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Setting Expectations When It Comes to False Claims Settlements

What can you expect with false claims settlements? Here are some points to ponder.

false claims settlementsThere are provisions found in the False Claims Act that make it possible to file suit and seek false claims settlements. If you’re considering blowing the whistle for false claims you are aware of it’s important that your expectations are realistic.

Experienced attorneys strive to set reasonable expectations with their clients and help them understand what could come to pass. Here is some basic information you should know about why defendants would be willing to settle and what could happen if there is a settlement.

Reasons Providers Settle Instead of Fighting Suits

Physicians, hospitals, hospice centers, and nursing homes may choose to settle a false claim lawsuit for many reasons. Some of the most common are:

  • Minimize legal fees: The legal costs related to fighting the claim may be prohibitive. If the case continues for a long time, those fees could be more than the amount of the original suit. When that is a real possibility, settling now translates into lower legal fees.
  • Reduce the amount paid to Medicare and/or the plaintiff: Defending against a lawsuit and ultimately losing does mean the risk of paying a higher figure to the plaintiff or repaying a more substantial sum to Medicare. In many cases, it would be both. When the parties who filed the suit are willing, negotiating a settlement could result in paying a much smaller amount.
  • Avoid negative publicity: Reputation is essential in the health care field. If word gets around that someone has intentionally falsified claims it could take years to undo the damage. Quickly and quietly settling contains the potential damage and makes a public relations disaster less likely.
  • No admission of guilt: The terms of many settlements exclude any requirement for the provider to admit guilt. That’s important, as it minimizes the risks of losing the license to practice or to operate a facility.
  • A matter of time: A settlement may be the best solution just because of the time involved. Next to the financial resources needed to fight the suit, allocating time for this action means less time to generate revenue or keep the facility or practice going.

Whatever the reason is for settling, the decision to settle impacts the plaintiff. The degree of that impact depends on what happens next.

Terms and Provisions within False Claim Settlements

Every settlement associated with a false claims lawsuit will include specific provisions. Those terms relate to the plaintiff as well as the defendant. Depending on the nature of the claim and the original amount sought, the terms and provisions may or may not include specific actions that one or both parties agree to observe.

The terms of payment are one example. In some cases, the plaintiff agrees to pay the settlement amount by a specific date. They can pay the sum in a series of installments leading up to the due date or pay the entire amount at one time. Depending on the number of plaintiffs, a trustworthy third party receives the payments and disburses the funds based on an approved schedule.

The plaintiff may agree to refrain from taking any further legal action against the defendant. The wording on this provision must be exact. A broad provision could prevent the plaintiff from pursuing action related to the same plaintiff but for a different cause. That includes claims prosecuted under laws other than the False Claims Act.

Sealing the terms of the settlement is another common approach. With this particular provision, the plaintiff and the defendant agree to not reveal the details of the settlement or talk about the case in anything other than the broadest terms. The goal is often to protect the privacy of all parties involved in the original suit.

The Bottom Line:  What about the Compensation?

What can you expect in the way of compensation? The plaintiff may agree to pay all legal fees, including the funds owed to your legal counsel. That’s good news since the plaintiff has no legal fees to pay.

In terms of how much the plaintiff may receive, a lot depends on whether a federal agency is among the relators and the degree of agency involvement. When the suit does not include a government entity, the relator who launched the lawsuit is by law allowed to receive somewhere between 15% and 25% of the settled amount. The remainder goes to Medicare.

Whistleblowers who pursue a case after the government chooses not to act may receive somewhere between 25% and 30% of the settlement amount. A writ of qui tam makes this possible. The private citizen comes forth with information and assists in pursuing a case of false Medicare claims issued by a health care provider.

Do you have some involvement with a claim you believe to be false? Contact the Bothwell Law Group online and get more information about false claims settlements and what to expect.

What Are the Success Rates of False Claims Act Cases?

Find out why success rates of false claims act cases remain high.

Success Rates of False Claims Act CasesThe success rates of False Claims Act cases have been on the rise for the past decade. Unfortunately, as financial rewards grew, so did the number of nuisance cases. The government spends money whenever they investigate an FCA lawsuit, so eventually, the Department of Justice asked prosecutors to assess cases more diligently. Specifically, they chose to place emphasis on the right to file for dismissal of certain lawsuits to avoid unnecessary costs.

The goal of a memo released in January 2018 by Michael Granston, the director of the Commercial Civil Fraud Division of the DOJ, was to reduce government waste and conflicts associated with FCA litigation. Once public, the Granston Memo created the impression the government would not be as supportive of FCA cases as it had been in the recent past. The memo caused worry the lawsuits weren’t as likely to be successful. Thankfully, that isn’t how things have played out in practice.

Hundreds of Cases, a Handful of Dismissals

When a whistleblower files a lawsuit, government agencies assess the case to see if they should intervene. It’s beneficial when a government agency joins a case. It brings a tremendous number of resources to the table. Whistleblowers usually have the choice to continue the case on their own if the government refuses. There is one exception: 31 U.S. Code § 3730(c)(2)(A).

The law allows for the government to file for a dismissal of a case when it meets specific guidelines. Lawsuits have clarified when these requests are appropriate. Namely, they must pertain to:

  • Meritless or opportunistic qui tam cases
  • Lawsuits that would interfere with federal policies and procedures
  • Lawsuits that would interfere with existing cases initiated by the government

Over the year, as whistleblowers filed more than 700 qui tam lawsuits, the government sought to dismiss only a handful. Most recently, the government sought to dismiss 11 cases, all filed by the same plaintiff, which claimed preauthorization of prescriptions and patient education materials supplied by pharmaceutical companies amount to illegal kickbacks.

These are helpful resources which help patients enjoy a safer, higher quality of care, and federal regulations require them in some cases. It was right for the government to intervene. Not only did the decision save money, but it protected the rights and safety of patients and the efficiency of existing healthcare programs. It’s obvious the memo has not created a wave of dismissal requests as some feared.

