Last night the three Republican candidates for Attorney General met in Roanoke for the second debate of this primary season.
I followed the live blog feed, and even from the vantage point of someone reading the debates as blogged by someone else, it was apparent to me that all three candidates have honed their presentations and have focused on the best arguments for their candidacies such that all three are now stronger candidates than they were two months ago at the first debates.
The single most important revelation of the night was this–all three men pledged to spend at least two terms in office (provided, of course, that the good people of Virginia will return them to office in 2013). Regular readers of this blog know that I have continually harped on the phenomenon of the one-term AG, which has been a tradition in Virginia for at least the last 36 years.
I have pointed out that groups like NAMFCU (National Association of Medicaid Fraud Control Units) and NAAG (National Association of Attorney Generals) who study issues related to the 50 state AG positions all agree that single term AGs are less effective than multiple term AGs. States with a tradition of one-term AGs fall prey to a host of ills that do not plague states with long-serving AGs.
(You don’t have to read a dry academic study to see this concept on a general scale–one of the chief reasons we have term limits on Virginia Governors is that the Virginia House of Delegates, which wields most of the power in Virginia government, likes to keep the Governor right where they want him. A two-term Governor would, without question, be more powerful than a one-termer).
The bottom line is this–state government, like government at every level, has grown more and more complex and more and more demanding to administer. State AGs have a number of very pressing demands that did not exist just four or five years ago. The position of AG is no longer a sleeper office, and it is no longer the kind of office that can see rotating AGs every four years–at least not if the Commonwealth is going to have the kind of government it deserves.
The obligations of our state AGs will undoubtedly grow in the coming four years. With the Obama Administration preparing to inject hundreds of billions of dollars into state economies, fighting fraud in our state budget is going to be an increasingly important part of the state AGs job. The very history of the federal False Claims Act and the Virginia Fraud Against Taxpayers Act confirm that whenever there is a government rush to spend money, fraud on government coffers will increase exponentially.
So, while I do not pretend that this blog can take credit for interjecting this major point into the Attorney General debates–because that credit belongs to John Brownlee, who first made the pledge to change the tradition of the one-term AG–I feel strongly that Virginia will better off in the long run as a result of the other two candidates stepping forward and matching Brownlee’s promise to end this tradition.
This will also give whoever gets the nomination a strong practical point against Democrat Steve Shannon, who wears his ambition to be Governor very openly. I think any one of the three men competing for the Republican nomination will give Shannon a real fight in a general election–and I also think any of the three men in the running for the Republican nomination have a very important distinction from Shannon, but that is another story for another day.
Now, here is my read on the AG’s race overall. I think it is clear, after last night, that John Brownlee has become the front-runner for the Republican nomination. Without a doubt, John Brownlee has the strongest legal background and has always been the most qualified candidate for the job, but those things alone do not make him the front-runner.
Brownlee has pulled away from the pack and is now the front-runner because he is now setting the terms of the debate. The issue of the one-term AG is just one example. In a number of other ways, Brownlee is now setting the terms of the debate and that, ladies and gentlemen, is where any politician wants to be.
In any strategic, competitive endeavor–whether it is war, football, complex litigation, or a political campaign–the winner may seem like the one who wins the most battles, or scores the most touchdowns, but in reality those things are just a corollary to winning. The simple truth is that you win by controlling the momentum of the contest. If you control the momentum, scoring points, or winning battles, or getting votes, simply falls into place. You have to begin a football game assuming the other side is going to score–but you absolutely have to have some control over when, where, why, and how they score.
This is not by accident, of course–Brownlee has the deepest reservoir of legal knowledge, has the most experience running a large office of litigators, and the most experience with the sort of issues our state AG will face in the coming years. It is thus only natural that he would dictate the terms of the debates, and set the standards for the others to follow.
News from the Race for Virginia Attorney General
Maryland False Claims Act Alert: Maryland Needs a Real False Claims Act!
With so many developments in the Virginia Office of the Attorney General and in the Attorney General race, I let some Maryland developments slip by the goalie.
Specifically, Three of the top five state False Claims recoveries would not have been possible if California had had a health-only statute, and California would have been $249 million poorer.
