Anyone who knowingly submits false claims for payment to the federal government may be subject to liability under the Federal False Claims Act (31 USC §§ 3729-3733). In addition, a private person who knows about the submission of false claims may be entitled to bring an action on his own behalf and on behalf of the government. This is known as a Qui Tam action from the latin phrase, “Qui tam pro domino rege quam pro se ipso in hac parte sequitur,” which means, “He who on behalf of the lord king as much as on his own behalf pursues the action.” See U.S. v. Pfizer, 507 F.3d 720, 727 footnote 4 (1st Cir. 2007). The purpose of the Qui Tam provisions of the False Claims Act is to encourage private citizens to help the government recover damages for fraud. If the action is successful, the government can recover civil monetary penalties and treble damages. The private person who initiated the action, known as the relator, may be entitled to a portion of the damages recovered for the government. Companies that are often defendants in Qui Tam actions include pharmaceutical companies, pharmacy chains, and defense contractors, among others.
The relator in a Qui Tam action, who is also referred to as a whistleblower, is entitled to protection from retaliation by the employer. Section 3730(h)(1) of the False Claims Act provides:
“Any employee, contractor, or agent shall be entitled to all relief necessary to make that employee, contractor, or agent whole, if that employee, contractor, or agent is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment, because of lawful acts done by the employee, contractor, or agent on behalf of the employee, contractor, or agent or associated others in furtherance of other efforts to stop 1 or more violations of this subchapter.”
Section 3730(h)(2) of the False Claims Act provides remedies for discrimination which include reinstatement, double back pay, interest on the back pay, compensation for special damages, litigation costs, and attorney’s fees.
The following table lists and describes some of the types of fraud engaged in by companies that violate the Federal False Claims Act. This table presents a sample only, and is not meant to be exhaustive.
Types of Fraud in Qui Tam Cases
|Up-coding||The defendant artificially inflates bills to the government by using a billing code for a more expensive procedure or treatment than the one actually provided.|
|Bundling||The defendant bills for a group of tests or procedures, when only one test or procedure was requested.|
|Unbundling||The defendant uses multiple billing codes to bill for a group of tests or procedures, when a single (less expensive) code should have been used.|
|Double Billing||The defendant bills two or more times for the same drug, test, or procedure.|
|Up-billing for Brand||The defendant bills for a brand name pharmaceutical when a generic is actually given.|
|Lick and Stick||A defendant pharmaceutical company sells a drug to an HMO at a deep discount, and places the HMO’s ID number instead of the pharmaceutical company’s ID number on the package. This scheme allows the pharmaceutical company to avoid reporting the discounted price to the government as its best wholesale price. As a result, the pharmaceutical company avoids paying rebates that are due to Medicare and Medicaid.|
|Failure to Report Defects||The defendant fails to report known defects in a product, in order to continue selling the product to the government.|
|Prescribing for Kickbacks||A defendant physician prescribes a drug or treatment regimen in order to receive a kickback from a hospital, lab, or pharmaceutical company.|
|Forging Signatures||The defendant forges a physician’s signature in order to submit claims to Medicare or Medicaid.|
|Falsifying Records||This type of fraud takes many forms. Some include billing for employees who do not exist; billing for time not incurred; falsifying records relating to production of a natural resource such as oil or timber; and billing for research never conducted or for services never rendered.|
|Yield Burning||The defendant skims profits from the sale of municipal bonds or other government issued securities.|
Attorney at Law
© 2014-2020 Craig Stephan
All Rights Reserved