Civil Division Priorities

• $6.5 Million Settlement with Cardiologist and His Medical Practice for Paying Millions in Kickbacks for Referrals:  In 2023, the Office filed and settled a civil fraud lawsuit against a cardiologist and his medical practice, Gramercy Cardiac Diagnostic Services P.C. (“Gramercy Cardiac”), alleging that he paid millions of dollars in kickbacks to physicians and their practices for patient referrals.  The kickbacks took the form of inflated office “rental payments” and fees paid to contracted cardiologists. 
• $678 Million Anti-Kickback Statute Settlement with Novartis Pharmaceuticals for Operating Sham Speaker Programs:  In 2020, the Office reached a $678 million settlement of its healthcare fraud lawsuit against Novartis Pharmaceuticals Corporation (“Novartis”), resolving claims that Novartis violated the False Claims Act and Anti-Kickback Statute by providing doctors with cash payments, recreational outings, lavish meals, and expensive alcohol to induce them to prescribe Novartis’s cardiovascular and diabetes drugs, which were then reimbursed by federal healthcare programs.  The Government alleged that Novartis organized tens of thousands of sham speaker events at high-end restaurants and other venues and paid exorbitant speaker fees to doctors who gave no meaningful presentations.  When those doctors then prescribed Novartis’s drugs, federal healthcare programs paid hundreds of millions of dollars in reimbursements for these tainted prescriptions.

• Settlement of Civil Fraud Lawsuit Against Medical Device Company for Creating and Selling a Fake Medical Component That Was Implanted Into Patients:  In 2023, the Office filed and settled a civil fraud lawsuit against Stimwave LLC (“Stimwave”), a Florida-based medical device company, alleging that Stimwave created and sold a non-functioning dummy medical device for implantation into patients suffering from chronic pain, resulting in millions of dollars in losses to federal healthcare programs.  Under the civil settlement, Stimwave agreed to pay $8.6 million to the United States.  Simultaneous with the resolution of the civil case, the SDNY’s Complex Frauds and Cybercrimes Unit announced the filing of criminal charges against the former CEO of Stimwave for her role in the fraudulent scheme.     
• $49 Million Settlement with Biotech Testing Company for Fraudulent Billing and Kickback Practices:  In 2020, the Office resolved claims against Progenity, Inc. (“Progenity”), a biotechnology company that provides molecular and diagnostic tests, for fraudulently billing federal healthcare programs for prenatal tests and providing kickbacks to physicians to induce them to order Progenity tests for their patients.  As alleged in the lawsuit, Progenity fraudulently used a billing code that misrepresented the tests provided and provided illegal kickbacks in the form of excessive “draw fees” to physicians, meals and happy hours for physicians and their staff, and the improper reduction or waiver of patient coinsurance and deductible payments.  Under the settlement, Progenity agreed to pay a total of $49 million to resolve various governmental claims. 
• $40.5 Million Settlement with Durable Medical Equipment Provider for Fraudulent Billing Practices:  In 2020, Apria Healthcare Group, Inc. and its affiliate, Apria Healthcare LLC (together, “Apria”) agreed to pay a total of $40.5 million to resolve governmental claims that, among other things, Apria submitted false claims to federal healthcare programs seeking reimbursement for the rental of costly non-invasive ventilators to program beneficiaries.  As alleged, those beneficiaries were not using the non-invasive ventilators, such that the devices were not medically necessary; Apria admitted that it continued to seek reimbursement from federal programs after it had information that patients had stopped using their ventilators.  In addition, the government’s lawsuit alleged that Apria improperly waived patient co-insurance payments for the devices.

