Multinational Monitor

DEC 2004
VOL 25 No. 12


The Ten Worst Corporations of 2004
by Russell Mokhiber and Robert Weissman

Offshoring: The Evolving Global Profile of Corporate Restructuring
by Kate Bronfenbrenner and Stephanie Luce


Blowing the Whistle on the FDA
an interview with Dr. David Graham


Behind the Lines

Sharpening Their Knives

The Front
India Confronts AIDS

The Lawrence Summers Memorial Award

Names In the News


Names In the News

Getting the Lead Out

WinnResidential Limited Partnership, a Boston-based real estate company, agreed in November to remove lead paint hazards from approximately 10,400 apartments in seven states and the District of Columbia, and pay a monetary penalty. More than 7,000 of the apartments are located in Massachusetts alone.

Federal officials claimed the company failed to notify its tenants that their homes may contain potentially dangerous amounts of lead.

WinnResidential Limited Partnership and its affiliates own and manage more than 235 housing projects across the country.

In settling one of the largest enforcement actions of its kind, the company will pay a $105,000 civil monetary penalty and test for and clean up all existing lead-based paint hazards in its units.

The Environmental Protection Agency estimates that the cost of lead abatement projects associated with this settlement are likely to be as high as $3.7 million.

“This settlement should remind landlords that they have a legal responsibility to tell their tenants if their homes may harm their children,” said Miniard Culpepper, the Housing and Urban Development Acting Regional Director for New England. “This agreement will not only create thousands of healthier homes and but will give families the peace of mind to raise their kids without fear of lead poisoning.”

In 2001, there were approximately 1,100 children in Boston alone with elevated blood lead levels. The majority of cases are in the City’s lower-income, most diverse neighborhoods.

Payday Lender Shut Down

Cashback Payday Loans, a payday lender charging super-high interest rates, won’t be doing business in New York.

In November, New York Attorney General Eliot Spitzer barred the company from doing business in New York State.

The Las Vegas-based Cashback Payday Loans, Inc. had been making loans at annual interest rates of up to 400 percent.

“Payday lending can be the modern equivalent of loan sharking and is illegal in New York,” Spitzer said. “My office will continue to take aggressive action to stop payday lenders from victimizing New York consumers.”

Spitzer’s investigation of Cashback’s operations was sparked by a consumer complaint from a borrower who, in order to avoid default on a $500 payday loan from Cashback, became stuck in a cycle of refinancing at annual interest rates of nearly 400 percent. Within three months of receiving the $500 loan, the consumer owed Cashback more than $900 in interest.

Payday loans are small, short-term loans that are repayable on the borrower’s next payday, usually by a post-dated check or by electronically withdrawing the money from the borrower’s checking account.

New York’s probe revealed that Cashback — which advertised “payday advances” over the Internet — extended such loans to dozens of New York consumers in violation of state usury laws.

Under the settlement agreement, the company must contact all New Yorkers with open accounts and notify them that their loans will be discharged. Further, the company must pay refunds to past customers who were charged exorbitant interest rates. It must cease issuing illegal payday loans in New York immediately, and discontinue any other lending operations.

Dialysis Fraud

A unit of Swedish medical supply giant Gambro Healthcare pled guilty in December to felony charges and will pay $350 million in criminal and civil fines to resolve federal healthcare fraud charges.

The company is the third largest owner and operator of renal dialysis clinics in the United States.

Gambro will pay a $25 million criminal fine and in excess of $310 million to resolve civil liabilities stemming from alleged kickbacks paid to physicians, false statements made to procure payment for unnecessary tests and services, and payments made to Gambro Supply — a sham durable medical equipment company set up by Gambro Healthcare.

A False Claims Act lawsuit was filed in 2001 by Gambro’s former Chief Medical Officer, Dr. Steven Bander.

Under the provisions of the False Claims Act, individuals such as Bander are able to file suit on behalf of the U.S. federal government against parties alleged to have defrauded the government. If the suits prevail or are settled, the initiator is entitled to receive a share of the settlement ranging anywhere from 15 to 25 percent.

Bander and the federal government charged that Gambro provided home dialysis patients equipment and supplies through a “shell” durable medical equipment company, Gambro Supply, in violation of Medicare regulations.

By billing in this manner, Gambro received a higher rate of reimbursement than it would have received if it had directly submitted the claims for payment. Emergency home dialysis supplies were not provided as billed by Gambro, federal officials alleged.

The government also alleged that Gambro engaged in practices that resulted in the submission of false statements and bills being submitted for ancillary medications and services which were not medically necessary.

— Russell Mokhiber


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