However, finding a lawyer experienced in the type of FCA case you want to file is more important than ever. You’ll need to be able to follow the letter of the law, and each type of violation has its own specifics.

Success Rates for Qui Tam Cases Remain High

According to data tabulated by Taxpayers Against Fraud, approximately 80 percent of FCA cases are qui tam suits. The overwhelming majority result in monetary settlements, awards, or restrictions for companies.

In one of the first cases of the new year, the pharmacy giant, Walgreens, reached a historic agreement with the government in a prescription billing scheme reported by an employee. The whistleblower in that case will receive 21 percent of a record-breaking $60 million settlement.

Together, the lawsuits recovered over $3.7 billion in federal funds last year – the eighth year in a row where awards have capped $3 billion – and qui tam suits recovered more, on average, than those the government waged on its own. In 2017, cases where the government declined to intervene resulted in awards of $426 million.

Despite the Granston Memo, FCA cases remain one of the most effective means of fraud detection in government spending. That’s true in large part to qui tam provisions which reward individuals financially for filing suit. Since 1986, whistleblowers involved in qui tam suits have collected more than $6.5 billion.

That’s different from saying anyone who files a lawsuit is going to cash in. Before taking up a cause, it’s important to work with a lawyer who can accurately assess your chances of winning and research whether or not the government will have cause to try to dismiss your case.

What Do We Need for the Laws to Change?

President Lincoln passed the FCA with the help of Congress in the 1800s. Fraudsters took advantage of Civil War funding without delivering on their promises. As a result, soldiers starved and froze to death without adequate supplies. The war was long, and the lack of reliable supplies led to significant losses on both sides. Legislators couldn’t ignore it.

In the 1940s, Congress revisited the FCA, making changes to the law which severely limited the benefits and benefits it would provide. Corruption soared again until, in the 1980s, Congress dealt with massive misspending within the Department of Defense.

These days, it’s used mostly to protect people against healthcare fraud. Legislators know these cases aren’t just saving money. They’re saving lives. It’s doubtful they’ll limit the reach of the FCA anytime soon. However, there are higher expectations placed on lawyers who try these cases.

Finding the right person for the job is more important to your success than ever. You’ll find the team you need by contacting the skilled FCA case attorneys at Bothwell Law Group by clicking or calling 770.643.1606 today.

What Is the False Claims Act and How Does It Affect Medicaid?

Learn how the False Claims Act and Medicaid work in tandem.

the False Claims ActThe False Claims Act is well-suited to deal with current Medicaid problems. Surprisingly, the law came out of the Civil War to combat other types of government fraud. The principles still hold true today. Furthermore, the government uses them more often to prosecute businesses and individuals who attempt to defraud the government’s healthcare system.

History of the False Claims Act

While many people think of whistleblowers as a construct of the 20th century, there have always been people willing to risk it all for the greater good. Instead of expecting them to sacrifice their livelihood to ensure the safety and security of the masses, politicians decided early on these people should have special protection.

The False Claims Act is also called the “Lincoln Law.” Abraham Lincoln, the 16th U.S. President, enacted the law in 1863 to stop corruption during the Civil War. The leading minds of the time couldn’t fathom corrupt individuals living high on the hog when boys were fighting with the barest essentials.

The passing of the False Claims Act was a pivotal moment in U.S. history where the country distinguished itself and its values in a way many have forgotten today. Fortunately, the law holds and serves to protect individuals who speak out in an effort to keep the country’s resources from going to waste.

What about Qui Tam Lawsuits?

The act introduced “qui tam” lawsuits, allowing private individuals to sue those defrauding the government on the nation’s behalf. At the time, whistleblowers (known as “relators”) received half of the damages assessed by the courts. That changed in 1943, which had a drastic impact on the number of false claims reported. It also restricted qui tam eligibility to cases where the government had previous information, even when the relator was the source.

The 1940s revisions to the False Claims Act left the legislation virtually impotent against government corruption. Over the next 40 years, the gaps the changes left in accountability created a widespread problem, particularly in regard to defense contracts. During the Reagan Administration, the military came under fire for paying exorbitant amounts of money for basic items.

Scores of contractors were suspect, but investigators ran into brick walls — or rather, walls of employees too afraid to talk. Congress worked diligently to rework the False Claims Act to make whistleblowing more enticing, providing job protection, regranting qui tam eligibility for individuals who had previously informed the government of the fraud and ensuring relators received 15 – 30 percent of judgments. It’s working.

In 2015, the Department of Justice awarded a whistleblower nearly $2 million in a judgment against a children’s hospital that misstated the number of beds it had available in order to qualify for grant funding. Between repayment, penalties and fines, the government reclaimed $12.9 million.

Using the False Claims Act to Fight Medicaid Fraud Today

Medicaid is a federal and state healthcare program for low-income individuals and those with disabilities. It covers approximately 74 million people in the U.S. The complicated structure of the program leaves it ripe for fraud and other types of correction.

The most common types of Medicaid fraud committed by facilities, organizations and healthcare providers include:

  • Performing unnecessary procedures
  • Billing for procedures never performed
  • Writing unnecessary prescriptions
  • Using improper billing codes to increase fees
  • Offering referral fees or kickbacks
  • Knowingly treating the wrong person
  • Knowingly treating someone who shouldn’t qualify

The most common types of Medicaid fraud committed by patients include:

  • Providing false information on Medicaid applications
  • Altering prescriptions or requesting unnecessary medication for resale
  • Taking money from a facility or professional in exchange for unnecessary services
  • Using multiple Medicaid cards under false identities
  • Loaning Medicaid cards to those who don’t qualify for coverage

As you can see, in certain situations an individual would be able to file a suit against any number of players in the Medicaid fraud game. The Department of Justice is going after the biggest offenders, and they’re winning big.

