Class 10 – Qui Tam Actions

False Claims Act (“FCA”) is considered at heart of federal government’s Medicare fraud and abuse effort because of triple damages involved

The False Claims Act (“FCA”) allows for private individuals to sue on behalf of the government. These cases are known as Qui tam actions. These type of cases are commonly known as whistle-blower cases. Typically, whistle-blower cases are brought by disgruntled employees, or in divorce proceedings by a disgruntled spouse.

Qui Tam Cases

  • False Claims Act (“FCA”) allows for private individuals to sue on behalf of government – These cases are known as Qui tam actions – commonly known as whistle-blower cases.
  • Typically, whistle-blower cases are brought by disgruntled employees, or in divorce proceedings by a disgruntled spouse.

These whistle-blower type of actions are typically under seal, which means from the doctor’s perspective, you may not even know these actions are pending. If the government wins the case, the whistle-blower can make a substantial amount of money because they would receive a portion of the government’s recovery.

For example, if the government prevails, it is awarded treble damages plus up to $10,000 for each false claim submitted. The qui tam plaintiff is awarded a percentage of this recovery plus legal fees and expenses.

What this Act also means to you is that if you see fraud and abuse and take it to the government, you might win a substantial amount of money.  However, stay abreast of the laws, because new laws are pending and some have passed dealing with the whistleblower bringing wrong actions.

The government can spot an over-billing problem at one hospital that violates the False Claims Act and apply that template to many other hospitals. Because of the treble damages aspect of the False Claims Act and fines of $5,000 to $10,000 per incident, it is pretty easy for a company to face several million dollars in civil penalties.

The fastest growing source of health care fraud cases in the 1990’s were qui tam actions. The DOJ has reported a sharp increase in the number of health care related qui tam actions in recent years. According to DOJ statistics, in 1992 about 12 percent of qui tam cases involved allegations of health-care fraud and the percentage increased to 55 percent for the year ending September 30, 1996.  In 1997, the DOJ recovered $625 million from 530 qui tam action settlements and over 50% of those cases were for health care fraud.

The SmithKline Beecham Settlement is reported by the DOJ to be the largest health care related settlement involving whistle-blowers, as of 1998. In this settlement reached in February, 1998, three whistle-blowers will share $52 million for their part in tipping off the government in the Medicare fraud investigation of SmithKline Beecham Clinical Laboratories. In its settlement with the government, SmithKline Beecham agreed to pay more than $325 million to resolve allegations of billing fraud initially brought by the lab’s former billing supervisor in a qui tam action.  Other large settlements include $324 million settlement in 1994 with National Medical Enterprises and $161 million settlement in 1995 with Caremark.

The federal government has set up a 1 – 800 # for reporting Medicare fraud and so have several states. There is even an attorney who set up a 1 – 800 # for potential whistle-blower lawsuits.  These healthcare fraud cases tend to settle out of court because health care companies cannot risk the enormous fines if they lose in court.