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

HealthSouth Corporation agrees to pay $14.2 million to settle allegations that the company submitted false claims to the government and paid illegal kickbacks to physicians who referred patients for care in some of its hospitals, outpatient rehabilitation clinics, and ambulatory surgery centers, according to reports from the Justice Department. 

HealthSouth, the nation’s largest provider of inpatient rehabilitation services, was also one of the largest providers of outpatient rehabilitation services, ambulatory surgery services, and diagnostic imaging services until it sold those lines of business earlier this year.

The settlement was due to the joint efforts of the U.S. Attorney for the Northern District of Alabama, the U.S. Attorney’s Office for the Central District of California, the Civil Division of the Department of Justice, the Department of Health and Human Services, Office of Inspector General, and the FBI.

U.S. Attorney for the Central District of California, “Thomas P. O’Brien, gave a powerful statement in response to the settlement and kickbacks “We will not be fooled when healthcare providers attempt to disguise kickbacks as cleverly crafted business arrangements. Medicare providers seeking federal funds must play by the rules. Providing sweet deals to physician groups to insure a steady stream of referrals runs afoul of those rules and will not be tolerated.”

HealthSouth Corporation stock closed yesterday at $21.48. Click here to find out more from Health South.

To read more from the Department of Justice, Click here.

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Johnathan Friedman, author of E-Commerce Law Blog and Host of the Carnival for Blawg Review #140 did an excellent job, spreading holiday cheer.  I came across his Blawg Review, while checking on our date to be the host of the Blawg Review Round Up/ Carnival next year. Our date for the Whistleblower Law Blog happens to be May 12, 2008, mark your calendars... A Blawg Review is a weekly review of law-related posts from a variety of blogs, hosted on different Blog site each week. The weekly Host decides which submissions and recommended posts are included in the presentation.

I digress, sorry... Now back to why I am writing this post, to tell Mr. Friedman, how much I enjoyed his Carnival. The tie in of the twelve days of Christmas was clever. I must give you two thumbs up for sharing your humor in the Carnival, with the classic song, "The Twelve days of Christmas". I can't get over how Jim Dunigan, A Wealth Manager at PNC was able to keep a straight face throughout his Christmas Price Index (CPI) PNC clip. I shared this with several financial  friends.. They loved it... Thanks for including this in your Blawg Review. You did not stop there with flexing your literary wit. You proceeded to follow the pattern of the famous song with each of your first 12 posts you reviewed. Brilliant... ... I enjoyed reading each one.  Your attention to detail, encouraged me to click on each link to the referenced blog post.  Not to leave anyone out, your stocking stuffers at the tail end, intrigued me just the same... So much so, that a few of the blogs have been tagged as favorites in delicious. I will attempt to highlight a few.   I found the blog post from Lowering the Bar, to be entertaining.  It is nice to have a new addition to my Blawgs with humor. I took note on what Slaw.ca and the analogy between Amazon and Client Activity. Why not interact with customers in ways they prefer?  It leads to a win-win relationship on both ends. Why can't the legal industry take a lesson on mastering client relationships, from an industry giant like Amazon?  I know I am going to catch some heat on this statement. The post from the Inspired Solo on "Aligning your work day for a higher purpose", was enlightening. It made me stop and take a "constructive break". I plan to do follow this a lot more next year.  Staying on track is the only way to accomplish goals, both personal and professional.

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The qui tam complaint against Pfizer, USA rel. Polansky v. Pfizer is pressing forward according to court documents filed by the Plaintiff's legal counsel, Hagens Berman Sobol Shapiro. To view the complaint, click here. (Warning, the document is pretty lengthy, 97 pages, but worth every moment spent reading.) This comes after the whistleblower complaint being initially filed with the federal government about 3 1/2 years ago and the federal government deciding recently not to intervene.

It can be difficult for a whistleblower to press forward with a qui tam claim, they often lose their jobs, face retaliation, lose family and friends and often are forced to give up something they truly love. ). The Pharmafraud Blogger discusses challenges whistleblowers can face while trying to do what is right, in the recent post  Big Pharma Retaliation, Just More of the Same, "If you think Dr. Polansky, or I, or any other "whistleblower" was motivated by money to file a qui tam, then you are sorely mistaken. Every one of us simply tried to do what was right".  However, I must add that whistleblowers, if successful, can receive up to 30 percent of the proceeds of what the government recovers. As we mentioned in a prior Whistleblower Law Blog post, In 2007, whistleblowers were awarded $177 million for their efforts in bringing corporations to justice, most of  which came from Health Care fraud.