In April, for instance, the DOJ won an $18 million settlement against Banner Health after an investigation showed four hospitals regularly provided unnecessary treatment for patients in order to increase their Medicaid bills. A whistleblower received over $3 million in the case and helped stamp out corruption that ultimately robs people of the care they deserve.

Do you have proof of Medicaid fraud? Speak out before someone else beats you to the punch.

Contact the skilled False Claims Act-Medicaid attorneys at Bothwell Law Group by clicking or calling 770.643.1606 today. We are here to help you consider your best legal options moving forward.

Why Are Medicare False Claims Cases on the Rise?

The instances of using the False Claims Act in Medicare cases are going up.

false claimsGiven its size and the amount of money at stake, Medicare has enormous potential for fraud and false claims. So it’s no wonder that the False Claims Act is a popular law to crack down on Medicare fraud. But what is the False Claims Act and why are Medicare fraud claims rising? Keep reading to get the scoop.

The False Claims Act

The False Claims Act is a federal law that fights fraud against the federal government. It imposes hefty fines on those who are responsible for improperly taking the government’s money. It also allows individuals, called relators, to bring civil lawsuits against those who commit fraud. These civil lawsuits are “qui tam actions” and enable relators not just to sue the responsible parties, but receive a reward for their efforts.

Depending on the facts of the case, such as the level of involvement of the relator in the qui tam action, a relator may recover anywhere from 10 to 30 percent of the total amount of money the government can recover. Most of the time, it will be around 15 or 20 percent. Thirty percent recovery is for situations where the relator has to do a lot of work, such as bringing the qui tam lawsuit without government assistance. Ten percent is more common when the relator had some involvement in the fraud. It sounds unfair to reward someone engaging in fraud, but the government understands that without these whistleblowers, the scam would continue. The government also knows that those involved in the fraud often serve as the most effective whistleblowers.

Besides rewarding whistleblowers, the False Claims Act can levy potentially millions of dollars in monetary penalties on those who commit fraud. For example, someone guilty of violating the False Claims Act can pay around $10,000 for each fraudulent act. So a doctor’s office that improperly bills Medicare 100 times doesn’t pay $10,000 in damages. Instead, it pays $1 million, or $10,000 for each fraudulent bill sent to Medicare.

Increasing Medicare Fraud

Why are the instances of Medicare Fraud going up? There are several reasons for this.

First, people are getting smarter in finding ways to defraud the government. Medicare is a relatively old program, starting back in the 1960s. This provides plenty of time and opportunity for unscrupulous individuals to find ways to steal money from the government. With such a complex government program, there are many ways fraud can occur.

One of the more popular methods is to use kickbacks. Kickbacks are special arrangements where one party will get money for providing an improper benefit to another. In the healthcare context, kickbacks often take place when one doctor sends a patient to another doctor in return for a cash payment. This cash payment is a kickback.

Another form of Medicare fraud is upcoding. With upcoding, medical offices use the wrong code on a bill to receive more money than necessary. So instead of using a billing code for a medical service worth $5,000, a code for a service worth $15,000 goes on the bill.

Fake Medicare Patients

Then there’s there use of fake patients. In this scenario, a doctor or hospital may completely make up patients to bill for nonexistent services. A hospital might bill Medicare for John Smith’s X-ray during last month’s emergency room visit even though there was no such visit and John Smith doesn’t exist. A slight variation of this scheme is when the patient exists, but the medical service does not. Perhaps there was a real John Smith that came into the emergency room, but he never got an x-ray, just a physical exam, which might be much cheaper.

Second, the overall population in the United States continues to age. As people get older, they require more medical services. This provides more opportunities for individuals in the healthcare industry to commit fraud. It’s a lot easier to defraud more money from the government when a doctor has 80 patients instead of 60. Even if the rate at which Medicare fraud occurs goes down, the total number of fraudulent occurrences may rise as a result of this growth in the use of Medicare.

Third, there is the passage of the Affordable Care Act, also known as “Obamacare.” This law made massive changes to the legal framework of the healthcare industry. One thing it did was take steps to cut down on Medicare fraud. Changes to Medicare to stop fraud include harsher penalties, sharing of information between state and federal agencies and more oversight. With closer scrutiny and additional attempts to reduce fraud, it’s no surprise when regulators and potential whistleblowers find more issues. So even though the amount of reported fraud rises, it may be due in part because people are just paying more attention.

Want to Discover More about Stopping Medicare Fraud?

Find out more about Medicare false claims by contacting our legal team at Bothwell Law Group online.

How a False Claims Settlement Makes Its Way Through the Courts

Getting a False Claims settlement is nice, but it often requires going through the court system.

False Claims SettlementThe False Claims Act is a powerful tool to stop fraud, but getting a False Claims settlement as a relator can be a very lengthy and involved process. This settlement usually comes as a result of someone going through the qui tam process. The purpose of this blog post is to explain what a qui tam case is and the major steps involved.

What Is a Qui Tam Action?

A qui tam action is a type of civil lawsuit where a relator (who is the whistleblower) sues someone or an organization that commits fraud against the federal government. The relator brings this lawsuit on behalf of the government and in return is eligible to receive a monetary award. This award varies but can range from anywhere from 15 percent to 30 percent of the money they can help recover. The exact percentage depends on how much work they provide in recovering the money for the federal government.

This percentage will drop if the relator takes part in the fraud. It might seem unfair that someone committing fraud can profit from it, but it is better that the federal government gets 85 cents on the dollar rather than zero cents on the dollar.

Getting an Attorney

If a whistleblower wants to become a relator, they must hire an attorney. This seems a bit odd since a criminal defendant facing decades behind bars can choose to represent themselves at the criminal trial. But the difference here is that in a qui tam action, the whistleblower is a relator, which means they bring a lawsuit on behalf of the federal government. Because it’s ultimately the federal government’s lawsuit, they decide on whether they want an attorney – and they always have an attorney.

