Whistleblowers, Fraud, & the False Claims Act
Our law firm represents whistleblowers who report harmful and illegal activity that they witness at their place of work. Whistleblowers bring unethical actions to light that would otherwise go unnoticed. This article focuses on allegations of fraud, but we are interested in hearing from all sorts of whistleblowers, particularly in the health care industry.
If you want to sound the alarm on unethical activities, legal representation can offer you protection and can even help you get compensation for yourself and others. To discuss your False Claims Act case with our experienced lawyers at no charge, call us at (800) 553-8082 or go online.
What is the False Claims Act?
Few people know that there are federal and Maryland state laws known as “False Claims Acts” with “qui tam” provisions that allow private individuals to make their own claim for money damages when they report fraud that was committed against the federal or state government.
The False Claims Act (FCA) is among the principal ways in which the government finds out and punishes those who have committed fraud against the state. It is a “qui tam” law, which means that people who are not a part of the government bring legal actions on behalf of the government. These people are called “relators” or “whistleblowers.” As a financial incentive, the plaintiff-relator in turn receives 15-30% of the damages that are recovered in the lawsuit and is also compensated for their legal fees and other expenses.
The people who committed the fraud have to pay the government a fine plus up to three times the value that they took. For reference, the US Department of Justice recovered over $3 billion from False Claims Act cases in 2019 alone.
Who can File Under the False Claims Act?
Any citizen can bring a qui tam action under the False Claims Act. They must, however, be the original source of information. Hearsay is not enough to file a qui tam claim. Typically, fraud is uncovered by employees while on-the-job.
When you accuse someone of fraud under the False Claims Act, you are initiating a civil action, not a criminal one. Only government prosecutors can bring a criminal action.
Does the Law Protect Whistleblowers from Retaliation?
Qui tam whistleblowers are protected from retaliation by their employers under both state and United States federal law. Additionally, there are previsions that keep information under wraps for 60 days or more while a government investigation is made.
In the event that your employer retaliates, good legal counsel can protect you. In fact, you may be entitled to additional compensation if your employer retaliates, including back pay. If you were fired, you have the legal right to be reinstated to your previous position.
The Federal False Claims Act
According to 31 U.S. Code § 3729. False claims, any person who commits fraud against the government is subject to a fine of $5,500-$11,000 for each false claim, plus three times the amount of damages that said person caused to the United States government. Since there is a separate fee for each fraudulent bill, this amount can quickly add up.
False claims are defined as knowingly presenting a false or fraudulent claim for approval. It is likewise illegal to fail to deliver all the money in your possession or control that was to be used by the government. Buying public property from someone who is not authorized to sell it is also not allowed. The law also states that it is illegal to make a false record, statement, or receipt about government money, or to conspire to do any of these things.
The federal False Claims Act is over 150 years old. It was passed during the Civil War by President Lincoln due to unprecedented fraud against the Union army from private contractors. In 1986, Congress decided to amend the False Claims Act to include a qui tam provision in order to incentivize private citizens to report fraud.
Over time, the government increased the fine for each false claim from $2,000 to up to $11,000. The requirement that offenders must pay back double the damages was increased to triple the damages (treble damages).
Additionally, the reward for reporting false claims has increased to 15%-25% plus reasonable attorney’s fees when the government intervenes, and 22% to 30% when the government chooses not to participate. The qui tam relator can object to the action if they choose, and the government must dismiss the action.
In 2009, the False Claims Act was amended again, this time expanding liability. Originally, the law was largely limited to military and federal employees. This has been a game-changer for health care fraud.
The False Claims Act is the oldest whistleblowing statute. Today, there are also state versions of the False Claims Act as well as opportunities entirely separate from the FCA to report to the Securities Exchange Commission (SEC) and the IRS.
