Browsing: / Home
Shortlink

Deputy Attorney General Announces New Anti-Fraud Effort for Disaster Relief Programs

By Zachary Kitts on September 30, 2017 in , ,

 

 

 

 

 

Deputy Attorney General Rod Rosenstein Announces Anti-Fraud Effort to Root Out Fraud on Disaster Programs

The Atlantic hurricane season is nothing new, but it seems to have been particularly virulent this year (though thankfully not for us here in Virginia).  What is new, however, is a new anti-fraud effort announced this week by Deputy Attorney General Rod Rosenstein.  As regular readers know, in certain drastic situations — such as a hurricane — the federal government puts massive resources into play, which is without question the right thing to do.  And, as with any massive deployment of government resources, there will always be a few unscrupulous actors who take advantage of the situation.

That was certainly the case following Hurricane Katrina in 2005, when billions of dollars poured into the Gulf Coast. In the wake of Katrina the National Center for Disaster Fraud (NCDF) was born.  The NCDF is a partnership between the U.S. Department of Justice and various federal law enforcement and regulatory agencies to coordinate resources to investigate, prosecute — and hopefully, deter — fraud related to natural disasters.

Department-Wide Standards Are Announced for the First Time

Needless to say, DoJ has previously co-ordinated its efforts in response to the massive storms that hit the Gulf Coast this year.  As just one example, several weeks ago, several USAOs in affected districts announced a coordination of efforts.  But the “Rosenstein Memo” is new in that it is Department-wide.

In a brief memo dated Sept. 22, 2017,  the Deputy Attorney General, among other things, requires each of the 94 U.S. Attorney’s Offices to designate a point of contact for fraud investigations and prosecutions.

Deputy A.G. Rosenstein had this to say:

The Justice Department is committed to pursuing any fraudsters seeking to capitalize on the tragedy and will devote the necessary resources to do so.  It is imperative that the department is able to properly track and manage its response to claims of disaster fraud and that agencies receive timely and relevant investigative leads and other relevant information. By working together, we can ensure that federal emergency relief funds are properly distributed to those who need them most and that taxpayers are not victimized by fraudsters or other criminals.

And that, dear readers, is a good start.  Stay tuned for reports on the inevitable criminal and civil prosecutions that will follow.

 

 

Mixx Delicious Digg Facebook Twitter
Shortlink

Attorney’s Fee Awards in Virginia State Courts 

By Zachary Kitts on August 31, 2017 in ,

 

 

 

 

 

 

Attorney’s Fee Awards in Virginia State Courts

As regular readers know, in addition to handling fee-shifting cases of my own, I am often asked to serve as an expert witness in litigation over reasonable attorney’s fees.  For years I have been mystified about the fact that Virginia state courts tend to award fees at lower rates than federal courts.  That could be because Circuit Courts are accustomed to more routine legal matters than federal courts.  It could also be that many Circuit Court judges are accustomed to “splitting the baby” so to speak.

Fortunately, several recent opinions from Virginia state courts give me some hope that this tide is turning and that Courts of the Commonwealth are beginning to take fee awards seriously.

A few months back I covered the SCOVA opinion in Lambert v. Sea Oats Condo Association.  There, the Supreme Court of Virginia overturned a Circuit Court that awarded a lawyer only $375 in attorney’s fees after hundreds of hours of work.  The Court based its reasoning on the idea that because the entire case was over a mere $500, it would be unreasonable and “unfair” (to use the term the Circuit Court used) to aware more than that amount in attorney’s fees.

Today, Virginia Lawyers Weekly covered a recent opinion from a Circuit Court for Hanover County in Winding Brook Owner’s Assoc. v. Thomlyn, LLC.  There, the total attorney’s fee award came to about ten times the amount of the judgment obtained.  The Circuit Court properly held that that should not matter, because the contract at issue contained a fee-shifting clause.

There is one aspect of the opinion that I predict will cause someone, somewhere, some heartache.  Judge Harros wrote: “Expert testimony is not required in all instances to prove the reasonableness of attorney’s fees, especially when the attorneys have submitted affidavits and detailed time records.”  This may be true in some instances.  For example, as part of a sanctions motion or a fee award for a discovery dispute, it might not be practical or warranted to require a lawyer to testify as an expert.