Additionally, as will be covered in more detail in a later post, Sen. Grassley and Rep. Berman are making serious efforts on the federal level to ensure that states without an FCA style statute to protect their money will feel the pain when the final stimulus bill is passed.
Breaking News: Virginia Attorney General Bob McDonnell resigns to focus on his gubernatorial race
Attorney General Bob McDonnell announced his resignation this morning in an email to OAG staffers. No big surprise there–for the last thirty years, no Virginia Attorney General has served more than three years in office. Julian Walker at the PilotOnline has the story.
IMHO, Bob McDonnell has done a fine job as AG, and he has been a big improvement over his predecessors in many ways. It appears that Bill Mims, McDonnell’s chief deputy, is poised to take the reins. Because the General Assembly is in session, the decision will be confirmed by them, and Mims is expected to sail through.
Just One Example of Why the Office of the Attorney General is so Important
Given that the last few posts have concerned the OxyContin prosecutions led by Attorney General Bob McDonnell and former U.S. Attorney John Brownlee, today’s OAG press release was perfect timing.
Today, Virginia Attorney General Bob McDonnell awarded a small slice of the money Virginia recovered from Purdue Pharma. A little over $650,000 of the $634 million recovered in the OxyContin prosecutions was awarded to three worthy causes in rural Virginia.
Click here to read the OAG press release.
Eli Lilly May Spend $2 Billion More for Fraud on State Governments–But Again, Where is Virginia’s Share?
Eli Lilly & Co., after agreeing to pay more than $2.6 billion to settle claims by the federal government and an assortment of state governments over the marketing of its anti-psychotic drug Zyprexa, still faces lawsuits that might cost the company an additional $2 billion.
That is because only certain states settled in the original settlement agreement, announced last week. There are currently 12 state suits pending, and additional states, such as Virginia, could bring suit any time to reclaim the money fraudulently obtained from our Medicaid coffers.
The states claim Lilly withheld information about the side effects of Zyprexa, such as diabetes, and encouraged sales of the drug for unapproved, or off-label, purposes. The states who have brought claims have asked for damages and fines for violations of their state false claims acts.
I suppose I will leave it to Attorney General Bob McDonnell to explain why Virginia has not filed its own lawsuit to claim its share–General McDonnell has done a very good job of making sure Virginia reclaims its money for the most part, so I hope it is just a matter of time.
Perhaps the biggest flaw in McDonnell’s administration of the OAG has been his failure to see the importance of hiring outside counsel to prosecute claims his office is too overwhelmed to handle.
Like some politicians in both parties, McDonnell brings to the table an inherent bias against trial lawyers, and especially a bias against hiring outside counsel on a contingency-fee basis. In some cases, he is quite correct that a state would be better off paying for its outside lawyers on an hourly basis.
Given the Commonwealth’s current budget crisis, however, I doubt very much that Virginia has the funds to pay outside counsel by the hour to pursue its share of the Zyprexa settlement. In this current climate, McDonnell would do well to reconsider his ban on hiring outside counsel on a contingency fee basis.
The take away message is this–big pharmaceutical companies have been gorging themselves on our state and federal tax dollars for many years, and they are just now starting to pay the piper. The battleground is shifting to state governments–specifically, to the various state Attorney Generals who have the authority to prosecute false claims made to the Medicaid programs of each state.
And THAT, ladies and gentlemen, is why this blog sometimes discusses politics and specifically the 2009 Virginia Attorney General race. In order to maximize our state expenditures, we need our next Attorney General to get tough with everyone gorging themselves on our state tax dollars. That includes “big pharma”–i.e., the big pharmaceutical manufacturers–but it also includes everyone else that does business with the Commonwealth, from Fortune 500 companies to the Wall Street traders that handle our bond sales to the mom and pop operations that provide mulch on our interstates.
Virginia has one of the lowest tax burdens in the entire country, and Virginia’s government does much with a little, but we could do so much more.
How The Mighty Have Fallen: Restrictions Are Upheld for Executives in Purdue Pharma OxyContin Case
An administrative law judge has upheld a decision barring three former Purdue Pharma executives from participating in federal health care programs for 15 years, the Department of Health and Human Services announced last Friday, according to the New York Times.
