Are Initial Coin Offerings (“ICOs”) Securities? Do ICOs have to follow Securities Laws?

Investors who invested in Initial Coin Offerings (ICOs) or purchased “digital tokens” may be wondering whether their investment is governed by any laws. Likewise, investors may be wondering if they have any recourse when they expect fraud or the ICO disclosures failed to provide material information.

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Healthcare Schemers Cannot Hide Behind the First-to-File Doctrine 

With a greater demand to access for healthcare services also comes the need for reliable and honest physicians and healthcare facilities. Unfortunately, throughout the country healthcare kickback schemes are becoming more prominent in the healthcare system.

Kickbacks are incentives, usually bribes or anything of value, paid to a physician or healthcare facility to induce the referral of items or services reimbursable by Medicare, Medi-Cal or private insurers. Now more than ever, whistleblowers are encouraged to exercise their duty and right to disclose fraudulent or wrongful conduct.

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CPM Seeks to Recover Damages for Users Affected by TikTok’s Biometric Data Storing

Social media is a deeply embedded part of our culture. The rise and use of social media applications (apps) has become as common as having a smart phone or a computer. The prevalence of these apps is especially persistent in use by minors and young adults.

TikTok is a video-sharing social networking service owned by ByteDance, a Chinese company. The application is used to create short, “fun” videos typically featuring the user performing a song, dance, or themed monologue. Largely targeted at, and used by teenagers, TikTok is one of the most downloaded social media applications of the decade. As of 2019, 41% of TikTok’s 800 million users were between the ages of 16 and 24, with 90% of this group using the app daily.

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Disaffirmance by a Minor as a Defense to Arbitration in Consumer Class Actions

Mandatory arbitration clauses are ubiquitous in consumer contracts. In a 2019 survey, eighty-one Fortune 100 companies, including their subsidiaries or related affiliates, used an arbitration agreement in dealing with consumers. Imre Stephen Szalai, “The Prevalence of Consumer Arbitration Agreements by America’s Top Companies,” 52 UC Davis L. Rev. Online 233 (February 2019), https://lawreview.law.ucdavis.edu/online/vol52/52-online-Szalai.pdf. Of these companies, seventy-eight also included a class action waiver. Id. at 234. Moreover, the same source found that more than sixty percent of retail e-commerce sales in the United States were covered by broad consumer arbitration agreements. Id. Strikingly, this led to an estimate that at least 826,537,000 consumer arbitration agreements were in force in 2018. Id.

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Nursing Home Residents Among the Vulnerable Populations Disproportionately Affected by COVID-19

The COVID-19 pandemic continues to affect people differently. Vulnerable populations who are inherently disadvantaged in protecting themselves against illness have, sadly, died from COVID-19 disproportionately to the population at large. The numbers are staggering. Reports show that 42% of COVID-19 deaths in the United States have occurred in nursing homes and assisted living facilities.

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Lawsuit Filed Against Fraudulent Puppy Traffickers Stayed As To Three Of The Four Defendants

For many years, the Kenney family— husband and wife Trina and Rick, and adult children Elijah and Jezriel — who is based in Phelan, California, have defrauded consumers in Southern California by misrepresenting the health, age, sex, and breed of puppies that they sell through Craigslist and other internet sites. The puppies that these consumers buy often die within days after purchase, and the consumers often spend thousands of dollars at the veterinarians office trying to save them before the puppies sadly pass away or are euthanized at the recommendation of the veterinarians.

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Common Cryptocurrency Scams and How to Avoid Them

The first modern cryptocurrency, Bitcoin, took the financial world by storm with its meteoric rise in 2009. As Bitcoin’s value and popularity grew, cryptocurrencies – virtual funds that exist within a decentralized currency system – have steadily gained their place within the modern financial market, despite their high volatility and lack of benchmark for evaluation.

The current market value of one Bitcoin is $6766 US Dollars. Stories of early investors such as Erik Finman, who purchased Bitcoin for $12 US Dollars a coin, motivate many to seek the same success by investing in Bitcoin and new coins alike. In the aftermath of the Bitcoin boom, the frenzy and excitement over these novel investment options have led to the emergence of numerous cryptocurrencies and online exchange platforms.

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Sanchez Update

I have previously written about the framework for analyzing Sanchez issues, and I explained that the answer turns on the difference between “background information” and “case-specific facts.” Last week, our Supreme Court reaffirmed that “the distinction between case-specific facts and background information thus is crucial—the former may be excluded as hearsay, the latter may not.” (People v. Veamatahau (2020) 9 Cal.5th 16, 26.)

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Some Businesses are Rethinking Arbitration over Class Actions

The U.S. Supreme Court has made it clear that arbitration agreements are governed by contract. An arbitration agreement will bind the parties to a resolution outside of traditional litigation.

Businesses have viewed an arbitration clause as an effective method to control the risks and costs of class litigation. Consumers and employees have regularly attacked arbitration clauses as bar to substantive rights, unconscionable, and expensive to challenge an individual claim. Furthermore, upon accepting arbitration agreements consumers and employees waive their rights to pursue class actions.

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Understanding Sanchez

Since our Supreme Court decided People v. Sanchez (2016) 63 Cal.4th 665, lawyers and judges have struggled to understand its implications. I recently opposed a motion in limine titled “Defendant’s Motion to Preclude Expert Opinions Based on Hearsay (People v. Sanchez).” The caption alone showed that opposing counsel had not overcome that struggle.

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Avoiding MICRA’s $250K Non-Economic Damages Cap

The California legislature enacted the Medical Injury Compensation Reform Act (MICRA) in 1975 with the intent of curbing a perceived increase in medical malpractice insurance premiums and health care costs. MICRA sought to achieve this by erecting a number of obstacles for plaintiffs in medical malpractice actions, the most well-known being a $250K cap on plaintiffs’ non-economic damages.

More than forty years later, health care costs have not slowed but innumerable victims of medical negligence have been denied just compensation. Though MICRA has been applied broadly to various acts and omissions only minimally related to the rendering of professional medical services, there are some fact patterns and theories of liability which may circumvent MICRA’s limitations and permit the recovery of full compensatory damages.

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Information Fiduciary Duty – Do Private Entities Have a Legal Responsibility to be Trustworthy with Your Data?

The Information Age has created a new type of business that thrives off of widespread collection and use of personal information. [1] At this time, though, there is no federal statute to define the obligations these businesses owe regarding the use of their users’ and customers’ data. While doctors and lawyers are legally obligated to respect the privacy of their clients’ information and cannot use that information to further their own interests, large companies are not held to the same standard.

As data-driven businesses continue to emerge, grow, and gain relevance in our society and economy, it is imperative that a clear standard of information fiduciary responsibilities be defined. Federal legislation classifying businesses as information fiduciaries would protect individual data privacy rights by requiring businesses to act with the utmost good faith in relation to their use of individual data.

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Differences between the Statute of Limitations and Statute of Repose Periods under the False Claims Act and California Insurance Fraud Prevention Act

An action under the FCA must be brought within the later of either: (1) six years from when the underlying § 3729 violation is committed; (2) three years after the government knows or should have known about the material facts ; or (3) ten years from when the underlying violation is committed. 31 U.S.C. § 3730(b)(1)-(2).

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How Does the Public Disclosure Bar of the California Insurance Fraud Prevention Act Differ from that of the False Claims Act

Both the FCA and California Insurance Fraud Prevention Act (“CIFPA”) have limitations on filing certain actions, including: (a) the first to file bar, 31 U.S.C. § 3730(b)(5) and Cal. Ins. Code §1871.7(e)(5); and (b) the public disclosure bar, 31 U.S.C. § 3730(e)(4)(A)-(B); Cal. Ins. Code §1871.7(h)(2)(A)-(B).

Under the public disclosure bar, relators/whistleblowers are barred from pursuing claims if they allege substantially similar allegations or transactions were publicly disclosed, unless the relator is the “original source.” 31 U.S.C. § 3730(e)(4)(A)-(B); Cal. Ins. Code §1871.7(h)(2)(A)-(B). However, what constitutes an “original source” varies slightly between the statutes.

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What is the California Insurance Fraud Prevention Act?

The California Insurance Fraud Prevention Act (“CIFPA”), Ins. Code §§ 1871, et seq., is an anti-fraud statute applicable to all types of insurance fraud. The CIFPA is a broad reaching statute designed to prevent and punish fraud, specifically insurance fraud through imposing significant penalties and provides for recovery of damages, attorneys’ fees and costs, and a share of the penalties imposed by the successful whistleblower.

Two unique pieces of the CIFPA were discussed in State ex rel. Wilson v. Super. Ct. (2014) 227 Cal. App. 4th 579: (1) what constitutes a “fraudulent claim” and (2) the prohibition on employing “runners, cappers, [or] steerers.”

