Welcome!

News Feed Item

Historic Lawsuit Against Philip Morris USA on Behalf of U.S. Government Charges Violations of the False Claims Act in Military Dealings; Pending Court Ruling

Alleged Overcharges by Philip Morris Diminish Funding for Programs Benefitting Military Families

WASHINGTON, DC -- (Marketwire) -- 11/13/12 -- Citing "knowing violations" and "wanton, willful and reckless disregard" of contractual agreements with the U.S. military that ultimately deprived millions of dollars in funding for programs for active duty and retired military personnel and their families, a lawsuit filed against Philip Morris USA Inc. (PM USA) by Anthony Oliver on behalf of the U.S. government is currently pending a ruling by the U.S. District Court, District of Columbia. The complaint was filed under the False Claims Act that allows individuals to effect legal action on behalf of the government ("writ of qui tam") and is the first known lawsuit of its type ever filed against PM.

The complaint states that PM USA has been selling its cigarettes to the military at prices significantly higher than what civilian distributors are charged. A particularly disturbing effect of PM USA's behavior is the significant reduction of funding for programs sponsored by the military services' Morale, Welfare and Recreation (MWR) Fund. MWR funding derives in part from tobacco profits from the military exchanges. Consequently, the victims of these False Claims are not the smoker, but all servicemen and women and their families who benefit from MWR-funded services.

According to the complaint, PM USA charged the higher prices to the military despite most favorable customer warranties stipulated in PM USA's long standing agreements with the Navy Exchange Service Command (NEXCOM) and the Army and Air Forces Exchange Services (AAFES). These entities, two components of the U.S. Department of Defense Supply Systems Command, provide goods and services to active duty and retired soldiers, sailors, airmen and marines.

As a result, the complaint maintains that PM USA has "charged NEXCOM and AAFES millions of dollars more, annually, for its cigarette products than has been paid by either defendant's affiliates purchasing such products or foreign purchasers buying such products..." The complaint also contends that PM USA "falsely warranted" that it was in compliance with price warranties as part of its agreements with NEXCOM and AAFES.

While the lawsuit seeks unspecified damages, the False Claims Act provides six years of retroactively applied recovery for the government of three times the cumulative overcharge plus up to $10,000 per occurrence. The suit estimates that, for Marlboro cigarettes alone, AAFES and NEXCOM purchased approximately 1.8 million cartons annually overseas "...at improperly inflated prices pursuant to defendant's false claims and false statements."

In its July 27, 2012 response attempting to get the legal action dismissed, PM USA called the complaint a "strike suit" by a "disgruntled competitor." PM USA then proffered a labyrinth of often-contradictory reasons to explain how its pricing structure to the military does not violate the False Claims Act.

"I will not remark on PM's preposterous personal attack on me today," Oliver stated, "but our opposition memo to the court efficiently unravels their obfuscations and absurd explanations. For example, in its motion to dismiss, PM USA maintains 'managing the Surgeon General's Warning' is justification for a higher price to the military compared to civilian market distributors. How exactly is that so when civilian market distributors purchase the very same product with the identical warning at a much lower price?"

Responding to another meritless argument from PM USA that boasts the government continues to contract with Philip Morris, Oliver again cited his Opposition Memo to the Motion to Dismiss: "...the existence of continuing contracts between Philip Morris and the military exchanges can be explained by Philip Morris's policy of restricting its civilian market distributors from selling to the military." International distributors will not defy Philip Morris' instructions and jeopardize their lucrative direct purchase privileges with Philip Morris or Philip Morris affiliates. This fact, the Oliver opposition memo explains, "leaves the government with only two options -- to either buy Philip Morris cigarettes directly from it [at any price] or to abandon the world's top-selling cigarette brands."

"In other words, Philip Morris has engineered both a price and supply chain chokehold on the United States military. This lawsuit is a civic duty intended to stop a charade -- a charade that has reduced funding by millions of dollars to the military's Morale, Welfare & Recreation programs," Oliver stated.

Mr. Oliver filed the complaint in 2008 which resulted in a four-year Department of Justice investigation. The Department of Justice has reserved its right to intervene.

Mr. Oliver and the interests of the U.S. government are represented by Zuckerman Spaeder LLP of Washington, D.C., Silver Golub and Teitell LLP of Stamford, Connecticut and John F. Murphy of Hartford, Connecticut. Anthony Oliver is President and CEO of Kick Cigarettes, an independent cigarette manufacturer and supplier to the U.S. government, and is CEO of HONCHO Brands, which markets e-cigars.

The complaint filed is Case # 08 0034 (CKK).