The three executives are former CEO Michael Friedman, Howard Udell, the company’s former top lawyer, and Dr. Paul Goldenheim, who was once the chief medical officer of the company. In a nutshell, they pled guilty to intentionally misbranding OxyContin as a safe, non-addictive pain reliever, when in fact they knew those things be untrue.
In 2007, as part of a /files/116785-109034/Plea_Agreement_Friedman.pdf”>Friedman, /files/116785-109034/Plea_Agreement_Udell.pdf”>Udell, each pleaded guilty to criminal charges. As a result, each was banned for 15 years from doing business with federal health care programs.
Notwithstanding the logistics and the sheer size and Mixx Delicious Digg Facebook Twitter
Eli Lilly Agrees to Pay $1.4 Billion to Settle Qui Tam Claims Brought by the United States and 26 States–Unfortunately, Virginia is Not Among Them
For the first time, a qui tam settlement has topped the $1 billion mark. Late last week, Eli Lilly announced that it had agreed to pay a total of $1.4 billion to the United States and to a collection of participating state governments for off-label marketing violations and other violations related to the drug Zyprexa.
Before going any further, a few words about pharmaceutical fraud and off-label marketing will be helpful. Off-label use of a drug occurs whenever the drug is prescribed by a doctor to treat a condition or illness other than the condition or illness for which it is approved by the United States Food and Drug Administration.
When a physician writes a prescription for a drug to treat a condition other than the one for which the drug is approved by the FDA, that is known as an “off-label” prescription. Physicians prescribe drugs for off-label purposes all the time–it is considered well within the discretion of the treating physician.
For Medicare or Medicaid patients, however, it is a different story. Both programs refuse to pay for any drug that is prescribed for an off-label purpose (i.e., any purpose other than one approved by the FDA.)
The states recovering money include Washington state, which will receive $7 million, Texas, which will receive $30 million; Michigan, which will receive $26.4 million, and others. No word yet on Virginia’s share.
SCOTUS Blog Selects Several False Claims Act Cases in “Petitions to Watch”
This week the renowned SCOTUS blog highlighted Petitions for Certiorari filed in several False Claims Act cases. This is important for many reasons, not the least of which is that the folks at the SCOTUS blog have an uncanny ability to predict which petitions will be granted by the United States Supreme Court.
SCOTUS, for those of you who may be wondering, is an acronym for Supreme Court of the United States. I confess to having no idea where this acronym comes from, but I assume it comes from the same source as the acronym “POTUS” for President of the United States. The SCOTUS blog was started by Supreme Court practitioner Tom Goldstein.
In federal courts, certiorari is the writ that an appellate court issues to a lower court in order to review its judgment when there is no right to an appeal. Any given petition faces incredible odds–of the more than 7,000 petitions that are filed in an average year, the Supreme Court will generally grant somewhere between 75 and 150.
The SCOTUS blog has correctly predicted certiorari grants in the last three FCA-related Supreme Court cases.
The two cases highlighted this week are:
Docket: 08-511
Title: U.S., ex rel. Feingold v. Palmetto Gov’t Benefits Adm’rs
Issue: Whether the Eleventh Circuit correctly decided that a provision granting immunity to Medicare carriers for any payment that is processed on behalf of the government barred a qui tam suit.
Docket: 08-660
Title: U.S. ex rel. Eisenstein v. City of New York
Issue: Whether the 30-day time limit in Federal Rule of Appellate Procedure 4(a)(1)(A) for filing a notice of appeal, or the 60-day time limit in Rule 4(a)(1)(B), applies to a qui tam action under the False Claims Act.
A New Year, A New President, and Lots of New Money–How We Can Prevent the Same Old Fraud?
The year 2009 will bring a new President to the White House who has promised lots and lots of new federal money to fund various state and federal projects. Some have gone so far as to say that President-elect Obama will supervise the largest spending program since the Eisenhower Administration built the federal interstate system.
With great opportunity comes great risk, however. This blog has previously argued that the Federal False Claims Act and state false claims acts such as the Virginia Fraud Against Taxpayers Act have their own role to play in protecting this large expenditure of federal funds. Furthermore, because anyone with knowledge of fraud on the federal government or a state government can come forward under the qui tam provisions of such statutes, each individual has their own role to play.
