Articles Tagged with false claims act law firm

It is no secret that, as a whistleblower’s law firm, we are big fans of the False Claims Act (“FCA” or “the Act”).  The Act holds liable any person/entity that presents a false or fraudulent claim for payment to the federal government (or an agency thereof) and/or create false records to that end.  In essence, it forbids overcharging the government for goods or services or charging for goods/services that are never delivered.  The Act’s qui tam provision is particularly powerful since it enables private individuals to bring suits on the government’s behalf.  This is key because it is often private parties, rather than the government itself, who are aware of these fraudulent schemes.  Recent trends show that the legislature and the courts are committed to working with whistleblowers and, more generally, to using the False Claims Act as a powerful tool to battle health care fraud and other forms of fraud on the U.S. government.

DOJ Nearly Doubles Per Claim False Claims Act Penalties

As Becker’s Hospital Review, a healthcare industry journal, reported last month, the Department of Justice (“DOJ”) recently published an interim final rule substantially increasing the monetary penalty for violations of the FCA.  Previously, penalties ranged from $5,500 to $11,000 per claim.  The new penalties neacash2rly double the old ones and range from $10,781 to $21,563.  These increased penalties took effect on August 1 and only apply to violations occurring after November 2, 2015.  The increase was made pursuant to the Bipartisan Budget Act of 2015 which required agencies to increase FCA penalties and authorized rulemaking to implement a “catch up adjustment” to account for inflation.  The DOJ is just one of the agencies updating penalties (the Railroad Retirement Board was the first), but it is certainly among the most impactful.

We pride ourselves on our work helping whistleblowers bring claims pursuant to the False Claims Act.  As a False Claims Act law firm, we have specialized knowledge of this complex piece of legislation that empowers individuals to bring fraud claims on behalf of the government.  A ruling from a federal district court released in late Spring in a case alleging Medicare fraud looks at one of the many important details that come up in these cases.  More specifically, the case looks at what constitutes a “usual and customary” price for purposes of determining whether a provider is complying with the law and offering Medicare beneficiaries an appropriate price on prescription drugs.   In doing so, the court highlights one important requirement that is often subverted by perpetrators of fraud and also provides a reminder of how complex False Claims Act cases can be.

Bhealth$ackground on the Garbe Case

On May 27, 2006, the Seventh Circuit Court of Appeals released an important ruling in United States ex rel. Garbe v. Kmart Corporation, a False Claims Act case brought by James Garbe on behalf of the United States against Kmart.  According to the complaint, Garbe, a pharmacist at Kmart, noticed that another pharmacy charged his Medicare Part D insurer substantially less that Kmart typically charged insurers for the same prescription.  He investigated and found that Kmart routinely charged customers paying out of pocket less than it charged those paying with insurance (public or private).  He also found that most cash customers took part in Kmart’s “discount programs” and that this discount price was not included when Kmart calculated its “usual and customary” prices on generic medications for purposes of Medicare reimbursement.

scotusThe False Claims Act (“FCA” or “the Act”) is a powerful tool that allows private citizens to play a key role in fighting fraud on the federal government.  As we have reported in previous blog posts, this term the Supreme Court agreed to look at a disagreement among appellate courts regarding the issue known as implied certification.  Our whistleblowers’ law firm is pleased to report that the Court recently released a decision that affirms and strengthens the Act, ensuring it is available to fight a wide range of fraudulent acts.

Background: The Implied Certification Theory and the Escobar Case

As explained in The False Claims Act: A Primer, a guide released by the Department of Justice (“DOJ”), a person violates the FCA when they knowingly submit a false claim for payment to the government, knowingly cause another to submit a false claim, or knowingly create a false record/statement in order to induce the government to pay a false claim.  The Act was originally passed during the Civil War.  It underwent substantial revisions in the 1980s and again in 2009 and 2010.