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It is Illegal for Gift Certificates to Expire

You may be wondering if the value of your old and dusty gift certificate is still valid. In California, it is.

Under California law, it is unlawful to sell a gift certificate to a purchaser that contains an expiration date. See Cal. Civ. Code § 1749.5. Simply put, a gift certificate sold without an expiration date is valid until redeemed or replaced. Cal. Civ. Code § 1749.5(b). A similar federal law prohibits expiration periods shorter than five years. See Electronic Funds Transfer Act (the "EFTA"), 15 U.S.C. § 1693 et seq., and the Credit Card Accountability Responsibility and Disclosure Act (the "CARD Act"). These laws apply to in-store sales and also to sales on the Internet. These prohibitions also apply to both goods and services.

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The End Is Near for Another Clinical Laboratory Accused of Fraud: True Health Diagnostics

Last week, court documents were unsealed in the Eastern District of Texas laying out serious allegations of fraud against True Health Diagnostics, LLC.  The documents arise from a failed attempt by True Health to lift a freeze on Medicare payments put in place against it based on suspicions of serious fraud.  The documents include the written Declaration of a Special Agent from the Office of Inspector General, United States Department of Health and Human Services.  According to the Special Agent, Jack Geren, True Health arose out of the ashes of another laboratory company called Health Diagnostic Laboratory, Inc. (“HDL”), which was “driven out of business as a result of pervasive healthcare fraud.”

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Criminal Judge Asks Cotchett, Pitre & McCarthy to Weigh in on PG&E's Safety Record

PG&E is on probation for its six felony convictions related to the 2010 San Bruno gas pipeline explosion, which killed 8 people, injured 58 and destroyed 38 homes. U.S. District Judge William Alsup is overseeing PG&E’s probation. As part of the probation proceedings, Judge Alsup has found PG&E violated its criminal probation by failing to notify a probation officer of a criminal investigation, prosecution and settlement with the Butte County District Attorney’s Office over its role starting the 150-acre Honey Fire in October 2017. The probation proceedings are on-going and Judge Alsup is considering forcing the utility to take far-reaching reform action, such as adherence to a stringent wildfire prevention program.

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CPM Wins in Whistleblower Award Decision in Virginia Supreme Court

In a decision of first impression in the state and federal appellate courts throughout the country, the Virginia Supreme Court issued an opinion in a case filed by CPM in 2007, Commonwealth v. Commonwealth ex rel. Hunter Laboratories, LLC (Va., Aug. 9, 2018, No. 170995) 2018 WL 3768538, holding that the whistleblower’s award under Virginia’s false claims act must be calculated based on the total amount of the settlement of a qui tam case, not just the portion retained by the state.

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Whistleblower Law for Whistleblowers: A Practical Guide

Part 6:  Are There Any Downsides to Becoming a Whistleblower? The Whistleblower Facts of Life

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Defrauded Investors May Lose Their Right to Recovery: Trump Administration Pushes for Regulatory Changes that Would Allow Companies to Avoid Securities Class Actions Through the Use of Mandatory Arbitration Agreements

“Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.”

 – Justice Louis Brandeis”

Investors need to be aware of efforts underway to undermine their ability to redress corporate fraud.  The Securities Exchange Commission (SEC) is contemplating a highly controversial change to securities policy which would allow companies to block securities class actions, which are often the only way that defrauded investors can be made whole.

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Whistleblower Law for Whistleblowers: A Practical Guide

Part 5:  Whistleblower Rewards

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In a divided opinion, the Sixth Circuit Court of Appeal overturned a lower court order dismissing a $35 million whistleblower suit against Brookdale Senior Living Communities. The suit was filed by a former employee of Brookdale who was tasked with reviewing Medicare claims prior to their submission. The whistleblower alleged that it was Brookdale’s policy to enroll as many residents as possible in home health care services that were billed to Medicare, even when the treatments were not medically necessary. She also alleged that Brookdale submitted claims to Medicare without obtaining the required physician certification of need, or that Brookdale obtained the certifications after the fact.

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Whistleblower Law for Whistleblowers: A Practical Guide

Part 4: Who Can Be a Qui Tam Plaintiff? And What Is the Basic Process?

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Whistleblower Law for Whistleblowers: A Practical Guide

Part 3:  Whistleblower Rewards: An Introduction to the False Claims Act

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Whistleblower Law for Whistleblowers: A Practical Guide

Part 2: Protecting Whistleblowers From Retaliation

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Whistleblower Law for Whistleblowers: A Practical Guide

Part 1: Am I a Potential Whistleblower?

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Finra Enacts Important Rule to Protect Seniors Against Fraudulent Activity

In you have a brokerage account it is subject to oversight by FINRA (Financial Industry Regulatory Authority).  Over the past several years FINRA has implemented new protections for senior citizens.  An important new rule (FINRA Rule 2165) went into effect in February 2018 to address scams and other fraud targeting vulnerable adults.  Rule 2165 is designed to protect two populations:

  • Elders aged 65 and older; and,
  • People over 18 who a brokerage firm “reasonably believes” have a mental or physical impairment that renders the individual unable to protect his or her own interests.

This wording dovetails nicely with FINRA’s “know your customer” rule (FINRA Rule 2090).

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Topics: Elder Abuse
The CPFB Remains Under Attack: Consumers Should Care About an Agency that has Recovered More than $11.9 Billion for Everyday Workers

Over the past several years we have posted news about the Consumer Financial Protection Bureau (“CFPB”).  As attorneys focused on socially just causes, we care about the watchdog agency that was formed to protect the interests of everyday consumers against unscrupulous practices of financial institutions.  The CFPB’s mission becomes that much more important in this era of forced arbitration and contractual class action bans.  In more and more cases the courthouse doors are shut to consumers who have been defrauded by their banks, mortgage companies, payday lenders, and brokerage firms.  Imagine your bank took $500 from your bank account without justification, what are your options?  It used to be that you could band together with other bank customers who had the same thing happen, but in 2018 that is often not the case.  This is one reason that the CFPB is so critically important – in a time when citizens’ rights to hold financial institutions accountable are being trampled, there at least was a government agencies that was designed to help injured consumers. 

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Fraud Trends In the Medical Laboratory Industry

The clinical laboratory industry continues to be a hotbed for Medicare and Medicaid fraud, as well as fraud and overbilling in connection with tests covered by private insurance.

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On March 20, 2018, in Cyan, Inc. v. Beaver County Employees Retirement Fund, the U.S. Supreme Court unanimously held that state courts retain jurisdiction over class actions brought under the Securities Act of 1933.  The decision resolves a split among the lower courts and protects pending class actions from removal.

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The State of California has finally woken up to the fraudulent practices endemic to the state’s addiction-recovery industry, which rips off insurers and preys upon people at their most vulnerable. The now-multibillion-dollar industry has found a lucrative home in Southern California, which has been dubbed “the Rehab Riviera.”

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Potential whistleblowers are sometimes afraid that if they bring their employer’s fraudulent scheme to light, the government will come after them for being involved in the fraud. While certainly possible, it is exceptionally rare. After all, the vast majority of money recovered by the federal government in False Claims Act cases comes from cases initiated by whistleblowers; scaring off whistleblowers would not be good business for the Department of Justice.

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The U.S. Supreme Court on Friday announced that it will review a Seventh Circuit decision finding income from $13.3 million given to employees was taxable.

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Direct to consumer genetic testing promises that with a couple dollars and a test tube filled with saliva, anyone has the power to look inside their DNA to assess health risks. In contrast to a traditional genetic test performed and interpreted by a physician, a direct to consumer (DTC) genetic test allows individuals to test themselves and bypass the physician and insurance provider.

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Lyme disease is the most common tick-borne disease in the United States. Diagnosis and treatment stir confusion and controversy among patients, doctors, and alternative care providers. Some have capitalized on this confusion, creating a market for laboratory developed tests to diagnose the disease.

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Defendants often cite Carter v. Prime Healthcare Paradise Valley LLC (2011) 198 Cal.App.4th 396 in support of their argument that the plaintiff’s complaint pleads a cause of action for professional negligence rather than elder abuse.  Defendants often argue that Carter, in effect, altered the law and heightened the pleading requirements for an elder abuse cause of action.  In making this argument, however, defendants misinterpret the Carter holding.  The Carter court did not modify the elements or the pleading requirements for elder abuse under California’s Elder Abuse and Dependent Adult Civil Protection Act.  In fact, the Carter court stated that it “distill[s]” the requirements of an elder abuse case.  The Carter decision did not, however, increase or enhance Plaintiff’s pleading requirements.  Id. at 406.

