False Claims-Qui Tam News

One company gave dementia patients drugs they didn’t need. A company working in the Middle East billed the Air Force for hours no one worked. Opioid makers treated loyal doctors to kickbacks in the form of “lavish meals and entertainment.”

Those are just a few of misdeeds catalogued in the Department of Justice annual report on False Claim Act cases. Whistleblowers helped the government collect $3 billion in fines and recoveries in fiscal year 2019, up from $2.8 billion in 2018.

Medicare and Medicaid were big targets for fraudsters this year, as they have been in years past, according to the annual report from the Department of Justice. The list also includes military contractors, universities and a fish oil producer. Read the full list here.

From the report:

Of the $3 billion in settlements and judgments reported by the government in fiscal year 2019, over $2.1 billion arose from lawsuits filed under the qui tam provisions of the False Claims Act.  During the same period, the government paid out $265 million to the individuals who exposed fraud and false claims by filing these actions.

“Whistleblowers continue to play a critical role identifying new and evolving fraud schemes that might otherwise remain undetected,” said Assistant Attorney General Hunt.  “Taxpayers have benefitted greatly from these individuals who are often required to make substantial sacrifices to bring these schemes to light.”


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Much of what we accept as legal in medical billing would be regarded as fraud in any other sector.

I have been circling around this conclusion for the past five years, as I’ve listened to patients’ stories while covering health care as a journalist and author. Now, after a summer of firsthand experience — my husband was in a bike crash in July — it’s time to call out this fact head-on. Many of the Democratic candidates are talking about practical fixes for our high-priced health care system, and some legislated or regulated solutions to the maddening world of medical billing would be welcome.

My husband, Andrej, flew over his bicycle’s handlebars when he hit a pothole at high speed on a Sunday ride in Washington. He was unconscious and lying on the pavement when I caught up with him minutes later. The result: six broken ribs, a collapsed lung, a broken finger, a broken collarbone and a broken shoulder blade.

The treatment he got via paramedics and in the emergency room and intensive care unit were great. The troubles began, as I knew they would, when the bills started arriving.

I will not even complain here about some of the crazy-high charges: $182 for a basic blood test, $9,289 for two days in a room in intensive care, $20 for a pill that costs pennies at a pharmacy. We have great insurance, which negotiates these rates down. And at least Andrej got and benefited from those services.

What I’m talking about here were the bills for things that simply didn’t happen, or only kind-of, sort-of happened, or were mislabeled as things they were not or were so nebulously defined that I couldn’t figure out what we might be paying for.


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Whistleblowing is good for our health. Not necessarily the whistleblower’s health. But, while we’ve been watching the battle over whistleblower protection in Washington, insiders have been busy flagging health fraud.

As a result, there are patients out there who may have been spared unnecessary spine surgery or viscosupplementation injections. As a bonus, the rest of us won’t have to pay for them through Medicare.

In its October announcement of a $7.1 million settlement with the now defunct Osteo Relief Institutes, the Department of Justice (DOJ) describes viscosupplementation as a treatment for osteoarthritis “in which a doctor injects a gel-like fluid into a patient’s knee joint to act as a lubricant and to supplement the natural properties of joint fluid.”

But the clinic didn’t quite get it right, according to the DOJ.


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Harvard Law School professor Terri Gerstein writes that the case of the IC whistleblower is strangely familiar to her.

A worker learns of brazen violations of law and feels compelled to speak up. The boss and his buddies go bananas, demanding to know the worker’s identity, making veiled or explicit threats, disparaging the worker’s credibility…

Terri Gerstein

Gerstein is director of the State and Local Enforcement Project at the Harvard Law School Labor and Worklife Program. Writing in The American Prospect, she describes what she’s seen in her years of enforcing workplace laws: A fast food is worker fired after reporting a gas leak to the fire department. An airport skycap reported fired the day after appearing at a press conference about minimum wage violation. Countless examples of workers being pressured to stay quiet about sexual harassment.

These examples point to the need for better protections for workers who report serious illegality. The focus on these high-profile whistleblowers should be a catalyst for strengthening whistleblower laws in general, which are currently a patchwork.

Protections vary from statute to statute and from state to state. Ideally, these laws would include strong protection against retaliation; confidentiality; standing for whistleblowers to bring their own lawsuits; and finally, incentives for coming forward. These goals are not unrealistic; the False Claims Act, for example, allows people reporting fraud against the government to file their own lawsuits. The Securities and Exchange Commission and the Internal Revenue Service have paid millions of dollars to whistleblowers who have provided original information leading to successful enforcement actions.
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Sen. Chuck Grassley believes the Department of Justice has moved to dismiss false claims cases without considering the merits or conducting cost-benefit analyses.

In a September 4 letter to Attorney General William Barr, Grassley writes that he is concerned about the DOJ’s “efforts to dismiss greater numbers of qui tam  (false claims) cases for reasons that appear primarily unrelated to the merits of individual cases. Those efforts rely at least in part on vague and at times questionable concerns over prerogatives or limited government resources to handle the cases.”

The Iowa Republican notes that such actions “could undermine the purpose of the False Claims Act by discouraging whistleblowers and dismissing potentially serious fraud on the taxpayers.”

Grassley and others have raised concerns about the increase in the DOJ’s motions dismiss cases brought on the government’s behalf. The change follows the emergence of the 2018 Granston memo, which recommended government dismissal of whistleblower cases that were costly or lacked merit.
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The AARP calls Medicare’s coverage of medical devices “a boon to beneficiaries but also a big draw for fraudsters, who exploit older Americans’ health care concerns to enrich themselves.” This week’s Modern Healthcare offers a piece that argues a recent False Claims Act case involving medical device kickbacks to doctors “illustrates an increasingly tenuous arrangement that may spur more whistleblower cases.” The piece also appeared Crain’s Chicago Business. 