But when the amounts are large, or are likely to be larger than the total amount of damages awarded, I certainly agree with Virginia litigator Stephen Emmert who is quoted by Virginia Lawyers Weekly in the article.  Emmert — who has long been an iconic figure in Virginia legal circles — is quoted as saying: “If I were litigating something like this, I would always want to have an expert.”

To that I add my hearty “amen.”  And not just because I have served as a paid expert witness on this topic numerous times.  In fact, I would go one step further and add that a bifurcation motion — pursuant to Virginia Sup. Ct. Rule 3:25 should be litigated — preferably early on — in such cases.

Mixx Delicious Digg Facebook Twitter
Shortlink

VaQuiTamLaw author Zachary Kitts Appointed to Virginia State Bar’s Mandatory Professionalism Course

By Zachary Kitts on July 31, 2017 in , ,

 

 

 

 

 

 

Author Zachary Kitts Appointed to the Virginia State Bar’s Mandatory Professionalism Course

Earlier this month I was appointed to the faculty of the Virginia State Bar’s Mandatory Professionalism Course.  Most states and jurisdictions require a similar course for newly admitted lawyers, but Virginia’s course was the first such program.  The course is named for Chief Justice Harry L. Carrico, who in addition to his 42 years on the Supreme Court of Virginia, was the driving force behind the creation and implementation of this course.

Attorneys and judges appointed to serve on the faculty are recognized for their commitment to upholding and elevating the highest standards of honor, integrity, and courtesy in the legal profession, and I am proud to be among them. At the definite risk of sounding like an old-timer, when I took the course it was still led by Justice Carrico himself.  Justice Carrico retired in 2003 so I must have been one of the last classes to have this privilege.

The Carrico Professionalism Course was just one of the three professionalism courses I attended in the 2001-2003 time-frame. Virginia’s course was however the best of the three for the same reason that Virginia’s continuing legal education courses are among the best — the faculty prepares to teach this CLE the same way they prepare a case for a client.

But there is also more to it than that.  As I recall, the faculty of the course I attended back in October of 2001 really opened up and shared personal stories from their years in practice.  Although “professionalism” is central to being a lawyer it is hard to define in the same way that words like “ethics” are hard to define.  One of the things I came away with was the understanding that professionalism requires constant work — it is not a merit badge you obtain and then forget about.

Soon to follow — my attempt at defining “professionalism” and what it means to me…

 

 

 

 

Mixx Delicious Digg Facebook Twitter
Shortlink

Fredericksburg Hospitalist Group Pays $4.2 Million to Settle False Claims Act Case

By Zachary Kitts on June 30, 2017 in , , ,

 

Fredericksburg Hospitalist Group Pays $4.2 Million to Settle False Claims Act Case

The United States Department of Justice and the Virginia Office of the Attorney General announced a $4.2 million settlement in a qui tam case of mine earlier this month.  My firm (K&G Law Group) was one of three firms involved and so I would be remiss not to mention my esteemed co-counsel, Steve Baril and Mike Lesser.

We jointly represented Rick Morrow, a former executive of Fredericksburg Hospitalist Group, P.C.  Mr. Morrow will receive 17% of the total settlement.  Mr. Morrow, who has spent his entire career in health care, was pleased with the outcome:  “Overbilling for health care services saps our federal and state tax dollars, and I am glad we have laws like the federal False Claims Act and the Virginia Fraud Against Taxpayers Act that level the playing field and allowed me to address these wrongs.”

The Complaint was filed on Mr. Morrow’s behalf in 2014 and his allegations — that defendants upcoded hospitalist services from 2010 to 2015 — were investigated by Assistant U.S. Attorney Robert McIntosh, and Assistant Attorney Generals Vincent J. Vaccarella and Adele M. Neiburg.

In a statement U.S. Attorney Dana J. Boente said “Rooting out fraudulent billing by healthcare providers is a priority; this office will continue to pursue such matters vigorously.