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Topics: Elder Abuse

Kids’ privacy and safety may be jeopardized by toys that connect to the internet. Parents should pay attention to toys with speech recognition, GPS, microphone, camera, or data storage capabilities. Such devices may ask for a child’s name, age, address, phone number, or other personal information. This is information parents may not want in the hands of an unscrupulous hacker, if it is intercepted or otherwise obtained.

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The number of data breaches occurring in the United States has privacy advocates watching new privacy laws that will soon take effect in European Union (“EU”) countries.

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I recently visited a small coffee shop and glanced at my phone while waiting for a friend to arrive. I had a notification asking if I was, indeed, at that cafe. When I clicked on the icon, my phone immediately showed the full menu and several photos of the establishment. This was possible because the geolocation feature on the phone could pinpoint my travel throughout the morning based on GPS, WiFi, and cell tower networks.

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In September 2017 an East Palo Alto women was sentenced to more than seven years in prison for financial elder abuse.  The prosecutors in the case, including San Mateo County District Attorney Steve Wagstaffe, did an excellent job seeing the case against Shirley Remmert to conclusion.

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Topics: Elder Abuse

From time to time we have posted information about the Consumer Financial Protection Bureau (“CFPB”) because it is an extraordinary agency fighting in the trenches for everyday consumers against big business, including financial institutions that are scamming Americans.  On Friday September 8, 2017 the CFPB won a trial in the U.S. District Court, Northern District of California before Judge Richard Seeborg.  The CFPB won $7.9 million in its case against Nationwide Biweekly Administration Inc. and its subsidiary, Loan Payment Administration, and its owner, Daniel Lipsk.  The CFPB presented testimony by experts as well as everyday consumers, including a retired schoolteacher and a member of the armed services and an FBI agent (all who testified that they had personally been tricked by the defendants).

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As a result of the recent case, Williams v. Superior Court (July 13, 2017, No. S227228) ___Cal.4th___ [2017 Cal. LEXIS 5124], employees received a big win on PAGA (Private Attorney General Act) class action claims. 

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On July 7, the Ninth Circuit issued an opinion in United States ex rel. Campie v. Gilead Sciences, laying out the standards for pleading plausible claims under Fed. R. Civ. P. 12(b)(6) in whistleblower cases filed under the False Claims Act.  United States ex rel. Campie v. Gilead Sciences, 2017 U.S. App. LEXIS 12163 (9th Cir. July 7, 2017) (“Campie”).

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On Monday, July 10, 2017, the Consumer Financial Protection Bureau (“CFPB”) issued a rule that will halt abusive tactics by credit card companies, banks, and other financial firms to prevent consumers from bringing class actions. 

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With the median price of home in some Bay Area counties topping the $1 million mark real estate fraud is rampant.  There are many types of real estate fraud – from equity stripping to foreclosure rescue, however, in recent years, the California Department of Real Estate (DRE) has noticed an uptick in criminal fraud related to real property deeds. 

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On April 14, 2017, the United States Court of Appeals for the Ninth Circuit affirmed the district court’s partial denial of All Nippon Airways, EVA Airways, and China Airlines’ motions for summary judgment, holding that the filed rate doctrine does not bar an antitrust class action challenging the airlines’ unfiled fares, fuel surcharges, and special discount fares. This marked the first time the Ninth Circuit addressed the application of the filed rate doctrine to airfares and fees.

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Topics: Antitrust

The California Fair Employment and Housing Act (FEHA) protects the right to seek, obtain, and hold employment without discrimination because of race, religion, sex, age, disability, or sexual orientation, among other characteristics.  Under the FEHA, the definition of “employee” in Section 12926 of the Government Code previously excluded individuals with disabilities granted special licenses to work at nonprofit sheltered workshops, day programs, or rehabilitation facilities.  Employers are still permitted to pay these individuals less than the minimum wage, but before January 1, 2017, there was no recourse under FEHA if these individuals were being discriminated against or harassed.  Now, they are afforded the same FEHA protections, thanks to Assembly Bill No. 488.

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Unsafe at 30,000 Feet: Why Lithium Ion Batteries Present a Serious Problem for Airlines and Passenger Safety

If you flew on a domestic flight between October 14, 2016 and January 10, 2017 you heard announcements about the ban on the transport of Samsung Galaxy Note7 devices.  This ban was put in place by the Federal Aviation Administration (“FAA”) because of the serious risk of the smartphones (also referred to as phablets) overheating, exploding and catching fire.  Although the FAA lifted the requirement of announcements, the devices are still banned on passenger and cargo flights.  (See, https://www.faa.gov/news/press_releases/news_story.cfm?newsId=21335). 

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Tens of thousands of Californians work in the state’s Skilled Nursing Facilities (“SNF”) and Assisted Living Facilities (“RCFE”).  Much of this workforce is underpaid and overworked.  Workers who care for senior citizens are the front line for preventing abuse and neglect.  Sadly, the companies that employ these workers frequently place hard working nursing staff, including Registered Nurses (“RNs”) and Licensed Vocational Nurses (“LVNs”) and Physical and Occupational Therapists in difficult if not impossible situations because they place profits over quality care.  When elder abuse occurs employers are often quick to blame low level staff when the root cause of the abuse is systematic under-staffing and poor training.

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Topics: Elder Abuse

With the rising numbers of households adopting pets, spending on pet services is steadily growing from year to year. From dog grooming to dog boarding services, many pet parents are investing in these services to pamper their pooches. In 2015 alone, according to the American Pet Productions Association, $5.41 billion was spent on grooming and boarding. Unfortunately, this billion-dollar industry remains unregulated and there is no government agency or regulatory body that administers an annual safety certification of pet groomers who are entrusted with our most beloved fury companions.  

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The recent inundation of rainfall in the Bay Area notwithstanding, water use, conservation and cost remain contested and closely monitored issues of local governance. Local governments and utility departments are required to comply with several constitutional provisions in charging customers for electricity and water.  Included are Proposition 26, requiring two-thirds majority approval to charge amounts not related to the cost of electric service, and Proposition 218, requiring rates be proportionate to costs, absent voter approval for other charges.

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Federal and state prosecutors are bearing down on pharmaceutical giants, and the glare on the lucrative generic drug industry is showing no signs of waning: last week, the Attorney General of Alabama announced it joined 39 other states suing many of the largest pharmaceutical corporations in the world for unlawfully skyrocketing the prices of common, household prescription medication to unprecedented levels.

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Topics: Antitrust

Creative trial lawyers always look for ways to win cases.  Not all wins need to resolve the entire case.  Under the federal rules, courts may grant partial summary judgment on some issues, but leave others for trial.  Motions for partial summary judgment on the issue of liability can be an effective way to secure an early victory, save time and expense, and avoid having a trial last longer than needed.

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On December 6, 2016, the U.S. Supreme Court, in State Farm Fire & Cas. Co. v. United States ex rel. Rigsby, Docket No. 15-513, slip op. (S.Ct. December 6, 2016) (“State Farm v. Rigsby”), found that failure to keep a False Claims Act (“FCA”) complaint under seal for the required 60 days was not sufficient to warrant a dismissal with prejudice.  

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Last week the U.S. House of Representatives passed the Fairness in Class Action Litigation Act (“FCALA”) by a vote of 220 to 201.[1]  While one of the bill’s authors gives lip-service to “keep[ing] the door of justice open for the American consumer,” the bill’s actual text contains numerous provisions that would increase litigation costs and delay the resolution of claims.[2]  For example, Section 1721 imposes a stay of discovery “during the pendency of any motion to transfer, motion to dismiss, motion to strike class allegations, or other motion to dispose of the class allegations.”  Discovery is often necessary at the pleadings stage because conspiracies, such as those alleged in price-fixing cases, are self-concealing, and defendants often destroy evidence of their wrongdoing.  Those same defendants will then argue that plaintiffs bring baseless claims.  Similarly, Section 1718(b) creates a difficult, if not impossible, administrative burden by requiring all settlement funds be distributed prior to “determin[ing]” attorneys’ fees, while simultaneously requiring that attorneys’ fees be based on “a reasonable percentage of any payments directly distributed to and received by class members.”  These provisions make the calculation of this percentage impossible, because they require a complete distribution prior to the determination of any fees. 

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Originally heralded as one of the “Top 10 Residential Buildings in the World” and “An Address Like No Other,” San Francisco’s 58-story Millennium Tower obtained unanticipated notoriety when it was finally disclosed to the public and residents that the building has sunk 16 inches and is leaning 2 inches at its base. A wave of finger pointing ensued between the building developers and owners of the neighboring Transbay Terminal project, with dueling teams of experts blaming excessive dewatering, failure to drill down to bedrock, or other factors, for the unexpected settlement.  Whatever its cause, however, it is clear that the building’s developers knew the building was sinking yet did not disclose this vital information when selling units to unsuspecting homeowners.

