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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Fleeing to the Dominican Republic did not prove to be a fool-proof plan of escape for Reynel Betancourt. Betancourt, once an employee of Dearborn Medical Rehabilitation Center in Michigan, was sentenced to 77 months in prison for a scheme that defrauded Medicare of about $9 million.

Betancourt must pay approximately $6 million in restitution for his crimes against Medicare. As a rehabilitation center employee, Betancourt is said to have paid patients to sign fraudulent paperwork stating that they had received injections and other treatments that they did not actually receive. After receiving payment from Medicare, Betancourt laundered the money through phony corporations created for this express purpose.

After being captured in Miami and agreeing to a trial there instead of Michigan, Betancourt was charged with conspiracy to commit health care fraud and conspiracy to commit money laundering. He eventually plead guilty to the charges and was sentenced by U.S. District Court Judge Cecilia Altonaga in the Southern District of Florida on June 7, 2011.

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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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Healthcare facilities can’t bring False Claims Act lawsuits to enforce ceiling-price contracts between drug manufacturers and the Secretary of Health and Human Services, according to the United States Supreme Court in Astra USA v. Santa Clara County, No. 09-1273.

This was a huge win to the pharmaceutical industry and a major blow to health care facilities, since the ruling overturned an earlier  lower court decision in favor of the healthcare facilities.

The clinics involved in the Astra USA v. Santa Clara County case were from California. According to their case, brought under the California False Claims Act.  In a legal maneuvering, the pharmaceutical manufacturers had the case moved to federal court.

The heart of the legal issue is whether drug makers, were at fault in over charging Medicare and Medicaid more than the pre-determined caps for drugs that serve 340B entities medical facilities serving the poor.

The eight pharmaceutical manufacturers in the case included subsidiaries of Astra Zeneca, Sanofi-Aventis SA, Bayer AG, Takeda Pharmaceutical, Bristol Myers Squibb, Merck, Pfizer and GlaxoSmithKine.

Justice Ruth Bader Ginsburg, stated in her opinion that drug-pricing enforcement was solely the responsibility of the U.S. Department of Health and Human Services. "Recognizing the county's right to proceed in court could spawn a multitude of dispersed and uncoordinated lawsuits," Ginsburg said in a 10-page opinion. She said the risk of conflicting court rulings "would be substantial.

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Pharmaceutical giants: Serono Laboratories Inc., EMD Serono Inc., Merck Serono S.A, and Ares Trading S.A. have agreed to settle False Claims Act allegations in connection with the marketing of the drug Rebif for $44.3 million, according to a recent announcement by the Department of Justice.

Under the Serno agreement, proceeds from the settlement will be split between the federal government and various states, with the United States receiving $34.6 million to resolve the federal claims and the states receiving $9.7 million to settle their respective claims under Medicaid.

As a Florida False Claims Act and Whistleblower Law Firm, we applaud the whistleblower, Tim Amato, who brought the qui tam suit in 2005. The False Claims Act permits private citizens with knowledge of fraud against the government to bring a lawsuit on behalf of the United States and to share in any recovery.  Mr Amato will receive $5.19 million out of the federal share of the Serno civil settlement.

Allegedly, health care providers were paid from the launch of Rebif in January 2002 through December 2009, to promote or prescribe Rebif, a recombinant interferon that is used to treat relapsing forms of multiple sclerosis. The payments were made to providers for hundreds of speaker training meetings and programs, as well as payments for attending consultant, marketing and advisory board meetings, all at upscale resorts and other locations. Serono’s actions allegedly resulted in the submission of false claims to federal health care programs including Medicare and Medicaid for the payment of Rebif, i.e., claims that were tainted by kickbacks.

It is a great day in America when the government can combat corporate greed and health care fraud. The False Claims Act is a powerful tool in that effort and allows the government to recover triple the amount of its actual damages, plus a civil penalty of $5,500 to $11,000 for each false claim.

We encourage whistleblowers to come forward and report fraud against the government. If you are aware of corporate fraud against the federal or state government, contact a whistleblower or qui tam lawyer to discuss your legal rights and steps to take on reporting the fraud.

