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Justice Department Recovers Over $2.2 Billion from False Claims Act Cases in Fiscal Year 2020

Below is a clip from The Justice Department, full article here: https://www.justice.gov/opa/pr/justice-department-recovers-over-22-billion-false-claims-act-cases-fiscal-year-2020

The Department of Justice obtained more than $2.2 billion in settlements and judgments from civil cases involving fraud and false claims against the government in the fiscal year ending Sept. 30, 2020, Acting Assistant Attorney General Jeffrey Bossert Clark of the Department of Justice’s Civil Division announced today.  Recoveries since 1986, when Congress substantially strengthened the civil False Claims Act, now total more than $64 billion.

“Even in the face of a nationwide pandemic, the department’s dedicated employees continued to investigate and litigate cases involving fraud against the government and to ensure that citizens’ tax dollars are protected from abuse and are used for their intended purposes,” said Acting Assistant Attorney General Clark.  “The continued success of the department’s False Claims Act enforcement efforts are a testament to the dedication of the civil servants who pursue these important cases as well as to the fortitude of whistleblowers who report fraud.”

Of the more than $2.2 billion in settlements and judgments recovered by the Department of Justice this past fiscal year, over $1.8 billion relates to matters that involved the health care industry, including drug and medical device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories, and physicians.  The amounts included in the $1.8 billion reflect only federal losses, and, in many of these cases, the department was instrumental in recovering additional tens of millions of dollars for state Medicaid programs.

In addition to combating health care fraud, the False Claims Act serves as the government’s primary civil tool to redress false claims for federal funds and property involving a multitude of other government operations and functions.  The act helps to support our military and first responders by ensuring that government contractors provide equipment that is safe, effective, and cost efficient; to safeguard American businesses and workers by promoting compliance with customs laws, trade agreements, visa requirements, and small business protections; and to protect other critical government programs ranging from the provision of disaster relief funds to nutrition benefits for needy families.

In 1986, Congress strengthened the act by increasing incentives for whistleblowers to file lawsuits alleging false claims on behalf of the government.  These whistleblower, or qui tam, actions comprise a significant percentage of the False Claims Act cases that are filed.  If the government prevails in a qui tam action, the whistleblower, also known as the relator, typically receives a portion of the recovery ranging between 15 and 30 percent.  Whistleblowers filed 672 qui tam suits in fiscal year 2020, and this past year the department recovered over $1.6 billion in these and earlier-filed suits.

 

Health Care Fraud

The department’s health care fraud enforcement efforts restore funds to federal programs such as Medicare, Medicaid, and TRICARE, the health care program for service members and their families.  But just as important, the department’s vigorous pursuit of health care fraud prevents billions more in losses by deterring others who might otherwise try to cheat the system for their own gain.  The department investigates and resolves matters involving a wide array of health care providers, goods, and services.

The largest recoveries in the past year came from the drug industry.  For example, following years of litigation and multiple unsuccessful attempts to have the government’s claims dismissed, Novartis Pharmaceuticals Corporation paid over $591 million to resolve claims that it paid kickbacks to doctors to induce them to prescribe its drugs.  Novartis sales representatives, on the instruction of their managers, selected high-volume prescribers to serve as paid “speakers” to induce the prescribers to write Novartis prescriptions.

The department also continued to investigate efforts by drug manufacturers to protect high drug prices by funding the co-payments of Medicare patients.  Congress included co-pay requirements in the Medicare program, in part, to serve as a check on health care costs, including the prices that pharmaceutical manufacturers can demand for their drugs.  This year, two pharmaceutical manufacturers – Novartis and Gilead Sciences – paid a combined total of over $148 million to resolve claims that they illegally paid patient copays for their own drugs through purportedly independent foundations that the companies in fact treated as mere conduits for these payments.  In addition, four of the purportedly independent foundations paid a total of $13 million this year to resolve liability for their involvement in the kickback schemes.  In August 2020, the department sued Teva Pharmaceuticals USA, Inc. and Teva Neurosciences, Inc., alleging that they conspired with two purportedly independent foundations to illegally subsidize Medicare co-pays for the drug Copaxone.