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“Give me your tired, your poor, Your huddled masses yearning to breathe free, The wretched refuse of your teeming shore. Send these, the homeless, tempest-tossed, to me: I lift my lamp beside the golden door.”
                       -Emma Lazarus

That quote used to be imprinted on the Welcome Mat of the United States.  Now, it’s been replaced by: “I’m sorry.  The hotel is full.  Next time make a reservation.”

In recent weeks, the new Administration of the United States has seen fit to clamp down on immigration.  There’s been fiery rhetoric about “bad hombres” apparently sneaking across the United States border with Mexico.  There was the now famous “refugee ban” that created chaos, confusion, hysteria and, now, has been replaced by a new policy that seems also destined to be the subject of multiple court challenges.  There’s even been talk about breaking up families – deporting adults who arrived in this country without going through proper channels but allowing their U.S.-born children to stay.  All of which has created a highly unstable and unpredictable situation with regard to the issue of immigration.

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Courts recognize that there is more than one way to measure damages with environmental torts. In response, some have been willing to be flexible and choose measures to allow as full a recovery as possible where appropriate to circumstances.[1] Whether the contamination involves air, water or soil, complicated statistical models and scientific analysis are often required to establish the nature, quantity, and economic value of the damages.

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Last week, the U.S. House of Representatives passed the Fairness in Class Action Litigation Act of 2017, H.R. 985 (The “Act”); the Senate referred the Act to its Judiciary Committee. The Act would “would crown a decades-long campaign” by the U.S. Chamber of Commerce to slam the courthouse doors shut on millions of Americans. The Chamber, and its allies in Congress, aim to achieve this through an amendment to the Federal Rules of Civil Procedure which could make it impossible in class actions for a damages class to be certified unless each class member suffered exactly the same amount of harm.  This provision, and the Act in general, would inure to the benefit of corporate wrongdoers at the expense of the American public; if passed, the Act would essentially immunize from civil lawsuits thefts committed on a national scale.    

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Pyramid and Ponzi schemes describe two types of fraud but lawyers who represent victims of the schemes, as our firm does, know that both types of fraudulent scheme share many characteristics.

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CPM's Water Rights Litigation Group has conducted a three-year investigation regarding the taking of public water by private corporations. Some of these companies continue to pump massive amounts of water from the public's natural resources, then bottle it and sell it to consumers for astronomical financial gains. The popularity of drinking bottled water instead of soft drinks has created a booming – and very profitable – line of business for beverage companies. In fact, in 2017, bottled water is expected to surpass soft drinks in popularity.[1]

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Civil and Criminal Enforcers Target Generic Drug Price-Fixers

Legal scholars have been forecasting that generic drugs will be the next big antitrust price-fixing case, and 2017 seems to be confirming this prediction thus far. In December 2016, the Antitrust Division of the United States Department of Justice (“DOJ”) charged two former executives of Heritage Pharmaceuticals Inc. with price-fixing, bid rigging, and customer allocation of two generic drugs. Shortly thereafter, 20 states filed civil lawsuits against Heritage and its competitors—Mylan NV, Teva Pharmaceuticals, Mayne Pharma Group Ltd., Heritage Pharmaceuticals Inc., Aurobindo Pharma Ltd., and Citron Pharma LLC—for allegedly conspiring to fix the prices of two generic drugs. The two drugs at issue are the delayed-release version of the antibiotic doxycycline hyclate and the diabetes drug glyburide. A total of 40 states have now filed suits.

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Topics: Antitrust
Court Upholds Consumers' Claims that Vizio Unlawfully Collects and Uses Private Consumer Data Collected through its Smart TVs in Cutting-Edge Privacy Case

A federal court judge has upheld privacy-related claims related to the collection and sale of consumer viewer data by Vizio. CPM is co-lead counsel in the class action lawsuit, which alleges that the TV maker failed to inform consumers that it is gathering their viewing histories, including what shows they watch, IP addresses, zip codes, product model numbers, hardware and software versions, chipset IDs, region and language settings, and other data.

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As drug addiction in the United States continues to gain national attention, the drug addiction rehabilitation industry booms. The Substance Abuse and Mental Health Services Administration estimates the addiction rehabilitation market is about $35 billion each year. While most of the industry provides life saving services for individuals struggling with addiction, some run scams to profit off of addicts and their insurance policies.

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Chemical restraints are drugs that are given in nursing homes (skilled nursing facilities) for improper purposes – for example, to make a senior’s behavior more “manageable” and for staff convenience.  Sadly, although against the law – chemical restraints are widely used.  According to professionals who oversee the health and safety of nursing home residents, misuse of chemical restraints can permanently damage the cognition of seniors.  A senior who lived independently and who is subject to chemical restraints at a nursing home may suffer permanent damage.

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Topics: Elder Abuse
Mylan Business Practices Harm Consumers, Insurers and the Government

Mylan NV's EpiPen has made headlines recently, and not in a positive way. Outrage grew in August at a jaw dropping 500% price hike for its EpiPen epinephrine auto injectors. The EpiPen is a lifesaving device used to treat severe allergic reactions, or anaphylaxis. The device is essentially a spring loaded syringe that injects a dose of epinephrine into the thigh, even through clothing. 

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Protecting Our Seniors (and Taxpayers) – U.S. Department of Justice (DOJ) Indicts Operators of 70 Facility Nursing Home Chain

Fraud in nursing homes is rampant and takes every imaginable form – from the small scale (a staff member who take narcotics from elders to sell on the street) – to the massive (systematic defrauding of the government).  With billions of government dollars flowing through our Nation’s nursing homes it is a hot bed for criminal activity.  Fortunately, whistleblowers and government investigators are able to work together to return funds to the government when there has been fraud or false claims for reimbursement by nursing homes.  

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Topics: Elder Abuse

Senior advocates, including elder abuse attorneys have long voiced opposition to the continued use of forced arbitration provisions in nursing home contracts.  In a rule that becomes effective November 28, 2016, the U.S. Government’s Centers for Medicare & Medicaid Services (“CMS”) is prohibiting pre-dispute arbitration clauses in nursing home contracts.  This move is a critical protection for our Nation’s approximately 1.3 million nursing home residents. 

Although the rule will not help elders in assisted living or nursing home residents with contracts that pre-date the November 28, 2016 effective date of the rule, the importance of this move by CMC cannot be understated.  The full text of the final rule, which is over 700 pages in length can be found here.

Our firm, Cotchett, Pitre & McCarthy, LLP represents elders in elder abuse and other types of litigation. We handle a wide range of cases under California’s elder abuse law, including cases involving serious injuries or death – as well as financial fraud.  

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Topics: Elder Abuse
Compounded Drug Fraud

Drug compounding is the process by which a pharmacist combines or alters ingredients to make medications tailored to individual patient needs. Common examples include putting medication in liquid form for elderly patients or excluding an allergen. Many people benefit from these services. 

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Bedsores – also known as pressure sores, or decubitus ulcers – are extremely painful.  They can lead to death.  A bedsore is an injury to the skin and tissue caused by prolonged pressure on the skin.  To people without medical training the name may seem benign.  They are not.  A Stage 4 bedsore can be an open wound that extends to the bone.

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Topics: Elder Abuse
Do You Have Children and Shop at IKEA?  If so, you need to be aware of IKEA’s major recall of dressers

29 million dressers are being recalled by IKEA for a tipping hazard that has led to the death of at least 6 children.  The recall covers dozens of models of dressers, although most news coverage has focused on the top selling Malm dressers – if you have bought any model dresser from IKEA you need to check the full list of recalled dressers.  IKEA dressers are ubiquitous in homes around the world, including in the United States.  

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10 Things You Should do if Your Parent is in a Nursing Home

As elder law attorneys we help seniors, dependent adults and their families when there has been serious injury or death or large losses of money.  Over the years we have worked with hundreds of elders and family members.  These are 10 take away points that we wished all families with loved ones in nursing homes (also referred to as Skilled Nursing Facilities (“SNFs”)) knew:

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Topics: Elder Abuse
Seventh Circuit Holds Medicare Part D is Entitled to Lower Prices Offered by Pharmacies to Patients under Discount Programs

The issue of what constitutes a medical provider’s “usual and customary” price has been at the center of a litany of false claims act litigation, at both the state and federal levels.  When dealing with prescription drugs paid for by Medicare Part D, CMS states “where a pharmacy offers a lower price to customers throughout a benefit year” the lower price is considered the “usual and customary” price rather than “a one-time ‘lower cash’ price.”

