DETROIT (Reuters) – Sixty-four former Chrysler dealers sued the U.S. government on Thursday, saying the Obama administration violated their rights by closing their stores during the automaker's bankruptcy without compensation.

The dealers said they were due "at least $130 million" in damages from the shutdown of their stores, according to a complaint filed with the U.S. Court of Federal Claims in Washington.

In court papers, dealers said the termination of those stores helped stabilize the U.S. economy and prevented the disruption of the American auto industry.

"This is a loss that should not, however, be borne by a few individual auto dealers but ... must in fairness and justice be borne by the public as a whole," dealers said in court papers.

Chrysler filed for bankruptcy in April 2009. It sent termination notices to 25 percent of its dealers -- or 789 stores -- as part of its U.S. government-funded restructuring in May 2009.

The Treasury Department declined to comment. In May 2009, Treasury said the store closures were "necessary" to help Chrysler rebound from its near-collapse and said it played no role in deciding which and how many dealers would close.

In court papers filed Thursday, the dealers said the U.S. government leveraged its authority under the Troubled Asset Relief Program to skirt state franchise laws designed to protect dealers.

Dealers said they spent millions on training, inventory and marketing to help sell Chrysler vehicles. For example, a group of four dealers in Maryland spent nearly $9 million to revamp their facilities and make other changes.

The dealers came from 29 states across the country including California, New York and Texas, according to the complaint.

Chrysler is now 25-percent owned and managed by Italy's Fiat SpA.

(Reporting by Deepa Seetharaman; Editing by Richard Chang)

WASHINGTON (Reuters) – The U.S. government on Thursday charged 111 doctors, nurses and other defendants with Medicare crime schemes that exceeded $225 million in false billings, the largest health care fraud crackdown so far.

Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius announced the charges in the latest of a series of cases brought by the Obama administration as health care fraud has emerged as an important political issue.

About 45 million elderly and disabled Americans are enrolled in taxpayer-funded Medicare plans, which have come under fire from critics who say the government pays too much to the companies running them and that they are subject to fraud.

Medicare reform represented a key part of the sweeping year-old health care law championed by Democratic President Barack Obama, but opposed by many Republicans in Congress.

The latest charges covered defendants in nine cities. In addition to arrests, law enforcement agents also executed 16 search warrants.

The defendants were charged various crimes, including conspiracy to defraud the Medicare program, false claims, kickbacks and money laundering, administration officials said.

They said the alleged schemes involved various medical treatments, tests and services, such as home health care, physical and occupational therapy and medical equipment.

"Although today marks a critical step forward in combating and deterring illegal activity, our work is far from over," Holder said. Fraud has accounted for as much as an estimated $60 billion a year in the Medicare program.

A top FBI official, Shawn Henry, said 2,600 health care fraud cases were under investigation and that organized crime groups have been increasingly linked to the alleged schemes.

Sebelius said $4 billion was recovered last year, and the government's Medicare Fraud Strike Force was recently expanded to nine cities, with the addition of Dallas and Chicago.

(Reporting by James Vicini; Editing by Cynthia Osterman)

NEW YORK (Reuters) – New York City Mayor Michael Bloomberg on Thursday unveiled a $65.6 billion budget plan for fiscal year 2012 that calls for firing 4,666 teachers and reducing capital spending 10 percent over the next decade.

Bloomberg blamed an approximately $4.4 billion reduction in aid from the state and the U.S. government for painful cuts that have already provoked a clash with school teachers and are certain to draw opposition from other public sector unions.

"The future does have some clouds," Bloomberg, a political independent, told a news conference.

New York City has withstood the recession better than many cities across the country, in part because Wall Street rebounded quickly from the 2008 financial crisis. For the second year in a row, Bloomberg has cut spending. The new budget plan is $300 million less than the current budget.

Bloomberg said the city was creating jobs at a faster rate than the rest of the country, had benefited from a record 48.7 million visitors in 2010, and that its commercial real estate market remained the strongest in the country.

That should help lead to an additional $2 billion in revenue over the next year half than previously forecast.

Even so, the city plans to lay off 4,666 of its 75,000 public school teachers and reduce a further 1,500 teaching jobs by attrition. Another 1,000 to 1,300 workers at other city agencies also will lose their jobs.

Bloomberg said his plan, which requires City Council approval, closes a $4.58 billion budget deficit without tax or fee increases.

Capital spending, which is separate from the operating budget and financed largely by borrowing, would be cut 10 percent over the next decade, realizing savings of about $6 billion. Bloomberg said he had considered a 20 percent cut but was talked out of it by City Council Speaker Christine Quinn.

Quinn, a Democrat, said she might try to restore some programs after Bloomberg proposed cuts in aid to disabled children, subsidies for adoptions, services for juveniles and the homeless.

The budget battle is a prelude to a separate conflict over which teachers to fire. Bloomberg wants those decisions made on merit rather than seniority but the state would have to agree.

"His complete insistence on teacher layoffs seems bizarre to us at this point. We think it's more of a political game and scaring people," Michael Mulgrew, president of the United Federation of Teachers, told NY1 television.

Bloomberg suggested he was free to take on public-sector unions now that he no longer will seek re-election.

"I have nothing to lose, I suppose is a nice way to phrase it," the billionaire mayor said.

"These are problems that never get solved because there is no short-term benefit to solving them. But that's why I ran for a third term," he said.

The mayor also pleaded with state legislators in Albany to allow him to negotiate pension benefits with city employees in order to slow growth in the city's contribution to the pension funds, which he said would otherwise increase from $7 billion this year to $8.4 billion next year.

City workers negotiate those benefits with the state.

(Reporting by Joan Gralla; Writing by Daniel Trotta; Editing by Chizu Nomiyama)