The lawsuit was commenced by two former employees turned whistleblowers, whose identities were kept secret, as a result of protections afforded to corporate “do-gooders” under the Civil War-era law.
The False Claims Act is a federal statute, enacted to “clean-up” government contracting in the wake of the U.S. Civil War, that allows whistleblowers, or “relators,” to bring qui tam lawsuits on behalf of the United States government and against businesses who commit fraud against the government.
Originally, whistleblowers provided information to the government that stopped manufacturers from providing the Union army with guns that did not shoot, food that was expired, and boots that fell-apart after a few miles of use.
Today, the FCA is the U.S. Department of Justice’s most effective tool in combating fraud against taxpayers. The False Claims Act has transformed from an avenue for prosecuting basic fraud, to a vehicle for dismantling a host of extremely intricate, well-concealed, and complex financial and healthcare fraud schemes that are often described as a parasitic drain on the country’s fiscal health.
The lawsuits are initially kept secret, or “sealed” while the government investigates fraud alleged by the whistleblower. The government may choose to “intervene” on behalf of the whistleblower, and prosecute the case with the full force of the U.S. Department of Justice. State Attorneys General are increasingly bringing their own FCA suits, under state statutes. If the government elects not to intervene, which is not uncommon, the whistleblower may prosecute the case privately, with the assistance of an attorney. If successful, any money judgment won against a fraudulent government contractor “goes back” to the government, and, the whistleblower is entitled to a portion of that recovery.
The FCA allows the government and whistleblowers who pursue cases on their own to recover actual damages and penalties of three times those damages for the government. The fraudulent government contractor is also hit with a $11,000 penalty per false claim. In November, those penalties per claim will raise to nearly $22,000 per claim.
Here, former employees alleged that Drayer submitted claims to Medicare and federal employee health programs for services provided to multiple patients simultaneously, and “up-charged” the programs as though the services were being provided by a physical therapist to one patient at a time.
The False Claims Act has been of particular significance in routing out fraud within the healthcare industry. Congress has made explicit in recent years that a healthcare provider’s over-billing schemes can cause those who can influence healthcare decisions to bill for goods and services that are medically unnecessary, or even harmful to a vulnerable patient population.
To protect the integrity of federal healthcare programs from this often difficult to detect harm, Congress enacted a prohibition against over-billing and the offer or payment of kickbacks in any form, regardless of whether the particular kickback actually gives rise to over-utilization or poor quality care.
Kickbacks and over-billing increase government-funded healthcare program expenses by inducing medically unnecessary devices and excessive reimbursements. Over-billing also generally reduces a patient’s healthcare choices, as a physician may use a medical device based on the physician’s own financial interests rather than according to the patient’s medical needs or safety.
The two whistleblowers in this case will collectively receive 24% of the funds of the settlement, or $1,680,000.
While the fraud a whistleblower sees may not be as easy-to-spot as what therapists turned whistleblowers experienced here, consulting an experienced whistleblower attorney or an attorney who specializes in the False Claims Act will help evaluate and guide a potential whistleblower’s claim.
Whistleblowers who bring qui tam False Claims Act cases against companies that commit fraud against the government stand to not only disrupt immoral practices, but often recover large financial rewards.
Greene LLP is a Boston complex civil litigation firm that specializes in False Claims Act litigation, employing a low-volume, high-attention approach. Greene LLP cases have resulted in over $1.2 billion in government recoveries, including nearly $500 million for claims for which the government declined to intervene.