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American Consumers Recover $225 Million As Court Approves Settlements Against Automotive Parts Cartel

Late Wednesday afternoon a judge in Michigan approved $225 million in settlements for American consumers and businesses who purchased automobiles that were affected by an international automotive parts price-fixing cartel.  The Hon. Marianne O. Battani of the United States District Court for the Eastern District of Michigan ordered that the settlements should be approved, compensating American consumers for overcharges they paid as a result of the conspiracy.

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Topics: Firm News

May 5, 2016 marks an important day for consumers in the United States, as it is the day that the Consumer Financial Protection Bureau (CPFB) issued proposed rules prohibiting banks and other financial institutions from inserting mandatory arbitration provisions in consumer contracts.  These arbitration clauses have grown in popularity as a tool by big-business to prevent consumers from banding together to pursue claims in court and also from pursuing claims as class actions.  Mandatory arbitration provisions give financial institutions a free pass to violate the law at the expense of consumers.  Banks know that they can make billions through sharp and illegal practices when they put a ban on class actions and court proceedings into their ‘take it or leave it’ contracts with consumers.  Big-business knows that few consumers would have the resources to pursue a claim in arbitration when only a few dollars, or few hundred dollars, or even a few thousand dollars are at stake.  This is especially true since class action bans prohibit consumers from joining together to remedy wrongs and is especially true when the mandatory arbitration clauses let the financial institutions pick which arbitrator to use, which rules apply, and which law applies.

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No Obstinacy, No Madness, and No Plaintiff “Pick Offs” Pre-Class Certification

The Ninth Circuit decided today that a named plaintiff in a representative action can still pursue class certification even if his individual claims are satisfied through a defendant’s “pick off” tactics and that a case cannot be deemed moot until the plaintiff is afforded a fair opportunity to show that class certification is warranted.

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Appellate Brief Filed in Surfrider Foundation’s Lawsuit to Restore Public Access to Martins Beach

Today, in the Surfrider Foundation’s litigation against the owner of Martins Beach, CPM filed its response brief in the appeal phase of the case.  After a full trial in 2014, Judge Barbara Mallach found the owner had violated the Coastal Act by blocking the public’s access to the popular surf spot just south of Half Moon Bay.

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In federal and California state courts, defendants often look to the “public disclosure bar,” 31 U.S.C. § 3730(e)(4)(A) and Cal. Gov. Code section 12652, subd. (d)(3)(A), to shield them from liability from claims brought under the Federal and California False Claims Acts. Not surprisingly, defendants routinely argue that the public disclosure bar should be broadly construed to bar claims that are only tangentially related to information publicly disclosed before the whistleblower (also called the “relator”) filed their false claims action.

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Court of Appeal Limits Public Disclosure Defense under the California False Claims Act

Under the California False Claims Act, like its federal counterpart, defendants often seek to have claims against them dismissed on the basis of the “public disclosure” bar, Cal. Gov. Code section 12652, subd. (d)(3)(A). The scope of the California False Claims Act’s public disclosure bar was recently considered by the Second District Court of Appeals, which explained that the bar is intended “to prevent parasitic or opportunistic actions by persons simply taking advantage of public information without contributing to or assisting in the exposure of the fraud.” State ex rel. Bartlett v. Miller (2016) 243 Cal.App.4th 1398, 1407.

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Bargain Shopper Beware: the growing use of deceptive suggested retail prices

Everyone likes a good deal when shopping.  However, if you are one of the millions of Americans who make purchasing decisions based on a comparison of the sale price to the manufacturer's suggested retail price (MSRP) there is a high probability that you are not getting the deal you think you are getting.  

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The federal government spent roughly 14% of its overall expenditures on Medicare in 2014. Included in those costs were significant money paid to rehabilitation companies and skilled nursing facilities to provide rehabilitation and care services to seniors. Given the massive amount of money being spent on those services, there is also an increasing amount of fraud, abuse and deception occurring, where dishonest providers are seeking to line their pockets with taxpayer dollars.

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Currently pending before the Supreme Court is an important False Claims Act case, Universal Health Services v. United States ex rel. Escobar. The complaint in the case alleges that Universal Health Services knowingly hired unlicensed, unqualified and unsupervised non-medical professionals to provide mental health services in violation of Massachusetts’ Medicaid rules. The company then billed the state and federal governments as if those services had actually been provided by professionals. The misconduct had tragic consequences. According to the complaint, after seeking mental health services and receiving inadequate care from untrained non-professionals, a seventeen year old girl suffered a fatal seizure and died. When her parents discovered Universal Health Services’ failures, they sued under the False Claims Act.

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New Year, New Rules: Changes to California Code of Civil Procedure

There have been significant changes to the California Code of Civil Procedure, all of which center on one unifying theme: judicial efficiency. Below are brief discussions of the changes to procedural statutes regarding demurrers, 998 offers, and summary judgment motions. 

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AB 1509 Expands California Whistleblower Protections to Family Members of Whistleblowers

Effective January 1, 2016, Assembly Bill (AB) 1509 prohibits employers from retaliating against an employee who is a family member of a whistleblower. Specifically, the bill “extend[s] the protections of these provisions…to an employee who is a family member of a person who engaged in, or was perceived to engage in, the protected conduct.” 

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New Study Highlights Unfairness of Mandatory Arbitration

A recent study by the Economic Policy Institute on mandatory arbitration, compiling data from five years and over 1,200 cases administered by the American Arbitration Association, found that employees subject to mandatory arbitration agreements achieve lower rates of success and lower recoveries than similar claims adjudicated in federal and state courts.  Thus, employers who require arbitration as a condition of employment are able to decrease the potential consequences of later illegal or discriminatory conduct.  The study is available online here.

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Attorneys who litigate in Federal Court need to be aware of the recent amendments to the FRCP, which went into effect on December 1, 2015, in particular changes to  Rule 26, which governs the “duty to disclose” information in discovery.

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The federal Fair Debt Collection Practices Act (“FDCPA”) provides significant protections to debtors, and allows claims to be brought individually or on behalf of a class.

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Often in class actions brought against debt collectors under the Fair Debt Collection Practices Act (“FDCPA”), some absent class members will be subject to state court judgments obtained (often wrongfully) by the debt collection defendant. The question often arises as to whether those individuals can still be part of the class, or whether their inclusion in an FDCPA action is barred by the Rooker-Feldman doctrine. In the Ninth Circuit, at least, Rooker-Feldman does not apply in such circumstances.  

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Under most federal and state False Claims Act statutes, successful relators are entitled to a percentage “of the proceeds of the action or settlement of the claim.” Unfortunately, in some cases, the government tries to twist this language to prevent whistleblowers from receiving a share of all of the proceeds of their cases. Whistleblowers and their attorneys should fight such efforts.

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CPM Appointed Lead Counsel In Resistors Antitrust Class Action

On December 21, 2015, Judge Ronald M. Whyte of the Federal Court for the Northern District of California appointed Cotchett, Pitre & McCarthy, LLP. (“CPM”) lead counsel for the indirect purchasers in a class action alleging that a number of companies illegally conspired to inflate the prices consumers and businesses paid for resistors.

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Topics: Antitrust

CPM is a proud volunteer of the 2nd Harvest Food Bank.  Second Harvest Food Bank of Santa Clara and San Mateo Counties is the trusted leader dedicated to ending local hunger.

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Topics: Firm News

The United States Department of Justice has announced further criminal charges in connection with CPM’s spine surgery qui tam case. Federal prosecutors announced charges against five individuals, including Paul Richard Randall, a key defendant in CPM’s case. Randall has been charged with, and pleaded guilty to, the conduct described in CPM’s whistleblower complaint, filed in May 2012. CPM’s complaint, and the subsequent indictments, allege that Michael Drobot paid millions of dollars in bribes and kickbacks to doctors in order to steer spinal surgeries to his hospital—Pacific Hospital of Long Beach. Randall and several others were on the receiving end of those kickbacks.

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Whistleblower Barred From Receiving Portion of $322 Million Settlement

On June 1, 2015, District Court Judge John Walter of the Central District Court of California dismissed whistleblower James Swoben’s federal False Claims Act (FCA) case, finding that he was not the “original source” of the information. This dismissal effectively barred Swoben from receiving a portion of a $322 million settlement between the U.S. Department of Justice and Swoben’s former employee, Scan Health Plan.  

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On Wednesday, August 19, 2015, CPM and co-counsel Howard Law Firm and Jenkins Mulligan & Gabriel, LLP, filed a lawsuit against Costco, Chareon Pokphand (“CP”) Foods, PCL and C.P. Food Products, Inc. on behalf of consumer, Monica Sud and all others similarly situated. As described in the Complaint, Costco continues to knowingly purchase prawns from CP Foods—prawns that are directly tied to human trafficking and slave labor. As documented by the Guardian, the Associated Press and the Environmental Justice Foundation, CP Foods purchases fish meal, which  contains “trash fish,” farmed frequently from suppliers that own, operate or buy from pirate boats manned with slaves that catch the trash fish to use for fishmeal. CP Foods uses this trash fish to feed its prawns, which are then shipped to the U.S. and U.S. consumers. 