• $7.85 Million Settlement with Skilled Nursing Facility for Fraudulently Switching Residents’ Healthcare Coverage to Boost Medicare Payments:  In 2022, the Office settled a civil healthcare fraud lawsuit against Plaza Rehab and Nursing Center (“Plaza Rehab Center”) and Citadel Consulting Group LLC (“Citadel”), which alleged that Plaza Rehab Center, acting at the direction of Citadel, fraudulently switched the type of Medicare coverage in which elderly residents were enrolled in order to maximize the Medicare payments that Plaza Rehab Center would receive.  The residents and their families often did not request, consent to, or know about the change to their healthcare coverage, which had the potential to impact their out-of-pocket payments, the scope of the services and care covered, and their drug coverage plan.  As part of the settlement, the defendants agreed to pay a total of $7.85 million.   
• Settlement of Lawsuit Alleging that Bronx Nursing Home Paid Kickbacks for Patient Referrals and Switched Residents’ Healthcare Coverage Without Their Consent:  In 2023, the Office settled a civil fraud lawsuit against Morris Park Nursing Home (“Morris Park”), a skilled nursing facility located in the Bronx, New York, and individuals formerly associated with Morris Park.  The government’s lawsuit alleged that the defendants engaged in two fraudulent and illegal schemes that violated the False Claims Act and the Anti-Kickback Statute.  The first scheme involved cash payments made to a supervisor at a nearby hospital for patient referrals, and the second scheme involved switching residents’ Medicare coverage without their consent in order to increase the Medicare payments that Morris Park received.  Under the settlements, the defendants agreed to pay a total of $3.46 million. 

• $37 Million Medicare Part C Fraud Settlement with Cigna:  In 2023, the Office reached a $37 million settlement of its healthcare fraud lawsuit against The Cigna Group (“Cigna”) and its subsidiary Medicare Advantage Organizations.  The settlement resolved claims that Cigna submitted to the government false and invalid patient diagnosis codes to artificially inflate the payments it received for providing insurance coverage to its Medicare Advantage plan members.  The government alleged that the invalid diagnosis codes were based solely on forms completed by vendors retained and paid by Cigna to conduct in-home assessments of plan members, and that the healthcare providers who conducted these home visits did not perform or order the diagnostic testing or imaging that would have been necessary to reliably diagnose the serious, complex conditions reported.  

• $269.2 Million Recoveries in Healthcare Fraud Settlements with Walgreens:  In 2019, the Office filed and settled two healthcare fraud lawsuits against national pharmacy chain Walgreens Boots Alliance, Inc. (“Walgreens”) for a total of $269.2 million, relating to Walgreens’s improper billings to government healthcare programs.  The lawsuit alleged that Walgreens improperly billed the government for insulin pens that patients did not need and made false representations to Medicare, Medicaid, and other programs in connection with that practice, and also that Walgreens sought and obtained reimbursement from Medicaid for prescription drugs at improperly inflated prices.

• $20 Million Dollar Settlement with Rochester Drug Cooperative for Failing to Report Suspicious Orders of Controlled Substances to the DEA:  In 2019, Rochester Drug Cooperative (“RDC”), a wholesale drug distributor, agreed to pay a $20 million penalty to resolve a lawsuit brought by the Office under the Controlled Substances Act.  The complaint alleged that between May 2012 and November 2016, RDC knowingly failed to comply with its legal obligation to report thousands of suspicious orders of controlled substances, such as Oxycodone and fentanyl, despite being aware that many of its largest pharmacy customers exhibited “red flags” associated with the diversion of such drugs. The Office’s investigation also ultimately led to a Deferred Prosecution Agreement with RDC and a first-of-its-kind felony conviction of RDC’s former CEO for conspiring to unlawfully distribute controlled substances and defrauding the DEA.

• $72.6 Million Settlement of Fraud Lawsuit Against Wells Fargo Bank for Overcharging Foreign Exchange Customers:  In 2021, Wells Fargo Bank (“Wells Fargo”) agreed to pay a total of approximately $72.6 million to resolve claims brought under the Financial Institutions Reform Recovery and Enforcement Act, alleging that Wells Fargo fraudulently overcharged hundreds of commercial customers, many of them small and medium-sized businesses and federally-insured financial institutions, who used Wells Fargo’s foreign exchange (“FX”) service.  The suit alleged that from 2010 through 2017, Wells Fargo FX sales specialists defrauded nearly 800 customers by systematically charging them higher markups on FX transactions than they represented Wells Fargo would charge and concealing those overcharges through various misrepresentations and deceptive practices.

