Whistleblower Lawyer & Attorney : LaBovick Law Firm, Florida : Federal False Claims Act, Qui Tam

S. 2041, has received support from leadership in both parties and has moved out of the Senate Committe. Leading the charge is:  Sen. Charles Grassley (R-IA), Senator Richard Durbin D-IL), Senator Patrick Leahy (D-VT), and Senator Arlen Specter (R-PA).

Proponents of S. 2041, note that the new bill clarifies the existing scope of False Claims Act liability, while closing the gap of a limited amout of loopholes for companies to use for stealing money from taxpayers. 

Specifically, S.2041 would:

• Remove the confusion over the statute of limitations period by adopting a straightforward 10-year period; 
• Provide strengthened employment protection for whistleblowers.
• Clarify that False Claims Act liability protects all federal funds;
• Explicitly clarifies that the False Claims Act applies to those who discover an overpayment and decide to pocket the funds
• Solely vest the Government with the power to dismiss whistleblower-filed False Claims Act lawsuits that are based on public allegations.

According to Jeb White, President of Taxpayers against Fraud, "This Bill has broad bi-partisan support. It's hard to be opposed to building a better rat trap to catch corporate cheats, chiselers, and con artists."

As mentioned here previously on the Whistleblower Law Blog,
highlights of the bill include:

• Makes corrections to 31 U.S.C § 3729 removing the requirement that false claims be presented to a government employee.
• Amends the FCA to clarify the dismissal of parasitic claims filed based upon publicly disclosed information.
• Clarifies that false or fraudulent claims against non-U.S. Government funds under the trust and control of the U.S. Government are subject to recovery under the FCA.
• Clarifies a split between Circuit Courts of Appeal as to when a government employee may act as a qui tam relator under the FCA. 
• Makes technical and clarifying amendments to the statute of limitations in FCA cases.

Click here to read the False Claims Act Corrections Legislation 2007.

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A New Orleans Hospital, Touro Infirmary, recently settled a qui tam suit for $1.75 million. According to the Department of Justice, the suit alleged that Touro Infirmary, submitted false claims to the Medicare program.

Involved in the Medicare scheme with the New Orleans Hospital, was Dr. Maria Carmen Palazzo. In previous a Whistleblower Blog post, we mentioned Dr. Palazzo's involvement with fraud in Paxil trials.  According to the recent qui tam case involving Touro Infirmary, Dr. Carmen Palazzo received unlawful payments of $144,000 per year from 2000 to 2004. This was a part of the scheme to get patient referrals to the hospital from Dr. Maria Carmen Palazzo to refer patients to the hospital. According to recent reports,  Dr. Palazzo, was found guilty on 39 counts of health care fraud, including 13 counts arising from her contractual relationship with Touro.

Click here to read more from the Department of Justice, on the False Claims Act settlement from Touro Infirmary.

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Medicare fraud can happen anywhere and can be detected by the most least suspecting individual in a company.  Recently, Fred Steinberg, M.D, a radiologist and owner of the chain, of  University MRI and Diagnostic Imaging Centers, located in Florida settled a qui tam suit for $7 million.  The  Florida firm denied all charges and agreed to settle the qui tam suit according to a quote in the Sun Sentinel  "to end the uncertainty of protracted litigation."

The company was accused of overcharging Medicare for Medical scans and billing the federal government for some tests that were not medically necessary. There were also allegations that that the Florida company paid doctors under the table for sending them imaging patients for tests that could cost as much as $2,500 apiece.

Why is it that when an employee reports questionable government billing practices to management, in this case Medicare bills, the company  takes the defensive and fires the employee.

In the case of the Florida Diagnostic Imaging Centers, David Clayman, M.D, a former radiologist for the imaging centers, was fired after questioning the Medicare billing practices. According to a recent DOJ release, Dr. Clayman will receive $1.75 million as his share of the $7 Million recovery.

According to the American College of Radiology, a doctors' association, in a Sun Sentinel article, the cost for Medicare and insurers is about $16 billion a year for unnecessary imaging tests ordered by doctors who made money from them. These tests not only cost the government and taxpayers, but also expose patients to radiation and and raise medical costs.

One of our favorite crusaders in the Medicare fraud fight, R. Alexander Acosta, U.S. Attorney for the Southern District of Florida, stated that  “We will aggressively prosecute any physicians, including board-certified specialists, who abuse and steal from the Medicare system to line their own pockets.”  Attorney Brian F. LaBovick mentions in an article on health care fraud for a  Thomson West Litigation Reporter, that "We must continue to prosecute fraud on all levels. New amendments are needed to continue to foster the cottage industry of civil attorneys assisting U.S. attorneys' offices around the country with their qui tam investigations. Each state must enact its own qui tam statutes (there are now 22 states with qui tam laws). This will give states the ability to potentially capture additional funds for Medicare fraud prosecution at a local level, pursuant to the Deficit reduction Act of 2005."