As a small law firm, we are particularly aware of the many contributions that small businesses and small business owners make to our economy.  In our case, we believe being a small firm allows us to have a more personal touch and collaborate more closely with every client while providing top-notch legal services.  There are also unique challenges to running a small business.  One way that the government recognizes these important contributions and special challenges is by requiring that a certain percentage of federal contracts be awarded to small businesses.  Sadly, some companies attempt to lie to the government and the American people by holding themselves out as small businesses when they truly do not qualify as such.  This a form of fraud.  Our government contract fraud lawyer is dedicated to partnering with honest individuals to protect the integrity of small business set-aside programs and ferret out other forms of fraud on the federal government.

Construction Company Pays $5.4 Million to Settle Government Contract Fraud Allegations

Earlier this month, the Times of San Diego reported that a California-based construction company paid $5.4 million to settle allegations of fraudulent billing for work performed at Camp Pendleton and other military bases.  Harper Construction is a privately held company that earns a substantial share of its revenue through government contracts.  As indcontract2icated in the report, Harper had contracts to construct facilities at the military bases and these contracts specifically required that Harper subcontract a specified portion of the work to small disadvantaged businesses.  These requirements stem from government programs intended to ensure that such businesses receive a fair share of federal contract dollars.  According to the article, Harper stood accused of knowingly using sham companies and falsely certifying that it complied with the small business subcontracting requirements.  Instead of having legitimate small businesses perform the work, the lawsuit alleged that Harper actually passed the work to a large affiliate.

The False Claims Act is a powerful weapon and, as we’ve talked about on this page numerous times, a large part of that power comes from the fact that ordinary citizens can use it to fight many forms of fraud on the United States government.  After the initial filing of a whistleblower fraud claim, the government will eventually decide whether or not to intervene in the case.  This is an important part of the process and our whistleblowers’ law firm knows that intervention in False Claims Act cases, such as recently occurred in a health care fraud suit, is often a positive sign.  However, it is important to know that claims can be and are successful even absent government intervention.

The FCA and Intervention Generally

lawbooksThe False Claims Act (“FCA” or “the Act”) is a Civil War Era statute that was reenergized by a series of amendments in the 1980s.  In short, a company or individual violates the Act when it defrauds the government, typically by overcharging the government or a government agency.  Under 31 U.S.C. §3730(b), private citizens are given the power to bring FCA claims on the government’s behalf.  These whistleblowers, also known as relators, are crucial since fraud by its nature is secretive and the government could not effectively fight fraud without the assistance of individuals who witness fraudulent acts.  After the suit is filed, the government investigates the claim and then the Department of Justice (“DOJ”) decides whether or not it wants to take over the case.  The decision to do so is known in legal circles as intervention.

We talk a lot courthouseabout the False Claims Act (“FCA” or “the Act”)) on this blog.  We do that because it is a powerful tool that allows ordinary Americans to take a stand and fight fraud.  The frauds it fights are frauds perpetrated against the government and government programs, frauds that are ultimately crimes against the American people.  Our posts often look at specific cases involving alleged violations of the FCA, but from time to time our whistleblowers’ law firm likes to take a step back and look at the FCA more generally to help our readers understand exactly what kind of wrongs the FCA tackles.

“A False or Fraudulent Claim”

The FCA is actually several sections of the United States Code, with 31 U.S.C. §3729 containing the basic description of what actions violate the Act.  Although it is only one of a number of subsections that describe these actions, §3729(1)(a) explains the basic wrong the Act tackles “a false or fraudulent claim for payment or approval.”  Essentially, this means that a person or entity is liable under the Act if they ask the government to pay an obligation that is not actually due or ask for more money than they are actually due.

Readers of this blog know that the False Claims Act and its state equivalents are powerful tools for fighting fraud on the government and, in turn, on taxpayers.  One of the reasons these laws are so powerful is that they cover a wide-range of frauds.  Although health care fraud is likely the most well-known wrong addressed through whistleblower litigation under the Acts, they cover a myriad of different subject matters as demonstrated by a recently settled case out of New York.  While the case is largely about government contracting fraud, it touches on issues two of the most important business issues of recent decades: the outsourcing of American jobs and data privacy.  Our False Claims Act law firm is encouraged to continue to see the power these laws give to ordinary people to tackle extraordinary issues (and, often, win!).

