False Claims Act/Qui Tam

This blog is about qui tam, a  lawsuit brought under the False Claims Act by a private plaintiff on behalf of the Federal or State Government (rather than by the Government itself). The False Claims Act was originally enacted by Congress in 1863, as a response to widespread abuses by government contractors against the Union Army during the Civil War. The qui tam provisions are now used widely and this blog is intended to keep readers up to date with all qui tam related news and to provide commentary when warranted.  This blog also contains an array of laws and regulations concerning qui tam set out in an easy to read format.

House Approves Anti-fraud Legislation

by Nolan and Auerbach on May 21, 2009

U.S. Senator Chuck Grassley (R-Iowa) announced in a May 18, 2009 press release that The Fraud Enforcement and Recovery Act, introduced by Senators Patrick Leahy (D-Vt.), Grassley and Ted Kaufman (D-Del), had cleared Congress that day with an approval by the House of Representatives.

The senate unanimously passed the amended bipartisan legislation, according to the release, and the bill is now headed to the President’s desk to be signed into law.

To see the press release, go to iowapolitics.com

For more information about Qui Tam law and Health Care Fraud, contact Nolan and Auerbach, PA.

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President Announces Support for Important False Claims Act Amendments

by Nolan and Auerbach on April 22, 2009

The Obama Administration strongly supports enactment of S. 386 (the Fraud Enforcement and Recovery Act of 2009), according to a statement released April 20, 2009, by the Executive Office of the President. The White House’s recent endorsement of this legislation which, among other things, restores the original power of the False Claims Act, comes with broad support from law enforcement and the Department of Justice, according to an April 22 press release by Senator Patrick Leahy (D-Vt.), who introduced the Fraud Enforcement and Recovery Act (with Senators Chuck Grassley (R-Iowa) and Ted Kaufman (D-Del.) on February 5.

To read the press release and the senator’s statement, go to http://leahy.senate.gov/press/200904/042209a.html.

For more information about qui tam law and health care fraud, contact Nolan and Auerbach, PA.

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The Time is Now for Fraud Enforcement and Recovery Act, Grassley says

by Nolan and Auerbach on April 21, 2009

As he debates on the senate floor on a bill that he cosponsored, the Fraud Enforcement and Recovery Act, Senator Chuck Grassley of Iowa released a statement reminding Americans that these fragile economic times are ideal for passing a bill aimed at empowering whistleblowers to help recover and stop health care and other types of fraud. The legislation, addressing among other things weaknesses in the False Claims Act (FCA), is necessary to encourage individuals in qui-tam type lawsuits to pursue cases that the Justice Department might or might not pursue.

Grassley says in his April 20, 2009, statement that special interests are surfacing, who don’t want to encourage whistleblowers to report wrongdoing and are looking to squelch the bill.

The point: We can’t keep spending, as a nation, without taking steps to combat fraud and abuse. The Fraud Enforcement and Recovery Act not only ensures that law enforcement officials and prosecutors have the tools and resources necessary to enforce our laws, but it also amends the civil False Claims Act to ensure that taxpayer money lost to fraud, waste or abuse can be recovered.

The legislation, most importantly, will ensure that the law adheres to the FCA’s original intent.

“Specifically, these amendments address a loophole that was created in the FCA by the Supreme Court decision in Allison Engine which could be used by fraudfeasors to evade liability by hiring subcontractors to perform work on government contracts.  Some defendants are already filing briefs in court seeking to have FCA cases dismissed based upon this decision, and it needs to be addressed to protect taxpayer dollars,” Grassley writes.

“We need to act now to stomp out new claims of fraud to send a message that the American taxpayers won’t be taken for a ride.”

To read the entire statement, go to: http://grassley.senate.gov/news/Article.cfm?customel_dataPageID_1502=20209.

For more information about qui tam law and health care fraud, contact Nolan and Auerbach, PA .

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Watchdog Groups Call on President to Support Stronger Whistleblower Protections

by Nolan and Auerbach on April 3, 2009

Our nation’s watchdog organizations, including the American Civil Liberties Union, American Federation of Government Employees, National Whistleblower Center and Project on Government Oversight, sent a letter to President Obama on April 1, 2009 urging that the government fulfill his campaign and transition policy commitments to strengthen whistleblower rights.

In the letter, the coalition asks the president to strongly endorse legislation that would protect from retaliation of federal employees who expose waste, fraud, abuse, suppression of federal research, and threats to public health and safety, and give them access to jury trials. The legislation would also direct federal government agency heads to institute “no-retaliation” policies for employees.

The groups are concerned that a signing statement issued by the president on March 11, attached to H.R. 1105, the omnibus spending bill, contradicts those earlier steps and could have a chilling affect on lawful whistleblowing disclosures, according to a press release about the letter on Project on Government Oversight’s website.

