Whistleblowers

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Halunen Law - Whistleblower Claim MiMedx Group Defrauded Investors

Whistleblowers Claim MiMedx Group, Inc. Defrauded Investors in Lawsuit Filed by Halunen Law

December 16, 2016/in BLOG, NEWS, WHISTLEBLOWERS /by Halunen Law

MINNEAPOLIS – (Dec. 15, 2016) The MiMedx Group (NASDAQ: MDXG) persistently inflated its quarterly revenue figures over several years, using a fraudulent practice known as “channel stuffing” to book sales of products that customers never ordered, according to a whistleblower lawsuit filed by Halunen Law against the company and its CEO today in federal district court in Minneapolis.

When two top company sales people objected to being part of what they perceived to be a scheme to defraud shareholders and the investing public, senior-level executives retaliated with threats, intimidation, and ultimately, termination, according to the lawsuit.

Filing the lawsuit on behalf of the plaintiffs, Jess Kruchoski and Luke Tornquist, is the Halunen Law firm of Minneapolis.

“The lawsuit alleges that MiMedx retaliated in a punitive and illegal manner against our clients, after they objected to the company’s alleged illegal practice of booking phantom sales of one of its most lucrative product lines, EpiFix, in an effort to shore up its legally-required quarterly financial reports to shareholders,” says Clayton Halunen, managing partner of the firm and lead attorney for the plaintiffs.

According to the lawsuit, the scheme implicates AvKARE, Inc., a Tennessee company that entered into a distribution agreement with MiMedx, and the Department of Veterans Affairs, an end customer of MiMedx products. Kruchoski and Tornquist allege that MiMedx directed sales managers and representatives to book large orders for products never requested by their customers, VA hospitals in the Upper Midwest. Typically the “request” to write these orders were issued in the waning days of a quarterly reporting period, with the goal of inflating the company’s quarterly revenue reports to shareholders, the lawsuit claims. The complaint further alleges that this scheme did not comply with generally accepted accounting principles for revenue recognition.

According to the complaint, when a company directive ordering sales personnel to “stuff the shelves” of VA hospitals with EpiFix packages came down in late December 2015, Kruchoski expressed his opinion about the illegality of such action. However, as alleged in the Complaint, on December 30, MiMedx CEO Parker Petit ordered the sales force to add inventory to government shelves.

According to the complaint, the company unveiled a new tactic to use in supplying VA hospitals with an abundance of EpiFix products in March 2016. The idea allegedly called for using FedEx to ship shoebox-sized packages filled with 15 of the most expensive EpiFix grafts to VA hospital shipping departments. The Complaint alleges that in late March, MiMedx shipped what was estimated to be about $2.4 million worth of product to VA hospitals nationwide. As of November 2016, much of this product was returned or remained on the VA shelves, unpurchased. The complaint describes at least one instance of the EpiFix grafts being stored at a sales representative’s home.

In early November, Kruchoski and Tornquist jointly submitted a report to corporate officials identifying MiMedx’s improper revenue recognition scheme as a violation of the federal Sarbanes-Oxley Act of 2002 (SOX), says the complaint. Over the next weeks, according to the complaint, Kruchoski and Tornquist were threatened, and ultimately terminated.

Both Kruchoski and Tornquist, allege in their complaint that the company retaliated against them because they formally declared their concerns over the channel-stuffing practice. They further claim this retaliation violates the whistleblower protection embedded in SOX, the Dodd Frank Wall Street Reform and Consumer Protection Act, and the Minnesota Whistleblower Act.

About Halunen Law

Halunen Law is a national whistleblower law firm with offices in Minneapolis and Chicago, offering experienced legal representation to protect whistleblowers who have experienced retaliation or are planning to blow the whistle. They also offer experienced legal representation to individuals who are blowing the whistle on government fraud under the False Claims Act and other statutes. For more information on Halunen Law, visit the firm’s website at http://whistleblower.halunenlaw.com/.

Case 0:16-cv-04171 Download the complaint.

Whistleblower Physician to Collect $4.5 Million

November 15, 2016/in BLOG, WHISTLEBLOWERS /by Halunen Law

Honesty is the best policy. It’s one of the first lessons we learn, and yet it seems there is an epidemic of selective memory loss among providers who choose to defraud Medicare. Our journey begins in South Carolina where another medical provider is paying out millions in an effort to put the allegations of wrongdoing behind them.

