By: Glenn C. McGovern
Metairie, La.
Qui Tam whistleblower lawsuits provide for rewards for those that discover fraudulent activity against the government. Liability in these cases can often exceed $100 million dollars. Whistleblower lawsuits are good for the government and they can be great for you. Recent amendments in the Obama Health Care Reform Act have made it easier to recover in the Patient Protection and Affordable Health Care Act and Health Care and education Reconciliation Act of 2010. (H.R. 3590 and H.R. 4872). Qui Tam lawsuits are said to have historically saved the government over $10 billion dollars in the past 15 to 20 years. States spending on Medicare and Medicaid exceeds $800 million per year. Due to the very nature of government bureaucracy sometimes the bureaucracy results in corporations overcharging the government. This hurts all of us who pay taxes, even the every day worker. But an every day person, (perhaps one of your clients) who works for a company as a lowly employee, is usually in the best position to expose fraudulent activity as the government cannot know everything the company is doing. Qui Tam lawsuits expose fraud against the government. They help reduce taxes. The federal False Claims Act, (FCA) 31 U.S.C. § 3279, is a federal statute that covers fraud involving any federally funded contract or program, including Medicaid and Medicare programs. This act is also known as the "Lincoln Law". It was first enacted to counter fraudulent activities involving military contracts during the Civil War. (So, fraud against the government is nothing new even in Honest Abe's administration.) The FCA act establishes liability for any persons who knowingly presents or causes to be presented a false or fraudulent claim to the U.S. government for payment.
The purpose of this article is to make you aware of potential Health Care Reform Fraud cases that you may run even across in your practice. I will just discuss some basic concepts and discuss major changes that make it easier to recover a mega-judgment for your client. These cases are out there in hospitals, nursing homes, drug companies, medical device manufacturers, and doctor groups.
The term "knowingly" was defined to mean that a person, with respect to information has actual knowledge of falsity of information in the claim, acts in deliberate ignorance of the truth or falsity of the information in a claim, or acts in reckless disregard of the truth or falsity of the information in a claim.
A claim is simply defined as any request or demand for money that is submitted to the U.S. government or its contractors.
There is literally a "boom" in healthcare provider-related lawsuits against hospitals, pharmaceutical companies and doctor groups. The Justice Department reported it recovered over $2.4 billion dollars in False Claims Case in fiscal year 2009 alone and more than $24 billion since 1986 in a DOJ news release on November 19, 2009. Healthcare providers and suppliers who violate the False Claims Act can be subject to civil monetary penalties ranging from $5,500 to $11,000 for each false claim submitted. Note that this is for each claim submitted. Therefore, this can be a substantial sum of money from the total numbers of each and every violation. In addition to the above civil monetary penalty, an offending company can be required to pay three times the amount of damages sustained by the U.S. government. If a company is convicted of a False Claims Act violation, the OIG may seek to exclude the provider or supplier from participation in federal health care programs.
Some examples of False Claims Act violations may be someone who makes false statements, falsifying records, double billing for items or services, submitting bills or services never performed or items never furnished, or in any way causing a false claim to be submitted. A pattern or overcharging for a drug, misrepresenting a drug that is not approved, or miscoding a medical service leading to overcharges are examples.
The Qui Tam Whistleblower provisions encourage individuals to come forward and report misconduct involving the False Claims Act. There is a provision for whistleblowers that provides for persons with actual knowledge of a false claim to the government to be able to file a claim. Such persons are known as "relators."
The procedure for a Qui Tam claim is that the relator must file his or her lawsuit on behalf of the government in a federal district court. The lawsuit is filed "under seal" meaning that the lawsuit is kept confidential while the government reviews and investigates the allegations contained in the lawsuit and decides how to proceed. The government may decide the lawsuit has merits and decides to intervene and the prosecution of lawsuit will be directed by the U.S. Department of Justice and if the government decides not to intervene then the individual whistleblower can continue with his lawsuit on his own. If the lawsuit is successful and certain requirements are met, the Qui Tam relator may receive an award ranging from 15%-30% of the amount recovered. The whistleblower can also be awarded reasonable expenses, including attorney's fees and costs for bringing the lawsuit and in addition to an award the FCA can order a FCA whistleblower have his employment reinstatement with back pay or other compensation due to any other retaliatory conduct against the whistleblower for filing the action under the False Claim Act.
