UK Contemplates Qui Tam Provision

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It has recently been reported that the British government is contemplating the creation of a reward system, with qui tam provisions similar to the False Claims Act, to encourage whistleblowers to come forward with necessary information to root out government fraud and other white-collar crime.

The U.K. Home Office, acting in concert with other British agencies, are examining the qui tam provisions contained in the False Claims Act, as well as the IRS and SEC Whistleblower programs. As of now, the British government does not financially reward individuals for revealing original information used by the government to thwart fraud. Due to the recognized potential and actual hardships associated with the courageous act of blowing the whistle, as a seasoned False Claims Act attorney, I feel the addition of a qui tam provision will greatly assist our allies across the pond in its fight against government fraud.

As reported in the New York Times here, Britain’s government will “consider the case for incentivizing whistleblowing, including the provision of financial incentives, to support whistleblowing in cases of fraud, bribery and corruption,” the Home Office said as part of a document announcing the new National Crime Agency (“NCA”) in Britain. The NCA is Britain’s closest equivalent to the FBI. Although discussions concerning a qui tam provision have commenced, there is no deadline regarding a decision on the same.

Since 1986, the Department of Justice’s civil fraud section has recovered more than $20 billion in settlements and judgments, including whistleblower actions.  It is well-recognized that the qui tam provisions of the FCA provide strong incentive for citizens to assist the government in preventing and deterring fraud.

In 2011, the SEC established its own whistleblower program pursuant to the Dodd-Frank Act, the financial industry reform bill passed in response to the financial crisis. Under the SEC’s program, whistleblowers who supply original information that results in sanctions exceeding $1 million can receive rewards representing up to 30 percent of those sanctions. The SEC on numerous occasions has praised the legislatures’ inclusive of a qui tam provision which, according to Mary Jo White, SEC Chairwoman, “has had a big impact on our investigations by providing us with high quality, meaningful tips.”

I am hopeful that the British government will recognize and appreciate the importance of our qui tam provisions and establish its own incentives to reward courageous whistleblowers for their vital information.

Young Law Group is a nationwide leader in whistleblower representation and has successfully represented numerous clients in some of the nation’s largest qui tam cases for over a decade.  For a free confidential consultation, please call Eric L. Young, Esquire at (800) 590-4116 or complete the online form here.

 

 

 

New York State Amends False Claims Act

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New York is leading the way at preventing tax fraud at the state level becoming the first state to creates a reward for whistleblowers. The amendment to New York’s False Claims Act will provide for an award to the whistleblower so long as the defrauding taxpayer earns more than $1 million in annual net income and defrauds the state of more than $350,000.

The whistleblower may earn up to 30 percent if he brings the case alone and up to 25 percent if the government decides to intervene. These percentages are based upon a number of factors including the amount of the whistleblower’s assistance.

As reported on The Post Standard, “The tax department guesses that billions of tax dollars go unpaid every year. In recent years, starting with Gov. Eliot Spitzer, the state has poured money into the department’s enforcement unit for staff, sting operations and sophisticated data collection systems to bust tax cheats. Spitzer appointed Comiskey to lead the effort and he set a record in his first year, bringing in $3 billion — $1 billion more than the year before. The effort continued under Gov. David Paterson. This year’s state budget relied on $221 million in extra tax fraud collections to help close the budget gap.

“New York state’s been exceptionally aggressive in the last few years during the budget crisis at collecting any source of tax revenue they can find, fairly or unfairly,” said Tim Lynn, a lawyer at Green & Seifter, an expert in business tax credits. “This is another weapon in their arsenal to cure their budget problems.”

Lynn said he suspects cases could come in the area of sales taxes or fuel and highway use taxes — the kinds of taxes where employees are aware of the amount of money that should have been paid. It is less likely there will be cases involving income taxes, which are confidential and handled by bookkeepers, he said.

The state first passed a whistle-blower law, called the False Claims Act, in 2007. It is modeled after the federal law. Until now, the law has mostly been used in Medicaid fraud cases. The old state law, like the federal law, specifically exempted tax fraud.

In three years, Medicaid fraud cases brought under the False Claims Act have recovered about $200 million for the state.

By 2014, the state estimates it will recover about $20 million a year from tax fraud.

Schneiderman likes to call it “the false claims act on steroids.”

McEldrew Young Purtell Merritt represents whistleblowers nationwide. For a free confidential consultation, please call Eric L. Young, Esquire at (215) 367-5151 to speak to one of our whistleblower attorneys.

Do You Have a Qui Tam Whistleblower Case?