So to bring a qui tam lawsuit as a relator, an individual must hire an attorney. The individual needs to hire a lawyer who has experience and knowledge in qui tam lawsuits. They are unlike any other civil or criminal court case, so a prospective relator doesn’t want an attorney to learn as the case goes along. They need experience right out of the gate.

Starting the Qui Tam Action

The qui tam lawsuit process officially begins when the relator files a complaint in federal court. The one unique thing about this complaint is that it is “under seal,” which means in secret. This means the defendant in the case has no idea it is now the defendant in a lawsuit. This secrecy is essential to prevent the defendant from hiding or destroying evidence or fleeing the country. It also helps protect the relator from potential retaliation because it allows them to stay anonymous.

Besides filing the complaint, the relator’s attorney will prepare a special memo for the United States Department of Justice explaining the fraud, as well as the evidence the relator has in support of the qui tam case.

The Federal Government’s Investigation

While the qui tam lawsuit is under seal, the Department of Justice will conduct its own investigation of the fraud. The Department of Justice initially has 60 days to complete its investigation. But since this is rarely enough time, they can easily get an extension. In most cases, it takes over 15 months for the DOJ to finish its investigation. Once the investigation is finally over, the Department of Justice will decide whether it will join the relator in the qui tam lawsuit.

The Federal Government’s Decision

The decision for the DOJ to join, or not join, can make or break the qui tam lawsuit. If the Department of Justice decides to join, it will litigate the case along with the relator. But if they choose not to participate, the relator may still proceed with his or her qui tam lawsuit.

If the Department of Justice decides to join the qui tam case, it can drastically increase the chances of success. One reason is due to the fact the DOJ has the resources of the entire federal government behind it. And there is a lot more money in Washington, DC than in any one person’s bank account.

If the Department of Justice decides not to join, that can create a problem because the relator loses out on two things. First, they no longer have the resources of the government to help them in the qui tam lawsuit. Second, it can embolden the defendant and encourage them to fight harder and not settle the case. This is because the Department of Justice will usually only decline to join when they think the case will lose.

One silver lining to the Department of Justice backing out is that if the relator wins the qui tam case, they are much more likely to receive a higher percentage of the money recovered for the federal government.

Qui Tam Litigation Takes Place

Now the case can proceed mostly like any other civil case. The defendant will receive a copy of the complaint. Discovery will take place. Then there is the trial. If the qui tam action settles, it will usually be during the litigation process and before the trial begins.

Interested in Speaking with a False Claims Act Attorney?

Click to find out more about a False Claims settlement by contacting our legal team at Bothwell Law Group online.

How the False Claims Act and Medicaid Interact, and What to Look Out For

Discover how the False Claims Act and Medicaid often go hand in hand.

False Claims Act and MedicaidGiven the size and importance of social welfare programs in the United States, it’s no wonder you will see the False Claims Act and Medicaid close to each other. The bigger the government program, the more money is at stake and the more bureaucracy available to hide the fraud. The purpose of this blog is to explain and discuss the relationship between the False Claims Act and Medicaid.

What Is Medicaid?

Medicaid is an important government program that provides healthcare to those who cannot afford to pay for it themselves. Medicaid is not the same as Medicare. Medicare refers to the government program that provides health insurance services to those who are 65 years of age or older. In simplified terms, Medicaid depends on financial need while Medicare depends on age.

Both federal and state governments handle Medicaid. The program is massive, with costs approaching a trillion dollars each year. With all that money comes the potential for government waste and fraud. That’s where the False Claims Act comes in to fight any fraud that may occur.

What Is the False Claims Act?

The False Claims Act is a federal law that creates legal liability to those who defraud the federal government. It forces those who defraud the government to pay back what they stole, plus additional monetary damages. One of the unique features of the False Claims Act is that it allows individuals (called relators) to bring lawsuits against defrauders to recover money for the federal government. These relators bring the lawsuit on behalf of the government. In return for their efforts, they receive a portion of the money recovered. This portion typically amounts to 15 percent to 25 percent. It can be a little bit higher or lower. It depends on the relator’s level of help provided to the federal government and any involvement in the fraud itself.

How Are the False Claims Act and Medicaid Related?

The False Claims Act affects Medicaid in several ways. First, it allows the federal government to have money it otherwise would not have. The federal government gets this money through a qui tam lawsuit recovery. Or it works by stopping fraud from continuing.

If the federal government recovers money from a healthcare related qui tam lawsuit, it can potentially recover millions of dollars. It can then theoretically use this money to help pay for government operations and programs, including Medicaid. But a more effective way for the federal government to obtain money to help pay for Medicaid is to stop the fraud from continuing.

Let’s say a qui tam action is unsuccessful in recovering any money. There’s a pretty good chance that the fraud no longer takes place. Depending on how much money the government was losing to the fraud, this could amount to millions of dollars each month. And without the qui tam lawsuit or fraud investigation by the Department of Justice (after someone blows the whistle), this fraud could continue undetected for years.

False Claims Act and Medicaid: A Deterrent

Second, the False Claims Act can act as a deterrent. It convinces those who might defraud the government to not to. Perhaps the idea of stealing money from the government sounds great. But consider the potential monetary penalties involved. Adding them on top of returning the original amount stolen often makes the potential fraudster think twice. It’s one thing to pay back what you took. It’s another to have to pay three times the amount you stole. Even worse, there’s an extra $5,000 to $10,000 for each occurrence of fraud. Additionally, they’ll have to consider that because of the qui tam reward, they’ll have to be on the lookout for potential whistleblowers. They might end up revealing the fraud and helping the federal government in its investigation and prosecution.

Third, the False Claims Act can affect Medicaid by adding more paperwork to the healthcare process. Because of the False Claims Act, a healthcare provider that accepts payments through Medicaid has more work to do. They might have special policies and procedures in place to stop its employees from engaging in fraud against the federal government.

