Qui tam actions in healthcare make up a significant portion of the qui tam lawsuits brought by private individuals. This shouldn’t be surprising given the staggering size of the healthcare industry in the United States and the government’s need for healthcare services. The armed forces, Medicare, Medicaid and the Affordable Healthcare Act are just a few of the major examples of qui tam actions in healthcare.
What Is a Qui Tam Legal Action?
A qui tam legal action is where a private individual, called the relator, sues on behalf of the government. In the United States, the qui tam action falls under the False Claims Act.
Under the False Claims Act, anyone who defrauds the federal government can be liable for hefty financial penalties. Since much of the fraud against the government goes undetected, the enforcement of the False Claims Act relies heavily on whistleblowers to alert the government to the fraud and provide critical information as to what’s going on, who’s doing it, how long it’s been going on, etc. Almost three-quarters of all False Claims Act enforcement lawsuits are the result of a whistleblower first bringing the lawsuit through a qui tam legal action. If it weren’t for these whistleblowers, much of the money recovered by the federal government would not be possible.
Healthcare Spending by the United States Government
A qui tam lawsuit will work with healthcare company violators just as it would if the violator was any other company or government contractor. However, qui tam actions in healthcare are particularly notable for one reason: significant amounts of money are at stake.
There is a lot of money in the healthcare industry in the United States. One of the largest expenditures of the US government is paying for medical care of its citizens. For example, about 4% of the United States entire GDP (Gross Domestic Product) goes to Medicare and Medicaid programs. The GDP of the United States was about $18 trillion dollars in 2015. This means that in the Medicare and Medicaid programs alone, the federal government is spending hundreds of billions of dollars each year. That provides plenty of opportunities for unsavory companies and individuals to try and cheat the system and defraud the federal government. And we haven’t even discussed healthcare services for the military, the Affordable Care Act and Social Security benefits.
Qui Tam Actions in Healthcare
Another way that qui tam actions in healthcare are notable is because of the potentially high amounts of recovery that are possible under the False Claims Act. Punishment of a violator will consist of two components.
The first component deals with actual damages suffered by the federal government. The False Claims Act violator will pay three times the amount of actual damages. For instance, if a hospital overcharges the government by $1 million, it would have to pay $3 million in damages.
The second component deals with penalties for each false claim submitted to the government. Currently, each claim carries a penalty of anywhere between roughly $11,000 and $22,000. This amount can also go up each year as a result of inflation. When healthcare fraud occurs, it usually occurs many times.
Looking at the earlier example of a hospital overcharging the federal government $1 million of medical care, let’s further assume that the $1 million involved the treatment of 10,000 patients. This amounts to 10,000 instances of fraud against the federal government. Since each instance of fraud is subject to between $11,000 and $22,000 in penalties, the hospital may face anywhere from $110 million to $220 million in penalties. This is on top of the $3 million it must pay in damages.
Even though the fraud amounted to “only” $1 million or $100 per patient, the hospital must now pay at least $113 million in penalties and damages for its False Claims Act violations. Since the qui tam provisions of the False Claims Act allow relators to recover anywhere from 15% to 25% of the amount ultimately recovered by the federal government, relators have the potential to receive a very substantial reward. In certain instances, this reward can be as low as 10% or as high as 30%. Looking at the hospital hypothetical, a relator could potentially recovery anywhere from $11 million to $66 million.
But before you decide to go on a whistleblowing crusade to get this type of reward, understand that these rewards are relatively rare and may take many years to obtain. On the other hand, understand that this hypothetical isn’t too far-fetched, either.
Many of the largest False Claims Act recoveries have been in the healthcare industry. Take for instance the top 20 largest pharmaceutical company legal settlements in the United States, which ranged from $345 million to $3 billion – only two of them did not involve the False Claims Act.
Do You Have Questions about a Qui Tam Lawsuit In Healthcare?
Qui tam actions in healthcare can be quite complicated with all of the money at stake. If you think you may want to report healthcare fraud against the federal government, learn more by contacting the Bothwell Law Group.