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Judge Allows Whistleblower Case Against BP to Proceed

In an order issued August 14, 2015, Judge Curtis E.A. Karnow of the San Francisco Superior Court cleared the path for CPM and California Attorney General Kamala Harris to pursue whistleblower claims against BP (formerly British Petroleum) for overcharging the State of California on purchases of natural gas. The case was filed in 2012 by a former-employee of BP, under the California False Claims Act. California Attorney General Kamala Harris joined the case in late 2014. The case accuses the oil company of massive overcharging of California cities, counties, universities, and government agencies on purchases of natural gas over the course of the past decade.

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Unanimous Jury Award for CPM Client

CPM attorneys Justin Berger and Eric Buescher completed a jury trial on August 5, 2015, winning a unanimous verdict awarding damages of half a million dollars on behalf of a local small business owner in a hotly disputed breach of contract case.  The lawsuit centered around a lease agreement for an advertising billboard owned by Defendant Ad-Way Signs that is located on the plaintiff’s property.  The plaintiff, CPM’s client, alleged that Ad-Way had failed to pay full rent according to the lease between the parties, believing that Ad-Way was delaying and underpaying rent in an attempt to leverage the small business owner into entering into long term lease that was more beneficial to Ad-Way.  CPM’s client never budged, relying on the legal protections provided to commercial landlords by Civil Code sections 827 and 1945 to prevail.  CPM often represents small business owners who are victimized by greed.

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Topics: Firm News
Ringleader Of Healthcare Fraud Conspiracy Arrested

On June 9, 2015, the FBI arrested Los Angeles-based chiropractor Bahar Gharib-Danesh, the alleged ringleader of a vast healthcare conspiracy first made public in a whistleblower lawsuit filed by Cotchett, Pitre & McCarthy (“CPM”). According to CPM’s lawsuit, which became public early this year, Danesh controls seven pain management clinics in Southern California. Together, these Clinics see hundreds of patients per day under the guise of “pain management” diagnosis and treatment. 

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$75.5 Million Settlement In Whistleblower Lawsuit Against Vmware, Inc.

The United States Department of Justice and Cotchett, Pitre & McCarthy, LLP announced today a $75.5 million settlement of claims against VMware, Inc. and Carahsoft Technology Corporation, in a False Claims Act case prosecuted by Cotchett, Pitre & McCarthy, LLP and the Law Office of Jeffrey F. Ryan on behalf of Relator Dane Smith. VMware is the market leader in “virtualization” technology, and the fifth-largest software company in the world. The action was filed in 2010 by Dane Smith, the former Vice President of Americas Sales for VMware. The settlement represents one of the five largest recoveries against a technology company in the history of the False Claims Act. 

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One of the most important factors in any case under the False Claims Act (federal or California), is whether the government decides to “intervene.” Oftentimes, however, when the government intervenes, it does not intervene on all of the qui tam plaintiff’s theories. The question then sometimes arises of how the non-intervened theories or claims should be treated. Defendants have argued that non-intervened claims must be dismissed. In fact, under both federal and California law, the qui tam plaintiff has full authority to proceed with non-intervened claims.  

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Fraud in Government Procurement of IT and IT Services

In this day and age, virtually all federal and state government agencies have integrated computer systems and technologies into their everyday business. As a result, technology companies are selling computer systems and data management products to the government on a level that rivals, and often exceeds, their sales to other commercial organizations. To manage government purchases and effectively utilize taxpayer monies, the federal government’s General Services Administration (GSA) utilizes the Multiple Award Schedule (MAS) to set pre-negotiated prices for government agencies to purchase products from commercial companies, including entering into larger purchasing agreements, known as “blanket purchase agreements” (BPAs). 

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Victim Blaming is Never Okay – CPM Agrees with Former Irish President on Problematic Coverage of Balcony Collapse Tragedy

On June 16, the same day as the balcony collapse in Berkeley killed six people and seriously injured at least seven others, the New York Times published a story on the tragedy under the headline “Deaths of Irish Students in Berkeley Balcony Collapse Cast Pall on Program.”  The “pall” is not on the victims of this tragedy, nor on a program that has allowed thousands of Irish citizens to spend a summer living in the U.S.  The “pall” is on whoever is at fault in constructing and maintaining a balcony that should never have collapsed, and on those who would blame a party atmosphere for the tragedy, and who would resort to stereotyping and underhanded victim blaming.  

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Balcony Collapse Litigation

Balcony and deck collapses are all too common – especially in the Bay Area.  Collapses occur through structural defects as well as through lax and deferred maintenance.  An example is the tragic balcony collapse that occurred at 12:41 a.m. on June 16, 2015 in Berkeley (Bay Area of California), which as of 9:00 a.m. had claimed six lives with many more victims in the hospital with major and life threatening injuries.  Most of the victims of this tragedy were Irish students spending their summer on work visas.  

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Niall McCarthy and Eric Buescher recently published a chapter titled “Fighting Financial Elder Abuse in California” for the Thomson Reuters / Astapore Books publication, “Inside the Minds: Elder Law Client Strategies in California.”  The chapter describes the current state of financial elder abuse law in California and discusses strategies for plaintiffs to successfully prosecute civil financial elder abuse cases in a variety of contexts.  

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Topics: Elder Abuse

Congratulations to Anne Marie Murphy for being selected by The Daily Journal as one of the Top 100 Women Lawyers in California.

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Topics: Firm News
Fraud in For-Profit Education: Sufficient Particularity and Causal Connections

With the mounting costs of higher education, students are increasingly relying on federal financial aid to finance their education. As a result, taxpayer monies are increasingly being advertised and used by higher education institutions, both non-profit and for-profit, to maintain student enrollment. As discussed in an earlier post, for-profit schools must certify they are in compliance with various federal statutes and regulations in order to receive federal financial aid, including: (1) being accredited by an approved agency; (2) that they do not derive at least 10% of their revenues from non-federal sources, known as the 90-10 Rule; (3) that they do not pay recruiters bonuses or other incentives payments based on student enrollments; and (4) that students are making satisfactory progress toward completing their course of study.  

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Nanci Nishimura has been selected by the White House to represent the Top 50 Asian Americans and Pacific Islanders at a White House Conference on Education and Entrepreneurship of Asian American businesses.

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Topics: Firm News
Unsealed Cases Reveal $461.5 Million Settlements in Health Care Fraud

On Monday, May 4, 2015, courts unsealed two health care fraud cases and revealed settlement amounts totaling over $461.5 million. In Carlisle v. Pacific Ambulance et al., Case No. 3:09-cv-02628-L-BLM (S.D. Cal.), whistleblower Kelvin Carlisle alleged that several ambulance companies engaged in an unlawful kickback scheme by providing heavily discounted ambulance services in exchange for exclusive rights to provide services to the hospitals. Carlisle stated that the scheme incentivized hospitals to order excessive and unnecessary medical services and seek reimbursement from Medicare. This case settled for $11.5 million, with Carlisle receiving $1.7 million. 

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$48.5 Million Settlement in Whistleblower Lawsuit

The United States Department of Justice today announced a $48.5 million settlement of claims against Health Diagnostic Laboratories (“HDL”) and Singulex, Inc., in a False Claims Act case filed by Cotchett, Pitre & McCarthy on behalf of a whistleblower in late 2011.  HDL is a Richmond, Virginia-based laboratory that specializes in coronary heart disease testing.  Singulex is a laboratory based in Alameda, California.  CPM prosecuted the case jointly with two other whistleblower actions filed by the law firms of Phillips & Cohen LLP, and Pietragallo Gordon Alfano Bosick & Raspanti, LLP.  CPM was assisted in the case by the Steven N. Berk, of Berk Law PLLC, based in Washington D.C.

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California Appellate Court Expands California Whistleblower Protections

California Labor Code §1102.5 protects employees from retaliation when employees report—either internally or to an outside law enforcement agency— employers that violate local, state or federal laws. Under this statute, employees who report unlawful employer activities (“whistleblowers”) are protected from employer retaliation such as discipline, reassignment, salary reduction, demotion, and termination. On November 21, 2014, a California appellate court broadened these whistleblower protections to include employees who were terminated because their employer “mistakenly believed” that the employee engaged in the protected activity of reporting employer misconduct.

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OIG Issues Advisory Opinion Regarding Free Laboratory Services

Last week, the United States Department of Health and Human Services, Office of Inspector General (“OIG”) posted an Advisory Opinion addressing several issues of importance in the medical laboratory industry. OIG Advisory Opinions provide useful guidance to industry participants and potential whistleblowers in understanding what categories of conduct cross the line from legitimate business practices to fraud and abuse.  