Hospitalists — defined as physicians who focus only on treating patients within a hospital — typically bill using CPT codes for patient evaluation and management services.   These include codes 99221-99223 (initial hospital care services) and  99231‑99233 (subsequent hospital care). Each of these groups of codes has three levels, for low, moderate, and high complexity. Thus, CPT 99221 is a low complexity initial encounter; CPT 99222 is one of moderate complexity, and CPT 99223 is an initial encounter of high complexity.

These codes also have an option to bill based on face-to-face time spent with the patient.  For example, codes 99221 covers up to 30 minutes, 99222 covers up to 50 minutes and 99223 covers up to 70 minutes.  If billing based on time, the physician is required to properly document the patient encounter to justify the billing amount and CPT code.  As regular readers know, in the world of FCA qui tam litigation, cases like this are commonly called “upcoding cases,” but the truth is that upcoding just means billing for services not provided.

For my part, I would like to thank all of the aforementioned government lawyers, Mr. Morrow (for being such a great client) and Mike and Steve for being some of the best lawyers I have ever worked with.

 

 

 

Mixx Delicious Digg Facebook Twitter
Shortlink

Virginia Supreme Court Issues Important Attorney’s Fee Opinion

By Zachary Kitts on May 26, 2017 in

 

 

 

 

 

 

Virginia Supreme Court Issues Important Attorney’s Fee Opinion

The Virginia Supreme Court issued an important attorney’s fee opinion recently.  The opinion, in Lambert v. Sea Oats Condominium Association, Inc., — S.E.2d. —-, 2017 WL 1378202 (Va., 2017) should be of interest to Virginia practitioners, as it lays to rest several hobgoblin-style arguments normally made by those resisting a fee petition in Virginia state courts.

As regular readers know, I maintain more than a passing interest in this topic for a number of reasons, not the least of which is that much of my law practice concerns fee-shifting statutes, and I have served as an expert witness in a number of cases on this topic.

BACKGROUND

Plaintiff Martha Lambert filed a civil action in a Virginia General District Court (for non-Virginia lawyers, GDCs have jurisdiction over misdemeanor criminal cases and civil cases up to $25,000).  Her claim alleged, in a nutshell, that her condominium association failed to reimburse her for a repair to the common area of her condominium in the amount of $500.  She sought judgment in the amount of $500 plus an award of attorney’s fees and costs pursuant to Va. Code § 55-79.3(A).  Under that code section a prevailing party “shall be entitled to recover reasonable attorney fees” in an action to enforce compliance with condominium instruments.

Lambert lost at the GDC, and appealed to the Circuit Court, where she won.  In addition to the $500 in damages awarded, she sought attorney’s fees and costs in the amount of $9568.50.  Citing the small nature of her award – and nothing else – the court awarded her exactly $375 in attorney’s fees and costs.

THE SUPREME COURT OF VIRGINIA REVERSES THE CIRCUIT COURT

Justice Mims, writing for SCOVA held that while a Circuit Court can consider the amount of damages awarded, that that is only one factor in an overall analysis of the reasonable nature of the fee. More important is his holding that Circuit Courts cannot limit an award of attorney’s fees based on a small award at trial if a plaintiff receives everything they demanded in the ad damnum.

This case is important for another reason as well.  It appears to put to rest the issue of whether a party must include evidence of its attorney’s fees in a fee-shifting case as part of its case in chief.  Where a party seeks to recover its legal fees pursuant to a statutory or contractual fee-shifting provision, it is appropriate to delay the issue of an attorney’s fee award until after the merits of the case have been decided.  The Court referenced Virginia Rule 3:25(D), which allows the parties to request a Court Order establishing a procedure for adjudicating an attorney’s fees claim after the case in chief has concluded.

As Virginia practitioners know, our Supreme Court is not big on issuing guidance to lawyers and litigants, so when it does we should all listen and listen close, and hopefully Judges throughout the Commonwealth will do the same.