• Settlement of Civil Fraud Lawsuit Against Former Hunter College Professor and Hunter College for Fraudulently Using Federal Research Funds:  In 2023, the Office resolved claims under the False Claims Act against Jeffrey T. Parsons-Hietikko (“Parsons”), a former psychology professor at Hunter College (“Hunter”), and Hunter, for the fraudulent misuse of research grant funds provided by the National Institutes of Health (“NIH”).  Parsons previously served as Director of Hunter’s Center for HIV Educational Studies (“CHEST”).  Among other things, the government’s lawsuit alleged that for years, Parsons improperly invoiced personal expenses to NIH funds, including expenses relating to scuba diving trips, international flights for his family, and a tropical birthday celebration.  The lawsuit further alleged that Hunter used NIH funds to pay Parsons tens of thousands of dollars in retention bonuses without disclosing those payments to NIH as required, and that Parsons and Hunter submitted false timekeeping records that resulted in the use of NIH grant funds to compensate CHEST staff for work performed for Parsons’s private clients.  Under the settlement, Parsons and Hunter agreed to pay $375,000 and $200,000, respectively. 
• Settlements in Civil Fraud Lawsuit Against Three Companies for False Statements About Disadvantaged Business Participation on Federal Construction Projects:  In 2019 and 2021, the Office resolved claims against three companies for their roles in a scheme to make false statements about disadvantaged business participation on two federal construction projects.  Under Disadvantaged Business Enterprise (“DBE”) rules, contracts for certain federally funded projects require the participation of businesses owned by women and minorities.  The government’s lawsuit alleged that, in connection with federally funded steel painting projects to renovate the Brooklyn Bridge and Queens Plaza, Ahern Painting Contractors Co. misrepresented that Tower Maintenance Corp., a certified DBE, was solely performing millions of dollars of work on the two projects.  In fact, much of that work was being performed by Spectrum Painting Corp., a non-DBE.  Under the settlements, the three defendants agreed to pay over $3.5 million. 
• $5.3 Million Settlement of Lawsuit Against New York City for Fraudulently Obtaining FEMA Funds Following Superstorm Sandy:  In 2019, the Office filed and settled a civil fraud lawsuit against the City of New York (the “City”) alleging that the New York City Department of Transportation (“NYCDOT”) fraudulently obtained millions of dollars from the Federal Emergency Management Agency by falsely claiming that numerous NYCDOT vehicles were damaged during Superstorm Sandy.  Under the settlement, the City agreed to pay $5.3 million. 

• $22.8 Million Settlement of Customs Fraud Lawsuit Against Vitamin Importer for Underpaying Customs Duties Owed on Products Imported Into the United States:  In 2023, the Office filed and settled a civil lawsuit against International Vitamins Corporation (“IVC”), a United States-based company that imports and sells vitamins and nutritional supplements from China.  The government’s lawsuit alleged that for years, IVC defrauded the United States by misclassifying more than 30 of its products under the Harmonized Tariff Schedule in order to avoid paying customs duties, and by failing to pay back duties owed to the United States even after IVC finally corrected its longstanding misclassifications.  Under the settlement, IVC agreed to pay $22.8 million.   
• Settlement of Customs Fraud Suit Against Clothing Companies and Their Former CEO for Misrepresenting the Value of Goods to Avoid Paying Customs Duties:  In 2021, the Office resolved a lawsuit against Stargate Apparel, Inc., Rivstar Apparel, Inc., and Joseph Bailey (the former CEO and owner of both companies), for employing a variety of schemes to defraud the United States of millions of dollars in customs duties, by submitting invoices to U.S. Customs and Border Protection that falsely understated the true value of the clothing they imported into the United States.  Under the settlement, the defendants agreed to pay a total of $6 million.  This civil settlement was in addition to a $1,661,617 forfeiture amount that Bailey was ordered to pay in parallel criminal proceedings handled by the Office’s Complex Frauds and Cybercrimes Unit.

• The Office has a number of ongoing investigations related to fraudulent conduct during the pandemic. With the assistance of our law enforcement partners, Civil Division AUSAs are investigating fraud related to the CARES Act’s Paycheck Protection Program and other government relief programs that were designed to help those in financial need, as well as pandemic-related health care fraud schemes involving false billings submitted to government programs.