This past summer, the Justice Department announced that Lexington County Health Services District Inc. d/b/a Lexington Medical Center located in West Columbia, South Carolina, had agreed to a $17 Million settlement. (1) The settlement resolved allegations that the Center had maintained improper financial relationships with physicians they employed and submitted fraudulent claims to Medicare. This is extremely troubling considering a large percentage of their income is from Government funded programs.

People who rely on Medicare are among our nation’s most vulnerable citizens, including the elderly, disabled and terminally ill. In many cases, this is truly their only hope for receiving the medical care they so desperately need, but many could not otherwise afford. Subsequently an extensive body of law protects the rights of these recipients and safeguards the tax payer dollars funding these services with severe penalties for those who choose to ignore them.

Minnesota Based Hospice Provider to Pay $18 Million in Response to Whistleblower Allegations

October 28, 2016/in BLOG, WHISTLEBLOWERS /by Halunen Law

Hospice and greed. Two words that are diametrically opposed and when combined—toxic.

At its inception, hospice in America was mostly a philanthropic movement led by volunteers and non-profit entities. Today the hospice industry is big business including a large percentage of for-profit providers. According to the Medicare Payment Advisory Commission (MEDPAC) in 2013 Medicare hospice expenditures alone totaled about $15.1 billion for services rendered by over 3,900 providers. (1)

The hospice movement is built on the core belief that patient dignity and respect are fundamental to providing compassionate care to the dying. When the prognosis of a terminal illness carries a life expectancy of 6 months or less it’s devastating. Hospice includes access to essential medical care along with emotional and psychological support which enables individuals and their loved ones to live as fully as possible in the time remaining while striving to come to terms with saying good-bye.

Halunen Law - Evidence of Fraud Against the Government

What should I do if I have evidence of fraud against the government?

October 26, 2016/in BLOG, WHISTLEBLOWERS /by Halunen Law

With changing times and expanding needs, the government finds itself increasingly reliant on the private sector to help deliver an array of services. As the private sector’s role has expanded, one thing remains constant: some businesses cheat—they commit fraud against the government. These deceptive practices date back to the Civil War era.

When a person has knowledge of such fraudulent business practices, they can “blow the whistle” through the False Claims Act. The process is complicated and whistleblowers need knowledgeable legal counsel to provide expertise and guidance, when exploring the possibility of becoming a “relator,” the term used for False Claims Act whistleblowers. Under the False Claims Act, if information provided by the relator ends in a government recovery, relators are compensated with a percentage of the total recovery.

What is the False Claims Act?

August 24, 2016/in BLOG, WHISTLEBLOWERS /by Halunen Law

Fraud against the government is nothing new. It’s an age-old problem dating back to the Civil War era when contractors supplied the army with broken guns, sand-packed bullets, lame pack mules, cardboard boots and more. President Lincoln asked Congress for a law setting severe financial penalties those who engaged in the practice. Today, the False Claims Act (FCA) —also known as the original Whistleblower Law—is still a viable way to protect the United States government and people who “blow the whistle” on fraudulent activity. Someone claiming fraud, also known as a relator, can sue a company for its illegal action. If the lawsuit is successful, relators receive a percentage of what the Government recovers.

Halunen Law attorneys have brought FCA cases on behalf of relators across the county. In this video, Halunen Law Founder and Managing Partner Clayton Halunen discusses the law in more detail. If you’re aware of fraudulent activity against the government, the team at Halunen Law is there to help.

Video link: reellawyers.com

Forged Under Civil War Fire, The False Claims Act Continues To Serve As Basis For Private Citizens To Blow The Whistle On Would-Be Fraudsters Of The Government Trust

June 6, 2016/in BLOG, WHISTLEBLOWERS /by Halunen Law

Forged Under Civil War Fire, The False Claims Act Continues To Serve As Basis For Private Citizens To Blow The Whistle On Would-Be Fraudsters Of The Government Trust

Under a little-known law, private citizens with knowledge of fraud against the government can bring a lawsuit against the offending organization. Called the False Claims Act, the law—often called the original Whistleblower Law — originated in the Civil War era, when rampant fraud against the U.S. government threatened the very existence of the country.