Another well known whistleblower and one of the most prominent in the health care segment is Dr. Peter Rost.  He knows first hand how difficult it can be to bring a claim against a large pharma giant, such as Pfizer. Dr. Rost, former VP of Marketing for Pfizer, is an outspoken pharma whistleblower that went on to become an activist on the subject. He has authored several books including: KILLER DRUG and THE WHISTLEBLOWER, Confessions of a Healthcare Hitman and maintains a blog known as Question Authority.

Is Pfizer off the hook? Can they breathe a sigh of relief? Are they in the clear with Lipitor, since the government chose not intervene in the qui tam claim? David Armstrong provides a nice answer to this in the Wall Street Journal article, "Pfizer Is Sued Over Lipitor Marketing"., when he writes "The government hasn't intervened in other cases which led to huge fines against drug companies. One example is another case involving Pfizer, this one for the off-label marketing of Neurontin." Only time will how the claim against Pfizer for questionable marketing for the billion dollar drug will turn out. May the truth prevail in this uphill battle.

According to Pfizer company issued statements, they are the world's largest research-based biomedical and pharmaceutical company. In 2006, they earned $48.4 billion in revenues and invested $7.6 billion in research and development. In a Pfizer fact sheet, the company writes, "Every day, approximately 87,000 colleagues in more than 150 countries work to discover, develop, manufacture and deliver quality, safe and effective prescription medicines to patients." One can only hope they are not doing this at the sacrifice of lives in the process.

Pfizer stock most recently closed at $22.90 on the NYSE.

Click here to read more on this this from the WallStreet Journal online.

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Thanks to a brave nurse for uncovering what she saw as fraudulent Medicare billing practices, the government will receive $26 million from Saint Josephs Hospital of Atlanta and Saint Josephs Medical System to resolve the "whistleblower" lawsuit that alleges the hospital violated the federal False Claims Act in regards to Medicare billing practices.  According to the DOJ, the St. Joseph's Hospital employee, Tami Ramsey, will receive $4.94 million for her valiant actions in coming forward and reporting the improper billing practices. She found that the hospital routinely billed Medicare for inpatient rates, when patients were receiving outpatient services, resulting in a higher charge, since inpatient services are more than outpatient services.

 According to United States Attorney, David M. Nahmias, "This significant settlement demonstrates our commitment to protect public funds from fraud and abuse. Every Hospital that submits claims to the Medicare program must ensure that its services are billed appropriately. We will continue to vigorously pursue Medicare provides who disregard billing rules."

This is a strong message to the Medical community, that fraudulent billing practices to the Medicare program will not be tolerated. There will harsh fines and penalties imposed. Rewards will be given to whistleblowers who uncover this fraud.  In a prior  Whistleblower Law Blog post this year, we reported that Medicare and Medicaid fraud in 2007 accounted for $1.54 billion to the government from corporations settling heath care fraud qui tam or false act claims.  Whistleblowers were awarded $177 million for their valiant actions of bringing the corporations to justice. Under the False Claims Act, whistleblowers can sue companies or individuals that they believe have filed fraudulent claims with the federal government. If successful, they can receive up to 30 percent of the proceeds of what the government recovers.

To read more from the Department of Justice on St. Johns Medical Center, Click Here

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The New IRS announcement released on December 19, 2007 details procedures of the IRS Informant Award program for information regarding underpayment of taxes. Since  December 2006, the IRS has received about 80 claims, half of those submitted in just the last two and a half months. I imagine these statistics will go even higher in the coming months. Why is this important in a qui tam blog? Under the new procedures, the amount of the qui tam award will be at least 15%, but no more than 30%, of the collected proceeds in cases in which the Whistleblower Office determines that the information submitted by the informant substantially contributed to the collection of tax. The award percentage can be reduced depending upon the circumstances. See the IRS guidelines for specifics.

Another interesting thing to note, is that eligibility for an award under the new procedure requires the dispute to exceed $2 million for any taxable year for a corporation and an individual with a gross income in excess of $200,000 for any taxable year in question.