Settlement Filed in Case Against Government Contractor Who Sent Data and Jobs Overseas

Last month, the New York State Attorney General’s Office issued a press release announcing a $3.1 million settlement in a case accusing Focused Technology Imaging Services, LLC (“FTIS”) and two of its leaders of unlawfully outsourcing government-funded work to India.  FTIS, a business located near Albany, entered into a $3.45 million agreementflag2 to digitize and index some 22 million fingerprint cards.  FTIS also agreed to create a searchable database of the print cards for the New York State Division of Criminal Justice Services (“DCJS”) and the non-profit New York State Industries for the Disabled (“NYSID”) in the 2008-2009 timeframe.  The fingerprint cards were used by a range of individuals from state employees to prisoners and arrestees and contained information including Social Security number, the reason for taking the fingerprint, the fingerprint itself, and other important personal information.

Last week, we wrote about the upcoming Supreme Court case that will decide if the implied certification theory is a valid interpretation of the Federal False Claims Act (“FCA”).  It is a decision that could substantially empower government fraud whistleblowers.  However, it is worth remembering that the federal false claims act is only relevant to cases involving alleged fraud on the federal government, including Medicare fraud.  State false claims acts, which in many cases are relatively similar to their federal counterpart, are a key tool for fighting fraud on the state government including state-level government contract fraud and Medicaid fraud (a joint state/federal program).  Our government fraud law firm supports whistleblowers nationwide, including in our home state of California.  The case law specifically supports implied certification under the California False Claims Act (“CFCA”) and we believe other states may accept the theory as well.

Courts Hold Implied Certification Theory Valid Under California False Claims Act

lawbooksIn San Francisco Unified School Dist. ex rel. Contreras v. Laidlaw Transit Inc., 182 Cal. App. 4th 438 (Cal. App. 1st Dist. 2010) and again in a 2014 decision, the Court of Appeals for the State of California considered a suit brought by a group of whistleblowers on behalf of the San Francisco Unified School District (“District”) under the CFCA.  The Plaintiffs alleged that the Defendant submitted payment claims to the District despite knowing it was in breach of assorted contract terms relating to student transportation services.  These violations allegedly rendered the Defendant’s buses unsafe and unhealthy.  The Plaintiffs also alleged that the Defendants knowingly falsified records and/or statements.

Why do we spend so much time talking about the False Claims Act (“FCA” or “the Act”)?  The short answer: It works.  Through the FCA, our government fraud attorney is able to partner with private citizens to fight back against those who knowingly take money from government programs.  A frightening amount of fraud occurs every year, much of it quite intentionally, including fraud targeting health care programs for the elderly, programs to aid the poor, military contract spending, and other important causes.  However, we continue to have hope.  The FCA is an excellent tool for fighting back, as illustrated by the recent government press release detailing the successes of the False Claims Act in 2015, and the honesty of ordinary citizens fuels its success.

piggybankFCA Results for FY2015

Earlier this month, the Department of Justice (“DOJ”) issued a press release with a title that speaks for itself: “Justice Department Recovers Over $3.5 Billion From False Claims Act Cases in Fiscal Year 2015.”  This makes four consecutive years with FCA recoveries exceeding the $3.5 billion mark and brings the total recovered under the FCA from January 2009 through the end of Fiscal Year 2015 (“FY2015;” unless otherwise indicated “2015” also refers to Fiscal Year 2015) to $16.4 billion.

longgavelIn the previously published Part One of this FAQ (link provided below), we looked at the False Claims Act (“FCA” or “the Act”) and discussed its coverage and enforcement.  This concluding section of the two-part series focuses on the role of whistleblowers in False Claims Act cases and how our False Claims Act whistleblowers’ attorney can help these honest people step forward to join the fight against fraud.

  • What happens after I file a whistleblower’s lawsuit?

Qui tam lawsuits (the legal term for suits filed by private citizens on the government’s behalf) under the FCA are filed under seal which essentially means they are kept secret.  The claim and a written disclosure of the information on which it is based must be served on the appropriate U.S. Attorney and the Attorney General.  From the time of filing, the government has 60 days to investigate the claim, although it can (and often does) ask for an extension if necessary.  Notably, the defendant is not informed until this investigation is complete.