Louisiana State Law also has a False Claim Act, La. R.S. 46:437 which prohibits false or fraudulent claims in which a health care provider or his billing agent submits knowing the claims to be false, fictitious, untrue or misleading in regard to any material information. Under state law "knowing" or "knowingly" means that the person has actual knowledge of the information or acts in deliberate ignorance or reckless disregard of the truth or falsity of the information. Just like the federal whistleblower statute, Louisiana law a private person may issue a civil action in courts of this state on behalf of medical assistance programs and himself to seek recovery. A person who is a public employee or official acting on behalf of the state cannot bring a qui tam action if the person has a duty or obligation to report the illegal conduct. There is state whistleblower protection prohibiting retaliation against a state qui tam plaintiff. Under La. R.S. 46:439 6(C), if the Secretary or Attorney General intervenes in an action brought by a qui tam plaintiff, the qui tam plaintiff shall receive at least 10% but not under 20% of the recovery. State Law provides for rewards for fraud and abuse of information of up to $2,000 dollars to an individual who submits information through the Secretary, which results in a recovery. Louisiana False Claims Act provides for penalties of actual damages and a civil fine not to exceed $10,000 per violation or a civil fine not to exceed three times the illegal remuneration, whichever is greater and payment of interest on the mandatory fine imposed.
Due to the False Claim Act there is also criminal Anti-Kickback Statues and civil Stark laws. (42 C.F.R. §411.350-89) The Anti- Kickback Statute is a criminal statute that prevents pharmaceutical manufactures and physicians from offering or receiving anything of value in return for patient referrals or in goods and services. Violations of the Anti-Kickback Statute are considered felonies with criminal penalties for $25,000 in fines and five years in prison. The Stark Laws are similar civil statutes that prohibit healthcare providers from profiting from referrals of patients for the specific designated health services that are made by physicians then the provider has an improper compensation agreement. Violations of the Stark Laws can result in denial of payments, refunding of payments and monetary penalties from $15,000 to $100,000 and exclusion from federal programs participation. In recent years the Department of Justice has been pushing false FCA and the implied False Certification theory. The DOJ are using the FCA to extend the reach of the Anti-Kickback Statute and the physician referral prohibition statutes collectively known as the Stark Laws. Under this theory, when submitting a claim for reimbursement to Medicare, the healthcare provider implies that it is not violating any Medicare Statutes or regulations including the Anti-Kickback Statute. Thus, the Kickback violations may be sufficient to trigger FCA liability if payment was made by healthcare provider as an inducement to refer Medicare patients or the goods and services reimbursement of Medicare, even if a referral was not actually induced. The healthcare provider may still be liable even if the healthcare provider actually provided services for which it billed and the services may be considered tainted by the fraud and the Anti-Kickback violation; thus the reimbursement claims of which it considers to be false. False certification theories have been applied to Stark violations. Boot strapping and Anti-Kickback and Stark actions to FCA liability can quickly escalate a potential liability in the $100 million dollars plus range. In addition to civil penalties it can be fines and exclusion from federal program participation. The government may claim three times the amount of legitimate services from the healthcare provider that was falsely billing Medicare and Medicaid for reimbursement and civil penalties from $5,500 to $11,000 and recurrence violations can lead to astronomical damages and liability.