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Fraud in For-Profit Education

The False Claims Act can be a powerful tool against for-profit educational institutions that exploit students, and bilk taxpayers. Under the Higher Education Act of 1965 (“HEA”), Congress established various student loan and grant programs, including the Federal Pell Grant Program (“Pell”), the Federal Family Education Loan Program (“FFELP”), and the Federal Direct Loan Program (“FDLP”) in order to financially assist eligible students in obtaining a post-secondary education. These loan and grant programs are only supposed to be offered to students who attend educational institutions that meet strict federal and state requirements. Unfortunately, many for-profit institutions fail to meet those requirements, and conceal that fact to continue receiving federal student loan proceeds. Many schools rely almost entirely on federal student aid to keep their programs running, and are willing to do and say anything, no matter how fraudulent, to keep those funds flowing.

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Public Radio Airs Story on CPM’s Counterfeit Screws Litigation

The Center for Investigative Reporting this weekend aired a story detailing CPM’s counterfeit screws litigation on hundreds of public radio stations around the country.  You can listen here.  The story covers a Southern California medical equipment supplier’s scheme to use private plane rides, international vacations and cash-stuffed envelopes to recruit doctors to use his company to buy spinal surgery screws – many of which were apparently counterfeit.

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Defendants in federal False Claims Act (“FCA”) cases often attempt to get cases dismissed by alleging that the whistleblower’s claims are based on information that was “publicly disclosed.” This type of defense is commonly referred to as a “public disclosure bar” defense. 

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“False Certification” Claims Under the California False Claims Act

When a company charges the government for goods or services that were provided in a manner that violates laws, regulations, rules, or contractual provisions, those charges may violate the False Claims Act. This type of violation is often characterized as a “false certification” violation. As described by a California Court of Appeals, under the California False Claims Act, “a vendor impliedly certifies compliance with its express contractual requirements when it bills a public agency for providing goods or services.” San Francisco Unified School Dist. ex rel. Contreras v. Laidlaw Transit, Inc. (2010) 182 Cal.App.4th 438, 442. In Laidlaw, for example, the defendant—a school bus company—was found to have violated the California False Claims Act because it failed to comply with maintenance standards and pollution controls that were required in its contract with the government.

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Lawyers Can Help The Plight Of The Middle Class By Supporting The Labor Movement

Op-Ed Columnist Nicholas Kristof wrote an important piece in today’s New York Times about the correlation between increasing economic inequality and the decline in union membership.  In addition to the article’s substance, what was noteworthy was Mr. Kristof’s mea culpa for previously “disdain[ing]” unions for their perceived corruption and nepotism.  See http://www.nytimes.com/2015/02/19/opinion/nicholas-kristof-the-cost-of-a-decline-in-unions.html?ref=opinion.  He admitted that he was wrong.

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On December 23, 2014, Judge Troy L. Nunley of the Eastern District of California ruled in plaintiffs’ favor, denying defendants’ motion to dismiss. See United States ex. rel. Dalitz v. AmSurg Corporation, No. 2:12-cv-02218-TLN-CKD, 2014 U.S. Dist. LEXIS 177374 (E.D. Cal. 2014). This effectively allowed plaintiffs’ False Claims Act (FCA) case to continue.  

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Halting Bullies At the Work Place – New California Law Requires Anti-Bullying Training

Last summer, Governor Jerry Brown signed AB-2053, which requires California employers with 50 or more employees to provide workforce bullying training in addition to the required sexual harassment training.  This training is now mandated for employers beginning January 1, 2015.  

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Another Circuit Endorses “Implied Certification” Theory of FCA Liability

Earlier this month, the federal Fourth Circuit Court of Appeals issued a landmark decision broadening liability for False Claims Act violations. The decision, United States ex rel. Badr v. Triple Canopy, Inc., No. 13-2190, -- F.3d -- (4th Cir. 2015), is particularly important, given that the Fourth Circuit covers areas surrounding Washington D.C. that are replete with government contractors.

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District Court Patent Rulings Now Relevant On Appeal

This past week, the United States Supreme Court made District Courts’ decisions relevant again as they relate to the field of patent cases.  The law that had developed out of the Federal Circuit related to Markman heairngs (hearings regarding claim construction/scope of the patent) held that the standard of review on Markman hearings was de novo.  This was the law, even if the basis of the District Court’s ruling was founded on evidence presented by witnesses.  Under the Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc. decision, where the claim construction was based on evidentiary underpinnings, those factual disputes are now to be reviewed under a “clear error” standard.

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Blowing The Whistle On Procurement Fraud Under The California False Claims Act

Procurement fraud—overcharging the government on some of the millions of products and services that government agencies purchase from private companies every year—is one of the most common schemes giving rise to whistleblower cases under the False Claims Act. On the federal side, an agency called the General Services Administration, or GSA, oversees the procurement of many goods and services on behalf of the federal government. Companies that want to sell their goods to federal agencies go through an application process to get their products listed on the federal GSA “schedule.” Many successful cases have been brought under the False Claims Act based on fraud committed on the GSA. For example, in one of the biggest recoveries, the software company Oracle paid $199.5 million to settle claims that it overcharged the government on the purchase of software products listed on the GSA schedule.

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Save Our Juries Campaign

Save Our Juries launched in July 2014, becoming ABOTA's first public awareness campaign. Its mission is to "uphold the jury system provided by the Seventh Amendment to the U.S. Constitution by educating the American public about the current issues, the history and the value of the right to trial by jury." In 1958, my father, ABOTA's first National President, built ABOTA on this one mission - to preserve our civil justice system. It's vital that we always use his founding purpose as the anchor of this organization. 

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California A.G.'s Office Files Complaint Against BP in CPM Whistleblower Case

In a complaint filed this week, California Attorney General Kamala Harris added detailed allegations to a whistleblower case filed by Cotchett, Pitre & McCarthy against BP (formerly British Petroleum) that accuses the oil company of massive overcharging of California cities, counties, universities, and government agencies on purchases of natural gas over the course of the past decade.

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Protecting Our Seniors: CCRCs - Buyer Beware

Continuing Care Retirement Communities (“CCRCs”) are gaining in popularity as an option for senior retirement living. Many CCRCs offer gorgeous surroundings akin to a 5-star hotel. Often they tout ties to prestigious universities in the hopes of attracting alumni and faculty. However, for all the attractions of CCRC living, there are serious legal consequences to be considered before a senior should make the move to a CCRC.

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Topics: Elder Abuse
Medicare Fraud in the Hospice Industry

Another area of healthcare that is rife with fraud is hospice care. Hospices aim to provide palliative care, as opposed to curative care, to patients in the last six months of their lives. Palliative care is aimed at relieving the pain, symptoms, and/or stress of terminal illness and includes a comprehensive set of medical, social, psychological, emotional, and spiritual services provided to a terminally ill individual. Medicare recipients of palliative care agree to forego curative treatment of their terminal illness.

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Niall McCarthy Named to the Irish Legal 100 for 2014

Congratulations to Niall McCarthy for being named to the Irish Legal 100 for 2014.  The Irish Legal is published in the Irish Voice, which is a national legal newspaper.

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Topics: Firm News

After an hour long hearing on Thursday, December 11, 2014, Judge Elihu M. Berle of the Los Angeles Superior Court rejected defense challenges to a CPM whistleblower complaint alleging that they engaged in a vast fraudulent scheme involving spinal surgeries in Southern California. The plaintiffs assert that the defendants have defrauded the government and various California workers compensation insurance carriers by systematically arranging and performing spinal surgeries that: (1) were medically unnecessary; (2) used non-FDA-approved, counterfeit surgical hardware, including rods and screws that were implanted in patients’ back; (3) result from a vast array of kickbacks; and (4) were billed to insurance carriers and government payers at illegally inflated rates. 

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Only Six Years Removed from Subprime September, Congress Acts to Undermine Dodd-Frank

Mixed news this week for Dodd-Frank whistleblowers and attorneys working in that space: As we already know from the Securities and Exchange Commission’s annual report to Congress (released last month), foreign-based whistleblowers are coming forward in ever-growing force to report Dodd-Frank violators to the Commission.

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Judge Orders Vinod Khosla to Open the Gates to Martin's Beach Immediately

The owner of the property adjacent to Martin’s Beach has been ordered to immediately reopen public access to the beach. Judge Barbara Mallach of the San Mateo County Superior Court issued a final order today directing Vinod Khosla to open the gate blocking access to the way it was when he purchased the property.

