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

The U.S. Justice Department recently announced that a $3 million settlement had been reached in the case of a Florida radiology clinic that violated the Medicare False Claims Act.

The case was filed in 2009 after two physicians employed by the radiology clinic effectively blew the whistle on the violations and each became a relator in a qui tam suit.

Each relator claimed that the violations to the Medicare False Claims Act occurred during the period between 2000 and 2008. Essentially, the physicians alleged that Midtown Imaging, LLC and the former owners of the clinic, listed as Midtown Imaging, P.A. and PBC Medical Imaging, embarked upon improper financial relationships with other physicians and physicians groups.

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All drug makers want consumers to believe that their product will be a miracle solution.  While many prescription medications can have a palpable impact on the lives of patients, such benefits can only be accrued when the medication is being used for the right condition. However, pharmaceutical companies are held accountable for the efficacy of their drugs and their advertising claims marketing  practices.

Recently, the drug maker, UCB has agreed to settle a qui tam lawsuit regarding the epilepsy drug Keppra,  for $34.4 million.   The North American Division of the Belgium pharmaceutical giant UCB admitted no wrong doing to the allegations, that Keppra, was marketed to treat other non-FDA approved conditions, such as headaches, migraines, and other pain based conditions.

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Facing massive fiscal deficits, the U.S government gave the IRS enhanced enforcement authority and the largest budget appropriation in the agency’s history in 2006. The current 2010 IRS budget stands at $12.5 billion with President Obama proposing an increase of $243 million targeted specifically for enforcement efforts. The IRS devotes over $5 billion annually to identify, apprehend and prosecute those that attempt to evade paying taxes to the U.S government

Notable IRS cases

Estimates of the annual cost of tax evasion in the United States range from $100-$300 billion every year. Most often, the criminal evasion involves complex offshore holdings in foreign banks in Switzerland, Hong Kong and the Cayman Islands. Accounts are usually established by international financial advisers who encourage their clients to avoid disclosing taxable assets to the IRS.

Recognizing the seriousness of the problem, the IRS launched several simultaneous investigations to identify and prosecute offshore tax evaders. These efforts culminated in 2009 when banking giant UBS turned over detailed information on nearly 5000 Swiss bank accounts to the IRS. In addition, UBS agreed to pay fines totaling $780 million for allegedly sending bankers posing as tourists into the U.S to help clients evade taxes.

Despite a foreign account holder tax leniency program that resulted in over 7500 applications from tax evaders, the IRS continues to uncover mass international tax fraud. Recently, an indictment was brought against four managers of multinational banks in a cross border banking conspiracy. The scheme was designed to help U.S customers evade rightfully owed taxes by maintaining covert accounts in multiple Swiss banks.

During the fall of 2008, the indictment alleges that the conspirators maintained thousands of accounts for customers in the United States while knowingly engaging in activities designed to conceal their ownership from the IRS. The conspiracy involves two generations of tax evaders that dates back to 1953.

Reporting Tax Fraud

The severity of the current recession has created further incentives for those considering tax evasion. The IRS has responded by offering additional incentives for those who come forward and identify tax fraud. Although the IRS has offered rewards for whistleblowers throughout its history, they were largely ineffective because the agency was under no real obligation to pay.

In 2006 the rules were modified to provide a reward for the informant of 15% to 30% of the total taxes that the IRS recovers. The requisites for the program consist of a $2 million threshold that includes interest and penalties, and the gross income of the perpetrator must be over $200,000 annually.

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Update on SENATE BILL - SB 5458

Recently, the Senate Committee on Health & Long Term Care met to discuss SB 5458. Several groups raised arguments for and against SB 5458.

Bill Sponsors included: Senators Keiser, Pflug, Kline, Becker, Conway, Pridemore, Rockefeller and Parlette.

A few PRO and CON Arguments for Senate Bill SB 5458 include the following:

Staff Summary of Public Testimony: PRO: This bill meets the growing need of the state to fight Medicaid fraud. It will address provider fraud. The bill will bring in money to the state and could bring in more if the False Claims Act qualifies for the federal rebate. It gives the AG the tools to fight Medicaid theft.

The longer statute of limitations will save the cases the AG already has. It will enable the AG to hire staff to fight Medicaid fraud and bring back recoveries to the state. DSHS does have an effective integrity program and a new fraud and abuse detection system. We are concerned about the rising costs of healthcare. Reducing waste and fraud will help to control costs.

CON: The bill will deter physician participation in the Medicaid program. Audit activities are already in existence and federal and state agencies already have activities to recover inappropriate payments. Instead of receiving more money, Washington will get less money  due to the qui tam plaintiff.

This will increase costs due to increased litigation. Seventy-five percent of qui tam cases are for non-meritorious claims. We support Medicaid auditor funding and the AG having the appropriate amount of resources to defend against fraud. The bill contains a bounty hunter provision. Regarding innocent parties, damages should go both ways.
 

Click on the following link to read the SB Report for SB 5458

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The Corporate Lobbyists are trying to make the whistleblower provisions in the Dodd-Frank less effective for whistleblowers.  We must stand up against them to help fight fraud. The National Whistleblower Center submitted very detailed comments addressing serious concerns with the recent recommendations made by the "Corporate Lobby" to the SEC..