See: www.olivervspmusa.com/falseclaimsactoppositiontomotion.pdf

Add to Digg Bookmark with del.icio.us Add to Newsvine

Media Contact:
Craig Parsons
Parsons Communications
(310) 472-7632 / (310) 200-4310
Email: Email Contact
www.parsonscorpcomm.com

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
With more than 30 Kubernetes solutions in the marketplace, it's tempting to think Kubernetes and the vendor ecosystem has solved the problem of operationalizing containers at scale or of automatically managing the elasticity of the underlying infrastructure that these solutions need to be truly scalable. Far from it. There are at least six major pain points that companies experience when they try to deploy and run Kubernetes in their complex environments. In this presentation, the speaker will d...
While DevOps most critically and famously fosters collaboration, communication, and integration through cultural change, culture is more of an output than an input. In order to actively drive cultural evolution, organizations must make substantial organizational and process changes, and adopt new technologies, to encourage a DevOps culture. Moderated by Andi Mann, panelists discussed how to balance these three pillars of DevOps, where to focus attention (and resources), where organizations might...
The deluge of IoT sensor data collected from connected devices and the powerful AI required to make that data actionable are giving rise to a hybrid ecosystem in which cloud, on-prem and edge processes become interweaved. Attendees will learn how emerging composable infrastructure solutions deliver the adaptive architecture needed to manage this new data reality. Machine learning algorithms can better anticipate data storms and automate resources to support surges, including fully scalable GPU-c...
When building large, cloud-based applications that operate at a high scale, it's important to maintain a high availability and resilience to failures. In order to do that, you must be tolerant of failures, even in light of failures in other areas of your application. "Fly two mistakes high" is an old adage in the radio control airplane hobby. It means, fly high enough so that if you make a mistake, you can continue flying with room to still make mistakes. In his session at 18th Cloud Expo, Le...
Machine learning has taken residence at our cities' cores and now we can finally have "smart cities." Cities are a collection of buildings made to provide the structure and safety necessary for people to function, create and survive. Buildings are a pool of ever-changing performance data from large automated systems such as heating and cooling to the people that live and work within them. Through machine learning, buildings can optimize performance, reduce costs, and improve occupant comfort by ...
As Cybric's Chief Technology Officer, Mike D. Kail is responsible for the strategic vision and technical direction of the platform. Prior to founding Cybric, Mike was Yahoo's CIO and SVP of Infrastructure, where he led the IT and Data Center functions for the company. He has more than 24 years of IT Operations experience with a focus on highly-scalable architectures.
The explosion of new web/cloud/IoT-based applications and the data they generate are transforming our world right before our eyes. In this rush to adopt these new technologies, organizations are often ignoring fundamental questions concerning who owns the data and failing to ask for permission to conduct invasive surveillance of their customers. Organizations that are not transparent about how their systems gather data telemetry without offering shared data ownership risk product rejection, regu...
CI/CD is conceptually straightforward, yet often technically intricate to implement since it requires time and opportunities to develop intimate understanding on not only DevOps processes and operations, but likely product integrations with multiple platforms. This session intends to bridge the gap by offering an intense learning experience while witnessing the processes and operations to build from zero to a simple, yet functional CI/CD pipeline integrated with Jenkins, Github, Docker and Azure...
René Bostic is the Technical VP of the IBM Cloud Unit in North America. Enjoying her career with IBM during the modern millennial technological era, she is an expert in cloud computing, DevOps and emerging cloud technologies such as Blockchain. Her strengths and core competencies include a proven record of accomplishments in consensus building at all levels to assess, plan, and implement enterprise and cloud computing solutions. René is a member of the Society of Women Engineers (SWE) and a m...
Dhiraj Sehgal works in Delphix's product and solution organization. His focus has been DevOps, DataOps, private cloud and datacenters customers, technologies and products. He has wealth of experience in cloud focused and virtualized technologies ranging from compute, networking to storage. He has spoken at Cloud Expo for last 3 years now in New York and Santa Clara.
Enterprises are striving to become digital businesses for differentiated innovation and customer-centricity. Traditionally, they focused on digitizing processes and paper workflow. To be a disruptor and compete against new players, they need to gain insight into business data and innovate at scale. Cloud and cognitive technologies can help them leverage hidden data in SAP/ERP systems to fuel their businesses to accelerate digital transformation success.
Containers and Kubernetes allow for code portability across on-premise VMs, bare metal, or multiple cloud provider environments. Yet, despite this portability promise, developers may include configuration and application definitions that constrain or even eliminate application portability. In this session we'll describe best practices for "configuration as code" in a Kubernetes environment. We will demonstrate how a properly constructed containerized app can be deployed to both Amazon and Azure ...
Poor data quality and analytics drive down business value. In fact, Gartner estimated that the average financial impact of poor data quality on organizations is $9.7 million per year. But bad data is much more than a cost center. By eroding trust in information, analytics and the business decisions based on these, it is a serious impediment to digital transformation.
Digital Transformation: Preparing Cloud & IoT Security for the Age of Artificial Intelligence. As automation and artificial intelligence (AI) power solution development and delivery, many businesses need to build backend cloud capabilities. Well-poised organizations, marketing smart devices with AI and BlockChain capabilities prepare to refine compliance and regulatory capabilities in 2018. Volumes of health, financial, technical and privacy data, along with tightening compliance requirements by...
Predicting the future has never been more challenging - not because of the lack of data but because of the flood of ungoverned and risk laden information. Microsoft states that 2.5 exabytes of data are created every day. Expectations and reliance on data are being pushed to the limits, as demands around hybrid options continue to grow.