As one example of the sort of mischief that follows large federal expenditures, today we will look at fraud in the E-rate Program. I selected this example because we have all heard a great deal recently about federal funding to extend broadband Internet access to remote areas of the United States.
E-Rate, a program authorized by Congress in the Telecommunications Act of 1996, was designed to ensure that all eligible schools and libraries have affordable access to modern telecommunications and information services. Up to $2.25 billion annually is available to provide eligible schools and libraries with discounts under the E-rate program for authorized services.
Under the E-Rate program, schools can receive money for cabling, Internet infrastructure items (i.e., servers, PBX switches and so forth), and the reimbursement of monthly Internet and telephone service fees. E-rate operates under the auspices of the Federal Communications Commission (FCC).
In a nutshell, eligible institutions can file a federal FCC Form 471 with the FCC listing the services and other items desired. Privater vendors can access these postings, and then directly contact the entity to bid on providing the work. E-rate is only available to institutions that have certain qualifying characteristics. If the entity seeking funding is a school, for example, a certain percentage of the school’s students must qualify for the National School Lunch Program. There is also a preference for rural schools and libraries.
As we see in other contexts such as healthcare, a cottage industry has sprouted up around defrauding the E-rate Program. Such fraudfeasors normally call themselves “Education Consultants” or some such title, and they promise to obtain E-rate funding for anyone who hires them. One such individual is former “Education Consultant” Judy N. Green, who was sentenced to 7.5 years in prison for participating in E-rate fraud in Arkansas, California, Michigan, New York, Pennsylvania, South Carolina, and Wisconsin.
Green was convicted of orchestrating schemes to defraud the E-Rate Program of funds by inflating the cost of eligible equipment and services in order to pay for ineligible equipment and services, and by misrepresenting schools’ ability and willingness to pay their portions of the projects’ costs. She also conspired to rig bids in favor of companies and individuals that had business relationships with her.
Anyone with first-hand knowledge of fraud on the E-rate program has the ability to step forward and take action to stop it utilizing the qui tam provisions of the Federal False Claims Act. Last year, the United States recovered more than $1 billion as a result of whistleblowers who decided enough was enough. Those who come forward are eligible to receive an award of between 15 and 30 % of the recovered funds.
To learn more about becoming a whistleblower under either the Federal False Claims Act or the Virginia Fraud Against Taxpayers Act, please click here.
Ohio Auditor Misses the Mark: Ohio’s Plan to Reduce Medicaid Fraud Includes Everything BUT a State False Claims Act
The state of Ohio–which, like every other state, is facing a record budget deficit–is searching for ways to cut costs and stretch its budget a little. Amazingly, in a new report released this week by Mary Taylor (who currently serves as the state’s Auditor), the passage of a state false claims act is not one of the suggestions made to stretch the state’s dollars further and eliminate fraud, waste, and abuse from the program.
To put things in perspective, Ohio spends over $13 billion each year on the Medicaid program. This amount represents nearly a quarter of the total state budget. Assuring that these funds are spent appropriately and that fraud, waste and abuse are identified and addressed is one of Ms. Taylor’s priorities.
You can view Auditor Mary Taylor’s web page, as well as some of some of the blog discussion from Ohio and you will find no mention of a state false claims act. I suspect the reason is a simple failure to understand the concept of the false claims act.
As a member of the House of Representatives in 2005, Auditor Taylor worked with the Ohio General Assembly to include legislative language giving the Auditor of State the authority to undertake a performance audit of the Medicaid program, as well as the ability to audit Medicaid providers. According to her website, this legislation has resulted in a number of policy changes that address efficiencies that can be achieved in the Medicaid program and protect and saved significant taxpayer dollars.
That is all fine and well–however, if Ms. Taylor really wants to save the good people of Ohio some money, she will simply request that a state false claims act that complies with the Deficit Reduction Act of 2005 be enacted. Simply by having such a law in place, the state will receive an additional 10% of all monies recovered–even without taking any further actions. In other words, there is no need to hire additional prosecutors, or do anything else, in order to start reaping the benefits.
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