblowers (known as “relators”) who bring qui tam whistleblower cases under the False Claims Act.

These significant changes to the False Claims Act took effect on May 20, 2009, when the Fraud Enforcement and
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Federal Contractor Fraud Laws To Get Tougher? ACORN Controversy Casts Spotlight on Larger Contractors That Violate False Claims Act

September 25, 2009
Michael Sullivan

Outrage over misuse of public funds is a healthy reaction to those who cheat taxpayers. It can also create interesting bedfellows, as newly-introduced legislation in the House demonstrates.

HR 3571, aimed at “de-funding ACORN,” would ban federal contracts and most federal funds to any organization that “has filed a fraudulent form with any Federal or State regulatory agency,” among other things. (Complete bill is below.)

As. Rep. Alan Grayson (D-FL) observed correctly, fraud by those who receive government funds involves much “bigger fish” than ACORN–and bigger dollar amounts of alleged fraud.

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Calls Continue for a “False Claims Act” for Wall Street Whistleblowers

September 20, 2009
Michael Sullivan

Since the Madoff and Stanford scandals, we have written about the calls for the Securities and Exchange Commission (SEC) to establish a meaningful whistleblower rewards program. Currently, no adequate incentives exist for whistleblowers to speak up when they might have a chance to stop large scale fraud and prevent the next Madoff or Stanford debacle. How much better off would so many Americans be if someone had exposed Madoff before he defrauded so many investors?

Forbes has run interesting column by Bill Singer, calling for a statute that apples “False Claims Act” whistleblower remedies to Wall Street. Why not protect investors from the massive losses that so many incurred? The current system obviously failed to do so. Harry Markopolis has described eloquently how the SEC could do so much better, and new SEC whistleblower rewards should make a huge difference.

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New IRS Group to Address Offshore Accounts and Other International Tax Abuses by Wealthy Taxpayers

September 4, 2009
Michael Sullivan

Offshore tax abuses and tax evasion have kept the IRS quite busy of late. The fast-approaching September 23 deadline for its “voluntary disclosure program,” and its agreement with UBS that will allow it to identify thousands of American taxpayers with offshore accounts, have added momentum to its efforts to combat offshore tax abuses by high net worth taxpayers.

Now, the IRS is creating a new group to “focus on examinations involving webs of entities and arrangements controlled by the high wealth taxpayer segment.” It will
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Protecting Whistleblowers from Criminal Prosecution: The Mystery of the UBS Whistleblower’s Prison Sentence

September 3, 2009
Michael Sullivan

In one of two prominent whistleblower cases in the news this week, whistleblower John Kopchinski will be awarded more than $50 million for his role in exposing improper “off-label marketing” of the drug Bextra by Pfizer. Other whistleblowers also will be rewarded because of this settlement. That settlement of $2.3 billion is the largest in history ($1 billion to settle False Claims Act allegations, and $1.3 billion in criminal fine and forfeiture).

As large as the Pfizer settlement is, the other whistleblower’s actions seem likely to lead to recovery of dollars that could dwarf this $2.3 billion settlement. UBS whistleblower Bradley Birkenfeld has lifted the shroud of secrecy from thousands of American taxpayers’ offshore accounts at UBS. He has given the IRS a foothold into recovering potentially many billions in unpaid taxes owed.

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Latest State “False Claims Act” Is Enacted in North Carolina

September 2, 2009
Michael Sullivan

We have followed closely the trend of states enacting their own versions of the nation’s chief whistleblower law the False Claims Act. North Carolina has become the newest state to enact its own False Claims Act, which is reprinted below.

We congratulate the State of North Carolina on a momentous accomplishment.
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UBS and IRS Voluntary Discloure Program: Interesting Convergence for IRS Whistleblower Program

August 30, 2009
Michael Sullivan

Offshore tax abuses have been an IRS priority for some time, but the impending September 23, 2009 deadline for the IRS “Voluntary Disclosure” program–combined with the recent announcement that UBS has agreed with the IRS to release 4,450 names of U.S. account holders–has created a flurry of activity for the IRS.

Anxious taxpayers with exposure cannot be sure that their names are not on the list being produced. Last week, the IRS added a 52nd “FAQ” about the Voluntary Disclosure Program to explain its application to UBS account holders:

Q52. Are UBS account holders eligible to make a voluntary disclosure under the IRS’s offshore Voluntary Disclosure Practice (VDP) announced on March 23, 2009, and set to expire September 23, 2009?

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Court Agrees with IRS That Hospital CEO Is Personally Liable for Unpaid Payroll Taxes

August 9, 2009
Michael Sullivan

Health care cases that our lawyers see most often involve whistleblowers who know of violations of the False Claims Act. While we also pursue many IRS violations under the IRS Whistleblower Program, the health care industry is not the source of most of those claims.

In perhaps a new trend, last week a federal court in Florida agreed with the IRS that a hospital CEO is personally liable for failing to pay over to the IRS close to $2 million in payroll taxes. (Doulgeris v. United States, M.D.Fla., August 03, 2009).

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The “Program Fraud Civil Remedies Act”–A “Mini-False Claims Act”

August 9, 2009
Michael Sullivan

For a “webinar” on August 11, 2009, I have been asked to discuss not only potential liability under the False Claims Act for false or fraudulent claims to the federal government, but also what has been called the “Mini-False Claims Act”: the “Program Fraud Civil Remedies Act,” 31 U.S.C. §§ 3801-12,

Because it is not feasible for the government to handle under the False Claims Act every conceivable case of a false claim in procurement, the PFCRA was enacted so that smaller claims could be handled in an administrative process.

A major provision of the PFCRA, section 3802, is reprinted below:

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Can IRS Whistleblower Program Help Offset Cost of Health Care Overhaul?

July 24, 2009
Michael Sullivan

How to pay for health care in the United States, as costs inexorably grow?

The IRS Whistleblower Program may help by narrowing the “tax gap”–the difference between taxes owed and taxes paid each year. Treasury’s latest estimate is that $345 billion owed remains uncollected from those who engage in tax fraud, tax evasion, and other tax noncompliance. (“Update on Reducing the Federal Tax Gap and Improving Voluntary Compliance”).

Senate Finance Committee Chair Max Baucus, D-Mont., raised this tax gap with the next IRS Chief Counsel, William J. Wilkins, on July 14: “We’re right now trying to figure how to pay for healthcare reform,” Baucus told Wilkins. “And it’s ironic that coincidentally, the amount we are trying to raise is that amount.”

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