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How Do I Know If I Have A Qui Tam Whistleblower Case?

The term “whistleblower” is very broad and can have multiple meanings. Any time someone reports a wrong, arguably they could be considered a whistleblower.

Only if the wrongdoing involves fraud against the government does a whistleblower have the right under federal and state false claims acts to file a qui tam case  on behalf of the government and collect a reward in the event of a recovery.

The following questions can help you determine if you have a qui tam whistleblower claim.  If you answer “Yes” to any of these questions, you may have a case.

Did this unjust conduct cause a governmental entity to lose money?

To bring a claim under federal or state False Claims Acts you have to have government money involved. In other words, there needs to be fraud on the taxpayers. For example, if you discover that your employer is defrauding its customers, you can certainly become a whistleblower and report that misconduct, but you cannot file a qui tam whistleblower case because there is no fraud on the government. The exception is, of course, when the government happens to be one of the customers.

Sometimes the fraud against the government can be very subtle. For example, maybe the company took a grant as part of a government program and it might be in violation of a contract it signed as a condition for getting the government grant.

Is your information based on something you saw or heard firsthand?

Generally speaking, you cannot base your qui tam case on something you learned from publicly available information. You must be an original source for the information – you must have first-hand and exclusive knowledge of the misconduct.

For example, there may be extensive discussion on web sites on how a pharmaceutical company is marketing one of its drugs off-label, which is arguing against the law. You cannot file a qui tam suit based on the information that is freely available on those web sites. If, however, you have specific first-hand knowledge of this off-label marketing, you might have a case.

Do you have any documents to back up your report?

The government is limited in terms of the time and resources they have to devote to qui tam false claims act cases, so they work on what they believe to be the best cases, with the most potential upside. Part of that consideration is the evidence a whistleblower has to support the case.

The reality is that if you don’t have any documentary evidence, this puts you at a severe disadvantage in getting the government’s attention. You want to be in a position where you’re giving the government a really good head start on the case.

Evidence could be, for example, emails or memos where people are talking about the fraud, or sometimes people record conversations when it’s legal to do so.

Does the government not yet know of this unjust conduct?

Generally speaking, you can’t make a case based on information that is already known. This can be a tricky question. Because qui tam cases are filed under seal, sometimes it is hard to tell whether there are other cases already on file. The simple truth is that in many cases there is more than one whistleblower, and the first whistleblower to file is the one that is entitled to any reward that might be paid.

An experienced whistleblower lawyer can help you work through these challenges.

Has anyone done anything to try to cover up this fraud?

Here, we get back to the question of whether you have evidence to support your claims. An experienced whistleblower attorney will counsel a client about how to maintain evidence that the client already has, or to gather additional evidence without being in violation of any laws that protect a defendant’s confidentiality or trade secrets.

If you answered “Yes” to any of these questions, you might have a qui tam whistleblower case. Please call us for a no-commitment, no-cost discussion. Qui tam whistleblower lawsuits can be complex, and you need an experienced qui tam attorney to help you get started on the right foot.

Young Law Group, P.C., Attorneys-at-Law, represents whistleblowers nationwide. For a free confidential consultation, please call Eric L. Young, Esquire at 1-800-590-4116 or email to eyoung@young-lawgroup.com.

Retina Institute Settles with Government for $6.65 Million Over Allegations of False Claims Act Violations

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On October 2, 2019, Retina Institute of California Medical Group (RIC), along with its former CEO and several physicians, agreed to pay $6.65 million to resolve allegations of False Claims Act violations. RIC is a medical partnership of ophthalmologists with multiple locations in California. The medical group was alleged to have defrauded government health care programs by billing for unnecessary exams, improperly waiving Medicare copayments, and other regulatory violations. Eric Young, managing partner of McEldrew Young Purtell Merritt’s whistleblower practice, worked on the case with attorneys from the law firm of Berger Montague.

The case, United States ex rel. Smith and Rogers v. Chang, No. 13-CV-3772-DMG (C.D. Cal.), was filed in May 2013. The complaint was unsealed in July 2016 after the government elected not to intervene in the case. The two Relators were both former employees of RIC who provided substantial documentation to support allegations in the complaint. Bobette Smith was the CEO of the practice group from June 2012 to January 2013, and Susan Rogers worked as the manager of the billing department over the same six month period. The allegations in the complaint were based on information discovered by the Relators during the course of their employment, as well as their personal observations and investigation into what they believed to be fraud against the federal government and the State of California.

