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False Claims Act Lawyer Discusses December 2012 cases

I wanted to advise you about several cases involving the False Claims Act that were decided in the month of December 2012.

The first case was in the District Court of Minnesota and involved North Memorial Healthcare.  A Relator filed a qui tam suit against Affiliated Healthcare Company alleging violations of the False Claims Act in connection with alleged Medicare billing fraud.  The Relator alleged that the defendant submitted claims for Medicare reimbursement that falsely stated that the defendants provided the requisite physician supervision of their rehabilitation programs.  The Relator also alleged that the defendant systemically falsely certified that their physicians had seen patients when in fact the physicians had not seen patients.  The Relator had been employed by the defendants as an administrator during the time of the alleged fraud and asserted that his allegations were based on his own observations.  After the government declined to intervene in the Relator’s lawsuit, the defendants moved to dismiss based upon a failure to state a claim and for failure to plead the alleged fraud with particularity.  The court agreed with the defendant’s position noting that the regulations relied on by the defendants were implemented after the fraud was alleged to have begun and did not reference the types of rehabilitation programs operated by the defendants.  As well, the court noted that the applicable regulations presumed that the direct supervision requirement was satisfied when the rehabilitation services were provided in a hospital setting since “staff physicians would always be nearby within the hospital.”  As such, there was a presumption of compliance with the applicable regulations.

The important thing to take out of this case is that it is important to have as much knowledge as you can about a particular fraud before making a whistle blower claim.  You should be able to know specific instances of frauds including dates, persons that participated in the fraud, and the like.  This type of detail is needed in order to both assist the United States Attorney’s office with making a claim for fraud and also proving fraud under a heightened standard for pleading fraud in federal courts.

Another case was from the Northern District of Ohio and involved Kaba Ilco Corporation.  A Relator filed a suit under the False Claims Act alleging that a lock and key company committed fraud by marketing and selling locks to various governments even though the defendant knew that the locks included a design flaw that allowed them to be easily opened by anyone with a small magnet.  After the government declined to intervene, the Northern District of Ohio dismissed the case for two reasons.

First, the Relator failed to respond to the defendant’s public disclosure argument and therefore dismissal was warranted.  The public disclosure doctrine states that unless someone is an original source, if the allegations involving the fraud are published in the public domain there is a jurisdictional bar to proceeding ahead.  Take note, however, that if you are an “original source” to the information, you may still proceed ahead in many instances even if the topics are in the public domain.

Second, the court found that there was no fraud pled with particularity.  Based upon these instances, dismissal was appropriate.

Another case was A-1 Procurement LLC v. Hendricks Corporation from the Southern District of Florida.  A corporate relator alleged that with respect to some 185 government contracts, a group of other corporations falsely certified to the federal government that they were at least 51% owned by a veteran resulting in liability under the False Claims Act.  This is a type of False Claims that can be allowed if you know a company is falsely making a representation that it is a minority business, or the like.  Nevertheless, the defendant’s motion to dismiss following the government’s declination to intervene was granted in part and denied in part.  The court found that because the relator did allege an objective falsity, namely that the defendant’s representations that they were at least 51% owned by a veteran, there were sufficient facts pled in order to not allow the entire motion to dismiss to be granted.  The relator’s claims against newly joined defendants, however, were dismissed.  The case remains pending.

A final case to discuss is U.S. Ex Rel Miller v. Westin Education, Inc. from the Western District of Missouri.  There, two relators brought a qui tam action against an educational institution alleging that the defendant made fraudulent representations to the government regarding its compliance with various statutes and regulations in order to receive financial aid funds.  In addition, the relators each claimed against the defendant under the False Claims Act’s anti-retaliation provision.  The defendant’s motion to dismiss was denied.

First, the court examined the relator’s claim that the defendant falsely certified to the government it was eligible to received federal financial aid funds.  The court agreed that the relator’s allegation that the defendant entered into its agreement with the government to participate in the financial aid program when it knew it had no intention of complying with the terms of the agreement stated a claim under the False Claims Act.

