Criminal Cases

US – Jan 2017 – Takata Airbag scandal – The DOJ announced, “Tokyo-based Takata Corporation, one of the world’s largest suppliers of automotive safety-related equipment, agreed to plead guilty to wire fraud and pay a total of $1 billion in criminal penalties stemming from the company’s fraudulent conduct in relation to sales of defective airbag inflators. An indictment was also unsealed charging three Takata executives with wire fraud and conspiracy in relation to the same conduct.

US – Jan 2017 – VW Cheat device scandal –  The US Attorney-General announcedVW is charged with and has agreed to plead guilty to participating in a conspiracy to defraud the United States and VW’s U.S. customers, and to violate the Clean Air Act, by lying and misleading the EPA and U.S. customers“: a $2.8 billion dollar criminal fine has been agreed.  Press conference footage here. (As noted in the release, six VW execs and employees were also charged)

US – Nov 2016 – “Pennsylvania-based medical device manufacturer Biocompatibles Inc., a subsidiary of BTG plc, pleaded guilty today to misbranding its embolic device LC Bead and will pay more than $36 million to resolve criminal and civil liability arising out of its illegal conduct“.  “Under the terms of the plea agreement before the U.S. District Court for the District of Columbia, Biocompatibles pleaded guilty to a misdemeanor charge in connection with the company’s misbranding of LC Bead, in violation of the Food, Drug and Cosmetic Act.” “The FDA sought assurances in 2004 that Biocompatibles would not use FDA clearance for the device for embolization to market the device for drug delivery, according to a statement of offense to which the company agreed.  Biocompatibles told the FDA that “under no circumstance” would the company use the embolization clearance to market the device for drug delivery.  However, two years later, Biocompatibles began marketing LC Bead for drug delivery through the company it hired to carry out its sales and distribution in the United States.  According to the statement of offense, the distribution company told its sales representatives that LC Bead was “[a] drug-delivery device” and trained its sales representatives to “aggressively penetrate the chemoembolization market.”  Sales representatives subsequently told health care providers that the device increased the level of chemotherapy delivered to a liver tumor and resulted in “better tumor response rates,” despite the lack of FDA clearance or approval for that use and despite the absence at that time of statistically significant evidence to support such claims.”

US – Oct 2016 – “four Texas companies pleaded guilty and agreed to pay a total of $3.5 million dollars for criminal violations of the Clean Air Act at two oil and chemical processing facilities in Texas.” – “The information filed in federal court in the Eastern District of Texas charges KTX Limited and KTX Properties Inc., with negligently releasing hazardous air pollutants after a tank explosion at their chemical and petroleum processing facility located in Port Arthur, Texas, on March 31, 2011. The explosion killed one worker at the plant and severely injured two others. ”  The case might also have been prosecuted under OHS laws, but it is unclear whether any such charges were filed.

US – Oct 2016 – Three companies, allegedly involved in the production of invalid renewable identification numbers (RINs), are being prosecuted by the US EPA, but their behaviour may also constitute offences of fraud.  The RIN system is an environmental incentive program for reduction of greenhouse gas emissions.  One of the companies has settled with the EPA for $6M.

UK – Oct 2016 – A farming company used a banned poison to kill and set traps for rabbit on private and public lands without permission (!) – potentially then, this is a case involving environmental, property (trespass), health and OHS offences.  As it happens the matter was prosecuted by the Health and Safety Executive; the company “pleaded guilty to breaching Sections 2(1) and 3(1) of the Health and Safety at Work etc. Act 1974 and were fined £15,000 in total and ordered to pay costs of £4,967.10 along with a victim surcharge of £120, giving a total to pay of £20087.10.”

Criminal & Civil Cases

US – Oct 2016 – This case demonstrates corporate conduct arguably constituting offences/civil illegal action under consumer, fraud, discrimination and health laws, but also is an example – rather unusual – of civil and criminal law enforcement working together, and resolving a matter across both the civil and criminal jurisdctions.  It’s also a qui tam litigation.

The offenders in this case are, a major hospital chain, Tenet Healthcare Corporation, and two of its subsidiaries. “Tenet cheated the Medicaid system by paying bribes and kickbacks to a pre-natal clinic to unlawfully refer over 20,000 Medicaid patients to the hospitals.  In so doing, they exploited some of the most vulnerable members of our community and took advantage of a payment system designed to ensure that underprivileged patients have choices in receiving care. ”  “As alleged in the criminal information as well as civil complaints filed by the department and the state of Georgia in 2014 and 2013, Atlanta Medical Center Inc., North Fulton Medical Center Inc., Spalding Regional Medical Center Inc. and Hilton Head Hospital paid bribes and kickbacks to the owners and operators of prenatal care clinics serving primarily undocumented Hispanic women in return for the referral of those patients for labor and delivery medical services at Tenet hospitals.  These kickbacks and bribes allegedly helped Tenet obtain more than $145 million in Medicaid and Medicare funds based on the resulting patient referrals.  According to the criminal information, as part of the scheme, expectant mothers were in some cases told at the prenatal care clinics that Medicaid would cover the costs associated with their childbirth and the care of their newborn only if they delivered at one of the Tenet hospitals, and in other cases were simply told that they were required to deliver at one of the Tenet hospitals, leaving them with the false belief that they could not select the hospital of their choice.  The criminal information alleges that as a result of these false and misleading statements and representations, many expectant mothers traveled long distances from their homes to deliver at the Tenet hospitals, placing their health and safety, and that of their newborn babies, at risk.”

The matter has been resolved via a civil settlement (concluding the qui tam litigation) and a deferred prosecution agreement.  In all, the settlement requires the companies to pay $513 million.

Civil Cases

US – Apr 17 – Consumer law; fraud law – “Attorney General Xavier Becerra today filed a civil lawsuit seeking to recover hundreds of thousands of dollars from two California charities claiming to support veterans. The lawsuit alleges that the operators of Wounded Warriors Support Group (WWSG) and Central Coast Equine Rescue and Retirement (CCERR) run raffles purportedly to support veterans, but instead spend the donated proceeds for personal use, including shopping at Victoria’s Secret, paying off personal credit card debt, and traveling, dining, traffic school, dressage equipment, and other personal expenses.

The lawsuit seeks general damages, civil penalties, involuntary dissolution of both charities, appointment of a receiver to oversee dissolution and distribution of recoverable assets, and an order preventing Matthew G. Gregory, his wife Danella J. Gregory, and their adult children Matthew J. Gregory and Gina D. Gregory  — all of whom run WWSG and CCERR — from operating a charity in California.”

Administrative Actions

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