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6th Circuit Says FCA Only Protects Whistleblowers in “Employmentlike Relationships"

The U.S. Court of Appeals for the Sixth Circuit held last week that the FCA does not bar prospective employers from discriminating against job applicants for having served as whistleblowers against different companies in the past.

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SEC’s Dodd-Frank Whistleblower Program Grows Significantly - and Consistently - for Third Straight Year

The U.S. Securities and Exchange Commission (“SEC”) released its annual report to Congress on its Dodd-Frank whistleblower program last week. As in years past, the results are heartening for prospective whistleblowers, shareholders, and good governance advocates worldwide: For fiscal year 2014, the SEC’s Office of the Whistleblower (“OWB”) received 3,620 tips—nearly 400 more than in fiscal year 2013, and about 20 percent more than the agency received in fiscal year 2012, which was the program’s first full year in operation.

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CPM Responds to Surge of Undocumented Children with Pro Bono Services

Due to rampant drug and gang violence in Central America—particularly in El Salvador, Guatemala and Honduras—there has been a huge influx or “surge” of unaccompanied minors immigrating to the United States. 

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Report: “Private Placement” Issuers and Brokers Take Exploitation of Main Street Investors to New Heights Amid Fracking Boom

“Wildcatter” oil and gas prospecting companies and unscrupulous brokerage firms are riding the explosive growth of hydraulic fracturing, or “fracking,” in the United States to reap sizable profits off unsuspecting Main Street investors, according to a recent investigative series report done by Reuters.  According to a recent report issued by Reuters, Ameriprise shaped deals to sell more securities potentially harming investors.  

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California Attorney General Joins Cotchett, Pitre & McCarthy in Whistleblower Case Against BP

It was publically revealed yesterday that the California Attorney General’s Office is joining a whistleblower case against BP (formerly British Petroleum) that accuses the oil company of massive overcharging of California cities, counties, universities, and government agencies on purchases of natural gas over the course of the past decade.

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California Legislature’s Changes to Labor Code Finally Paying Off for Whistleblowers

The Legislature has enacted several changes to the California Labor Code designed to protect employee-whistleblower activity. Many of these changes relate directly to areas in which CPM practices. The Legislature’s changes are beginning to pay real dividends to whistleblowers who expose the corporate wrongdoing of their employers.

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Feds Continue to Target “Forced Arbitration” Clauses in Consumer, Employment Contracts

In a recent op/ed in Salon, labor and consumer organizations teamed up to criticize the vast impact of “forced arbitration” clauses in consumer and employment contracts, and to call on Congress to act on behalf of the great majority of its constituents and ban the practice.

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“The Outsiders”: New Ninth Circuit Ruling on the Public-Disclosure Bar and Original Source Exception

On October 29, 2014, the Ninth Circuit issued a published opinion in Malhotra v. Steinberg, et al. that contains a detailed discussion of the public disclosure bar, and the original source exception, of the False Claims Act. The opinion is helpful in reiterating the Ninth Circuit’s approach to the public disclosure bar, and provides a bit more guidance on a few open issues, including the definition of “outsiders” as it relates to the public disclosure bar. 

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Sixth Circuit Upholds Gay Marriage Bans, Setting Stage for Likely Supreme Court Review

On November 6, 2014, a three-judge panel of the United States Court of Appeals for the Sixth Circuit upheld bans on gay marriage in Kentucky, Michigan, Ohio and Tennessee. The ruling in the consolidated appeal overturns four district court decisions that found the bans unconstitutional. Significantly, the Sixth Circuit’s opinion contradicts decisions from four other federal circuit courts of appeal finding similar bans unconstitutional and is the first time a federal circuit court has upheld a gay marriage ban after the Supreme Court’s landmark decision in United States v. Windsor, 133 S. Ct. 2675 (2013) (finding the Defense of Marriage Act unconstitutional). The United States Supreme Court has thus far declined to hear appeals from decisions finding the bans unconstitutional, but the Sixth Circuit’s decision creates a “circuit split,” making Supreme Court review likely.    

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Newly Published Ninth Circuit Case Non-Controversial, Despite Abortion-Debate Undertones

A recently published Ninth Circuit case interpreting the California False Claims Act proved relatively non-controversial, despite involving a dispute at the fringes of the abortion wars. In the case, Gonzalez v Planned Parenthood, 759 F.3d 1112 (9th Cir. 2014) (“Gonzalez”), a former Planned Parenthood director sued the organization’s Los Angeles branch under the federal False Claims Act and the California False Claims Act, alleging that Planned Parenthood overcharged California’s Medi-Cal program (specifically, Medi-Cal’s “Family PACT” program) for contraceptives provided to low-income individuals. The relator was represented in the case by the American Center for Law & Justice, a conservative Christian law firm founded by Pat Robertson. The lawsuit was presumably inspired (at least in part) by ideological disdain for the work of Planned Parenthood.

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Center for Investigative Reporting Covers CPM's Spinal Screw Case

The Center for Investigative Reporting published a 4,000-word article yesterday detailing a Southern California medical equipment supplier’s scheme to use private plane rides, international vacations and cash-stuffed envelopes to recruit doctors to use his company to buy spinal surgery screws – many of which were apparently counterfeit. 

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Coastal Use and Beach Access Rights in California: Lessons of Martin’s Beach

In a high-profile case with potentially national implications, a San Mateo County Superior Court judge sided in September with Cotchett, Pitre & McCarthy client Surfrider Foundation and ordered Silicon Valley billionaire Vinod Khosla to stop blocking public access to a Northern California beach used and enjoyed for nearly a century by families, fishermen, surfers, and other members of the community. Khosla had gated off a road leading from Highway One to the beach in 2010, two years after buying most of the land fronting the beach for $32.5 million.

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Dodd-Frank Whistleblower Program Continues to Thrive As Courts Debate Extent of Protections

Even as recent federal rulings threaten to narrow the scope of anti-retaliation protections provided to individuals who report violations of America’s securities law, the Dodd-Frank Act’s whistleblower program continues to grow – both in the raw number of apparent violations brought to the attention of federal authorities and in the size of monetary rewards issued to whistleblowers. 

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Pension Advance Scams Target Senior Citizens and Military Veterans

Criminals and fraudsters often target senior citizens and military veterans – residents who have given much, and who are sometimes among the most vulnerable members of a community. According to the Los Angeles County District Attorney’s Office, 70 percent of assets in the United States are in the hands of seniors (defined as citizens who are over 65 years of age.)

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Topics: Elder Abuse

The California Advocates for Nursing Home Reform (CANHR) has reportedly observed a disturbing uptick in elder abuse centered on the Department of Veterans Affairs’ (“VA”) Aid and Attendance benefit. Aid and Attendance is a financial need-based benefit to help senior veterans who need assistance to pay for in–home care, assisted living facilities, or nursing homes. The program provides an important benefit to our nation’s elderly veterans. Unfortunately, due to the reality that some opportunists view senior veterans as attractive targets for scams, proceeding with caution is paramount.

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Topics: Elder Abuse
Why the Consumer Financial Protection Bureau (CFPB) Is Important to Seniors

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), signed into federal law by President Barack Obama on July 21, 2010, created a ground-breaking new agency: the Consumer Financial Protection Bureau (CFPB). The CFPB aims to protect Main Street America from Wall Street abuses. Moreover, the Bureau operates under an explicit mandate to protect senior citizens.

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Topics: Elder Abuse

Defendants often attack actions brought under the California False Claims Act by arguing that the complaint does not provide sufficient specificity. Such attacks ignore two fundamental principles of pleading.

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Joe Cotchett Honored as “Titan of the Plaintiffs Bar”

Citing a half-century of trial experience spanning the gamut of the law—from civil rights to antitrust, securities fraud to the representation of outed CIA spy Valerie Plame—Law360 selected CPM founding partner Joseph Cotchett as a “Titan of the Plaintiffs Bar” in September. 

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Topics: Firm News

More than five years have passed since President Obama signed into law several important, relator-friendly amendments to the False Claims Act as part of the Fraud Enforcement and Recovery Act of 2009 (“FERA”), S. 386 (introduced by Senators Leahy and Grassley). Those amendments, however, are as important today as they were then, and thus a review of those changes—and how they affect FCA whistleblowers (“relators”) and whistleblower attorneys—is warranted.

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Cotchett, Pitre & McCarthy Honored as America’s Elite Trial Lawyers by The National Law Journal

Cotchett, Pitre & McCarthy has been honored as America’s Elite Trial Lawyers by The National Law Journal. The list is composed of firms that pulled in huge victories in complex cases that have wide impact on the law and legal business. 

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Topics: Firm News
Niall McCarthy Honored with Defender of Justice Award

Congratulations to Niall McCarthy for being honored with the Defender of Justice Award by the California Judicial Council. 

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Topics: Firm News

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