• Environmental Justice for 400,000 Low-Income New Yorkers: The Office conducted a sweeping investigation of health and safety issues, including violations of lead paint safety regulations at the New York City Housing Authority (“NYCHA”), home to roughly 400,000 low-income New Yorkers.  In January 2019, the Office and its partners at the U.S. Department of Housing and Urban Development (“HUD”) entered into a pathbreaking settlement with NYCHA and New York City to address these issues.  The settlement imposes strict health and safety standards, puts in place a program of institutional reform, requires the City to provide more than $2 billion in additional funding for NYCHA, and appoints a federal monitor.
• Record-Setting Clean Air Act Settlement: In January 2021, the Office sued Toyota Motor Corporation on behalf of the U.S. Environmental Protection Agency (“EPA”) under the Clean Air Act for emission defect reporting violations.  The Office simultaneously entered into a consent decree with Toyota that imposed a $180 million civil penalty — the largest ever for emission defect reporting violations — and injunctive relief that sets the standard for future compliance. 
• Largest Recovery of Clean-Up Costs Ever, with More than $1 Billion for Clean-Up in Disadvantaged Communities: In the Tronox bankruptcy, after years of litigation and negotiation, the Office entered into a settlement recovering more than $4.4 billion from affiliates of Anadarko Petroleum Corporation for environmental claims and liabilities.  More than $1 billion of this funding went to address contamination in communities with environmental justice concerns, including historic uranium mining waste on Navajo Nation and creosote chemical waste in communities in the South.

Environmental justice matters that have been handled by the Office include the NYCHA and Tronox cases described above, as well as numerous other matters, including the following:

• A September 2023 consent decree requiring the City of Mount Vernon to spend more than $150 million to upgrade its storm sewer system, protecting water quality and addressing the needs of its residents who are living with the unlawful discharge of sewage and illicit pollutants.

• A September 2023 consent decree with Apex Building Company, which had violated lead paint safety regulations in hundreds of renovations of low-income apartments.  The consent decree included the second largest civil penalty ever imposed under the lead paint regulations, and required Apex to take steps to mitigate potential harms caused by its conduct.

• A June 2022 settlement with Tzumi Innovations, LLC, which had targeted lower-income individuals in the sale of unregistered antimicrobial products.  The settlement required payment of a $1.5 million civil penalty, the largest civil penalty ever obtained in a judicial settlement under the governing statute, and barred Tzumi from future sale or distribution of unregistered antimicrobial products.

• The Civil Division is involved in representing the foreign policy interests of the United States:  Hamilton Reserve Bank Ltd. v. Democratic Socialist Republic of Sri Lanka, 22 Civ. 5199 (supporting a stay of litigation against Sri Lanka to recover on defaulted sovereign bonds, in order to advance U.S. foreign policy interest in orderly and consensual sovereign debt restructuring); Kunstler v. CIA, 22 Civ. 6913 (alleging that the CIA had unlawfully monitored Julian Assange’s meetings with third parties while he resided in the Ecuadorian Embassy in London); Tanvir v. Tanzin, 13 Civ. 6951, 23-738 (2d Cir.) (challenge under the First and Fifth Amendments, the Administrative Procedure Act, and the Religious Freedom Restoration Act to Plaintiffs’ alleged placement on the No Fly List, which they claimed was due to their refusal to become informants for the FBI).

• Civil Division AUSAs prepare submissions advising judges on issues related to foreign government immunities:  Havlish v. The Taliban, 03 Civ. 9848 (statements of interest in actions brought by victims of the September 11 attack to seize funds of the Islamic Republic of Afghanistan’s central bank held by the Federal Reserve Bank of New York following the Taliban’s takeover of Afghanistan).

• Civil Division AUSAs handle matters involving the protection of national security information:  In re Terrorist Attacks of September 11, 2001, 03 MDL 1570 (successfully asserting state secrets and law enforcement privileges to protect certain classified and otherwise sensitive information sought in discovery); New York Times Co. v. CIA, No. 18-2112 (2d Cir.) (litigation regarding refusal by CIA to confirm or deny whether it possessed records involving covert funding of rebel forces in Syria); American Civil Liberties Union v. CIA, No. 18-2265 (2d Cir.) (request for records cited in the publicly released executive summary of the Senate Select Committee on Intelligence’s Committee Study of the CIA’s Detention and Interrogation Program); Osen v. CENTCOM, 19 Civ. 6867 (withholding of photographs depicting improvised explosive device (IED) attacks on U.S. military vehicles in Iraq); Open Society Justice Initiative v. Department of State et al., 19 Civ. 234 (requests for records from multiple members of the U.S. Intelligence Community concerning the killing of journalist Jamal Khashoggi); Osen v. OFAC, 19 Civ. 405 (challenges to withholding of classified information in memoranda and associated intelligence reports that supported the Office of Foreign Asset Control’s sanction designations of three charities that were determined to be support nodes for Hamas).