The story refers to a July case where  the FBI, the Department of Health and Services and the Department of Justice joined in the whistleblower suit against spinal implant company called Life Spine. The feds charge that the company paid doctors to use their devices. The kickbacks included “millions of dollars of consulting fees, royalties, and intellectual property.”

In a release on the case, Manhattan U.S. Attorney Geoffrey S. Berman said: “Kickbacks to doctors can alter or compromise their judgment about the medical care and services to provide to patients,and can increase healthcare costs. This office will continue to hold companies and the people who run them accountable when they make improper payments to doctors.”

Life Spine tells Modern Healthcare in a statement “that both parties are engaged in discussions and look forward to resolving the matter.”


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Whistleblowers are playing a key role in revealing Medicare kickback schemes disguised as so-called patient assistance programs. In April, five separate pharmaceutical companies paid a total of $247 million for running such programs. This week, a new qui tam suit was unsealed.

Kaiser Health News offers a round up on the case:

The American Kidney Fund is supposed to help patients pay for health insurance premiums and other costs for treatment based solely on a patient’s financial need, and not favor companies that donate to it. But a new whistleblower lawsuit claims the charity created a so-called blocked list of dialysis clinics whose patients would not get financial assistance while it made sure patients at clinics operated by DaVita and Fresenius would.

The story notes that the Department of Justice declined to join the case. The lawsuit makes many of the same claims outlined in a 2016 New York Times series. Here’s what the Times reports on the new developments:

The lawsuit, filed by David Gonzalez, who worked for 12 years at the kidney fund in its patient assistance program until he left in 2015, accused the charity of creating a so-called blocked list of dialysis clinics whose patients would not get financial assistance while making sure patients at clinics operated by DaVita and Fresenius would…
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Medicare and Medicaid are the deep pockets of the federal budget, paying out nearly $1 trillion in 2018. So, it’s no wonder the programs are targets for fraudsters. Some steal from the sick. Some steal money meant to soothe the dying.

So, a new Department of Health and Human Services report on poor quality hospice care is a reminder: Whistleblowers, who have helped expose hospice billing fraud under the False Claims Act, may also have a role in ensuring quality care. It is essential to protect the False Claims Act to target cases of Medicaid or Medicare fraud.

Increasingly, billing for substandard care is considered a form of fraud, attorney Nina Zhang wrote on the American Bar Association website in March.

The False Claims Act (FCA) has emerged, for better or for worse, as a quality enforcement tool. With quality of care as an ever-moving target by the federal government (with the constant development of new quality measures), the FCA has faced its share of criticism as too blunt of an instrument to regulate quality of healthcare, a matter that many argue is better left to the states under their police power…However, it can be argued that since the federal government is the biggest buyer of healthcare, it thus has a stake in how its monies are used.”

Whistleblower hospice cases generally involve care that was not needed or never delivered. In June, a Los Angeles doctor was charged in a $33 million fraud scheme that involved hospice care. Last year, a nurse blew the whistle on a for-profit hospital chain. Caris Healthcare agreed to repay $8 million for submitting hospice bills for patients who were ineligible for the because they were not terminally ill. Sometimes billing and quality of care are intertwined. In a 2018 Texas case, a doctor told an informant that the way you make money on hospice patients “is by keeping them alive as long as possible.”


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The Department of Justice announced last week that Encompass Health Corporation, formerly known as HealthSouth Corporation, has agreed to pay $48 million to resolve allegations that it was enrolling patients in its program and charging Medicare whether they would benefit from rehab or not. The DOJ called the company nation’s largest operator of inpatient rehabilitation facilities.

The qui tam cases were brought by a former company physician in Florida, the head of therapy at a Texas facility and the medical director at a Virginia hospital.

From the DOJ press release:

The government alleged that beginning in 2007, in order to ensure compliance with Medicare’s rules regarding classification as an (inpatient rehabilitation facility) IRF, and to increase Medicare reimbursement, some Encompass IRFs falsely diagnosed patients with what they referred to as “disuse myopathy” when there was no clinical evidence for this diagnosis. Additionally, Encompass IRFs allegedly admitted patients who were not eligible for admission to an IRF because they were too sick or disabled to participate in or benefit from intensive inpatient therapy.


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Citizens and activists can help stop environmental crime, but they need to know which laws apply, how to collect evidence and when to get a lawyer.

Different approaches to the role of citizens in collecting and reporting evidence of environmental crime were discussed last week by a three panelists at the Environmental Law Institute in Washington, DC.

In many cases, there is no meaningful law enforcement to stop environmental crimes. That’s where citizens can come in.

By understanding how to collect evidence and navigate whistleblower programs, anyone can help enforce environmental laws. Anyone includes, NGO staff, those impacted by crime or insiders, such as cruise ship crews.

John Kostyack, director of National Whistleblower Center, talked about a range of existing federal laws with provisions that reward citizens who come forward with credible information about environmental crime.  Shaun Goho of the environmental law clinic at Harvard Law School talked about how the courts are likely to interpret evidence and expert testimony. Stevie Lewis of the Public Laboratory for Open Technology and Science said the EPA has been slow to act on the recommendations in a 2016 report on promoting citizen science. But, her group hasn’t.

Kostyack started his talk with a slide of a small, endangered porpoise known as the vaquita, according to a video of the event.

“It’s really a fitting symbol of what we’re up against,” he said. “The forces that are driving this beautiful animal to extinction in its home in the Gulf of California are the same forces that are driving much of the environmental devastation around the world and those are the forces of crime.”


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