Safeguards against Medicaid Fraud

These safeguards could include extra paperwork for doctors and nurses. Or it could mean additional review of billing documentation by outside auditors. All this will cost money, in either extra expenses or lost productivity.

Then there’s the less obvious consequences, such as lower employee morale. The employees may resent that their bosses don’t trust them. Or that they have to do additional work because of a few dishonest workers who commit fraud. This resentment can be especially dangerous because it makes it easier, on a psychological level, for an employee to misbehave. This could include doing something in violation of the False Claims Act. Or it could mean something completely different, such as stealing directly from the employer or even coming into work a few minutes late on purpose.

Find out More about the Relationship Between the False Claims Act and Medicaid

Click to find out more about False Claims Act and Medicaid by contacting our team at Bothwell Law Group online now.

What Is the False Claims Act Penalty for Defense Contractors?

Defense contractors thinking about committing fraud against the federal government need to be aware of the False Claims Act penalty.

false claim act penaltiesTo help convince would-be fraudsters not to try defrauding the federal government, the False Claims Act penalty is severe. Steal from the federal government? Get caught? Fraudsters face paying amounts of money that vastly exceed what they originally stole. But is the penalty greater if the False Claims Act violator is a defense contractor? The short answer is no.

Does the False Claims Act Apply to Defense Contractors?

Yes. In fact, the False Claims Act applies to anyone who tries to defraud the federal government. This includes knowingly submitting a false claim to the federal government or causing another to submitting a false claim to the government. Additionally, the False Claims Act will apply to anyone who lies with the purpose of having a false claim paid by the federal government.

Defense contractors are notable because their primary client and source of revenue will almost always be the federal government. Therefore, a variety of government contracts are between the federal government and defense contractors.

Defense contractors aren’t the only group of businesses that commonly fall under the False Claims Act. The healthcare industry is another area of business that finds itself in trouble with the federal government and allegations of fraud.

The reason the healthcare and military industries seem to always have companies in trouble with the False Claims Act is thanks to how much money the federal government spends in those two areas. Each year, the federal government spends trillions of dollars on military and healthcare spending by sending payments to thousands of companies and individuals. It’s no wonder that at least a few defense contractors (and healthcare companies) will find themselves running afoul of the False Claims Act.

What Penalties Are Possible Under the False Claims Act?

There are two major types of penalties that defense contractors (or anyone else) could find themselves paying to the federal government. The first one concerns monetary penalties that apply for each fraudulent offense. Within the past few years, this amount rose (adjusted for inflation) to about $10,700 to $21,500 per violation.

The second type is treble damages. This sounds complicated. But the word treble is just legalese for the word “triple.” In other words, treble damages simply three times the actual damages.

Seeing the False Claims Act Penalties Provisions at Work

When these penalties apply to a specific fraud, we can see how they can result in the violator paying far more than the actual amount of money stolen. We will examine two examples to illustrate.

In the first example, let’s say the federal government enters into a contract with a defense contractor to buy a new service pistol for its armed forces.

The important terms of the contract state the federal government will buy 500,000 pistols for $500 each and that each pistol must be able to survive 10,000 shots fired before needing repair or replacement.

In the middle of production, the defense contractor realizes the pistol has a design flaw where it will only survive 5,000 shots fired before needed repair or rebuilding. However, the upper executives at the defense contractor ignore this information and pretend nothing is wrong, then ship the 100,000 pistols to the federal government.

Several years later, after numerous reports of unreliable operation of the pistol, the United States military realizes the pistol cannot last for 10,000 shots before needing repair or rebuilding. The federal government investigates what went wrong. With the help of a whistleblower, the government learns that the pistol could not meet the requirements and the defense contractor knew that but said nothing. What are the potential penalties for the defense contractor?

  • Actual damages = $50 million (100,000 x $500)
  • Treble damages = $150 million ($50 million x 3)
  • Penalties = Between $1.07 billion and $2.17 billion (100,000 x $10,700 or 100,000 x $21,700).

This defense contractor made $50 million but faces over a billion dollars in penalties. That’s because there were penalties imposed for each claim, and there were 100,000 individual claims. But even if there are only a few claims, a defense contractor’s damage can still be high.

In a second example, a defense contractor agrees to design special software for use in the Navy’s new destroyers.

Because there are five destroyers, the federal government will purchase five copies of the software, which cost $10,000 per copy. One of the important provisions in the contract is that the software must be immune from any virus for the first year of operation.

After only six months after installation on the five destroyers, all five of the destroyers suffer computer virus attacks. It turns out that the defense contractor that designed the software knew of security weaknesses in the software and could have easily made fixes, but decided not to and said nothing to the federal government. This defense contractor faces the following potential damages:

  • Actual damages = $50,000
  • Treble damages = $150,000
  • Penalties = Between $53,500 and $108,500 ($10,700 x 5 or $21,700 x 5)

In this example, the defense contractor made $50,000 but will have to pay at least $200,000 in penalties.

Need to Figure Out What False Claims Act Penalties May Apply to Your Case?

Click to find out more about the False Claims Act penalty by contacting Bothwell Law Group online.

What Are the Statistics for False Claims Act Damages Awards?

False Claims Act damages awards recovered by the federal government can add up to the billions of dollars.

False Claims Act Damages AwardsThe False Claims Act damages awards potentially recoverable by the federal government are huge. It’s commonplace for the Department of Justice to collect in the billions each fiscal year. But how much money does the federal government recover and how is this possible?

Recovery Under the False Claims Act

The False Claims Act allows the federal government to not just obtain a recovery on the actual amount of money stolen, but penalties, too. The penalties imposed by the federal government can be much higher than the actual amount of money taken through fraud.

The federal government can recover under the False Claims Act in two primary ways. The first is with treble damages. This just means triple the actual damages. If a hospital defrauds the federal for $1 million, treble damages allow the federal government to collect $3 million.