The Maryland False Claims Act
The Maryland General Assembly passed the Maryland False Health Claims Act in April of 2010. The law places special emphasis health care fraud. The Maryland FHCA is codified in § 2-601-611 of the Health and Mental Hygiene section of the Maryland Annotated Code. The broader Maryland False Claims Act—Maryland Code Ann. Health Gen. Prov. §8–101 et seq—was enacted in 2015.
The Maryland FCA law is similar to the federal law in most respects. A difference is that if the Maryland government decides not to intervene, the case is dismissed. In the federal law, a whistleblower can still pursue the action in court even if the government does not intervene.
The statute of limitations for any claim brought under this law is 6 years from the date of the violation or 3 years after the date when material facts were known or reasonably should have been known. In any case, the claim must be filed within 10 years after the date when the violation was committed.
Who Are Typical Defendants in Whistleblower Cases?
Historically, those accused of fraud have been military and federal employees, government officials, and government contractors. Some examples include fraud pertaining to federal student loans, the U.S. Postal Service, federal insurance, defense contractors, U.S. customs, and government construction. In 2009, the law was amended, and anybody who tries to unjustly obtain funds from the government is now liable under the False Claims Act. These days, the health care industry is one of the largest sectors that goes to court for fraud.
Health Care Fraud in Maryland
In Maryland, an emphasis has been placed on health care fraud. Nursing homes are a common target of qui tam actions due to Medicare and Medicaid fraud. Pharmaceutical companies are another common defendant in FCA suits. Health care fraud amounts to tens of billions of dollars a year.
How do health care providers fraud the government? Some common ways include writing bills for services that were not provided, falsifying records and reports, using unnecessary drugs and medical devices, and bribery. This is somewhat easy to get away with due to the complexity of medical jargon—the untrained eye is completely unaware that anything unusual has been recorded.
With health care providers more interested in money than in patient safety, it is easy to see how the issue of health care fraud is intimately tied to the issue of medical malpractice. In fact, researchers at Johns Hopkins University in Baltimore found that Medicare beneficiaries treated by perpetrators of health care fraud and abuse had a 13% to 23% higher mortality rate than those treated by non-perpetrators.
False Claims Act FAQs:
- Is there a statute of limitations for qui tam actions?
An FCA action has to be brought within 6 years of the date of violation or within 3 years of when the United States knew or should have known about it. Whichever of these time limits is longer applies, however, the action must be brought within 10 years of the violation. 10 years is also the limit for Maryland’s False Health Claims Act. If you suffered retaliation as a whistleblower, you must bring your retaliation claim within 3 years.
- Does the relator have to prove that there was intent to defraud the government to bring a qui tam action?
The relator does not have to prove that the defendant specifically intended to defraud. However, the relator must show that the defendant acted knowingly. That is, it must be clear that the defendant knew about the facts but ignored them or falsified them.
- What is a reverse false claim?
A reverse false claim is when a person or entity makes a false record that they paid a government entity an amount owed when they did not really pay. In other words, instead of making a false claim in order to take money from the government, the defendant made a false claim in order to avoid paying money to the government.
- Must the relator have firsthand knowledge of all the details of the alleged fraud?
No. The relator must have firsthand knowledge of the information on which the allegations are based, but not direct knowledge of the false claims themselves. The relator should, however, have some firsthand knowledge of the plan to commit fraud and a good reason to believe these false claims actually were made. The relator must be able to name the time and place of the false claims, who committed them, and the nature of the false claims.
Broadly, to have a claim, the relator must show that there was (1) a false statement or fraudulent conduct (2) made with intent (3) that was material (i.e. influenced the payment of money or property), and (4) that the government lost money as a result.
- Is a violation of “x” law also a violation of the False Claims Act?
Violations of rules like the Anti-Kickback Act and the fraudulent inducement of a contract may also be violations of the False Claims Act. For example, the FCA applies if a contractor lied about its capabilities to secure a contract with the government.