 

 

Mixx Delicious Digg Facebook Twitter
Shortlink

UPDATE: THE 2017 VIRGINIA ATTORNEY GENERAL RACE WILL BE REPUBLICAN JOHN ADAMS AGAINST DEMOCRAT MARK HERRING

By Zachary Kitts on April 28, 2017 in

 

 

 

 

 

 

UPDATE: 2017 VIRGINIA ATTORNEY GENERAL RACE WILL BE REPUBLICAN JOHN ADAMS AGAINST DEMOCRAT MARK HERRING

It appears that no primary will be necessary for Republicans to pick their 2017 challenger to AG Mark Herring — Richmond lawyer John Adams will be the Republican nominee for Virginia Attorney General in 2017.

As reported a few weeks ago in the Richmond Times Dispatch, Chuck Smith failed to collect the necessary number of signatures to qualify.  As I said before, Chuck Smith seemed to be a promising candidate and, of course, democracy itself benefits from a hard-fought primary.  Republican John Adams, on the other hand, turned in an impressive 15,573 signatures—far exceeding the minimum requirement.

By the way, I’m not sure if Virginia’s qualification system is more complicated than other states, but the process of collecting signatures is a bit more complicated than you might think.  Candidates needed 10,000 signatures from registered voters, including 400 from each of Virginia’s 11 congressional districts.  And there is only a very limited window of time in which to collect the signatures. Smith didn’t meet the requirements and so there will not be a primary.

Stay tuned readers, we here at vaquitamlaw.com will be asking the Attorney General candidates for comment on their approaches toward the Virginia Fraud Against Taxpayers Act and whether they would support vigorous enforcement of the law….

 

 

Mixx Delicious Digg Facebook Twitter
Shortlink

Virginia False Claims in Business Development Incentive Programs

By Zachary Kitts on March 24, 2017 in ,

Virginia Fraud Against Taxpayers Act

 

 

 

 

 

 

The Roanoke Times has an article today about a lawsuit against a company that accepted a $1.4 million grant from the Commonwealth yet failed to follow through with its end of the bargain. Surprisingly, there is no claim made against the defendants for violations of the Virginia Fraud Against Taxpayers Act, which as regular readers know is the single most potent weapon in the litigation arsenal of the Commonwealth.

As regular readers also know, most states maintain economic incentives to lure industries to their state, and Virginia is no exception.  Like all government programs, these programs are subject to abuse and, in fact, problems with the Virginia’s incentive grants programs are nothing new and have been covered here before on several different occasions.

 BACKGROUND ON THE CASE AGAINST LINDENBURG AND DAI

In 2014, Governor McAuliffe announced the plan to open a plant building catalytic converters in Appomattox County.  A Chinese company, Lindenburg Industry, LLC, teamed up with a North Carolina company called Development Advisers Incorporated for the project.   Initial reports were optimistic, announcing that Lindenburg would invest $113 million into the project.

But that was only the beginning of the smorgasboard of public funds the project intended to reap.  The Virginia Tobacco Indemnification and Community Revitalization Commission also approved a grant of $1.17 million for the project.  Lindenburg  was also all set to receive benefits from the Port of Virginia Economic and Infrastructure Development Grant Program.  Funding and services to support the company’s employee training activities was to come from the Virginia Jobs Investment Program.

Talk about a potential goldmine of taxpayer money…and then it went south.

UNRAVELING THE FALSE CLAIMS — THE ROANOKE TIMES INVESTIGATES THE VEDP

A Roanoke Times investigation revealed a web of unsavory characters and unsavory activity that stretches across the world.  It turns out that Virginia economic officials did minimal background research, apparently basing their decision to approve a $1.4 million grant on a fake company website.  The litany of horrors is widely available for anyone to read, and in addition to the current lawsuit, the Virginia State Police have opened a criminal investigation into the matter, according to a news report.

The VEDP has had problems in Court and has had to change lawyers — it seems like the initial lawyers representing the VEDP were conflicted out of the case.  The Virginia Economic Development Partnership, under its new counsel, notified Judge Blessing that it wanted to amend the Complaint in the lawsuit pending against Lindenburg.

But, there is no word on whether that amendment will include a claim under Virginia Code 8.01-216.1 et seq., otherwise known as the Virginia Fraud Against Taxpayers Act…it certainly seems like it should…more to come readers, stay tuned.

