Qui Tam Actions Under the False Claims Act by rsg18606


									Reprinted from   Medical Journal-Houston                                             , July 2003


Qui Tam Actions Under the False Claims Act
Whistleblowers as Soldiers of Fortune in Uncle Sam’s War Against
Healthcare Fraud.

An      assortment       of     pharmaceutical    damages that the government sustains as a
                 companies, managed care          result of the violation.
                 organizations,        hospital
                 chains,     long-term    care    Understanding Qui Tam
                 facilities, and individual
                 physicians all have at least     The qui tam provisions of the False Claims
                 one thing in common. All         Act permit private citizens to pursue actions
                 have recently been the           for fraudulent claims in the name of the
subject of highly publicized qui tam actions      federal government. Almost anyone can
brought by whistleblowers under federal           instigate a qui tam action, including current
and/or state false claims acts.                   and former employees of the entity allegedly
                                                  defrauding the government, competitors, and
The Federal False Claims Act                      private citizens.     Legally, these private
                                                  citizens are known as relators, but are more
As the name of the act suggests, the federal      commonly referred to as whistleblowers. In
False Claims Act targets false claims. In         exchange for bringing the fraudulent claims
general, the act prohibits persons (including     to light and for pursuing the qui tam action,
but not limited to healthcare providers) from     if the action is successful whistleblowers can
knowingly presenting or causing to be             recover up to 30 percent of the proceeds, in
presented to an officer or employee of the        addition to reasonable attorney’s fees and
United States government a false or               costs. In just the past few years alone,
fraudulent claim for payment or approval.         hundreds of millions of dollars in “bounties”
In addition, the act prohibits knowingly          have been recovered by whistleblowers.
making, using, or causing to be made or
used a false record or statement to get a false   Procedurally, qui tam actions are filed under
or fraudulent claim paid or approved by the       seal and are not immediately served on the
government. Fraudulent claims presented to        alleged wrongdoers in order to provide the
government contractors or in connection           government with an opportunity to
with governmental programs can also give          investigate the alleged fraud. In addition,
rise to liability under the act.                  the government has an opportunity to decide
                                                  whether or not the government wants to
Violation of the act subjects the responsible     intervene in the action and assist in the
party to a civil penalty of not less than         prosecution of the claims being asserted
$5,000.00 and not more than $10,000.00 per        against the alleged wrongdoers.
violation, plus three (3) times the amount of
Qui Tam Actions in the Healthcare Field               Protecting Against Whistleblowers

In terms of qui tam cases currently on file,          From the perspective of the healthcare
healthcare fraud is far and away the leader.          provider, the most important prophylactic

           “Almost anyone can instigate a qui tam action,
        including current and former employees of the entity
         allegedly defrauding the government, competitors,
                        and private citizens.”

At present, approximately 60% of all qui              for guarding against qui tam actions brought
tam cases filed involve alleged healthcare            under the False Claims Act continues to be
fraud. Among others, durable equipment                the implementation of a comprehensive and
suppliers, physician groups, hospital chains,         effective compliance program.
nursing home chains, managed care
organizations, pharmaceutical companies,              Protection of Whistleblowers
laboratories, and home health agencies have
all been the subject of qui tam actions.              From the perspective of the employees who
Some examples of the type of conduct that             come forward to disclose fraud, the federal
can be involved include the following:                False Claims Act includes provisions that
                                                      protect those employees who investigate,
    •    Providers upcoding, unbundling,              testify, initiate or assist in a qui tam action
         double billing, or submitting claims         from any threats, harassment, demotion, or
         resulting from referrals in violation        wrongful termination.
         of the Medicare anti-kickback
         statute (i.e., illegal remuneration) or      State False Claims Acts
         in violation of the Stark laws
         proscribing         nonexempt        self-   Following the lead of the federal
         referrals;                                   government, several states (some running
    •    Drug       manufacturers       falsifying    significant deficits and in desperate need of
         information        to     obtain    FDA      money) have enacted false claims acts
         approval;                                    containing qui tam provisions. Given the
    •    Physicians         falsely     certifying    current budget constraints being experienced
         medical necessity, billing for               by both federal and state governments, one
         services not performed, or utilizing         thing seems certain—Whistleblowers likely
         incorrect diagnosis codes; and               will continue to play a significant role in the
    •    Managed          care      organizations     ongoing fight against healthcare fraud in the
         improperly refusing to authorize or          years to come.▼
         pay for care, or intentionally
         misrepresenting information used to          Mr. Gumbert is co-owner of the law firm of
         calculate capitated fee rates.               Hollaway & Gumbert in Houston, Texas.
                                                      He can be reached by telephone at
                                                      713.942.7900,    or    by     email     at

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