Wednesday, December 22, 2004
The law firm Fried, Frank, Harris, Shriver & Jacobson LLP has an e-mail service called FraudMail Alert that notifies recipients about qui tam and contractor fraud-related developments [you can subscribe by going to one of the following websites: http://www.ffhsj.com/quitam/cfc.htm or http://www.ffhsj.com/wcc/fmamain.php3?sort=chron]. An e-mail sent today discusses the prosecution of a Minnesota beauty queen for fraud that is certainly worth reading (and enjoying):
FraudMail Alert® No. 04-12-22
December 22, 2004
The False Claims Act and the Beauty Queen
Over the many years that FraudMail Alert has served its readers, we have tried at holiday time to warn our readers of the substantial risk of fraud they face at such a precarious time of the year. Last year we warned of "Lobster Fraud," see FraudMail Alert No. 03-12-18. In previous years, we had warned our readers of "Caviar Fraud" (December 2002); "Chicken Fraud" (December 2001); "Frog Leg Fraud" (December 2000); and "Coffee Fraud" (December 1996). (In order to protect themselves and their organizations from allegations of "food fraud," we strongly encourage those who have not read these prior Alerts to do so at http://www.ffhsj.com/wcc/fmamain.php3?sort=chron.)
Having covered all the major food groups, we thought that we would have difficulty finding a Federal enforcement effort silly enough to give us holiday cheer - but we were wrong. After all, this past year brought the sad and tragic - but also true and amazing - case of the enforcement of the civil False Claims Act against the "Minnesota Beauty Queen." Once again, we are not making this up.
In March of this year, trolling through the daily grind of new FCA cases, we happened on the case of United States v. Denise Marie Henderson, 2004 WL 540278 (D. Minn., March 16, 2004). It appears that Ms. Henderson was hurt in an automobile accident and, some time later, applied to the U.S. Government for disability benefits paid for by the U.S. Social Security Administration, an agency of the Department of Health and Human Services ("HHS"). According to the Complaint, she allegedly made numerous false certifications, both express and implied, regarding her disability and ability to work.
Turns out, however, that Ms. Henderson's disability did not prohibit her from participating in, of all things, beauty pageants. Apparently quite attractive, Ms. Henderson won both the Mrs. Minnesota International - and the Mrs. Iowa International - beauty pageants despite her disability.
Ever vigilant to protect the Federal fisc, the U.S. Attorney's Office promptly sued Ms. Henderson under the civil False Claims Act, claiming that she obviously lied about her disability since she clearly was able to stand on a stage and look good (a skill that has always eluded the undersigned).
The Federal District Court heard oral argument on the case and promptly dismissed the FCA case under Rule 9(b) - for failure to plead with particularity. The Government, although free to file an amended complaint, never did so, and Ms. Henderson emerged victorious. But, alas, Ms. Minnesota/Iowa International's legal victory was short-lived. She was indicted, and recently convicted, for fraud.
All of this, of course, both warms and chills the heart at this holiday season. As your mind wanders while you are at a boring holiday party, think of these questions:
1. Just what facts did the Justice Department not plead with particularity? Perhaps her choice of songs at the pageant? The color of her evening gown?
2. Was the HHS OIG involved in this case? One can see one or two OIG agents, stealthily making their way into the exhibition auditorium, waiting breathlessly for Ms. Henderson to make her appearance in the bathing suit competition and take "pictures" of the contestants (purely as evidence, of course).
3. Be careful of winning those Rule 9(b) motions. Requiring the government to plead its civil case with particularity may have dire consequences.
As has been the case in past years, when FraudMail Alert applauded the efforts of the Department of Justice to protect the eating habits of the "rich and famous," we applaud these prosecutions. After all, without agents and prosecutors lacking a sense of humor or common sense, these annual holiday FraudMail Alerts would not be possible.
Most importantly, we want to wish you and your families the best for the holiday season and a Happy New Year.
Thanks to Jack Boese of Fried Frank for permission to post the e-mail. One question: how can someone from Minnesota win an Iowa beauty contest? (ph)