Routine Waiver of Medicare Deductibles and Copayments Can Result in False Claims Act Violations

Medical service providers are required to collect copayments and deductibles from all Medicare beneficiaries, except in specific cases of financial hardship. Any incentive that generates improper referrals, particularly where a medical service provider offers free or discounted items or services to Medicare beneficiaries, or promotes overutilization of medical services can constitute the submission of false claims to the federal government. Thus, a service provider that routinely waives cost-sharing amounts for Medicare beneficiaries, but bills Medicare for the full allowable amount, can be face substantial penalties under the False Claims Act.

The Office of Inspector General for the Department of Health and Human Services set forth detailed guidance on this issue back in 1994:

“Routine waiver of deductibles and copayments by charge-based providers, practitioners or suppliers is unlawful because it results in (1) false claims, (2) violations of the anti-kickback statute, and (3) excessive utilization of items and services paid for by Medicare.

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A provider, practitioner or supplier who routinely waives Medicare copayments or deductibles is misstating its actual charge. For example, if a supplier claims that its charge for a piece of equipment is $100, but routinely waives the copayment, the actual charge is $80. Medicare should be paying 80 percent of $80 (or $64), rather than 80 percent of $100 (or $80). As a result of the supplier’s misrepresentation, the Medicare program is paying $16 more than it should for this item.

In certain cases, a provider, practitioner or supplier who routinely waives Medicare copayments or deductibles also could be held liable under the Medicare and Medicaid anti-kickback statute . . . When providers, practitioners or suppliers forgive financial obligations for reasons other than genuine financial hardship of the particular patient, they may be unlawfully inducing that patient to purchase items or services from them.

One important exception to the prohibition against waiving copayments and deductibles is that providers, practitioners or suppliers may forgive the copayment in consideration of a particular patient’s financial hardship. This hardship exception, however, must not be used routinely; it should be used occasionally to address the special financial needs of a particular patient. Except in such special cases, a good faith effort to collect deductibles and copayments must be made. Otherwise, claims submitted to Medicare may violate the statutes discussed above and other provisions of the law.”

Retina Institute’s Alleged Systematic Waiver of Medicare Copayments and Deductibles

According the allegations in the complaint, the defendants attempted to induce referrals by routinely waiving Medicare copayments and deductibles for patients without properly investigating or documenting their financial status. In order to disguise the practice, the defendants sometimes allegedly had patients complete a financial hardship form; however, most deductible and copayment waivers were allegedly granted without the completed form. On those limited occasions when the form was used, patients often signed the forms, allegedly without providing any information regarding their financial status.

A ophthalmologist who maintained a general practice near one of RIC’s locations allegedly told an RIC ophthalmologist he expected that copays for Medicare patients to be waived, and that he would not refer patients if copays were not waived. The Relators had records which identified the patients who were referred to RIC by this particular ophthalmologist. The documents showed the receipts for those patients amounted to only 80% of the Medicare allowable amount. Without consideration of financial hardship or any documents to verify such designations, the copayments for these patients were allegedly waived as a matter of course.

Relators independently investigated several patients whose records indicated a financial hardship waiver. They discovered that some of those patients lived in expensive homes, including one residence valued in the millions of dollars.

The Relators each separately explained to Dr. Tom Chang, one of RIC’s physician/owners, that the policy and practice of routinely waiving Medicare copays and deductibles did not comply with Medicare regulations. Dr. Chang allegedly responded, on more than one occasion, that he would prefer to continue using the financial hardship waivers to ensure that RCI did not lose any referrals or patients. Dr. Chang allegedly said he would simply pay the fines if Medicare ever learned about the practice. In light of his former position as a Medicare compliance officer for the Department of Ophthalmology at the University of Southern California School of Medicine, Dr. Chang’s alleged comments and lack of concern are quite noteworthy.

Relator Smith made several attempts to advise RIC’s partners about changing the manner in which financial hardship cases were handled. She even made a presentation to the RIC senior management team and Executive Committee warning of the potential adverse consequences of continuing with the current practice. During the presentation, Dr. Chang allegedly repeated that he would pay the fines if Medicare ever discovered the way in which RCI handled the waivers.

The History and Purpose of the Anti-Kickback Statute

The Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b) (“AKS”), prohibits any person or entity from offering, making, soliciting, or accepting remuneration, in cash or in kind, directly or indirectly, to induce or reward any person for purchasing, ordering, or recommending or arranging for the purchasing or ordering of federally-funded medical goods or services. The statute was enacted in 1972 to address concerns that remuneration provided to those who influence health care decisions would result in services that were medically unnecessary, of poor quality, or harmful to a vulnerable patient population. Congress therefore passed the AKS to prohibit the payment of kickbacks in any form. The statute was amended in 1977, and again in 1987, to ensure that kickbacks could not be disguised as legitimate transactions to circumvent the law.

