Reprinted from Medical Journal-Houston , July 2003 LEGAL AFFAIRS Qui Tam Actions Under the False Claims Act Whistleblowers as Soldiers of Fortune in Uncle Sam’s War Against Healthcare Fraud. BY JAMES G. GUMBERT, ESQ. 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 firstname.lastname@example.org.
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