IRS informants should also read  IRS Notice 2008-04 and Form 201, since it gives guidance on filing  claims under Internal Revenue Code section 7623 as amended by the Tax Relief and Health Care Act of 2006, Pub. L. No. 109-432 (120 Stat. 2958) (the Act) enacted on December 20, 2006.

In a recent WSJ article, Tipster Rewards Require Patience by Tom Herman, there was recently a  claim filed by a Florida based law firm that alleges a large international company underpaid its U.S. taxes by more than $2 billion, including penalties and interest. This case could make history if turns out to be true.

It is nice to see that qui tam laws can help the government capture money from fraudsters and pay what is owed to the government. Whistleblowers do not be afraid to speak up, if you have proof of a company not paying corporate taxes, you could be rewarded for your information, if the information can help the IRS build a case against a tax fraudster. 

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A Whistleblower took his case public and to the Web after initially being ignored. A recent article by General Counsel entitled, Employee's YouTube Video Sounds Ethics Alarm.  The article talks about how a former Lockheed Martin Engineer felt something was wrong with his company's ship shipbuilding project for the U.S. Coast Guard. In his mind he felt that the materials Lockheed were selling to the government were not up to code and that sailors and national security were at risk . This whistleblower now has filed a quitam case against  his former employer. Initially, trying to do the right thing, the whistleblower, took his complaint to his superiors, but his warnings were not taken seriously maybe because this project known as Deepwater was a cost around $100 million. He was told that his allegations were baseless.

Nearly three years later, in February 2006, this whistleblower, contacted the U.S. Department of Homeland Security's inspector general. The IG sent auditors to speak with him. Unfortunately, after several months, he felt that the investigation was going nowhere, and felt that he should matters in his own hands and decided to do something revolutionary. He took his case to You Tube, for the world to hear and see if they agreed, that the Deepwater project should be looked into for safety reasons.

His revolutionary idea worked and his idea was picked up by several media outlets. A detailed report was eventually released by the Inspector General's Office.  The 10 minute You Video made an impact. The Coast Guard reorganized the program and took oversight of project management of the deepwater program in house, instead of having the contractors perform this oversight.

It is not known how much this whistleblower's quitam or false claims act case could be worth, if anything at all. Time will tell... One thing that is important to note, is that whistleblowers are taking things to the next level when reporting quitam False Claims Act cases. 

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This week I read an interesting post from a fellow legal blogger at Blawgletter re: California Supreme Court Upholds Professional Duties: DQ Awaits Cheaters. The post was about a case Rico v. Mitsubishi Motors Corp.,, No. 123808 (Cal. Dec. 13, 2007).

As a young attorney it was hard to balance the greater needs of society with the absolute duty to crush and burn any opposing party to your client's interest. I remember clearly arguing with a more mature and wise attorney about the benefits of professional courtesy vs. the need to do the very best for your client. It is the same with the "notes on the table" decision. In my younger days I would have had a hard time emotionally giving up that advantage. Now that I see that society benefits from professional and honest representation across the board, I am less tempted to keep this type of information.

Brian

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Yesterday, the U.S. Senate, with a unanimous vote, passed the Federal Employee Protection of Disclosures Act (S.274). This new law enhances the protection for federal employee whistleblowers.

Passage of S.274 now sets the stage for a conference between the House and Senate to agree final legislative language. On March 14, 2007 the House enacted the Whistleblower Protection Enhancement Act (H.R. 985), which expanded the scope of whistleblower protections to national security related agencies, permitted employees to obtain jury trials in federal court, provided enhanced protections for federal contractors and protected employees who exposed misconduct to their managers.

According to the Government Accountability Project (GAP), the Whistleblower Protection Act reform has been struggling for eight years to reach the end of a convoluted approval process. Proud supporters include the bi-partisan efforts of Senators Daniel Akaka (D-HI), Chairman Joseph Lieberman (I-CT) Susan Collins (R-ME), Charles Grassley (R-IA), Carl Levin (D-MI) and Richard Durbin (D-IL). In 2004 and 2005 the bill passed committee, but was blocked by procedural holds. Last year Senators Levin and John Warner (R-VA) obtained its Senate approval as part of the Defense Authorization funding bill, but it was killed in the conference committee on the defense bill.
Unfortunately, the GAP also mentions that S. 274 does not contain five critical reforms passed in March by the U.S. House of Representatives in H.R. 985, co-sponsored by Chairman Henry Waxman (D-CA) and Rep. Todd Platts (R-PA). The House-passed reforms include protection for national security whistleblowers at the FBI and intelligence agencies, protection for government contractors, protection for federal baggage screeners, jury trials for a fair day in court, and reinforced protections for federally-funded scientists. The House passed H.R. 985 by a 331-94 vote, a veto-proof majority, despite a threat to veto the legislation issued by the Bush administration the day prior to the vote.

