The False Claims Act has proven extremely successful in combating wasteful healthcare fraud. In fact, fiscal year 2014 proved so far to be the most lucrative year in terms of healthcare fraud settlements and verdicts. To trigger possible liability under the False Claims Act, a whistleblower must allege that certain state or federal regulations were violated by a government contractor, followed by submissions of invoices or claims for reimbursement. Hallmarks of healthcare fraud include violations of Medicare and Medicaid regulations including sub-standard care, overbilling for medically unnecessary procedures, or submitting claims for reimbursement for procedures that never occurred.
UPDATE: Federal Court Dismisses Six Affirmative Defenses in Lance Armstrong False Claims Act Lawsuit
The federal False Claims Act can apply to just about any act of fraud involving taxpayer dollars, including the systematic abuse of government funds at the hands of a wayward cycling team – headed by none other than the disgraced former Tour de France champion Lance Armstrong. In 2013, a former teammate of Armstrong’s initiated a whistleblower lawsuit under the False Claims Act, alleging the cyclists intentionally submitted false claims for reimbursement to the government for purposes of funding his U.S. Postal Service racing team despite consistently utilizing banned performance enhancing drugs. This was a clear violation of not only the rules of cycling, but also of the agreement between Armstrong and the federal government for the provision of the funds.
When it comes to False Claims Act lawsuits, there are a number of confidentiality protections in place that are not generally required in a typical civil lawsuit. For instance, relators are required to file their lawsuit under seal and keep the details of the claims confidential until the defendant has been served or the lawsuit is dismissed. Likewise, the government must maintain strict confidentiality when implementing its initial investigation into the matter, primarily to avoid tipping off the defendant before an investigation begins in earnest.
In a recent False Claims Act settlement, California contractors Arbon and its subsidiary Rite-Hite have agreed to pay $4 million to settle claims of unlawful wage practices involving its employees. Under the False Claims Act, it is considered a violation for a contractor to breach the terms of its agreement with the government and thereafter submit claims for reimbursement. If this occurs, anyone with original knowledge of the scheme can commence a whistleblower lawsuit, which not only exposes the fraud but can result in a sizable reward for the whistleblower relator.
The Medicaid program is a need-based health insurance program run by the federal and state governments. In most instances, the federal government matches state funding dollar-for-dollar. However, states generally have latitude in determining the type, extent and frequency of services covered. In Illinois, certain medical transport services (aside from emergency ambulance or air transport) may be covered for eligible Medicaid enrollees, provided certain criteria are met and the situation makes it medically necessary for the patient to receive medical transport. However, as today’s case reveals, transport companies often skirt various federal regulations in an effort to increase profits and maximize billing, which will quickly trigger False Claims Act liability under both state and federal laws.
In yet another healthcare fraud settlement, Tennessee-based Ageless Men’s Health has been targeted by the Department of Health and Human Services, as well as the Department of Justice, for fraudulently billing Medicare and TRICARE for medically unnecessary male hormone therapy services.
When it comes to unlawful billing practices settled under the False Claims Act, nursing homes and long-term care facilities are frequently implicated in fraudulent misconduct with regard to the various services they offer to residents. In today’s case, the federal government recently reached a settlement with Kentucky-based Associates in Eye Care following an investigation that revealed the provision of medically unnecessary services to various long-term care patients across the state.
Medtronic, Inc. – a company familiar with false claims allegations – has agreed to pay $2.8 million to settle claims it unlawfully induced physicians and medical practitioners to use its spinal neuromodulation devices to treat conditions not considered by the FDA when the product was granted approval. This dangerous and risky practice is known as off-label marketing and is frequent fodder for False Claims Act liability.
Medical device manufacturer EV3, an owner of the subsidiary Covidien, Inc., has agreed to pay $1.25 million to settle a False Claims Act lawsuit brought about following allegations it intentionally offered fraudulent billing advice to hospitals with regard to the use of its atherectomy products. The case was settled after a lengthy investigation, which was commenced upon the filing of a whistleblower lawsuit by a former sales representative for the company prior to its recent merger. For her troubles, the whistleblower is set to receive 20 percent of the settlement amount, or $250,000.
One of the world’s largest manufacturers of eco-friendly reusable shopping bags has settled claims it unlawfully evaded customs payments by using a complex invoicing scheme designed to intentionally defraud the government out of money. Following a whistleblower lawsuit filed by a former executive with Green Bag Co., Inc., investigators from the U.S. Attorney’s Office for the Northern District of California and the DHS Office of Inspector General revealed that the company had engaged in potentially unlawful customs avoidance activity and eventually settled the matter. Green Bag, Inc. did not admit any liability or wrongdoing on its part and the relator received $100,000 for his willingness to come forward with the allegations of fraud.