Companies, CEO Settle Illegal Marketing Charges for US$2.8 Million
Business Ethics and Corporate Culture, Consumer Protection, Health, Safety and Environment

The US Department of Justice (DoJ) has announced that pharmaceutical company Cypress Pharmaceutical, its subsidiary Hawthorn Pharmaceuticals and chief executive officer (CEO) Max Draughn have agreed to pay $US2.8 million to resolve false claims allegations. It was alleged that the defendants marketed to physicians and state Medicaid officials three pharmaceutical products, namely Hylira, Zaclir and Zacare, that were not approved as safe and effective by the US Food and Drug Administration (FDA). It was also alleged that the defendants submitted false reports to the Centers for Medicare and Medicaid Services (CMS) that misrepresented these products’ regulatory status and, further, failed to advise the CMS that the drugs did not qualify as outpatient drugs that were covered for payment.

DoJ’s media release (28 March 2012)
(Source: DoJ)

Company Settles Medicare False Claims Case for US$180,000
Business Ethics and Corporate Culture, Financial Integrity

The US Department of Justice (DoJ) has announced that EUSA Pharma has agreed to pay US$180,000 to settle charges that it advised health care providers to submit false claims to Medicare for imaging scans. It was alleged that EUSA Pharma, which makes and sells ProstaScint, a radiopharmaceutical, encouraged doctors to submit multiple claims for certain imaging scans performed using ProstaScint, after the Society of Nuclear Medicine informed the company that only one claim should be submitted for these scans. The lawsuit was filed by Ann-Marie Williams, a former EUSA Pharma employee, under whistleblower provisions.
DoJ’s media release (23 March 2012)
(Source: DoJ)

Lockheed Martin Settles False Claims Case
Business Ethics and Corporate Culture, Financial Integrity, Government Contracting

The US Department of Justice (DoJ) has announced that defence contractor Lockheed Martin Corporation (Lockheed) has agreed to pay US$15.85 million to resolve false claims charges in relation to the mischarging of perishable tools used under various government contracts. According to the DoJ, the US Government was overcharged as a result of a seven-year pricing scheme by Tools & Metals (TMI), a subcontractor that sold perishable tools to Lockheed for use on military aircraft. It was alleged that TMI inflated the costs of these tools and Lockheed passed these costs on to the US Government under various contracts.

DoJ’s media release (23 March 2012)
(Source: DoJ)

Probe Finds Restaurant Workers Underpaid US$1,307,808
Employment and Workplace Issues

The US Department of Labor (DoL) has announced that its investigation into the Massachusetts restaurant industry has revealed “significant violations of the minimum wage, overtime and record-keeping provisions” of the US Fair Labor Standards Act. The investigation uncovered US$1.3 million in back wages due to 478 employees of multiple businesses. The DoL found employees were being paid flat wages for all hours worked without overtime pay, a failure to combine hours worked at multiple locations for overtime purposes, illegal deductions from employees’ wages and a failure to keep records of employees’ hours, amongst other violations. The businesses found to have underpaid workers are: Not Your Average Joe’s restaurants, Science Partners restaurants, Metropolitan Club restaurants, Noon Hill Grill, T.G.I. Friday’s, Fresh City restaurants and Paul W. Marks. According to the DoL, all establishments have paid or are in the process of paying underpaid employees.

DoL’s media release (29 March 2012)
(Source: DoL)

Wall Street Firms Adapting for Safer Use of Social Media
Business Ethics and Corporate Culture, Careful Communication and Proper Use of Computers, Employment and Workplace Issues, Insider Trading

Wall Street firms are beginning to wade into the somewhat choppy waters of social media. In order to comply with securities regulations, most of these firms block their employees from using their personal accounts on social media sites like Twitter and Facebook while at work and from accessing their personal email accounts. However, in order to access the marketing opportunity these sites present, some companies are turning to outside firms to help them utilize these tools while also complying with applicable securities regulations. Companies like Socialware provide software that allows companies within the financial industry to store pre-written content, archive posted messages, and enable compliance departments to review postings. Socialware counts among its clients the insurance company Guardian Life, asset manager AllianceBernstein and the financial advisor Morgan Stanley Smith Barney. It has not been easy for companies to monitor postings on sites designed to distribute information at such a fast pace. Regulators have already brought charges against individuals in the securities industry based on their Twitter and LinkedIn postings. Still, companies are moving forward with using social media as a tool. Banks like Deutsche Bank and Wells Fargo have begun to allow limited groups of employees to communicate through social media outlets.

New York Times: On Wall St., Keeping a Tight Rein on Twitter (21 March 2012)
(Source: New York Times)