Articles Tagged with whistleblowers’ 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.

Regular readers of this blog know that part of what makes the False Claims Act such a powerful tool is its qui tam provision which allows individuals to bring claims for repayment on the government’s behalf.  This is important because the government cannot police every single claim it pays and individuals who witness fraud and act on that knowledge are critical to the fight against fraud.  A recent trend in litigation under the Act involves individuals in a very different sense – individual liability under the False Claims Act.  Our whistleblowers’ law firm for fraud on the government is watching this trend and is prepared to help honest individuals fight fraud committed by both organizations and individuals.

DOJ Focuses in on Individual Liability for Corporate Wrongdoing

At the beginning of the year, Becker’s Hospital Review, a leader in healthcare industry information, published a piece entitled “5 False Claims Act Trends, Cases that will Fuel Recoveries in 2016.”  One of the trends identified in this article is a “spotlight on individual liability” whereby the government is increasingly holding individuals, not just the companies they work for, liable for fraud.  This stance grows, in part, out of a Department of Justice (“DOJ”) memorandum issued in September 2015 that discusses steps the DOJ is taking to increase legal accountability for individual corporate wrongdoing.  One change announced in the memo is that corporations will only receive credit for cooperating with an investigation if they reveal the names of the individuals involved in the fraud.

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.

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.

While it is no longer headline news, the impact of mortgage fraud continues to be felt nationwide.  As the fallout continues, so does the fight to make companies and individuals pay for violating the law and contributing to a major financial crisis.  The False Claims Act (“FCA”) is one of the most important tools in this fight.  Its use in this context is an important reminder of the FCA’s broad coverage, reach that extends far beyond health care fraud to include financial industry fraud that improperly takes money from the government or its agencies.  Our government fraud whistleblowers’ law firm works with honest individuals to combat fraud on the government using this important legislation.

Lender Pays $64 Million to Resolve Claims of Mortgage Fraud

On Friday May 13, the Department of Justice (“DOJ”) announced that M&T Bank had agreed to pay $64 million to resolve allegations its mortgage lending practices violated federal guidelines and the FCA.  The underlying suit dealt with the Bank’s role as a Direct Endorsement Lender (“DEL”) for the Federal Housing Administration (“FHA”).  Under that program, M&T could originate, underwrite, and endorse FHA insured mortgages so that the holder of the loan could submit a cmoneyrolllaim to the FHA if the lender later defaults.  The government relies on DELs to follow program rules, including the use of a quality control program, and does not independently review the loans for compliance.  When companies violate this trust, it can lead to the government endorsing unqualified loans and paying out substantial money after lenders default on loans that should never have been approved.

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.

Last year, our health care fraudcourthouse whistleblowers’ law firm reported on an important issue in the False Claims Act arena: implied certification.  The implied certification theory has the potential to be a powerful tool in the fight against fraud and, when we last discussed the topic, the Fourth Circuit Court of Appeals had ruled in favor of the theory.  However, there has been disagreement on the issue among the federal appellate courts and the issue is headed to the Supreme Court.  We continue to believe in the implied certification theory and we are closely following the issue as it makes its way to the highest court in the land.

The Escobar Case

As Modern Healthcare recently reported, the implied certification theory is heading to the Supreme Court via the case of Universal Health Services v. United States ex rel Escobar.  The case involves a claim filed by the parents of a teenager who died while under the care of a mental health clinic.  The plaintiffs allege that the clinic’s staff was not properly supervised and that the clinic lacked required board-certified or board-eligible supervisory personnel.  As the First Circuit wrote, “The crux of their complaint is that [Defendants’] alleged noncompliance with sundry supervision and licensure requirements rendered its reimbursement claims submitted to the state Medicaid agency actionably false under both the federal and Massachusetts False Claims Acts.”

By its nature, fraud is a crime of secrets.  The depth and breadth of these secrets are part of the reasons why whistleblowers are such an essential part of the fight against health care fraud.  The law recognizes this and both rewards and protects health care fraud whistleblowers for their role in helping return wrongfully diverted government health care funds to already-strained program budgets like Medicare and Medicaid.  As a whistleblowers’ law firm, The Brod Law Firm is proud to work with the men and women who speak up when others might remain silent.

Whistleblower Files Retaliation Lawsuit Against Former Employer

One whistleblower in Oregon is currently pursuing a lawsuit against his former employer claiming illegal retaliation based on his role in reporting potentially fraudulent Medicare claims.  According to The Oregonian, Dr. Robert Dannenhoffer filed a federal whistleblower claim late last week against Architrave Health LLC, a health doctor2care organization in southern Oregon.  Dr. Dannenhoffer claims that a subsidiary company, Umpqua Medical Group, set up an improper compensation structure that rewarded doctors for prescribing certain medications and procedures for Medicare patients.  He says the pay structure led to inflated Medicare payments in violation of both the False Claims Act, a general law dealing with fraudulent claims for government funds, and the Stark Act, a law specifically limiting the ability of medical providers from profiting on referrals.

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.