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May 2015 Archives

UPS Agrees to Settle Whistleblower Claims for $25.7 Million

Government customers of United Parcel Service Co. (UPS) overpaid the company because it falsified delivery records over a 10-year period, according to a lawsuit UPS recently settled. The whistleblower suit was filed by a former driver and manager for UPS. Now he is expected to receive $3.75 million for bringing the allegedly false claims to the attention of the federal government.

NJ Court Upholds Consumers' Rights by Rejecting Ascertainability 'Requirement' From Federal Courts on Class Action Issue

In a New Jersey State Court case captioned, Daniels v. Hollister, 2015 WL 2342917 (N.J. Sup. May 13, 2015), a panel of judges held that adopting the "doctrine of ascertainability" to toss a class action "would violate New Jersey's long-standing belief that rules governing class-action lawsuits should be liberally construed in order to offer the broadest possible protections to wronged customers."1 In this class action, plaintiffs received a $25 gift card when they purchased more than $75 in merchandise from a Hollister store. The lead plaintiff found that when he went to use the gift card just over a year after he had received it, the card had expired. He and the other plaintiffs allege that they were never given notification that the cards had expiration dates and that the gift cards themselves did not show any expiration date.2

Supreme Court Increases Employers' Fiduciary Responsibilities in 401(k) Plans

In 2007, a lawsuit was filed against energy giant Edison International, alleging that the company violated the Employees Retirement Income Securities Act of 1974 (ERISA) by offering employees higher-priced retail class mutual funds as retirement plan investments when what were basically the same funds could be had under lower-cost institutional shares. The class action against Edison was brought on behalf of about 20,000 employees and retirees.

Whistleblower Given Large Award in SEC's First Retaliation Action

In its first settlement regarding a claim of retaliation against a whistleblower, the Securities and Exchange Commission ("SEC") awarded whistleblower James Nordgaard ("Nordgaard") $600,000, which was 30 percent of the commission's settlement with Nordgaard's former firm, Paradigm Capital Management, Inc.1 After blowing the whistle on Paradigm in 2014 for engaging in prohibited transactions, Nordgaard, who was the former head of trading at the hedge fund, experienced retaliatory actions such as demotion, rescinding of his responsibilities, and being "otherwise marginalized" until he eventually resigned from the firm. Paradigm and its owner, Candace King Weir ("Paradigm"), paid $2.2 million in total to settle the case with the SEC.2

California Supreme Court Makes Important Ruling Regarding Pay-for-Delay Cases

Basing its ruling on the Supreme Court's ruling that "pay-for-delay" payments can be challenged under federal antitrust law, the California Supreme Court held that the patent settlements can similarly be challenged under state antitrust law. In the case FTC v. Actavis (133 S. Ct. 2223 (2013)), the Supreme Court did not rule that pay-for-delay arrangements were illegal, but it allowed such payments to at least be scrutinized via antitrust lawsuits. The California Supreme Court overturned decisions by lower courts in cases involving Cipro purchasers against Barr Laboratories Inc., Hoechst Marion Roussel Inc., The Rugby Group Inc., and Watson Pharmaceuticals Inc.1

DaVita Will Pay Nearly $500 Million to Settle FCA Claim

DaVita Healthcare Partners, Inc. ("DaVita") is a large provider of kidney dialysis treatment in the United States. The medical giant, as part of its first quarter SEC filings, disclosed that it has allotted $450 million to settle a False Claims Act ("FCA") case. Two whistleblowers brought the suit against DaVita alleging that the company defrauded the government by overcharging the Medicare system. The plaintiffs alleged that DaVita used "larger-than-necessary medicine vials or unnecessarily spread medicine dosages across multiple treatments knowing that Medicare would pay for what it considered 'unavoidable' waste."1 The company's leadership was accused of creating a procedure for employees to provide dosages of the drug Venofer, which treats anemia in patients with kidney disease, "over several treatments instead of one to increase reimbursements."2

Illinois Supreme Court Strikes Down Pension Law

On May 8, 2015, the Illinois Supreme Court held that a pension law which cut government workers' benefits was unconstitutional pursuant to a clause in the Illinois Constitution. The law was passed in 2013 with the intention of reducing the state's $105 billion debt from the retirement system. Specifically, the law "stopped automatic, compounded yearly cost-of-living increase for retirees, extended retirement ages for current state workers and limited the amount of salary used to calculate pension benefits."1 The Constitution states that pension benefits cannot be "diminished or impaired" once they are agreed upon and are settled as part of a contract between the government and employees.

Universal Agrees to Pay $26 Million to Class of Movie Industry Professionals

For decades Hollywood studios have found creative and controversial ways of dividing profits among industry professionals. One specific area where actors, writers and directors have taken issue is in the division of profits from home video revenue.

United States Intervenes on Another Medicare Fraud Case

Several former employees of HCR ManorCare, Inc. ("HCR") brought False Claims Act ("FCA") complaints against HCR, a nationwide nursing home company. The United States Department of Justice ("DOJ") has decided to intervene in the case, which alleges that the company's leadership forced employees to provide unnecessary and possibly harmful care to patients in order to bill the Government for more money.1

Supreme Court Holds that State Claims Can Stand In Natural Gas Price-Fixing Case

The Supreme Court has reaffirmed a ruling by the Ninth Circuit Court of Appeals, which held that state antitrust law claims in a price-fixing case are not preempted by the Federal Natural Gas Act ("NGA"). In the case before the Supreme Court, Oneok, Inc., et al v. Learjet, Inc., et al, 2015 WL 1780926 (U.S. Apr. 21, 2015), Learjet and other purchasers of natural gas alleged that Oneok and other wholesale sellers had engaged in price fixing during the 2000-2002 energy crisis. Specifically, the buyers alleged that the sellers "reported false information to the natural-gas indices on which [buyers'] natural-gas contracts were based. The indices affected not only retail natural-gas prices, but also wholesale natural-gas prices."1