We are happy to announce that President Obama signed the Fraud Enforcement And Recovery Act of 2009 yesterday. The House and Senate passed the bill with overwhelming majorities and the bill presented to the President included the best of the House and Senate versions. The new law makes much needed improvements to the False Claims Act. It is good to see Both Houses of Congress and the President have taken the very kind of action we have been advocating for years.Continue Reading...
Yesterday, I blogged about a pending multi-million dollar False Claims Act (FCA) lawsuit agains Pharm giant Wyeth. Today's news brings another example of how the FCA can be used to bring gross misconduct to light. This case, involving a western Pennsylvania psychiatric institution has settled for far less money than many of the more highly publicized FCA cases, but the shocking allegations are what really caught my attention.
The whistleblower in this case, Dr. Stefan Kruszewski, was a psychiatrist reviewing records of the Southwood Psychiatric Hospital. Southwood is a private facility that houses over 100 juvenile boys who are wards of the state. For the care of these kids, Southwood is paid through state and federal contracts. Dr. Kruszewski reported that Southwood, in order to inflate their government payments, "...held juveniles who did not require hospitalization, prescribed and administered unnecessary medication to increase government reimbursements, and billed the government for care that was not provided." (Pittsburgh Tribune Review)
The Department of Justice has settled this lawsuit and Southwood is paying $150,000 and is being forced to make necessary changes to raise its standard of care and clean up its act. Under the settlement, Southwood is not admitting any wrongdoing, but it is unthinkable that a hospital would take advantage of, indeed abuse, vulnerable young children in order to make a quick buck off of the taxpayers. The story also shows how valuable the False Claims Act can be in bringing to light all kinds of misconduct when government money is involved. Congress should continue to work to pass current legislation which is designed to strengthen the FCA.
The United States Government, along with the governments of 15 states and the District of Columbia, have joined with two whistleblowers who allege that drug manufacturer Wyeth bilked US taxpayers out of hundreds of millions of dollars. As reported in the Wall Street Journal and the FierceHealthcare website, Wyeth is accused of overcharging Medicare and Medicaid programs nationwide for purchases of it's acid-reflux drug Protonix. Under federal law, drug companies are required to offer prescriptions to federal aid programs at the lowest possible price. Wyeth, however, the suit alleges, was offering Protonix at a 90% discount to private hospitals, while charging the federal government much higher rates.
The lawsuit was filed under the False Claims Act, which has its roots in the civil war era, and remains the United States' most powerful tool for rooting out fraudulent government contracts. President Obama's administration has recently expressed its support for strengthening the law, and legislation to do so is currently pending in Congress.