False Claims Act Verdicts & Settlements
Below are examples of qui tam verdicts and settlements from False Claims Act lawsuits. Many of the defendants in these cases are pharmaceutical companies, while others are physicians and nursing home employees. The value of your qui tam case will not reflect the value of these example cases. Instead, these examples are meant to show you a bit about how these cases work and what they are worth.
- February 2019: $57.25 Million Settlement Greenway Health LLC is a developer of electronic health records software (EHR). The company falsely obtained a certification for its product “Prime Suit” by concealing facts that would have prevented the software from meeting the certification requirements. One of the issues with the software allowed certain health care providers to receive Medicaid EHR incentive payments that they were not eligible for. What’s more, the company paid money and incentives to health care providers who recommended the product to others. Greenway agreed to pay a $57.25 million settlement.
- July 2019: $1.4 Billion Settlement The Reckitt Benckiser Group (RB Group) manufactures the drug Suboxone, an opioid called buprenorphine with a high risk of addiction and dependence. The RB Group marketed Suboxone even to doctors who wrote prescriptions without providing counseling support and who wrote prescriptions for unsafe and illegitimate uses. It also falsely claimed that its version of buprenorphine was less addictive than others. Finally, the RB Group delayed the submission of the drug to the FDA so that it could continue controlling the price of the drug, including to federal health care programs. $700 million of the $1.4 billion settlement was for the settlement of these civil whistleblower claims.
- June 2019: $225 Million Settlement Insys Therapeutics, the manufacturer of the powerful opioid painkiller Subsys—aka fentanyl—was accused of violating the False Claims Act in five qui tam lawsuits in 2018. The company allegedly paid “kickbacks” to doctors and nurse practitioners to prescribe fentanyl. These kickbacks included things like payments for making “sham” speeches, jobs for their friends and families, and expensive dinners. These physicians prescribed the addictive opioid drug to patients for whom it was medically unnecessary. $195 million of the global settlement that the parties reached went towards settling the civil allegations, while the remainder went towards settling related criminal allegations.
- December 2018: $360 Million Settlement Actelion is a drug maker that sells several hypertension drugs. The drug maker set up a foundation that it donated to, and the foundation, in turn, paid the co-pays of Medicare patients th
at took its drugs. The large co-pays prevented some patients from being able to afford Actelion’s drugs, therefore, the foundation got them more customers without them having to lower the price of their drug. Normally, high co-pays would mean fewer customers for a drug maker, incentivizing companies to lower the prices of their drugs so that people can afford them—this effectively serves as a government check on health care costs, preventing companies like Actelion from inflating their prices. Having violated the False Claims Act and other statutes, Actelion agreed to pay a $360 million settlement.
- March 2018: $500,000 Settlement The relator in this False Claims Act case was an ex-employee at a nursing home in New York. His superior, he claimed, knew about a double-counted Medicare Transfer Price that resulted in the nursing home receiving excess depreciation-reimbursement payments from Medicare that amounted to hundreds of thousands of dollars. The superior said, according to the relator, that they did not report the error because they believed it corrected an unfairness in the reimbursement system. The $500,000 settlement is to be split between the federal government, the State of New York, and the relator, who received a total of $94,100.
- December 2017: $2.5 Million Settlement The relator in this case was a patient of a Florida dermatologist. The dermatologist removed skin on the patient’s forehead that was potentially cancerous. However, according to the relator, the dermatologist billed the procedure as a flap surgery—a procedure that cannot be performed on the forehead. The relator used data from the CMS database to show that the dermatologist was the top biller in the country for flap surgeries in 2012 and 2013, alleging that the dermatologist had falsely billed Medicare for surgeries that he never performed.
Hiring a False Claims Act Lawyer
If you have a qui tam case or another whistleblower claim, you are seeking legal advice from an experienced, hardworking attorney. To discuss your potential Maryland FCA case, reach out to our whistleblower lawyers for a free, confidential consultation online or call us at (800) 553-8082. We primarily handle cases in the state of Maryland and the District of Columbia, though we handle strong cases from other states as well.