The Florida qui tam case discussed in this post is: U.S. ex rel. David Clayman v. University MRI and Fred Steinberg, M.D. et al. Civil Action No. 02-81143 (S.D. Fla.). 

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The annual ABA Seminar on Civil False Claims Act and Qui Tam Enforcement will be held in Washington, D.C.  June 11-13, 2008. 

Since, the civil False Claims Act is a growing area of federal litigation, particularly because of its unique qui tam enforcement, the conference will have experts from all areas – healthcare, defense, pharmaceutical, oil and gas, accounting and consulting, construction, higher education and grant recipients – in which qui tam lawsuits under the FCA have been filed.

Click here for the ABA Brochure on the Qui tam and False Claims Act Conference.

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In a remarkable turn of events, America's self proclaimed largest pharmacy, CVS Caremark, has agreed to settle Medicaid fraud allegations for $36.7 million. According to information obtained from a whistleblower and extensive research, the company allegedly switched the tablet version of the drug  Ranitidine (generic Zantac) to a more expensive capsule version. According to the Justice Department, CVS Caremark allegedly made the drug switch from 2000 to 2006 to increase reimbursements from Medicaid.

The whistleblower, Bernard Listiza, a licensed pharmacist, will be rewarded $4,309,330 for his efforts in bringing this medicaid fraud to light.  As previously mentioned previously on the Whistleblower Law Blog, a whistleblower can receive a reward of 15 percent to 25 percent of what the government recovers,  if the government joins the qui tam case and if the government declines to join the qui tam lawsuit, the whistleblower can receive a reward of 25 percent to 30 percent of what the government recovers.

We can only hope that these large awards will begin to serve as deterrents for companies such as CVS Caremark to engage in Medicaid fraud. Thanks to the diligence of U.S. Attorneys such as U.S. Attorney Patrick Fitzgerald, the government is pursuing corporations and individuals charged with fraud against the government. In a recent statement, U.S. Attorney, Patrick Fitzgerald, said, “These penalties, coupled with the willingness of insiders to report fraud, should deter such misconduct, but when it doesn’t, the result in this case and others serves notice that we will aggressively pursue all available legal remedies.” 

The Whistleblower Law Blog salutes the brave whistleblowers who come forward and the diligent men and women prosecuting fraud on behalf of the government.  Sometimes, it may take years and many obstacles to overcome, but it is all worthwhile when a whistle blower's testimony can help the government recoup dollars and treble damages from Corporations and individuals that are found defrauding the government.

Click here to read more from the Department of Justice.

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Florida based, Acculab Laboratories has agreed to settle a qui tam suit alleging false claims and fraudulent billing to Medicare. The company has agreed to pay the United States $461,000 according to the Justice Department. The allegations surrounding the Sarasota based company included included billing Medicare for laboratory services that were not ordered, were not provided, were not medically necessary or were improperly unbundled.

The whistleblower will receive $92,200 of the settlement. The whistleblower provisions of the False Claims Act, allows private parties, called "relators," to file an action on behalf of the United States and receive a portion of the proceeds of a settlement or judgment awarded against a defendant.

It is the American taxpayer who is victimized when a provider submits false claims to Medicare," said acting Assistant Attorney General Jeffrey S. Bucholtz.

The case was handled by the Justice Department's Civil Division, Commercial Litigation Branch; and the U.S. Attorney's Office for the Middle District of Florida. 

Click here to read more from the Department of Justice

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We are pleased to announce that our Whistleblower Law Blog celebrates its one year anniversary. It seems like we started blogging, yesterday.

In addition to states creating and strengthening state qui tam/false claims acts around the country, the world of legal blogging has exploded. When we started, blogging was somewhat a novel idea for law firms.  Not anymore, there are over 1500 legal blogs and new ones being created weekly. Check out some of the legal blogs at Kevin O'Keefe's "Real Lawyers Have Blogs",  Justia's Justia Blawg Search, Law.com's Legal Blog Watch, ABA Law Journal Blawg Directory, and the Blog carnival Blawg Review to see for yourself.

In the beginning, we had only only a few readers, but we were encouraged by Kevin O'Keefe at LexBlog not to be discouraged but to keep on blogging. Well it has worked, reader traffic increases weekly and page views are over 3500 per month. There was a time when page views reaching 500 was a milestone.  We look forward to the numbers surpassing the 5000 mark.

