Healthcare Fraud Unsealed: Recently-Unsealed Whistleblower Lawsuits Show Variety of Fraudulent Medical Claims

Under the terms of the False Claims Act, an original whistleblower complaint must be filed confidentially under seal within a federal district court. From there, the Department of Justice receives notice of the lawsuit and is afforded an opportunity to investigate the allegations on its own. In about 20 percent of the cases, the DOJ opts to intervene in the lawsuit and will file its own Complaint in Intervention. However, even if the DOJ opts not to intervene, the court will unseal the lawsuit and allow the defendant the opportunity to review the allegations and file its own response in the matter.

Today and tomorrow, we’ll examine some of these recently unsealed qui tam lawsuits. In the September Health Care Qui Tam Update by the National Law Review, 39 recently unsealed cases were surveyed. Many involve allegations of wasteful, costly, and, in some cases, extremely dangerous healthcare fraud. Of these cases, the following trends and statistics were revealed:

• The government opted to fully intervene in five of the 39 cases – or approximately 13 percent;
• Twenty-one cases involved state-level False Claims Act allegations, and two cases involved municipal-level False Claims Act allegations (e.g., New York City and Chicago false claims);
• Eight cases alleged wrongful retaliation;
• The majority of relators are former employees of the defendant. In some cases, however, the relators are employees of the defendant’s competitors;
• Alarmingly, many of the cases involve exposing patients to untrained or unqualified staff members, as well as medically unnecessary procedures and surgeries.

According to the government’s H.E.A.T. Task Force—which targets fraud in the healthcare industry— healthcare misconduct costs taxpayers tens of billions of dollars annually. Unsealed cases such as the one below, and the two we’ll look at tomorrow, provide essential information to help government entities like H.E.A.T. combat a future of medical fraud and protect the public.

United States of America and State of New York ex rel. Jamie Cantor v. Option Care, Inc.

This case was filed in August 2009 and intervened in by the state of New York. The relator worked as a former sales representative for the defendant company, Option Care, Inc. The defendant, which is in the business of home health services, pharmaceutical distribution, and skilled nursing, is alleged to have ordered excessive medication for patients in order to increase reimbursements from Medicaid and Medicare. In addition, the company provided these medications without the proper documentation and allowed patients to receive medication for which they did not sign a receipt.

Unlike many of the other unsealed cases, this case has already reached a settlement agreement. Specifically, the defendant agreed to pay $2.55 million to the State of New York, as well as $459,191 to the relator under the state False Claims Act’s qui tam provisions.

This case is highlighted as an indication that a state may opt to intervene even where the federal government decides not to—and a relator can still be successful in a state-level false claims lawsuit.

Moreover, healthcare employees considering a similar allegation against their employer should be encouraged by this and several other recent settlements, as the government maintains its dedication to eliminating the unrelenting drain on government healthcare programs caused by fraud and abuse.

Contact Berger Montague today

If you are aware of healthcare fraud and would like to discuss your information with a reputable whistleblower, please do not hesitate to contact Berger Montague today.