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 The False Claims Act was originally enacted by Congress in 1863, as a response to widespread abuses by government contractors against the Union Army during the Civil War.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.

From the category archives:

Legal

Filing a Qui Tam Case Because Nobody Is Listening

by Nolan and Auerbach on January 11, 2012

Oftentimes, qui tam relators first raise their concerns publicly. However, whether it is on the public pulpit or up the chain of command of a dishonest employer, their voices are, too often, tuned out to the detriment of the public fisc.

Thankfully, federal and state False Claims Acts provide a viable avenue for exposing fraud. By deputizing private citizens, the qui tam provisions of the False Claims Act empower individuals in their fight against corporate fraudsters.

A recent $70 million False Claims Act settlement involving New York City is a perfect example of why we need the False Claims Act. In this case, Dr. Gabriel Feldman, a board-certified preventive medicine physician, was employed by the New York County Health Services Review Organization (NYCHSRO) as a local medical director, and he was tasked with determining whether Medicaid patients qualified for 24-hour personal care services (PCS) under Medicaid’s PCS program. However, time and time again, the City of New York overruled his PCS determinations, improperly authorizing PCS for thousands of New York Medicaid beneficiaries.

Since 1993, Dr. Feldman voices his concerns, both internally and externally. For example, Dr. Feldman testified publicly before the New York City Council in 1993, stating that the City’s PCS program was causing the government to make unjustified payments representing, “…hundreds of millions of dollars in Medicaid waste.”  He also complained repeatedly to his supervisors at the NYCHSRO. However, each time, his concerns fell on deaf ears.

Finally, in 2009, Dr. Feldman filed a qui tam action against the City, laying out the allegations of fraud and detailing the City’s complete disregard for the applicable Medicaid regulations.

Recently, the City of New York finally listened, when it inked a check for $70 million. For his courageous efforts, Dr. Feldman received a handsome reward of $14.5 million.

For more information about qui tam law and healthcare fraud, contact Nolan & Auerbach, P.A.

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When Medical Device Companies Fail to Honor Product Warranties

by Nolan and Auerbach on October 4, 2011

Oftentimes, medical device companies will tout the longevity and reliability of their products. To further seal the deal, companies will tag on an extensive warranty, promising generous credits and rebates should their devices need repair or replacement. However, if a company inappropriately skirts its obligations under these warranties, it could run afoul of the federal False Claims Act when government health care dollars are involved.

This alleged business practice emerged in a recently settled False Claims Act action against Guidant LLC, a subsidiary of Boston Scientific Corporation. In this intervened qui tam suit, which settled for $9.25 million, the company allegedly inflated the cost of replacement pacemakers and defibrillators to federal health care programs by knowingly failing to grant warranty credits and rebates to hospitals for devices that were explanted while covered under a product warranty.

According to the government, Guidant’s misactions were evidenced in inflated invoices that failed to include appropriate credits and rebates for replacement pacemakers and defibrillators. These invoices were submitted to Department of Veterans Affairs hospitals and Department of Defense facilities. In addition, inflated invoices were allegedly submitted to private hospitals, which caused these facilities to overstate the cost of these devices on Medicare cost reports.

At its core, this is just another variation of a century-old False Claims Act theme of overcharging the federal government. However, because these misdeeds are easily obscured behind corporate walls, the qui tam litigation process offers substantial rewards to employees who successfully tear down these walls and expose companies who knowingly turn a blind eye to product warranties.

For more information about qui tam law and healthcare fraud, contact Nolan & Auerbach, P.A.

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Nuanced Judicial Hurdles for Off-Label Marketing Medical Device Cases

by Nolan and Auerbach on August 29, 2011

While the pharmaceutical industry is slowly starting to appreciate the legal and regulatory constraints to illegal off-label promotions, the medical device industry still appears light years away from fully embracing ethical marketing practices. A prime example of the industry’s wayward behavior is evident in several ongoing False Claims Act cases involving the promotion of biliary stents.

A number of device makers have received FDA clearance to market their biliary stents as palliative and short-term fixes to relieve pain caused by bile blockages experienced by a limited number of late-state cancer patients. Because these devices were positioned to the FDA as short-term and not life-sustaining, they were subjected to less rigorous clinical studies.

However, once the devices received the FDA’s seal of approval, several device makers allegedly started promoting the devices as suitable vascular stents, which are implanted for permanent use and undergo far longer-term and variable stresses than biliary stents due to their location in the body.

The industry-wide pervasiveness of these promotions was chronicled in a recent court decision out of the District of Massachusetts. In this case, United States ex rel. Nowak v. Medtronic, Inc., the judge observed that the off-label promotions of bilary stents are so rampant in the industry that the vast majority of bilary stent sales are for off-label uses.

Here, the court distinguished off-label pharmaceutical promotions from off-label medical device promotions. Notably, the court concluded, “Off-label promotion cases involving medical devices are uniquely complicated by the relatively more permissive and undefined nature of Medicare and Medicaid coverage of ‘off-label’ medical devices.” For support, the court reaches for a quote from a recent Texas district court decision: “While Medicare and Medicaid typically do not reimburse off-label prescriptions for drugs, . . . eligibility for reimbursement [of Category B medical devices] depends on whether the procedure performed is ‘medically necessary’ or ‘reasonable and necessary.’” United States ex rel. Bennett v. Medtronic, Inc., 747 F. Supp. 2d 745, 747 (S.D. Tex. 2010).

For more information about qui tam law and healthcare fraud, contact Nolan & Auerbach, P.A.

 

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Leveling the Playing Field for Honest Business Competition

by Nolan and Auerbach on June 3, 2011

Oftentimes, when people describe the typical whistleblower, they paint a picture of a dissatisfied employee who stands up to his or her wayward employer. While this is certainly true in a lot of False Claims Act cases, there is no requirement that the whistleblower be an employee or a so-called “insider.” Indeed, some of the most effective whistleblowers are the direct corporate competitors of the fraudulent businesses.

The most recent example involves a case filed under the California False Claims Act, which maintains that seven private medical labs allegedly overbilled the state Medicaid program for diagnostic testing. The whistleblower, the CEO of a competitor lab company, refused to join in the alleged price-gouging.  His courage was recently rewarded, after Quest Diagnostics agreed to pay Medicaid $241 million to settle the lawsuit.

For more information about qui tam law and healthcare fraud, contact Nolan & Auerbach, P.A.

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