The department continued to pursue opioid-related fraud schemes.  One of the largest opioid-related recoveries this past year was from Practice Fusion, Inc., a health information technology developer that accepted kickbacks from the opioid manufacturer Purdue Pharma in exchange for implementing clinical decision support alerts in its electronic health records (EHR) software that were designed to increase prescriptions for OxyContin, and caused its users to submit false claims for federal incentive payments by misrepresenting the capabilities of its EHR software.  In addition, the $145 million Practice Fusion settlement reflects that complex EHR-related fraud schemes remain a focus of the Department’s work.

Kickbacks in the healthcare industry are pernicious because of their potential to subvert medical decision-making.  In addition to pursuing improper payments by drug manufacturers, the department resolved other schemes involving the willful solicitation or payment of illegal remuneration to induce the purchase of a good or service paid for by a federal health care program.  For example, ResMed Corp., a durable medical equipment manufacturer, agreed to pay more than $37 million to resolve allegations that it paid kickbacks to suppliers, sleep labs, and other health care providers.  The Oklahoma Center for Orthopaedic and Multi-Specialty Surgery, a specialty hospital in Oklahoma City, its part-owner and management company, an orthopedic physician group, and two physicians agreed to pay a total of over $72 million to resolve allegations that the hospital provided improper remuneration to the physician group in exchange for patient referrals.  UTC Laboratories Inc. (RenRX) agreed to pay $41.6 million, and its three principals agreed to pay $1 million, to resolve allegations that they paid kickbacks in exchange for laboratory referrals for pharmacogenetic testing and for furnishing and billing for tests that were not medically necessary.

In addition to these recoveries, in March 2020, the department filed a complaint against medical device manufacturer SpineFrontier, Inc., its Chief Executive Officer, Dr. Kingsley Chin, and certain related entities and individuals, alleging that they paid kickbacks to spine surgeons in the form of sham “consulting” agreements to induce use of SpineFrontier surgical devices.

As in years past, the department also resolved a number of matters in which providers billed federal health care programs for medically unnecessary services or services not rendered as billed.  For example, Universal Health Services paid $117 million to resolve allegations that its inpatient psychiatric hospitals and residential psychiatric and behavioral treatment facilities knowingly submitted false claims for inpatient behavioral health services that were not reasonable or medically necessary and/or failed to provide adequate and appropriate services to its patients.  Additionally, Logan Laboratories, Inc., pain clinic Tampa Pain Relief Centers, Inc., and two of their former executives agreed to pay a total of $41 million to resolve allegations that they automatically ordered both presumptive and definitive urine drug tests for all patients at every visit, without any individualized determination that either test was medically necessary for the particular patients for whom the tests were ordered.

The department also pursued health care frauds arising under government contracts, as in the case of its $1.85 million settlement with Veterans Administration contractor Sterling Medical Associates for allegedly failing to offer timely appointments to veterans and falsifying wait times at Minnesota outpatient clinics.

 

Recoveries in Whistleblower Suits

Of the $2.2 billion in settlements and judgments reported by the government in fiscal year 2020, over $1.6 billion arose from lawsuits filed under the qui tam provisions of the False Claims Act.  During the same period, the government paid out $309 million to the individuals who exposed fraud and false claims by filing these actions.

The number of lawsuits filed under the qui tam provisions of the Act has grown significantly since 1986, with 672 qui tam suits filed this past year – an average of nearly 13 new cases every week.

“Whistleblowers with insider information are critical to identifying and pursuing new and evolving fraud schemes that might otherwise remain undetected,” said Acting Assistant Attorney General Clark.  “These individuals often make substantial sacrifices to bring these schemes to light, and our efforts to protect taxpayer funds continue to benefit from their actions.”

In 1986, Senator Charles Grassley and Representative Howard Berman led the successful efforts in Congress to amend the False Claims Act to, among other things, encourage whistleblowers to come forward with allegations of fraud.  In 2009 and 2010, further improvements were made to the False Claims Act and its whistleblower provisions.

The Bothwell Law group does not claim ownership of this article.