Click on the following links to read more on the $44.3M Serno FCA Settlement:

Pharmaceutical Giant, Serono, Agrees to Pay $44.3 Million to Settle False Claims Act Case - DOJ

Serono to Pay $44.3 Million to Resolve False Claims Act Allegations in Connection With Promotion of Drug Rebif - PharmaLive

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Recently, the Health and Human Services Department, Department of Justice, and FBI issued a joint announcement that they were charging 111 defendants with Medicare fraud in nine cities, and expanding their investigative operations, called the Medicare Fraud Strike Force, to two more cities. The 111 charges is the largest federal health care fraud take-down in history.

Who's Defrauding Medicare?

The 111 individuals charged consisted mostly of doctors, nurses, and health care company owners / executives. The fraud consisted of over $225 million in false billing.

Attorney General Eric Holder stated that the arrests prove that the Department of Justice is “waging an aggressive fight against health care fraud” and securing taxpayer dollars. In 2010 alone, Holder went on to say, the Medicare Fraud Strike Force recovered more than $4 billion in fraudulent Medicare claims. The Strike Force focuses primarily on identifying and shutting down large-scale fraud schemes.

Examples of Fraud

The arrests on February 17 included some of the following examples:

Miami 32 defendants, including 10 health care professionals, participated in frauds that led to $55 million in false billings. The false billings were mostly for home health care, medical equipment, and prescription drugs.
 

• Detroit:21 defendants, including 9 health care professionals, defrauded Medicare for $23 million. These cases included home health care, psychotherapy, physical therapy, and podiatry.
• Brooklyn: A mere 10 people, including 4 health care professionals, managed to run schemes that totaled $90 million. These schemes focused on physical therapy, proctology, and nerve conduction testing.
• Los Angeles: 5 individuals defrauded Medicare for $28 million, mostly with false claims for medical equipment and home health care.

The strike force intends to expand its operations into Dallas and Chicago – the next two cities that have been identified as fraud hot spots.

Medical Identity Theft

The Office of the Inspector General (OIG) calls attention to a new sort of identity theft – medical identity theft. This identity theft relies upon a person's name, Social Security number, or Medicare number to make false prescription drug claims and other false Medicare claims. Like other types of identity theft, medical identity theft can threaten the victim's credit and finances, while simultaneously defrauding taxpayers.

As basic precautions against healthcare fraud, OIG suggests the following measures:

• Protect your information by not giving out your Medicare number to people who offer free medical equipment or services, or who offer a free gift in exchange for a Medicare number.
• Check your Medicare Summary Notices to see if you were billed twice for anything or if you were charged for any services or equipment that you didn't receive.
•  If you do suspect someone is using your Medicare or Social Security number to commit fraud, contact the Department of Health and Human Services

Considering the ongoing, heated debates over health care in America, watching out for medical identity theft is one step Medicare recipients can take to ensure all taxpayers are protected from healthcare fraud.
 

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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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According to recent reports from Department of Health and Human Services, since  Jan. 4, there were 1,341 qui tam cases under investigation for fraud against the government. Healthcare fraud dominates this list with, 885 or 66 percent with most alleging filing of false claims to Medicare and Medicaid.

The marketing and pricing of prescription drugs have led to 180 qui tam cases against drug manufacturers accused of defrauding the government. Allegedly the drug makers are improperly marketing or pricing popular prescription drugs. The HHS is watching these cases carefully.

The Florida False Claims Act helped the Medicare Fraud Strike Force snag 383 fraud cases. The cities of Miami and Tampa saw a significant amount of activity in Medicare Fraud.  The city of Los Angeles took the second spot with 36 Medicare Fraud cases. 

Recently, US Senator Chuck Grassley shared a January 24 letter from HHS outlining progress and status of several qui tam cases and the fight against Medicare fraud.

Click on the following link to read more from on

The Feds Are Investigating How Many Fraud Cases?