The Obama Administration Amendments the Federal Fraud Enforcement Statutes. (H.R. 3590 Sect. 1303, 6402, 6409,10606, and H.R.4872)
Several recent health care bill amendments have been passed which increase the likelihood of an explosion in the quantum and the number of these health care fraud claims that will be filed. Briefly these changes will be discussed. The Anti-Kickback Statute amendments that provide that an Anti-Kickback Statute violation may be established without a showing the individual knew of the statute prohibitions or intended to violate it. Thus violations no longer have to be intentional under the amendments. A violation of the statute that is considered to be false or fraudulent claims under the FCA may affect manufacturers of say misbranded drugs or inflated drug pricing even if they do not submit any actual claims to the government. There are more healthcare violations that will be subject to the FCA under the new amendments. It applies to providers, practitioners, supplies, health plans, healthcare service entities and may make many healthcare industry activities subject to the False Claim Act violations that were not covered otherwise prior to the amendments. The Public Disclosure Bar is not jurisdictional any longer. It used to be the original relator had to be the original source of the information and the amendment relaxes the "original source" requirement. The Public Disclosure bar has been amended and does not require dismissal if the government opposes dismissal. Direct knowledge is no longer required under the amendments. The whistleblower realtor used to be required to have direct and independent knowledge of the activity to file a Qui Tam lawsuit, according to the former original source definition but now the amendments make it so that the realtor must simply provide information to the government prior to public disclosure and the information must be independent and materially add to the public disclosed allegations. These amendments make filing a whistleblower lawsuit easier.
How to win a $137 million dollar case? Start with a $600 million dollar case.
These cases have historically been large, but they promise to be bigger in the future. An example, which has recently been reported involving Wellcare health plans. Four years ago, a whistleblower within the company filed a suit which was recently un-sealed. The whistleblower persuaded U.S District Judge James S. Moody to un-seal the records around June 26, 2010 after learning that the U.S. Attorney's Office was discussing settling the case with Wellcare for just a $137.5 million. The complaint described the company as using fraudulently accounting as a business model. It was accused it of stealing from between $400 and $600 million from Medicare and Medicaid programs in several states including Florida.
There has been some local whistleblower success our state. One of the most successfully whistleblower cases is experienced whistleblower, Dr. William St. John LaCorte of Metairie, Louisiana. It was reported in an NOLA.com article by Janet McConnaughey entitled "Serial Whistleblower: Doctor who won lawsuit against Merck," in 2/8/2008. Dr. LaCorte was quoted in the article as saying "Some people think I'm a pathological serial qui tam relator. "I can't help it ..." Dr. LaCorte ran across fraud in violating elderly patients in hospitals and nursing homes in the course of his practice. Dr. LaCorte reportedly received $10-15 million after taxes and legal fees for this one whistleblower case. As a result of his latest qui tam case again Merck the lawsuit brought a $250 million settlement over prescription rebates. His unreported whistleblower cases include: U.S. ex rel. St. John LaCorte v. Merck & Co., Inc., 2008 West Law 818982, E.D. La., March 24, 2008 ( St. John LaCorte v. Merck & Co., Inc., 2004 WL 1373276, E.D.La., June 16, 2004); U.S. ex rel. LaCorte v. Merck & Co., Inc., 2004 WL 595074, E.D.La., March 23, 2004 ; State ex rel. LaCorte v. Smithkline Beecham Clinical Laboratories, Inc., 2000 WL 22843, E.D.La., February 23, 2000; U.S. ex rel. LaCorte v. Puckett Laboratory, Inc., 2000 WL 98119, E.D.La., January 26, 2000 U.S. ex rel. LaCorte v. SmithKline Beecham Clinical Laboratories, Inc., 2000 WL 17838, E.D.La., January 10, 2000; U.S. ex rel. LaCorte v. SmithKline Beecham Clinical Laboratories, Inc., 1999 WL 420547, E.D.La., June 18, 1999 ; and U.S. ex rel. LaCorte v. Smithkline Beecham Clinical Laboratories, Inc., 1998 WL 840012, E.D.La.
Maybe you will be so lucky to be successful in a health care fraud case now that you know what to look for.
