Qui tam is a very interesting niche practice in the law. It has a long history in the United States and today is widely used by the Government.

The qui tam provisions started in the 1800’s during the United States Civil War. President Abraham Lincoln was getting his army requisitions ripped off and he was buying things that were not coming through once he bought them. For instance, the Union army would pay for rifles and instead of getting a thousand rifles they would get 100 rifles and they wouldn’t work.

So, they wanted to figure out a way of making sure that what they were purchasing was what in fact what they were trying to buy. They created a reward system called qui tam, which is short for a Latin phrase which means “he who sues on behalf of the king sues for himself as well.” In other words, if you as someone who knows that a deal is going through, and also knows that the person doing business with the government is going to rip off the government, and you turn them in, commonly called a whistleblower, that you will be included in part of the savings, reward, or recovery that the government gains in that transaction.

In today’s environment fraud schemes are incredibly complex. But here’s a very simple example.

Corporation A makes a deal with the government to sell them a million paperclips a month and that works for a couple of months, but that corporation realizes that nobody on the governments end is trying to count the paperclips or do anything to make sure that they are getting their million paperclips. Instead they decide “you know what, we are going to send them 900,000 paperclips a month.” Since nobody is counting, they are getting away with 10% of the deal. Then they decide to send 800,000. This goes on for five years. Five years go by of ripping off the government 20% on that contract until someone in the company finds out, and when they do and look back and realize that millions of dollars of purchased paperclips have never been sent to the government, they can tell the government about that. When the government recovers, they can recover a reward with the government.

Unfortunately, it doesn’t happen easily. First off, the schemes are very complex, so one needs the paperwork, documentation, etc. Second, the government is very apt to listen to you, and then in the end if you are not properly secured in your claim, the government may not allow you to keep that claim and not give 15-30% of that money.

That’s why it’s necessary to have an qui tam attorney to represent them in going to the government. The people that they should hire for that job should be attorneys with governmental prosecutorial experience. You would want somebody who understands how the government works and to bring the case to them in a format they understand, in a significant organized fashion. In doing so, the person who gives them the claim, the professional name for that is "relator", the "relator" secures their claim so that they can then recover in the end.

It’s a long and arduous process. It can be risky for the "relator" They have to be willing to go out and do these things. But usually, if they have a really valid claim, it can be extremely lucrative.

At the present time politicians wonder “Why are we so hated?” They sit in total befuddlement about why they are “So poorly regarded.” Basically, politicians are about as loved and trusted as snakes, alligators, used car salesman and ambulance-chasing-low-rent lawyers. But then you get stuff like New York congressman Michael Grimm’s new bill that gives Wall Street and big corporations the right to rip off Americans and not have to worry about Whistleblowers any longer! Of course, the rest of the politicians are lining up to pass the bill because big business and Wall Street needs a little legal protection from being called out for ripping off America.

The Grimm Act, which is listed as House Bill 2483, is being called the “Whistleblower Improvement Act” and was written and created to take down the corporate whistleblower protections we finally have in the United States. It is basically a bill to stop Whistleblowing! America needs to read this bill and write their congressperson to stop being a corporate lackey and vote against the bill.

The bill creates a loophole in the two most important whistleblower laws to come out over the last 50 years. The first is the Dodd-Frank Act, which reformed Wall Street, and the second is the Sarbanes-Oxley Act, which reformed corporate America and their creative accounting departments and led to things like Enron and World Com!

The US Securities and Exchange Commission (SEC) is a busy agency. They cannot investigate every company in America. However, when they receive a tip or a report from an insider, they are able to quickly identify the wrongdoers and bring them to justice. The Grimm Act will undermine the SEC’s ability to take action on those tips.

Under the new law, the SEC would be required to put the wrongdoers on NOTICE and warn them that their company is a suspect. Do you think that may “tip them off,” so they cover their tracks? I DO! This is the same thing as telling the police to warn a drug dealer they are about to come over and arrest him and ask him to “not destroy the drugs and evidence”! Law enforcement cannot be effective in this environment, and the American people deserve better legislation than this corporate protectionist bill.

Don't Play with Qui Tam Matches without being familiar with the statute - You will get burned!

This week the United States District Court (USDA) Sixth Circuit (6th Cir.) confirmed that the Plaintiff was liable for filing frivolous Qui Tam Actions. In the case of Stalley v. Mt. States Health Alliance, 2011 U.S. App. LEXIS 13895, No. 10-5211/5212 (6th Cir. Jul. 8, 2011) the District Court for the Eastern District of Tennessee held that the Plaintiff had filed a frivolous Qui Tam action against the Defendant for failure to abide by the Medicare Secondary Payer Act (MSPA).

There is no actual authority to file a Qui Tam action for such a violation. However, on it's face, it would seem that breaching any portion of Medicare could straddle you Qui Tam liability. The court said no. To make matters worse, the court granted the Defendant sanctions against the Plaintiff in the amount of $276,589.00. Feeling confident that the MSPA should apply, the Plaintiff appealed.

UH OH! The USCA 6th said WE AGREE and AFFIRM the Sanctions. They also found that the sanctions should be held against plaintiff AND HIS COUNSEL!

The real lesson here is that an unfamiliar legal niche, such as Qui Tam, is a hard place to practice if you don't know the rules.