Retina Institute’s Alleged Violations of the Anti-Kickback Statute

A physician who refers a patient for medical services to an entity in which the physician has a financial interest violates the AKS unless the referral falls within the “safe harbor” regulations.

The physician defendants named in the complaint had financial ownership interests in an ambulatory surgery center known as the San Gabriel Surgery Center. Those physician defendants, as well as other RIC physicians, routinely referred RIC patients in need of surgery to the San Gabriel Surgery Center.  Such referrals would only be covered by the safe harbor regulations if the physician’s investment interest was fully disclosed to the patient.

According to the allegations in the complaint, RIC physicians did not advise their patients that RIC principals had an investment interest in the San Gabriel Surgery Center.  Patients were allegedly given a brochure instead that stated, “The ownership for San Gabriel Ambulatory Surgery Center may be obtained by contacting the center at (626) 300 – [XXXX].”

In order to ascertain whether accurate information was disseminated, Relator Smith asked the scheduling agent at RIC to call the phone number on the brochure to learn who owned the surgery center. The scheduling agent allegedly reported to Relator Smith that the individuals who responded to the call could not provide any information about the ownership of the center nor could they find anyone who could answer the question.

The Government Relies on the Assistance of Whistleblowers

This case illustrates the important role that whistleblowers play in identifying and reporting fraud.  Due to the enormity of claims processed under government-funded health care programs, it is impossible for every instance of fraud to be detected.  Employees are often in the best position to observe fraud and gather evidence to corroborate their observations. The government depends on such individuals to come forward and report what they reasonably believe to be fraud.

The False Claims Act permits a private individual to sue on behalf of the United States and share in any recovery. The government may intervene in the action, in which case a Relator may receive a reward of 15 percent to 25 percent of any monetary recovery.  In cases such as this one, where the government declines to intervene, the whistleblower may pursue the action on their own and can receive a reward of 25 percent to 30 percent of any monetary recovery.

If you have evidence of fraud being committed against the government by an employer, business competitor or contractor, call the experienced whistleblower attorneys McEldrew Young Purtell Merritt at (215) 367-5151 for a free, no-obligation consultation.

Record Breaking Settlement of Declined False Claims Act Lawsuit

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Personal Injury Lawyers Philadelphia PA

DaVita Healthcare Partners agreed to pay up to $495 million to settle a False Claims Act lawsuit brought by two whistleblowers, a doctor and a nurse, that worked at DaVita. It is the largest settlement ever in a case where the Department of Justice chose to decline intervention. The company has now agreed to pay nearly $1 billion to settle allegations of Medicare and Medicaid fraud since 2012.

DaVita provides dialysis services to patients with chronic kidney failure and end stage renal disease.  The lawsuit concerned allegations that DaVita wasted medicine in vials and billed Medicare for it. The CDC since 2002 has allowed the reuse of single-use vials in the drugs at issue if proper procedures are followed. The company billed Medicare for the unused portions of the drugs which it discarded.

What is a declined case? The government, after conducting an investigation on the merits of the litigation, generally intervenes and takes over prosecution of the civil claims in around 20 percent of cases brought under the False Claims Act. The rest of the whistleblowers receive a declination letter from the Department of Justice which informs the relator (as a whistleblower under the FCA is known) that they may continue the lawsuit on the government’s behalf (this is what is meant by qui tam, which you may often see in this context).

There have only been five years in the history of the False Claims Act where non-intervened cases reached settlements or judgments exceeding $100 million. Looking at the statistics since 1987, none of the annual totals of these cases exceeded $200 million.

In the past, relatively few non-intervened cases reached a successful settlement or judgment. Some whistleblowers evaluate the situation and decide that they are not interested in prosecuting it themselves if the government isn’t interested in vindicating the fraud against them. However, the success ratio may be improving as more law firms have decided to take these cases and run with them against the large corporations that they challenge.

When False Claims Act cases like these settle, the whistleblowers who file them typically get between 15 and 30 percent of the settlement. The law mandates these percentages, but there are few situations where the amount paid could be less than the minimum award. However, the Department of Justice, on behalf of the U.S. Government, investigated the relator’s claims and declined to intervene in it. In a declined case, the mandated percentage by the law is between 25 and 30 percent.

If you have additional questions about how these lawsuits worker, or have evidence of misconduct by a company which you wish to report, contact one of our Philadelphia FCA attorneys.

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