Next are penalties, which range from around $10,700 to $21,500 (recently adjusted for inflation) per fraudulent act. So if the hypothetical hospital stole the $1 million through 1,000 false billing statements, the federal government could collect anywhere from $10.7 million to $21.5 million in penalties.

This seems a bit unfair, allowing the federal government to collect more than twenty times the amount the fraudsters actually took. But this makes sense for several reasons.

First, it’s expensive to litigate a False Claims Act case.

It can take years of investigation and research before trial. Then even after the trial, if an appeal takes place, it can be another few years until the federal government can actually collect its money.

Second, the perpetrator of fraud must pay an amount of money well in excess of the money actually stolen.

If the perpetrator only had to pay back what it stole, then it has absolutely zero incentive to follow the law. It can ask, “What’s the worst that will happen? I just pay back what I took? If that happens, I have lost nothing.” Therefore, the damages and penalties the government imposes have to be high enough to deter someone who is on the fence about committing fraud.

Third, the False Claims Act has a special provision called the qui tam provision.

This allows whistleblowers to receive a piece of the government’s recovery. This bounty or reward ranges anywhere from between 10 percent to 30 percent and comes from whatever the government can recover from the violator. So just to break even, the federal government must recover the amount of money stolen plus 10 to 30 percent. The government often has to pay this 10 to 30 percent because a large number of False Claims Act cases are successful only with the help of the whistleblower.

How Much Money Does the Federal Government Recover?

The amount of money the Department of Justice recovers each fiscal year varies, but since 2000 the amounts range from just under $690 million to just over $6 billion. The following lists the amount of money that the Department of Justice recovered under the False Claims Act since 2000:

  • 2000: $1.6 billion
  • 2001: $1.8 billion
  • 2002: $1.2 billion
  • 2003: $2.2 billion
  • 2004: $686 million
  • 2005: $1.4 billion
  • 2006: $3.2 billion
  • 2007: $1.9 billion
  • 2008: $1.3 billion
  • 2009: $2.4 billion
  • 2010: $3.0 billion
  • 2011: $3.0 billion
  • 2012: $5.0 billion
  • 2013: $3.1 billion
  • 2014: $6.1 billion
  • 2015: $3.1 billion
  • 2016: $4.7 billion
  • 2017: $3.7 billion

Since 1986, the amount recovered by the Department of Justice is over $56 billion. To further understand these numbers, we can examine the 2017 fiscal year in more detail.

2017 Fiscal Year False Claims Act Recoveries by the Department of Justice

One of the biggest areas of recovery for the Department of Justice under the False Claims Act is the healthcare industry. In 2017, $2.4 billion of the $3.7 billion total recovered came from healthcare. And about $900 million of that came from the pharmaceutical and medical device industry alone.

One of the biggest recoveries came from Shire Pharmaceuticals LLC, which paid $350 million to settle claims that it gave kickbacks to doctors and clinics to overuse its products. One overused product, in particular, was its bioengineered skin substitute. The kickbacks took the form of travel, food, drink, medical equipment, medical supplies and cash.

Another industry making major payouts under the False Claims Act is the housing and mortgage industry. For the 2017 fiscal year, it paid $543 million to the Department of Justice.

It’s easy to see how significant the False Claims Act is for the federal government. And the amazing thing is that there are many instances of fraud the government will not be able to recover or doesn’t even know exist. This is why whistleblowers and the qui tam provision of the False Claims Act are so important.

Want to Help the Department of Justice Recover Money It Has Lost?

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What You Need to Know about the False Claims Act for Medicare

False Claims Act for Medicare is a significant source of fraudulent activity against the government.

False Claims Act for MedicareIndividuals looking to defraud the federal government often find themselves dealing with the False Claims Act for Medicare. But how is a major government social welfare program connected to a federal law aimed at stopping fraud? We’ll explain how and what it could mean for those on Medicare and taxpayers in general.

What Is Medicare?

Medicare is a medical insurance program run by the federal government. It provides health insurance benefits mostly to individuals over the age of 65. However, individuals younger than 65 can sometimes receive benefits. Medicare is important because unlike private health insurance, individuals receive guaranteed benefits at a very low cost. It is the government, through taxes, that foots the majority of the bill. It’s the government that pays for the bulk of medical services and products. Therefore, Medicare is a prime target for fraud, especially kickbacks.

What Are Kickbacks and How Do They Work with Medicare?

Kickbacks refer to a type of commission or payment that one party pays to another to obtain business or other benefits. Let’s use an example to explain how kickbacks work.

Let’s say you have a clinic that treats older patients, often those who receive Medicare benefits. This clinic treats the patients. Then they file a Medicare claim and receives payments from the federal government for the medical services provided. This is a pretty good arrangement for the clinic. However, it wants to make more money, so it devises a kickback scheme.

Under the clinic’s plan, it recruits Medicare-eligible individuals to serve as fake patients. These fake patients will go to the office and claim they need medical care, even if they really don’t. The clinic then bills the federal government through the Medicare program for non-existent treatment. Not knowing what’s really going on, the federal government sends the clinic Medicare payments. Those payments result in fraudulent gains for the clinic. In return, the fake patients receive a cut of the fraudulent Medicare payments. The cut (or commission) received by the fake patients is the kickback. Here, the clinic has “kicked back” some of its ill-gotten gains to the fake patients.

Another Example

A more common example of kickbacks doesn’t involve any fake patients. Instead of a clinic and a fake patient, let’s pretend we have a clinic and a doctor’s office. Medicare-eligible patients go to their doctor. The clinic and doctor have a special arrangement where the doctor will always send the unsuspecting patients to the clinic for medical care. That’s even if the patient doesn’t need it or the doctor could send the patient to a different clinic or hospital instead. In return for this “guaranteed business,” the clinic gives a cut of its profits from the referred patient back to the doctor. Basically, the clinic pays the doctor to give it patients so the clinic can then bill the federal government and receive reimbursement through Medicare. In this second example, the payment the doctor receives is the kickback.

How Does This Affect You?