 

Mixx Delicious Digg Facebook Twitter
Shortlink

The Virginia Attorney General Race in 2017

By Zachary Kitts on January 4, 2017 in , , ,

 

 

 

 

 

 

 

 

 

The Virginia Attorney General Race in 2017

The New Year will hold lots of new developments for the Virginia Fraud Against Taxpayers Act.  Among the most important of them will be the upcoming Attorney General election.  The 2017 race will mark the first time since the 1980’s that a sitting Attorney General has run for re-election.

Let’s take a look at how the election is shaping up.

DEMOCRAT MARK HERRING SEEKS RE-ELECTION AS ATTORNEY GENERAL

Democrat Mark Herring is, as most of you know, running for re-election.  This is the first time since Mary Sue Terry was re-elected attorney general in 1989 that a sitting Attorney General has run for re-election.  Putting aside General Herring’s other work as Attorney General (some of which has been controversial) he has used the Virginia Fraud Against Taxpayers Act more aggressively than his predecessors.  In fact, as reported here last year, General Herring’s office finally broke my own record for the largest non-healthcare recovery under the VFATA.

THE REPUBLICAN CANDIDATES

There are currently two Republicans competing for the Attorney General nomination — Richmond lawyer John Adams, and Virginia Beach lawyer Chuck Smith.  A few weeks ago, Del. Rob Bell dropped out of the race.  Rob (who competed with Mark Obenshain for the Republican nomination in 2013) was favored to win the primary.  Now that he isn’t running this is anybody’s ball game.

Adams and Smith are both impressive candidates.  Both have considerable experience, including Navy JAG Corp experience.  As would be expected for a Virginia Republican primary, both of the candidates have a straightforward Republican approach to issues like individual responsibility, gun control, minimizing government interference with the economy, lowering taxes, etc.

It might be my imagination, but it seems like Chuck Smith’s materials have a bit of a populist flavor, while Adams’ materials seem more “mainstream” for lack of a better word.

With the two Republican candidates coming from such similar backgrounds and running on similar platforms, it is likely to come down to a contest of personalities and who Virginia Republicans feel will offer them the best shot at victory in November.

CONCLUSION

As we learned in 2008, the man (or woman) in the street cares but little for the nuances of legal work.  They care even less about the specific types of work of performed by the Commonwealth’s Attorney General.  Instead, it seems like they vote for Attorney General the same way they vote for any politician — they go with what their gut tells them.  As discussed previously in this blog, there is nothing inherently wrong with that, and that is just as good a way as any to pick the next Virginia Attorney General in 2017.

No matter who wins the Republican primary, Herring seems likely to have a fight on his hands come November.

 

 

 

 

Mixx Delicious Digg Facebook Twitter
Shortlink

Defend Trade Secrets Act litigation in federal courts

By Zachary Kitts on December 30, 2016 in , , ,

 

 

 

 

 

 

Defend Trade Secrets Act Litigation in Federal Courts

As regular readers know, the Defend Trade Secrets Act of 2016 is one of the biggest developments in the world of qui tam / whistleblower law from this past year.  What makes it an important development to the world of qui tam / false claims act litigation is its immunity provisions for whistleblowers who remove documentation from their place of employment to support thier cases.

The DTSA, with its immunity provisions, was signed into law in May of this year, and as we close out the year cases concerning the immunity provisions are beginning to filter in.  The reported decision so far, in my opinion, shows us some important things, but nothing we didn’t already know.  Mainly, being a whistleblower is not without risks.