According to the Executive Director of the National Whistleblower Center, Stephen M. Kohn, 

 “The Dodd-Frank Act clearly states that the rules implemented by the SEC must be ‘user-friendly’. We will be paying close attention to tomorrow’s SEC meeting to see if the SEC’s promise to protect whistleblowers is more than simple lip service.”

 A few key points from the letter to the SEC by the National Whistleblower Center include the following:

• Requiring Employees to Utilize Internal Corporate Whistleblower Procedures Would Violate the Law
• The SEC Should Implement a Rule that Prevents the Regulated Industry from eviscerating the ability of Internal Corporate Compliance Programs to Properly Detect and Prevent Fraud
• The Restrictions on Attorney Fees Urged by Baker Donelson Are Radical and Without Support in Law or Policy.
• The Other Proposals Should Be Summarily Rejected.

It is important to note that the law firm of Baker Donelson made a proposal to place a restriction on  attorneys who represent whistleblowers. If implemented, these restrictions would completely undermine the requirement that the Dodd-Frank whistleblower rules be "user-friendly'". 

These proposed restrictions are unprecedented in law, and none of the numerous federal whistleblower laws, including the False Claims Act, contain any type of restriction that is suggested by Baker Donelson law firm. If implemented, these proposals would undermine the efforts of the Dodd-Frank Act and make it nearly impossible for corporate whistleblowers to obtain attorneys to represent them in Dodd-Frank cases.

Important Links:

NWC Letter to SEC opposing corporate lobby position

Baker Donelson letter representing corporate lobby position

Arent Fox letter representing corporate lobby position

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A patient recruiter for a Houston-based home health care company pleaded guilty to a $5.2 million Medicare fraud scheme. 

Sammie Wilson, pleaded guilty to conspiracy to commit health care fraud. According to court documents, Family Healthcare Group (Family Group) was supposed to provide skilled nursing to Medicare beneficiaries. However, the owner hired Wilson and others to recruit Medicare beneficiaries for the purposes of filing false claims with Medicare.

Court documents show that Family Group used the Medicare beneficiary numbers to submit false claims to Medicare for skilled nursing. In return, Wilson was paid kickbacks for referring beneficiaries for services that she knew were not medically necessary and/or not rendered.

Fraud of any magnitude is not acceptable. Unfortunately, health care fraud, involving Medicare is too common. Concerned citizens with information pertaining to Medicare fraud, should report the fraud immediately. According to the recent numbers, more whistleblowers are stepping forward in reporting fraud.

In a qui tam claim, a whistleblower may be entitled to 15 - 30 percent- of what the government recovers which includes damages for the false bills, tripled, plus civil penalties of from $5,000 to $10,000 per false claim.

Click on the following link to read more from the DOJ on the Houston-area Patient Recruiter Pleads Guilty in a $5.2 Million Medicare Fraud Scheme

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American pharmaceutical manufacturer Allergan Inc. has agreed to plead guilty and pay $600 million fine. This will resolve Allergan's criminal and civil liability arising from the unlawful promotion of Botox® Therapeutic, for uses not approved  by the Food and Drug Administration (FDA). The resolution includes a criminal fine and forfeiture totaling $375 million and a civil settlement with the federal government and the states of $225 million to resolve claims that its unlawful marketing practices caused false claims to be submitted to government health care programs.

The civil settlement resolves three lawsuits filed in federal court in the Northern District of Georgia under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the United States and share in any recovery. The following whistleblowers – Dr. Amy Lang, Charles Rushin, Cher Beilfuss, Kathleen O'Conner-Masse, and Edward Hallivis – will receive $37.8 million from the federal share of the settlement amount.

Tony West, Assistant Attorney General for the Civil Division of the Department of Justice, and Sally Quillian Yates, U.S. Attorney for the Northern District of Georgia, filed charges against Allergan for promoting Botox® for headache, pain, spasticity and juvenile cerebral palsy – not approved by the FDA. According to the criminal charges, Allergan made it a top corporate priority to maximize sales of Botox® for such off-label uses.

Allergan’s off-label marketing tactics included calling on doctors who typically treat patients with off-label conditions. In 2003, Allergan doubled the size of its reimbursement team to assist doctors in obtaining payment for off-label Botox® injections. Allergan held workshops on billing for off-label uses, conducted detailed audits of doctors’ billing records, and provided a Botox® Reimbursement Hotline.

This settlement is part of the government’s emphasis on combating health care fraud.  Since January 2009, the False Claims Act has helped the Justice Department recover approximately $3.1 billion in cases involving fraud against federal health care programs.  The Justice Department’s total recoveries in False Claims Act cases since January 2009 have topped $4 billion.

Click on the following link to read more on the Allergan settlement:
Allergan Agrees to Plead Guilty and Pay $600 Million to Resolve Allegations of Off-Label Promotion of Botox® - DOJ
 
Allergan Will Pay Fine, Plead Guilty to Misdemeanor - Bloomberg

Allergan To Pay $600 Million To Resolve Off-label Marketing Allegations, Agrees To Drop First Amendment Suit - Thompson

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