For any taxpayer, Medicare fraud means wasted government money. From a big picture perspective, the vast majority of tax revenue collected by the federal government goes to two places. They are the military and social welfare programs, such as Social Security, Medicaid, and Medicare.

With so much taxpayer money paying for Medicare benefits, whenever Medicare fraud takes place, it means taxpayers paid for fraudulent medical services. Ultimately, this means the taxpayer paid taxes it didn’t really need to.

Two Problems Here

For those on Medicare, fraud is a problem for two reasons. First, it jeopardizes the future of Medicare because too much waste from fraud might mean a cut in Medicare benefits. More importantly, it also means Medicare patients may not receive the medical services they actually need.

In the second example from above, there’s a good chance that patients sent to the clinic are not receiving the proper medical care they need. Some patients might be better off going to a hospital. But instead, their doctor sends them to the clinic. In some cases, this could lead to physical harm to the patient. For example, the patient might need a specific procedure or test that can only take place at a hospital, but the doctor sends them to the clinic anyway. As a result, a disease goes undiagnosed. By the time the patient finds out what’s really going on it’s, too late. Or the patient doesn’t need any further testing or medical care but is still sent to the clinic anyway. This could subject the patient to a medical procedure that causes harm.

While these more extreme examples are less likely and most patients involved in a Medicare fraud scheme probably don’t get hurt, the possibility is there. And at the very least, there is a tremendous amount of wasted taxpayer dollars, which is never a good thing. Luckily we have laws such as the False Claims Act. It punishes fraudsters and provides rewards to individuals to investigate fraudulent activity. This helps the federal government recovery lost money due to fraud.

Want to Learn More About Medicare and the False Claims Act?

Contact our team of skilled False Claims Act for Medicare attorneys at Bothwell Law Group by calling 770.643.1606 today.

The Truth About Protection of Whistleblowers in Hospice Kickback Cases

The protection of whistleblowers is very important in False Claims Act legal actions.

protection of whistleblowersWhen fraud against the federal government occurs, the protection of whistleblowers becomes critical. This is because about 80% of False Claims Act fraud cases originate from a whistleblower. Why so many? Much of the fraud is well hidden and therefore unknown to the federal government. However, someone on the “inside” usually knows about it. In situations where the federal government is aware of fraud, it may not have the evidence to prove it. Again, those on the “inside” can usually find the evidence.

Whistleblowers are important to a federal government’s False Claims Act action against the violator. Therefore, it’s easy to see how the whistleblower could be the victim of retaliation, especially in cases involving kickbacks and hospice care providers. Luckily, there are special protections. Yet, they don’t always work as well as a whistleblower might hope.

Whistleblower Protections: Qui Tam Actions Begin in Secret

The False Claims Act contains various provisions that provide protections for a whistleblower. The first line of defense is the secrecy of a qui tam action when it begins.

A qui tam action is a lawsuit brought by the whistleblower (also called a relator) where the whistleblower sues the violator (often the whistleblower’s employer) on behalf of the federal government. Any of the stolen money the whistleblower can recover goes to the federal government, less a certain percentage as a reward to the whistleblower. This percentage ranges between 10 and 30 percent.

When a qui tam action begins, the whistleblower must file the complaint “under seal.” This means the whistleblower files the complaint in secret. Only the federal government and the court know about the lawsuit. One reason for this secrecy is to protect the identity of the whistleblower while the government investigates the basis of the qui tam action and assesses whether it will take over the case.

Secrecy Has Limits

This secrecy doesn’t last forever. It only lasts for 60 days, although an extension is possible if the government wants additional time to investigate the fraud. Even then, once the case proceeds to trial, things change. It’s very likely the defendant in the qui tam action will be able to figure out who the whistleblower is because the whistleblower will likely be a key federal government witness in the case.

But in many cases, the defendant discovers the whistleblower’s identity before the qui tam action ever gets to trial. Once the federal government begins investigating the alleged fraud, the defendant will know something is up. They’ll realize the investigation probably began with the help of an inside person. Perhaps the whistleblower previously warned the defendant about the fraud. Or maybe they’re the only person with access to information that the federal government now knows. The defendant can often put two and two together. When this occurs, the whistleblower can assume he or she will endure some form of retaliation. Luckily, the False Claims Act has anti-retaliation provisions that make this retaliation illegal.

Whistleblower Protections: Anti-Retaliation Provisions

The False Claims Acts makes it unlawful for an employer to retaliate against a whistleblower. This retaliation can take the form of discrimination, harassment, threats, demotion, firing and pay cuts.

If a whistleblower can prove retaliation, they can get their job back plus double back pay, special damages, interest and attorney’s fees. On paper this is great. But the reality doesn’t work as well, and there are several reasons for this.

First, it’s not always easy to prove retaliation.

An employer might fire the whistleblower. If the whistleblower has a history of poor performance, the employer can make the plausible argument that the firing has nothing to do with retaliation. This may not be true. But it creates enough doubt as to the reason of the whistleblower’s firing to prevent a court from concluding the employer is guilty of unlawful retaliation.

Second, let’s say the whistleblower can prove illegal retaliation.

The potential relief often isn’t worth the consequences. For example, is a whistleblower who suffers retaliation really going to want to still work at the same employer that just tried to fire him or her? What if the whistleblower wants to continue working for the employer. Can the whistleblower expect fair treatment, as if nothing happened? The answer to both these questions is usually “no.”

But working somewhere else is not always possible because now the whistleblower has a reputation for being “untrustworthy.” Even though the whistleblower did the right thing, they may face challenges. Few companies want to hire someone they know has a reputation for going behind the employer’s back and reporting something to the federal government.

The harsh reality is that the False Claims Act’s anti-retaliation provision helps. It can reduce the pain or harm a whistleblower endures. But it rarely provides for the perfect protection of whistleblowers, especially in the hospice care industry.

Thinking about Becoming a Whistleblower?