Jose Diaz, Lisandra Aguilera, and Estrella Rodriguez were all once employed by Metro Med of Hialeah Corp. The Metro Med clinic was allegedly a facility that helped HIV positive patients receive medically necessary infusions and injections. Many of these patients were Medicare beneficiaries. According to prosecutors, the fraudulent clinic charged for infusion therapies which were medically unnecessary or not provided at all.

In the operation of their fraudulent Medicare scheme, the group would provide kickbacks to patients who allowed them to use their Medicare number to fraudulently bill the system. In some instances the workers would falsify the blood test results, making it appear as if certain injections and infusions were medically necessary.

The scheme began in April of 2003, not long after the Metro Med clinic opened. The group continued its practice of Medicare fraud all the way up until October of 2005. Although they billed Medicare for an estimated $23 million, the group received only about $11.7 million in Medicare payments.

Diaz has been sentenced to 54 months in prison, while Aguilera received 70 months and Rodriguez received 57 months. Damaris Oliva, former owner of Metro Med, was previously sentenced to 82 months in prison for her role in the scheme. Dr. De Los Rios has been convicted of the conspiracy charges against him, and will be sentenced on June 27th for crimes.

If you are considering bringing a qui tam against a former employer, contact a Florida attorney to evaluate the strength of the complaint and protect your rights in the claim.

Inuka Rhaheed, former owner of First Premium Financial Services, was once,  one of the Treasure Coast’s finest. As a former detective with the Fort Pierce Police Department, Rhaheed enjoyed a respected standing within his community. It’s easy to see why. People tend to trust law enforcement officers and former law enforcement officers.  Law enforcement officers are typically, honorable citizens with integrity that uphold the law, not bend it, like Rhaheed.

Clients who trusted Rhaheed, his partner, Jacqueline, and First Premium employee Wilens Bertrand, to lawfully prepare and file their taxes were got more than they bargained for. First Premium drew a sizable clientele, many being law enforcement officers. Since Rhaheed, was a former detective, it was assumed that he had integrity and was ethical in his tax preparation services.

During the trial expert testimony estimated that the U.S. government lost as much as $500,000 through the fraudulent activities of Rhaheed. He now faces a maximum of 11 years in prison. His wife may serve up to 5 years, while Bertrand may be jailed for as many as 8 years.

This is one instance in which crime most certainly does not pay. Rhaheed and his accomplices have forever tarnished their reputations and will likely never be able to recover their standing in the community, even after serving their prison terms.

If it seems too good to be true, it usually is not true or ethical. Don't get caught up in tax fraud or other scams, if you can avoid them.  Report tax fraud and other fraudulent activities against the government.

Click on the following link to read more on

Former Detective and Tax Preparer Convicted of Tax Fraud in Florida

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.

In 2010,  UCB made $3.2 Billion in Revenue, therefore, it is easy to see why after preliminary court proceedings, they agreed to settle the False Claims Act violations for a reported $34.4 million dollars. The head of the North American Operations for UCB, Greg Duncan, stated the following:

We are pleased to have resolved this matter and look forward to continuing to work with the many organizations with whom we partner to advance our mission of transforming the lives of people living with severe diseases."

This qui tam settlement includes reimbursements, payments to Medicare, Medicaid, and other government agencies and programs. A large portion of the False Claims Act settlement will be used to compensate plaintiffs in civil cases against UCB.

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

“Patients have a right to know that the drugs they are prescribed have been approved by the FDA as safe and effective for a particular use. Off-label promotion of pharmaceuticals undermines the FDA’s important role in protecting the public and is a drain on taxpayer dollars.”

In the False Claims Act settlement, UCB also agreed to participate in a corporate integrity agreement, with a five year time line during which the company will cooperate closely with federal investigators to ensure no further lapses in false advertising.

The settlement is another step toward monitoring the booming pharmaceutical industry. Consumers should take note of the settlement as a reminder to be aware of all prescriptions.

If a whistleblower has knowledge of a company's fraudulent activities regarding the defrauding the government, they should report the fraud immediately.  Seeking the assistance of a qualified and experienced qui tam attorney is essential in protecting the rights of the relator. This serves to help protect the relator's reward which can be anywhere from 15% to 30%, depending upon whether the government intervenes in the qui tam complaint.

Click on the following link for more information on:

UCB to pay $34.4 mlm over illegal drug promotion - Reuters

UCB Pays $34M To Resolve Off-Label Charges - Pharmalot

U.S. Subsidiary of Belgian Pharmaceutical Manufacturer Pleads Guilty to Off-Label Promotion; Company to Pay More Than $34 Million - DOJ

Smyrna drug maker settles fraud claims - AJC

The title caught me by surprise, but I was amazed at the ruling in Cafasso v. General Dynamics C4 Systems, Inc., Case Nos. 09-16181/09-16607 (9th Cir. Mar. 24, 2011).

According to the post, the  Ninth Circuit affirmed a $300,000 fee award against a qui tam plaintiff who lost a contract claim and had a history of litigation abuse throughout the case.  Wow.. Yes, you read it correctly, the Plaintiff was charged for bringing the litigation against the defendant, General Dynamics C4 Systems, Inc. 

I encourage you to read the entire blog post and the complaint, it is startling that this would happen. 

"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.)

The Court's decision -- which also drew the first dissenting opinion by Justice Sonia Sotomayor -- said the act's public disclosure bar was not limited to federal sources of information.

Click on the following link to read more on the Justices Limit Qui Tam Cases but New Health Care Law Does Opposite - National Law Journal

Attorney LaBovick will cover Qui tam - False Claims Act issues and verdicts along with other breaking legal news that affect consumer rights.

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