Unum Group v. Loftus — the first immunity case concerning documentation of a case

Just in time for the end of the year, we have an unpublished decision from the federal District Court in Massachusetts, Unum Group v. Loftus, 2016 WL 7115967 (D.Mass., 2016).   Plaintiff brought this case against its former employee after he was seem — on video no less — removing multiple file boxes, shopping bags and briefcases full of documents from his employer’s facility after normal business hours and without authorization.  This apparently happened at least two different times.  When a corporate security official called him to ask him what he had been doing removing the documents and materials, he refused to answer questions about it.
Right after he hung up the phone, he was seen — again, on video — leaving the office with a laptop and returning without the laptop.  After he apparently refused to return any of the documents or the laptop, Unum filed a Complaint against him in U.S. District Court alleging that Loftus misappropriated protected information.
Loftus filed a Motion to Dismiss the Complaint, asking the Court to dismiss Unum’s trade secret claims on the grounds that he gathered the and removed the documents from Unum to report and investigate a violation of law.  He was, he argued, immune from any liability for trade secret misappropriation pursuant to 18 U.S.C. § 1833(b), which as readers of this blog know, shields individuals from liability under any federal or state trade secret law for disclosure of a trade secret made “in confidence … to an attorney … solely for the purpose of reporting or investigating a suspected violation of law.”

Conclusion

Naturally, of course, the District Court ruled that this was not an appropriate grounds for a Fed. R. Civ. P. 12(b)(6) motion to dismiss.  That makes sense, because the DTSA is an affirmative defense to a claim of trade secret misappropriation and affirmative defenses are almost never appropriate for decision under 12(b)(6).  As it turns out, I happen to agree with the District Court.
As I have been saying here for several years now, documentation of a qui tam case is not to be taken lightly by a potential relator.  Moreover relators should use common sense and be discreet. There is, in my experience, never a reason to remove “multiple file boxes, shopping bags, and a briefcase full”  of documents, and while that is especially true in this day and age of digital information, even in the days of paper it would be absurd to remove so much information…of course, no one should ever truly remove any documents from thier employment, but that is another topic for another day.
I wish Mr. Loftus well, but he has made his bed and now, I fear, he will have to lay in it.
Mixx Delicious Digg Facebook Twitter
Shortlink

President-elect Trump selects key government officials for the new administration

By Zachary Kitts on November 30, 2016 in ,

Virginia Qui Tam Law.com -- The first blog dedicated to the Virginia Fraud Against Taxpayers Act and to Qui Tam Litigation in Virginia

 

 

 

 

 

 

President-elect Trump selects key government officials

As regular readers know, this blog is completely non-partisan and will support any elected official who supports vigorous enforcement of the federal False Claims Act.

As President-elect Donald Trump begins naming the key government officials who will guide his administration, I figured it was worth a look to see how some of the folks feel about qui tam/false claims cases.  As I have said before, false claims laws enjoy bipartisan support; there are also a small number of people in both parties who would like to see the FCA gutted.  While it may not be possible to determine exactly how any one nominee will handle FCA matters, here is what we know about the nominees for two of the most important positions in government for false claims act enforcement.

 Attorney General Nominee Jeff Sessions

Trump has identified Sen. Jeff Sessions as his nominee for Attorney General.  This is, of course, a very important post for FCA enforcement.  The vast majority of the public information available about Senator Sessions concerns his supposed hard-line stance on deporting illegal aliens who have committed crimes.

A bit more digging however reveals someone who should be quite good on FCA-issues.  For example, Sessions is a former United States Attorney, which means that FCA enforcement would have fallen in his bailiwick.  He is also a former Attorney General for the state of Alabama.  He also voted in favor of the FERA amendments (which strengthened the federal FCA).

As regular readers also know, Sen. Charles Grassley (R-IA) has been a stalwart proponent of the federal False Claims Act as well as state false claims acts.  So I was happy to read that Sen. Grassley meet with Jeff Sessions this week and discussed the importance of the federal FCA with him.

Only time will tell how Sen. Sessions will handle federal False claims act enforcement as AG…

Congressman Tom Price (R-GA) selected to head Health and Human Services

A second government position that will be critical to qui tam/FCA enforcement is that of HHS secretary.  Representative Tom Price (R-GA) has gotten the nod for this position.  We don’t know too much about how Rep. Price feels about FCA legislation — he is a doctor, and not a lawyer — but we do know that he has railed against fraud, waste and abuse in government programs, including health care programs.

 

Stay tuned for more, dear readers…

 

K&G Law Group PLLC

 

 

Mixx Delicious Digg Facebook Twitter