Sickened by the spectacle of contractors supplying the army with broken guns and sand-packed bullets, lame pack mules and cardboard boots, President Lincoln pressed Congress for a law setting severe financial penalties for fraud against the government. The law also included a provision to empower private citizens to sue fraud perpetrators on behalf of the government. Known by its Latin name as “qui tam,” this provision allows the courts to award whistleblowers, called “relators” under this law, a share of the monies recovered by the government in fraud cases. In Lincoln’s time, the law brought corrupt defense contractors to heel. Today it serves to protect taxpayers against fraud from contractors in any number of industries. Equally important, the law protects individuals, like the Civil War soldiers fighting with inferior equipment, who suffered injury as a result of the fraud. Many states, including Minnesota, have adopted whistleblower laws to protect against fraud against state agencies.

Whistleblower Alleges Shocking Fraud Involving Cancer Patients

March 31, 2016/in WHISTLEBLOWERS /by Halunen Law

The diagnosis: Cancer. Few words have the power to alter one’s life as dramatically as those six letters linked with the phrase – “test results.” The Journey begins. The two critical elements for any cancer patient are affordable care and a physician that, above else, you can trust with your life. There is an ethical expectation that providers will live up to their oath to make the patient’s need their top priority, abstain from medical malfeasance and recognize and be mindful of the impact their patients’ care can have on the stability of their families and finances.⁽¹⁾

Tuesday, March 8, 2016, a press release by the Department of Justice⁽²⁾ announced a $37-million-dollar settlement with 21st Century Oncology Inc., the nation’s largest physician led integrated cancer care provider, and its wholly owned subsidiary South Florida Radiation Oncology LLC. The False Claims Act lawsuit included allegations that they defrauded Medicare and other federal health care programs including TRICARE, the Department of Defense military health program supporting our uniformed services.

Protecting the Public with Whistleblower Protections

December 27, 2015/in WHISTLEBLOWERS /by Halunen Law

The Star Tribune published an article today about how a mental health agency, Complementary Support Services, that was supposed to provide quality services to a vulnerable population, instead is reported to have engaged in rampant fraud that “bilked the state’s Medicaid program of millions of dollars and provided inadequate supervision of unlicensed practitioners.” That private agency is now the subject of a federal and state False Claims Act qui tam lawsuit that resulted from a report to the government by a former employee.

The False Claims Act is designed to encourage citizens to challenge conduct that cheats private agency clients and wrongfully takes taxpayers money to do so. It also provides whistleblower protection to employees who are treated badly or fired because they challenge, report or refuse to engage in illegal conduct. The goal of the law is to stop fraud in its tracks by encouraging oversight by employees, recipients of services and the public.

Happy National Whistleblower Day

July 30, 2014/in WHISTLEBLOWERS /by Halunen Law

Today, July 30th, is National Whistleblower Appreciation Day. Halunen Law applauds the men and women who have the courage to blow the whistle when they become aware of illegal conduct by their employers. Managing Partner Clayton Halunen observed, “We have had the honor of representing many whistleblowers, and what is so impressive is their sense of integrity and their determination to do the right thing even in the face of personal risks. Their commitment brings to mind the words of Martin Luther King: ‘Our lives begin to end the day we become silent about things that matter.’ We are grateful for whistleblowers who do not become silent about things that matter and pledge to use our resources to protect and support whistleblowers in whatever way we can.”

Halunen attorneys represent whistleblowers across the country. Their fierce advocacy has resulted in hundreds of millions of dollars recovered on behalf of their clients and the government.

Whistleblowers Take a Stand – What is a Whistleblower?

May 16, 2014/in WHISTLEBLOWERS /by Halunen Law

Has your treatment on the job changed recently? Have you all of a sudden received performance criticisms you never received before? Were you terminated for a bogus reason? And did this negative treatment come after a time you told your employer or a government agency that the company was doing something illegal?

If this sounds familiar, you may be a whistleblower and the retaliation you have experienced is likely illegal. Many states (including Minnesota) and federal statutes prohibit what has happened to you and you may have recourse for the damage caused by the retaliation.