To read the letter, click here. For a copy of the POGO press release, go to http://www.pogo.org/pogo-files/alerts/whistleblower-issues/wi-wp-20090401.html.

For more information about qui tam law, whisleblowers and health care fraud, contact Nolan and Auerbach, PA.

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Whistleblower Exposes What Could be Massive Medi-Cal Fraud Scheme

by Nolan and Auerbach on March 21, 2009

The State of California has joined a qui tam action against seven private laboratories to recover hundreds of millions of dollars in false claims submitted to the state’s Medi-Cal program for the poor, according to a March 20 press release by the California Office of Attorney General.

The lawsuit contends that the medical labs systematically overcharged the Medi-Cal program during the past 15 years. The defendants, including Quest Diagnostics and Laboratory Corporation of America, allegedly engaged in illegal kickbacks and overcharging the state by up to 400% for blood, urine and other lab tests. It is estimated that damages could amount to hundreds of millions of dollars.

Filed under California’s False Claims Act, the qui tam lawsuit asks for relief in the amount of triple the amount of California’s damages, civil penalties of $10,000 for each false claim; and recovery of costs, attorneys’ fees and expenses.

This is one of the largest, if not the largest, single state qui tam intervention against multiple laboratories, in history.

To read the full press release, go to: http://ag.ca.gov/newsalerts/release.php?id=1705&. For more about qui tam law and Healthcare Fraud, contact Nolan and Auerbach, PA.

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SEC Ponders Cash Rewards for Whistleblowers

by Nolan and Auerbach on March 12, 2009

As Bernard Madoff was planning his guilty plea in a history-making fraud case, Securities and Exchange Commission Chairman Mary. L. Schapiro announced that the SEC is considering offering cash rewards to whistleblowers who expose financial wrongdoing, according to a March 12, 2009 Washington Times article. The practice of offering cash bounties to securities fraud whistleblowers would be similar to financial rewards given to people who help to expose insider-trading. Having this power, Schapiro said in the article, would enable the SEC to pursue cases more aggressively.

For the full article, go to: http://washingtontimes.com/news/2009/mar/12/sec-considers-cash-bounties-to-whistleblowers/.

For more about qui tam whistleblower law, contact Nolan and Auerbach, PA.

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Weill Medical College of Cornell University to Pay in Excess of $2.6 Millon to Settle Fraud Connected to Research Funding

by Nolan and Auerbach on March 9, 2009

Weill Medical College of Cornell University has agreed to pay $2,606,751 to resolve civil charges that the New York City-based college defrauded the government in connection with federal research funds awarded under grants made by the National Institutes of Health (NIH).

A whistleblower, who filed a qui tam complaint under the False Claims Act, first brought the case to government’s attention.

Weill Medical College made false statements to the NIH and the Department of Defense (DOD) in connection with the school’s federal grant applications. In particular, the principal research investigator who sought funding for the grants failed to disclose to the government the full extent of her various active research projects, according to a March 6, 2009 press release by the U.S. Attorney Southern District of New York.

For the complete release, go to http://www.usdoj.gov/usao/nys/pressreleases/March09/weillmedicalcollegesettlementpr.pdf.  For more information about the False Claims Act, contact Nolan and Auerbach, PA .

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U.S. Intervenes in Whistleblower Suit against Community Health Systems and New Mexico Hospitals

by Nolan and Auerbach on March 8, 2009

The United States is intervening in a whistleblower suit that alleges that Community Health Systems Inc. (CHS) and three of its hospitals in New Mexico violated the False Claims Act (FCA) by presenting the government with false claims for federal matching Medicaid funds.

According to the U.S. Department of Justice, which made this announcement March 6, 2009, the suit was filed under the qui tam or whistleblower provisions of the FCA by Robert Baker, a former revenue manager in CHS’s corporate office.

The relator’s complaint alleges that, beginning in 2000, CHS and its hospitals improperly obtained federal funds through the New Mexico Sole Community Provider Fund (SCPF) and Sole Community Hospital Supplemental Payments (SCHSP) Medicaid programs.

To review the DOH press release, go to http://www.usdoj.gov/opa/pr/2009/March/09-civ-200.html. Or, for more information about the False Claims Act or qui tam whistleblower law, contact Nolan and Auerbach, PA.

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2009 FCA Amendment Aims to Increase Government Accountability and Whistleblower Protection

by Nolan and Auerbach on March 5, 2009

The fate of a bill amending the False Claims Act (FCA) is in Senate hands. The False Claims Clarification Act of 2009, introduced by Sen. Chuck Grassley (R-Iowa) (S. 458), could fuel government’s ability to recover taxpayers’ dollars lost to fraud and abuse by increasing government accountability and extending whistleblower protection. Under the new legislation, the attorney general would be required to submit an annual report to Congress about settlements made under the FCA. This would help determine if the Department of Justice is using the act as it is intended and ensure that qui tam relators are protected from the court’s potential abuse of provisions to seal a case.