In this past year, we have enjoyed the discussions, learned a lot, and look forward to making the Whistleblower Blog even better.  We are working on some cool additions for the blog and look forward to reader feedback.

We encourage readers to share thoughts and opinions about the whistleblower law blog.  Our goal is to keep this blog relevant and interesting.

Thanks again for reading our blog and joining us on our blogging journey.

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This week, Defense Counsel, Mark S. Olinsky of Sills Cummis & Gross P.C., wrote an article for the Metropolitan Corporate Counsel, titled "Defending Qui Tam Suits Under New Jersey's New False Claims". One may find it strange for a Plaintiff's firm to highlight an article written by a Defense firm.  Howeverm, this article is well written, provides a good introduction of the history of the False Claims Act,  and acknowledges the New Jersey False Claims Act that will go into affect on March 13, 2008.   As previously mentioned on the Whistleblower Law Blog, New Jersey is among 20 states that have passed a state False Claims Act with qui tam whistleblower provisions similar to the Federal False Claims Act.

Mr. Olinsky reference to whistleblowers as "bounty hunters" is interesting, when he writes "New Jersey's new statute follows the federal version, and will invite suits by a new group of bounty-hunters - those involved with companies that do business with the State or "any contractor, grantee or other recipient of State funds."

At the end of the article,  Mr.Olinsky provides a useful corporate tip  when he writes "companies that do not already have in place a comprehensive compliance program - including training, anonymous reporting, and self-auditing - should make the implementation of such a program a top priority". The fines for a company found defrauding the government, can be expensive.  As he points out, "The New Jersey False Claims Act  provides for treble damages and civil penalties of at least $5,000 to $10,000 per false claim."  Several other states already have this penalty in force.

Whistleblowers or "bounty hunters" as Mr. Olinsky calls them, are out there ready and willing to report a company for defrauding the government. They get to share in the government's recovery, anywhere from 15% - 30%, depending upon the government's intervention in the case. However, despite the money, most whistleblowers would prefer for the company to stop the wrong doing and acknowledge them for reporting the fraud to management. In several instances, the whistleblower loses their job, friends and life as they know it, because the large corporations vilify the whistleblower. Just ask two of the most well known whistleblowers, Dr. Peter Rost formerly of Pfizer or Cynthia Cooper formerly of Worldcom. They told what they believed was the truth about their organizations and their worlds changed dramatically. Although both have written books and are household names  if you asked them, why they came forward, I am sure they will say "it was  to tell the truth". We believe that whistleblowers are brave individuals that give up a lot to share the truth.  A large corporation can pay defense firms millions of dollars to fight a qui tam claim and end up settling without admitting any wrongdoing. They can finance a well paid PR campaign to help with their public image, give millions to a worthy cause and life goes on as usual.  At the end of the day, who stands to lose the most for coming forward? the brave whistleblower. 

Click here and check out the article on the New Jersey False Claims Act by Mr, Mark Olinsky and make your own conclusion.

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South Carolina Regional Hospital, Tuomey Regional Medical Center, is accused of Medicare and Medicaid  fraud in a qui tam lawsuit, brought by the U.S. Attorney's Office in South Carolina.  According to a recent article on State.com, the suit involves the Regional Hospital overcharging Medicare for surgeries and “bribing” doctors with “kickbacks” for their business. The case is being handled by U.S. Attorney Norman Acker. The lawsuit alleges that the Toumey Regional Medical Center created a billing scheme from January 2005 to September 2007, in which "it submitted and caused others to submit false and fraudulent claims for payment to Medicare and Medicaid ...”

Judge Matthew Perry ruled yesterday that the Justice Department-backed lawsuit against the South Carolina Regional Hospital can proceed and crucial evidence against the Hospital can be admitted into the f the case. The lawyers for the hospital had been trying to get the case dismissed.

Orthopedic Surgeon, Michael Drakeford, initial qui tam lawsuit  was filed under seal in federal court in Columbia in October 2005. The federal government investigated Drakeford’s claims and before taking over as lead plaintiff in the case. 

Time will tell how much of the behind-the-scenes, big-profits world of doctors and hospitals in the billion-dollar S.C. health care industry will be revealed. The hospital is expected to answer the allegations by March 28.

The case could be worth millions of dollars to the government if the South Carolina Hospital is found guilty of fraudulently over billing the government or if they decide to settle and no admit any guilt or wrong doing. 

Charles Miller, a Department of Justice spokesman is quoted as saying, "The government intervenes only if a case has merit. The department gets involved in less than 25 percent of qui tam actions filed each year. In qui tam cases, the government nearly always gets a settlement or wins in a jury trial."

Click here to read more on this case from the State.com

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