Contact the Bothwell Law Group by calling 770.643.1606 today. Let our firm’s skilled attorneys explain the protection of whistleblowers so you can make a wise choice.

What Kind of False Claims Act Damages Are the Most Common?

Violators may be subject to several types of potential False Claims Act damages.

False Claims Act DamagesThose who defraud the government could face several types of False Claims Act damages. Those who violate the False Claims Act must pay these damages. They are rarely subject to a judge eliminating them. These damages aim to not only make the federal government whole, but severely punish illegal behavior. The following is a description of these damages, as well as how they work.

False Claims Act and Damages

The False Claims Act imposes monetary penalties on individuals who defraud the government. Instances of fraudulent behavior usually revolve around either: overcharging the government, mis-charging the government or avoiding having to pay the government.

Overcharging occurs when the violator makes the government pay a higher price than the government should pay. This is one of the most common ways fraud occurs against the government.

Mischarging is the charging for a service or item that they did not actually provide to the government. Mischarging is common in fraud cases involving healthcare services.

Avoiding having to pay the government is like the reverse of overcharging or mis-charging in that the violator tries to get out of a bill they should pay.

Identifying these methods of defrauding the government will help determine what potential damages a violator must pay.

Two Major Types of False Claims Act Damages

The False Claims Act imposes two major types of damages or penalties on a violator. The first are penalties that range from between $5,000 and $10,000, although this amount goes up for inflation and is now closer to $5,500 and $11,000. This penalty will apply to each instance of misconduct. This means if a violator engages in 100 instances of fraud against the government, they don’t face an $11,000 penalty. Instead, they face a far larger penalty of $1.1 million.

The second type of damages under the False Claims Act is treble damages. Treble is a fancy legal word for triple. In other words, treble damages are another way of saying “triple the actual damages.” Treble damages are pretty severe. Many laws only allow for actual damages plus interest or sometimes double damages. Treble damages are usually a sign that Congress or other government entity wants to severely punish a particular behavior. Let’s look at a simple example to explain how this could work.

An Example of Defense Contractor Fraud

A military contractor overcharges the government $50 for each piece of body armor it manufactures and delivers to military units and federal law enforcement officers. If the government orders 10,000 pieces of body armor, the military contractor overcharged by $500,000. So if the government catches the military contractor, that contractor will have to pay $1.5 million as treble damages, even though the actual damages are only $500,000.

Forcing violators to pay treble damages is very important because it serves as a strong deterrent to potential violators. If the False Claims Act only made the violator pay actual damages, there would be almost no deterrent effect. This is because someone who is thinking about defrauding the government might think the potential penalties are worth the risk. They might think this if they only have to pay up to $11,000 for each fraudulent transaction plus actual damages. We can use another example to show how this is the case.

Military Contractors and False Claims Act Damages

Let’s take another military contractor, but instead of manufacturing and delivering thousands of pieces of body armor, they are only making one nuclear powered aircraft carrier at a cost of $10 billion. In an attempt to defraud the government, the military contractor actually charges the government $10.1 billion. This results in a $100 million overcharge.  The government pays $10.1 billion and doesn’t give it a second thought.

Let’s assume the government eventually discovers the military contractor’s overcharge and successfully prosecutes them under the False Claims Act several years later. Without treble damages, the military contractor would only have to repay the $100 million it overcharged plus $11,000 in penalties.

So in reality, for the opportunity to steal $100 million from the government, the military contractor only lost $11,000. That’s an amazing deal – consider that a $100 million loan over a term of several years would be impossible to find for only $11,000 in interest. The total interest for a $100 million loan over several years would probably be closer to $10 million or more. But with treble damages, the military contractor isn’t $11,000 poorer, but rather, $300,011,000 poorer. This is a huge difference in monetary consequences that should deter most potential fraudsters.

Need More Information About Damages Under the False Claims Act?

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How Do I Find a Good False Claims Act Lawyer?

False Claims Act Lawyer

False Claims Act LawyerFederal False Claims Act claims are among the most complex legal claims. They stretch across multiple substantive areas of the law. They also have more procedural steps to take than a standard legal claim. All attorneys are technically qualified to work in every area of the law. However, the False Claims Act lawyer you choose can make or break your claim. There are a few things you may want to consider looking for in a False Claims Act lawyer.

Experience in a Specific Field

The False Claims Act covers many different types of fraud. This includes Medicare and Medicaid, disaster relief funds, defense contracting, and more. An attorney will need to be able to show that specific laws relevant to the industry were violated. Therefore, they will need to be familiar enough with the industry to know what evidence to look for and how to get it. An attorney with extensive experience in financial services industry may not know how to analyze medical billing records and build a strong Medicare fraud case.

Experience Working With the Government

All qui tam litigation under the False Claims Act must be reviewed by the Department of Justice. In many cases, the DOJ will take over the litigation. As a matter of legal procedure, all information that a whistleblower has must be turned over to the Government. However, it helps to ensure that the Government can pursue the case successfully. Hence, it can be helpful to have an attorney who knows how to present the potentially thousands of pages of documents in a way that highlights the most important information and makes the job of an overworked Government attorney easier.

Ability to Back Litigation

Lawsuits can easily have tens or hundreds of thousands of dollars in filing fees. There are also costs of obtaining and reproducing costs, travel expenses for witnesses, and deposition fees. Often, a large firm may be able to cover these fees pending a court order that the defendant reimburse them. However, a small firm may not have the financial resources to proceed. Additionally, a small firm attorney may not be able to provide enough attention to the case if they need to continue to take other cases to pay their daily bills.

A Track Record of Success

Past results are never a guaranteed of future success. However, they are one possible indicator that an attorney has the knowledge and experience to handle a similar claim. An attorney with a lengthy track record has already likely made and learned from the mistakes that a less experienced attorney might make that could damage or delay a case.

To speak with an experienced False Claims Act lawyer, contact the Bothwell Law Group today.