To review the legislation, go to http://thomas.loc.gov/cgi-bin/query/z?c111:S.458: Or, for more information about qui tam whistleblower law, contact Nolan and Auerbach, PA.

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Dallas Hospital Reaches Settlement With the Government for Stark Violations

by Nolan and Auerbach on January 2, 2008

According to the U.S. Attorney Richard B. Roper of the Northern District of Texas, Harris Methodist HEB Hospital, a 284 bed acute-care facility, will pay $1.9 million to settle allegations that it violated the False Claims Act by improperly submitting claims for payment for orthopedic-related items and services.  These claims were identified as having taken place between March 15, 2004 and September 1, 2005.

According to the hospital in its own news release, the parent company of Harris Methodist HEB Hospital (Texas Health Resources) did a self report by telling the Office of Inspector General of Health and Human Services about it identification of a physician contract that did not comply with federal regulations. This triggered an investigation based on information provided by Harris Methodist HEB that Medicare and Texas Medicaid programs paid for orthopedic items and services referred to the hospital by a physician group that received free rent from the hospital, a violation of Stark self-referral law (also known as Physician Self-Referral Law).

The Stark law was created to forbid physicians from profiting from their own referrals.  This law acts to sanction improper physician referrals and to stop the potential for over-utilization. In this fashion, physicians and other health care professionals are able to exercise independent judgment for what is in the best interests of their patients as opposed to themselves.

To read the full story click here or on the following to read more about the False Claims Act and the Stark Laws .

If you believe you have information concerning a violation of the False Claims Act and want to read more about Nolan & Auerbach, P.A. you may contact us.

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Hospitals Are Giving Lessons on Blowing the Whistle on Fraud

by Nolan and Auerbach on December 27, 2007

A federal law that takes effect in January 2007 requires the country’s hospitals and nursing homes to educate their employees and officers on how to detect and report fraud. This requirement applies to companies that earn at least $5 million a year in Medicaid business. Under the False Claims Act, whistleblowers have received millions of dollars for disclosing large-scale fraud.

To read more, click here.

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U.S. Joins Suit Against Renal Care Group Alleging False Billings to Medicare for Home Care Renal Dialysis

by Nolan and Auerbach on August 28, 2007

Last month, the United States intervened in a qui tam lawsuit accusing Renal Care Group Inc. (RCG) and Renal Care Group Supply Company (RCGSC) of fraudulently billing Medicare. The suit alleges that RCG and RCGSC fraudulently billed for supplies and equipment provided to End Stage Renal Disease (ESRD) patients who received dialysis treatments at home. Both companies are owned by Fresenius Medical Care Holdings Inc. which was also named in the lawsuit.

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Feds Sue Nursing Home Company

by Nolan and Auerbach on June 25, 2007

Cathedral Rock Corporation of Ft. Worth, Texas, which operates five nursing homes in St. Louis, Missouri has to now defend itself against a medicaid fraud lawsuit brought by federal authorities for violations of the False Claims Act.  The lawsuit was brought by two whistleblower nurses who complained that patients were being neglected and that the facilities provided “worthless” health care.

To read more on this story click here.

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Medicis Pharmaceutical Pays $9.8 Million to Settle False Claims Accusations

by Nolan and Auerbach on May 17, 2007

Medicis Pharmaceutical, located in Scottsdale, Arizona, is paying $9.8 million to settle False Claims Act allegations.  This case was brought by four former Medicis sales representatives. The allegations centered around Loprox, a topical skin preparation.  Loprox, while approved by the FDA as a fungicide for patients over 10 years of age, was off-label marketed for the treatment of diaper rash.  This marketing or promoting for unapproved uses by Medicis Pharmaceutical is prohibited.

To read more about this case, click here or  to read more on filing qui tam actions go to Nolan & Auerbach.

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DOJ May Join False Claims Act Lawsuit to Collect $30 Million Relator Share

by Nolan and Auerbach on April 30, 2007

The Department of Justice may end up joining a False Claims Act case to collect the $30 Million recovery won by the relator but then subsequently overturned by Judge Phillip Figa citing that fact that if a relator is dismissed from a case, the court still has subject matter jurisdiction if it intervenes. After the verdict was returned by the jury in the Kerr-McGee case finding that the company cheated the federal government, the judge ruled that the whistleblower did not qualify to bring the case under the False Claims Act because the wrongdoing had already been disclosed to the government.  Up until that point, the Department of Justice did not intervene in the case.

On April 11, 2007, however, the Department of Justice  indicated that they are interested in the $30 million the jury said was defrauded by Kerr-McGee and has requested the judge to grant them time to decide whether to intervene.

To read more on this article click here and to read more on False Claims Act click on Nolan & Auerbach.