- Pharmalot

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In Fiscal Year 2010, the U.S. Department of Justice recovered over $3.1 billion of America's stolen money largely due to valiant whistleblowers and the federal False Claims Act, According to the Consumer Interest Group,  Taxpayer's Against Fraud.

Over 80 percent of all successful False Claims Act recoveries are brought to the government by whistleblowers and their lawyers, making the law the most important tool the U.S. Government has in the war against fraud

80 percent health:
Approximately 80 percent of all fraud recoveries under the False Claims Act occur in health care, but significant amounts of fraud are also found in defense, education, transportation, and the oil and gas industries.
 
28 State False Claims Acts:
In order to increase the amount of money coming back to them, and to initiate their own recoveries, 28 states and the District of Columbia have now passed their own versions of the federal False Claims Act.

A few significant qui tam cases for Fiscal Year 2010 include the following:
 

• Allergan -  $600 M -($225 million to resolve civil allegations and a $375M criminal fine.)  9/1/2010 - Off-label marketing practices involving Botox
• AstraZeneca - $520 M-  4/27/2010 - Illegal marketing - anti-psychotic drug Seroquel 
• Novartis Pharmaceuticals
   $422.5 million ($237.5 M - Civil allegations and a $185 M criminal fine)  9/30/2010
  Unapproved promotion of Trileptal 
• Forest Laboratories -  $313 M - ($149M -Civil claims, a $150M criminal fine, and $14 M forfeiture.   9/15/2010
  Unlawful marketing - Levothroid and promoting Celexa and Lexapro for pediatric use
• Elan Corporation -  $203.5 M - 7/15/2010 - improper marketing of Zonegran
• Teva Pharmaceuticals - $169 M -  7/26/2010 -  Inflated prices reported to  Medicaid
• WellCare Health Plans -  $137.5 M- 8/9/2010 - Defrauded Medicare and Medicaid programs in several states
• Health Alliance of Greater Cincinnati and Christ Hospital -  $108 M -  5/21/2010
  Kickbacks to doctors in exchange for referring cardiac patients

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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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Mobil Oil and several affiliate companies have agreed to pay $32.2 million to resolve False Claims Act violation allegations. According to the Department of Justice, Mobil Natural Gas Inc., Mobil Exploration & Producing U.S. Inc. and their affiliates “knowingly underpaid royalties” owed from the production of natural gas on American Indian and Federal lands. The Justice Department alleges that from March 1, 1988 to Nov. 30, 1999, the Mobil companies underpaid multiple Native American tribes and the United States due to the systematic understating of the produced natural gas’ value. The Mobil companies’ settlement stems from a lawsuit brought by whistleblower Harold Wright. 

Tony  West, Assistant Attorney General for the Civil Division of the Department of Justice stated the following:

"The message to those who seek to evade their mineral royalty obligations is this: We will aggressively pursue you. We at the Justice Department are committed to protecting the public trust by ensuring that those who remove valuable minerals, some of which are non-renewable, from American Indian or public lands pay their full, fair, negotiated share for those assets."

Under the qui tam (or whistleblower) provisions of the Federal False Claims Act, private citizens such as Mr. Wright may file lawsuits on behalf of the United States. These provisions also allow the whistleblower to recover a portion of any settlement received by the government. Although Mr. Wright passed away before the Mobil companies settled, his heirs will receive approximately $975,000 for his role.

The U.S. Department of the Interior’s Minerals Management Service requires companies such as Mobil and its affiliates to report the value of natural gas produced on federal lands (including American Indian lands) on a monthly basis. According to the United States, the Mobil Companies “used transactions with affiliated entities to falsely reduce the reported value of gas taken from federal and American Indian leases to claim excessive deductions for the cost of transporting that gas, and to otherwise understate the value they reported each month for their natural gas production.”

Thanks to the qui tam provisions of the False Claims Act, private citizens such as Mr. Wright can bring violations to light. Thanks to Mr. Wright’s actions, the United States will receive $32.2 million, and his heirs will be rewarded $975,000 for his role in supporting justice.