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About the Bothwell Law Group:

Since 1996, the Bothwell Law Group has earned a national reputation for successful representation of whistleblowers in federal and state courts across the United States, and is one of only a handful of firms exclusively representing whistleblowers. Bothwell Law Group’s cases have resulted in the recovery of more than $400 million for the United States treasury and in the payment of millions of dollars in whistleblower rewards. Inquiries may be directed to Mike Bothwell at (770) 643‐1606, email Mike@WhistleblowerLaw.com.

What Is the Criminal False Claims Act and What Does It Mean?

Criminal False Claims Act

Criminal False Claims ActThe Criminal False Claims Act (FCA) provides that the U.S. government can take civil action to recover civil penalties and damages for false claims and payments. A basic definition of the FCA is that it is a crime for anyone to submit a false claim to the government, or to cause someone else to submit a false claim to the government, either to get money from the government or to avoid having to pay money to the government.

The “qui tam” provisions of the FCA allow anyone with evidence of fraud against government contracts or programs to bring legal action against the wrongdoer on the U.S. government’s behalf. When a qui tam action has been filed, the government has the right to join in the suit as a party (this is called “intervening”). Sometimes, the government decides not to intervene; in those situations, the person or entity who brought the claim forward initially can still decide to pursue it alone.

Note that although the qui tam provisions allow anyone with evidence to file suit, if someone else has already filed a qui tam action on the same evidence, you will be barred from bringing a lawsuit.

What Are the Elements of the FCA?

The elements of the FCA are fairly straightforward. In order for the government to prove a violation of the act, evidence must show that:

  • The defendant made, presented, or caused to be presented, a false claim to the government for payment or approval; or
  • The defendant made, presented, or caused to be presented, a false document, statement or another record to facilitate the payment of a false claim; or
  • The defendant conspired with others in getting the government to make payment on such a false claim or statement; and
  • The defendant knew that the claim or document was false or fraudulent; or
  • The defendant knowingly submitted the false or fraudulent claim or document knowing it was wrong or acted with reckless disregard of the claim’s truth or falsity.

It is important to note that FCA violations are often found to have occurred even if the government did not suffer any financial loss. If you are considering filing a False Claims Act suit, the best way to determine whether you’ve got a valid case to pursue is to talk with an experience attorney.

Examples of some of the more common FCA claims include:

  • Contract violations: These come up frequently in the areas of defense contract work and construction.  This type of fraud can happen when work is a company bills for work that never occurred.  Or, a company uses substandard materials – especially if they are substituted for specified materials. Or, a company receives a contract kickback.
  • Healthcare fraud: Fraud in Medicare, Medicaid, and other federal healthcare programs are generally proven relatively easily when an FCA violation is alleged. A few examples of cases that fall under this umbrella include a provider that charges for services that were never provided, charging for more expensive services than what were provided, providing substandard care, kickbacks, and off-label prescription drug marketing.

What Constitutes “Knowing” Under the FCA?

Anyone can be held liable in an FCA action for submitting, or causing to be submitted, a false or fraudulent claim, or a document or statement supporting a false or fraudulent claim as long as it is shown they had either actual knowledge that the claim, document or statement was false or fraudulent; or in deliberate ignorance of the claim’s, document’s or statement’s truth or falsity.

The FCA offers three different definitions of “knowing,” as follows:

  1. Actual knowledge
  2. Acting in deliberate ignorance (looking the other way)
  3. Acting in reckless disregard

The first definition is straightforward.  However, the second and third are open to some interpretation by the courts based on the evidence of the case. Again, it’s best to have an experienced FCA attorney review your case.  This will ensure you’re on the right track before you move forward.

What Damages and Penalties Do Violations of the FCA Carry?

The FCA carries steep penalties for violations, including an award of three times the amount of its loss, plus penalties of $5,500 – $11,000 per false claim/false document used. There’s a provision that says someone who self-reports under certain conditions may be liable for a lesser amount; however, in no case less than double the amount of the government’s loss.

To learn more about whistleblower defense and the criminal False Claims Act, call 770.643.1606 today.