The court also agreed with the relator’s third argument that the defendant’s alleged false statements contained in the participation agreement were material to the government since the defendant would not have been eligible to receive any federal government funds unless it entered into the participation agreement.  The court agreed finding that execution of the Participation agreement was not merely a condition of participation in the government program but also a condition of payment stating that “Execution of the [agreement] would be a meaningless gesture if compliance with its terms was never material to the government’s payment decision.”  The court held that “it is reasonable to infer that the government paid [the defendant] based on the assumption that [the defendant] was fulfilling, or at least not intentionally violating, the promises made in [the agreement].”

The court also found that the relators pled their claims of fraud with particularity as required by Rule 9(b) of the Federal Rules of Civil Procedure.  The court noted that the complaint provided a detailed account of how the fraudulent scheme was alleged to have been executed, including specific allegations about the defendant’s manipulation and falsification of records and discussions of this and other improper practices by high ranking administrators.

If you would like a free, confidential case evaluation, contact us now.

THE SCOPE OF FRAUD

Amazingly, some estimates have suggested that approximately 10% of the entire annual United States budget is lost to companies or individuals who are defrauding the government. The United States Federal budget for 2010 was $3.456 billion, meaning around $345.6 million was wrongfully wasted on fraud.

The entities defrauding the government do so in a variety of ways: Medicare or Medicaid fraud whereby they bill the government for services which they never provided or overbill for services that were provided; SEC Trading; Tax Fraud; TARP Fraud; Military/Defense contract fraud; Pharmaceutical Manufacturing;contract fraud involving any number of large government spending programs; or other types public benefit fraud.

HELPING THE PUBLIC.

As a whistleblower attorney, we are interested in speaking with persons willing to make known the truth about company practices and are willing to file a qui tam or whistleblower action. One area in particular we are interested in discussing are lawsuits involving medical device companies where the company is alleged to have overcharged, engaged in kickback programs, and the like. We will nevertheless investigate claims in a variety of areas.

Workers and persons all across the country witness actions at their work that may be unlawful or even corrupt. Unfortunately, some employees and workers feel that they will be fired, terminated, harrassed or punished if they report an unlawful or corrupt action. These reporters, however, are protected by the law as a Whistleblower and can receive compensation because of the False Claims Act or the Medicaid False Claims Act. If you have reported actions that may be fraudulent, then you should talk to a Whistleblower or qui tam lawyer about your facts.

Whistleblowers help the government to get back billions of dollars each year with the help of the False Claims Act. In fact, fraudulent Medicaid claims are also caught by whistleblowers having the Medicaid False Claims Act on their side. If you report a false claim or fraudulent action to the government, then the government will give you, the whistleblower, a part of the money that gets recovered. This is because of qui tam requirements. Qui Tam means that a person files a lawsuit for the king and also for him or herself. The phrase is qui tam pro domino rege quam pro se ipso in hac parte sequitur, or, “he who sues for the king as well for himself.”

These requirements and lawsuits were made popular during the Civil War when many people were getting away with fraudulent actions against the government. In 1986, the False Claims Act was amended to raise the total compensation given to people who reported fraudulent actions, or whistleblowers. If a whistleblower works with a lawyer then it may be possible for them to get three times the amount the government would get in damages and also get additional compensation for general fines.

TYPES OF CASES

The most common situations that could form the basis of a Qui Tam action include:

• Submitting a false or fraudulent record, bill or statement to the government in order to fraudulently obtain money such as reporting a medical service that was never performed for Medicare or Medicad;
• Conspiring with a third party to submit or present have a false or fraudulent claim to the government;
• Withholding property of the government with the intent to defraud or conceal the property from the government;
• Fraudulently buying property of the government from someone not authorized to sell that property; and
• Making a false statement to fraudulently avoid paying money to the government or to avoid delivering property to the government.

FOR HELP, PLEASE CONTACT US.

We help whistleblowers on a contingency basis, meaning there is no fee charged for our work unless there is a recovery. We also front any and all expenses. No matter where you are located — we will represent you. We will come to you, you will not have to come to us.

Attorneys in our firm and attorneys that we work with on Whistleblower, Qui Tam, False Claims Act cases have represented a host of persons making claims, for violations of federal tax law, Medicare law and more.

For more information, please contact our team of whitsleblower and qui tam attorneys today.

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