Mobil Oil Companies to Pay U.S. $32.2 Million to Resolve Allegations of Underpayment of Royalties from American Indian and Federal Lands – U.S. Department of Justice

Mobil Companies Settle Unpaid Royalties Case for $32 Million - Law.com

Case Information: U.S. ex rel. Wright v. Chevron USA, Inc. et al., 5:03-CV-264 (E.D. Tex.)

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Pfizer Inc has agreed to pay a record settlement of $2.3 billion to resolve a qui tam case and to settle federal and criminal probes. According to the DOJ and several published reports, this involves the alleged Medicare/Medicaid fraud, and the illegal use off-label marketing of multiple drugs.

The fines in this case are $1.3 billion, which are the largest settlement ever paid for a health care fraud claim and a criminal case. In addition to Pfizer, Pharmacia & Upjohn Co, a Pfizer subsidiary was also involved with misbranding a pharmaceutical.

The settlement involves the marketing drugs not included in the label approved by the FDA. Two drugs included in this probe are antibiotic Zyvox and antipsychotic Geodon.

Pfizer has agreed to pay $400 million to settle whistleblower claims involving Zyvox and Geodon drugs. They will pay an additional $33 million for improper marketing with 42 states and the District of Columbia.

The whistleblowers involved in this case will receive over $100 million for their roles in bringing this fraud to light.
 

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The Atlanta based home builder, Beazer Homes USA Inc. settled a qui tam suit involving mortgage fraud with Federally insured mortgages. Beazer Homes USA has agreed to pay $50,000,0000 to the United States to be shared with victimized private homeowners, to resolve the False Claims Act allegations.

According to published reports by the DOJ, the Builder's mortgage company made Federal Housing Administration (FHA) insured mortgage loans for the purchase of homes built by the Builder and both companies fraudulently and improperly:

1) required purchasers to pay "interest discount points" at closing, but then kept the cash and failed to reduce interest rates;
2) provided cash "gifts" to home purchasers through certain charities, so purchasers could come up with minimum required down payments, with assurances the "gifts" would not have to be repaid, and then increased home purchase prices to offset the amount of the gifts;
3) obscured which of its branches made defaulting mortgage loans to avoid FHA detection of excessive default rates, and;
4) ignored "stated income" requirements in making loans to unqualified purchasers.

The Attorney General's Office is serious about fighting mortgage fraud. The US Attorneys Office along with the Department of HUD are working together to crack down on fraudulent mortgage practices by firms. Assistant Attorney General Tony West, who heads the Civil Division stated recently:

"We will aggressively pursue fraud claims against federal mortgage insurance programs, which are so vitally important to this economy."

This is further echoed in a DOJ press statement by HUD Secretary Shaun Donovan, that the lenders will be held accountable for their actions if they are involved with mortgage fraud:

"This action shows that the Administration is serious about making the housing market safe from mortgage fraud and will crackdown on those who violate the trust of American homebuyers."

Beazer has agreed to provide appropriate restitution to buyers and have established a national restitution fund. The Chief Executive Officer and Chief Operating Officer are voluntarily contributing funds from their 2008 year end bonuses to the restitution fund. This was a smart move on their part. However, they should have thought about the repercussions of the company's actions beforehand.

It is interesting that we covered Beazer Homes on our Law Planet Blog recently regarding the SEC charging Chief Accounting Office, Michael Rand of misleading investors by inflating earnings. This was the first time that a firm made The Whistleblower Law Blog and The Law Planet Blog both in the same week.

Note to all firms committing mortgage fraud: "if you are actively engaging in fraudulent behavior that can be construed as mortgage fraud, you will be caught and prosecuted by your actions. Whistleblowers are bring educated on "what is qui tam" and the False Claims Act and are stepping forward with information on mortgage fraud. Based on the nature of their information, they may get a Whistleblower reward, which can be 15% - 30% of what the US recovers based on their information. Be advised... Your secrets will come out and you will be caught and brought to justice. Thanks to a Whistleblower stepping forward and bringing this information to light with a qui tam attorney.

To learn more on qui tam and the rights of Whistleblowers, click on the following for more information on qui tam and the False Claims Act.
 

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