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Inflated Cost Reports Cost California Hospital Over $2 Million to Settle False Claims Act Allegations

by Nolan and Auerbach on April 30, 2007

On April 20, 2007, the Loma Linda Behavioral Medicine Center paid the United States government in excess of $2 million to settle allegations of overbilling from 1992-1996.  The settlementis the result of a lawsuit filed by a whistleblower under the False Claims Act.  The lawsuit was originally filed in 1998 by a former employee of Healthcare Financial Advisors (HFA), a consulting firm that assists hospitals in preparing cost reports that are submitted to insurers.  The lawsuit alleged that Healthcare Financial Advisors prepared for clients two costs reports; one which was inflated and sent to Medicare and another one designed for internal use only, that accurately reflected the amount of reimbursement the hospital should have received from Medicare.  It should be noted that seven defendants thus far have settled the HFA whistleblower lawsuit, paying approximately $55 million to the government. (Jackson Memorial Hospital in Miami, Florida more than $14 million; St. Elizabeth Regional Medical Center in Lincoln, Nebraska more than $4 million, Lovelace Health System, a wholly owned subsidiary of Cigna Corp. based in Albuquerque, New Mexico, paid $24.5 million in 2002; St. Joseph’s Hospital in Houston, Texas, paid the government $1.5 million in 2002; Eisenhower Medical Center, located in Rancho Mirage, Calif., paid $8 million in 2005 and HealthSouth Bakersfield Rehabilitation Hospital in Bakersfield, Calif., paid $740,000 in 2005).

To read more click here and here or to learn more on cost report fraud click on this link.

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$15.5 Million Owed to Feds By Houston Hospital District

by Nolan and Auerbach on March 29, 2007

Harris County, a part of the Houston, Texas healthcare system for the needy became the system for the greedy when it overcharged the federal government by district employees who”were asleep at the switch,”according to Commissioner Steve Radack. During 200-2005 federal programs were billed for treating hosptialized county jail inmates when in fact the Sheriff’s Office, which runs the jail should have been billed.  Medicare and Medicaid were also billed for people injured in car accidents when it should have billed their auto insurers. A district employee blew the whistle on the improper billing and therefore, under federal law will qualify for a percentage of the $15 million paid to the federal government.

To read more click here or visit Nolan & Auerbach to read about Health Care Fraud.

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Cost Report Fraud Allegations Cost Baptist Medical and Integris Health $12.2 Million

by Nolan and Auerbach on December 4, 2006

A former contractor of Integris blew the whistle on Integris Health, Inc., alleging that it was submitting inflated claims to Medicare. The complaint stated that Integris sought payment from Medicare for post and non-transplant related costs that Integris knew were not reimbursable under the Medicare program. In addition,the Complaint alleged that Integris claimed Medicare reimbursement for liver and heart organ acquisition costs related to transplant patients who were not Medicare beneficiaries. The whistleblower will receive $2.3 million as a share of the recovery under the False Claims Act. Integris Baptist Medical Center, a not-for-profit health organization, is located in Oklahoma City, Oklahoma and operates the largest Medicare certified Heart, Liver and Kidney transplant program in the state of Texas. Integris Health, Inc. is the parent corporation for Integris Baptist Medical Center.

To read more on this article click here.

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Kickbacks in Medical School? Take a Look at New Jersey’s State Medical School

by Nolan and Auerbach on November 21, 2006

Two doctors are being fired and the pay of at least eight others are being reduced in the wake of a federal monitor’s charges that the medical school has been paying kickbacks to cardiologists resulting in bilking Medicare and Medicaid out of tens of millions of dollars. The federal monitor said that the school’s top officials were complicit in the scheme and directly accused the interim university president, Bruce C. Vladeck of “trying to rebut, refute and bury” information. Vladeck released a letter responding to the report which included instructions to the dean of the medical school to fire or reduce the pay of 10 of the 18 physicians named in the monitor’s report. The kickback accusations are the latest in a line of accusations which caused investigators, after reading an article in a New Jersey legal publication which detailed a $2.2 million settlement by the school to a whistleblower, the former chief of the division of cardiology, who had warned the school that he feared these arrangements were probably illegal and to look further into the matter.

For more information please click here.

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$48 Million to become $144 Million Verdict Against Amerigroup Corp. For False Claims

by Nolan and Auerbach on November 3, 2006

It may cost Amerigroup Corp, a company that specializes in health care for low-income patients $144 million in damages for discriminating against pregnant women. A federal jury returned a $48 million verdict, which will be tripled under state and federal False Claims Act laws. The whistleblower lawsuit alleged that while marketing its services in Illinois, Amerigroup avoided pregnant women and others likely to run up high doctor bills. State Attorney General Lisa Madigan called the company’s alleged discrimination “unconscionable.”

Visit Nolan Law Firm for more information on the False Claims Act.

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