All things considered we have made progress with this new legislation.  Let's see if Congress can continue to work together and do what is right in regards to this whistleblower legislation that aims at protecting our brave citizens that come forward and report fraud against their employers.

We're counting on our elected officials to make this a reality so that whistleblower rights can be enforced and protected.

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Dear Blog Readers,

I write this blog with absolute reverence. What I am about to share is a biblical tale of the Lord's retribution against the evil fraudsters in our midst.  In modern society we often see the hand of the Lord as a simple act of coincidence or an explained scientific event or better yet, a scientific anomaly.  But here, the hand of the Lord is obvious.   He  (this is not intended to be sexist) is against those who defraud Medicare.  That's right, you heard it here first.  The Lord is paying attention to the fraudulent people who are ripping off Medicare.

Ok, let me clarify this beginning.   On Wednesday, December 5, 2007, Mark Potter, an NBC Correspondent, wrote an article for MSNBC.com entitled "Fake Companies Steal Billions from Medicare". What makes this article interesting is that it involves a man from Miami, Florida, literally being eaten by an alligator while running from the police. Another important feature about this man is that he allegedly ran a fraudulent Medical Supply Company in Florida. 

Make no mistake about it.  This is not an unfortunate event.  This is one of those events that gets written down in the Holy Scriptures and retold for centuries to come.  I can hear it now:

And the people cried, for the coins set aside for the sick were stolen by the evil souls amongst the people.  And so the people sent their courageous fighters to find the evil souls, collect their coins and cage the evil to stop the theft of the coins set aside for the ill.  The courageous fighters searched across the swamps and paved lots through a sea of multi-colored automobiles.  Upon finding the evil souls the courageous fighters took flight to capture and cage the evil amongst them.  The evil would not be taken and caged and thus also took flight.  Into the wilderness the evil fled to avoid capture by the courageous fighters.  Through all  this  the Lord was watching.  The Lord was angered by the evil in the land.  The Lord knew the coins set aside for the sick were sacred to the people.  Helping the ill was judged by the Lord as good and proper under his laws and commandments.  Therefore the coins were good and aiding the ill was important to the Lord.  The Lord  decided he would no longer permit the evil to dwell in the land.  The Lord sent a great lizard to rise up from the Earth's midst.  The great lizard heard the voice of the Lord and came forth  to teach the people how to rid the evil from their midst.  The great lizard searched the wilderness until it found the evil souls.  In a quick and merciless moment  the  great lizard tore from limb to limb the evil souls .  The people could hear the gnashing of teeth and the and wrenching of souls.  The intent of the Lord was good and the people understood the evil must dwell in the land no more.

Can we stick that in one of the minor scriptures?

All Jokes aside. It is not my intent to be blasphemous.  Please note: I am just kidding around.   I do think it is unfortunate that the Lord doesn't intervene more often to stop fraudulent people.  But then again, the Lord could be leaving it up to us to take action and bring these corrupt people to justice.  The fraud that is going on in the world around us is astounding.  Medicare is bilked out of an estimated $60+ Billion  (yes "B" billion) dollars a year.  Imagine what we could do with the money, if it was applied to some cause other then fraud.

Potential Whistleblowers: If you know of a significant fraudulent scheme, stand up.  Stop the silence.  The sight of criminals driving luxury cars and living on oceanfront mansions is too much for society to bear.  These people must be brought to Justice.  If the Lord is willing to take one or two out with an alligator now and again, so be it.  But we are being challenged to take out the rest.  We must take a stand.  We must swallow the safety of anonymity and report the fraud.  We must be willing to fight.

Brian

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"How Qui tam helps fight Medicaid Fraud" - an article written by Brian F. LaBovick, Esq. was recently published  by Thomson West in the Volume 13, Issue 5 /November 2007 edition of the Andrews Litigation Reporter on Health Care Fraud.

Click Here to read the article "How Qui tam helps fight Medicaid Fraud".

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