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Boston Whistleblower Law Blog

Terminated 9 days after False Claims Act claim, dis-accommodation

In 2012, an instructor for a Department of Defense contractor called ManTech was living and working in South Korea when he was involved in a serious motorcycle accident. He suffered injuries that left him with a permanent limp, so he sought disability accommodations from the company. His supervisor came through for him, allowing him to telecommute during his recovery and then moving his office to the ground floor and giving him a handicap parking space.

Unfortunately, when a new supervisor arrived, that spirit of accommodation for his disability seemed to disappear. Even before his handicap parking space was taken away, the man says, his new supervisor "made known his disdain and, at times, outright hostility toward Mr. Parker's disability even before starting his new position."

Increase in whistleblower tips to SEC in 2014

The $30 million payout to an overseas whistleblower is not likely the shining example of what lawmakers had in mind when they passed the 2010 Dodd-Frank Wall Street Reform Act. Indeed, the law was inspired to combat fraud perpetrated upon consumers and other investors that eventually caused the market collapse of 2008.

However, the law gave the Securities Exchange Commission the authority to initiate a whistleblower program that would reward people who reported fraud and other types of misconduct. According to a recent CNBC report, the program was inspired, in part, by the numerous tips the SEC received about Bernie Madoff, even though the SEC did not detect the fraud for decades. 

What can motivate a whistleblower?

In 2014 thus far, there have been a number of stories announcing settlements in False Claims Act cases involving improper billing of Medicaid and Medicare for services that were either unnecessary or excessive. We have highlighted a few of these cases in prior posts.

In fact, healthcare based FCA cases have garnered quite a bit of interest from federal officials in the past five years. Since 2009, the U.S. Department of Justice has recovered nearly $24 billion in funds from providers, with a majority coming as settlements (and verdicts) based on fraud perpetrated through federal health care programs. Additionally, the Justice Department announced that healthcare related FCA cases would be reviewed by the Criminal Division for prosecution.

But arguably, many of these cases would not have been commenced but for a whistleblower; a person with knowledge of potential wrongdoing (and the courage) to expose fraudulent dealings. This naturally begs the question: what made them do it? There may be a number of reasons behind it, and this post will explore some of them.

Health Care Fraud & Abuse Gets First Person Account on Stark Violations

Students in the Health Care Fraud and Abuse seminar led by whistleblower attorney Bob Thomas were treated to a fascinating retrospective from a successful whistleblower, Elin Baklid-Kunz, the former employee of Halifax Hospital, which recently settled False Claims Act accusations against it for $85 million. Ms. Kunz and her attorney Marlan Wilbanks spoke to the students by telephone connection, and answered a variety of excellent questions from the students.

Having covered the most important areas of health care fraud law (the False Claims Act, the Anti-Kickback Act, the off-label/misbranding/adulteration prohibitions of the Food Drug & Cosmetic Act, and the Stark Laws) earlier in the semester, the students are being exposed in the final four weeks of the seminar to the thoughts of different participants in this dynamic field. Last week, they visited Cambridge biotech Ironwood Pharmaceuticals to hear from its chief compliance officer. Yesterday they heard from a whistleblower and her attorney (concerning a case they had studied previously in the course with respect to the Stark law). In the following two weeks, they will be hearing from two former Assistant U.S. Attorneys, who will be addressing the prosecutorial and defense perspectives.

Hospital chain to pay $37 million to settle FCA lawsuit

In a prior post, we noted how the criminal division of the U.S. Department of Justice would begin reviewing False Claims Act cases having to do with improper medical billing to Medicare. We also noted how the criminal division had been working with the U.S. Department of Health and Human Services in prosecuting these cases.

A recent settlement between the Department of Justice and Dignity Health raises questions as to whether the criminal division will forgo formal charges. According to a recent Courthouse News report, the nation’s fifth largest hospital chain will $37 million to settle allegations that it falsely billed Medicare and TRICARE by admitting patients that could have been treated as outpatients. 

Life Care Seeks Sixth Circuit Review of Sampling Decision in False Claims Act Case

We recently wrote about a federal district court decision allowing the government to use statistical sampling to prove liability in a False Claims Act case pending against Life Care Centers of America, Inc.The government's case stems from two whistleblower suits accusing Life Care of providing uncovered, unskilled, and medically unnecessary services. Life Care has more than 200 locations in about 30 states and much of its revenue comes from Medicare patients. 

Whistleblower could be awarded more than $50 million in FCA case

As we have noted in prior posts, the federal False Claims Act (FCA) allows individuals to bring suit against companies that commit fraud against the government. Whistleblowers who stand up against fraud are also called relators, and the monetary rewards that are afforded to them encourage them to speak up against government fraud. When the federal government (through the Department of Justice) joins in a FCA claim, the relator is able to recover up to 15 percent of the total recovery. If the federal government does not join the lawsuit, the relator can recover up to 30 percent of the recovery.

However, according to some FCA claim experts, cases where the Justice Department does not get involved do not usually result in recoveries.

False Claims Act Case Against Lance Armstrong Going Strong

The whistleblower who filed a qui tam False Claims Act suit and the United States who joined that suit in 2013 scored another victory in court this week. The district court sided with them and against Armstrong, ruling that the UCI in Switzerland must produce documents in the case alleging that Armstrong's doping activities amounted to fraud under his sponsorship contract with the US Postal Service. Many have long claimed that the UCI helped shield Armstrong from detection so the documents could be highly relevant. Still to come in the case is much more discovery with the judge yet to rule on how many depositions the parties will be allowed to take. It is also possible that the UCI documents will pave the way for requests for documents from other foreign entities.  As we have previously written, if Armstrong is ultimately found liable under the FCA he could be liable for treble damages and penalties. The ultimate damages figure will depend on the proof at trial as well as the theory of damages the court adopts, but the liability could reach $100 million or higher. 

Whistleblowers awarded $3.9 million in Boeing fraud case

A number of our posts have focused on the financial rewards that whistleblowers can realize for being part of a False Claims Act case. Essentially, whistleblowers can earn 15 percent of the amount recouped by the government if the Department of Justice joins in such a case. A recent settlement between the federal government and Boeing Corporation is a prime example of how people who come forward to expose fraud can be compensated.

According to a recent Wall Street Journal report, the Seattle-based airplane manufacturer allegedly defrauded taxpayers by improperly billing for maintenance work completed on C-17 transport planes. Those who reported the fraud claim that Boeing directed subcontractors to overcharge on labor costs related to the repairs. Boeing is also accused of changing workers’ classifications so that it could charge additional amounts for work that was supposed to be billed at a fixed amount.

What is 'knowing' in False Claims Act cases?

One of the important questions to be answered in litigating False Claims Act cases is how much should the offending entity know about the false billing in order to trigger liability under federal law. Under 31 U.S.C. §3729(b), “knowing” is defined in three instances. This post will highlight these definitions.

Actual knowledge – Section 3729(b)(1) is very straightforward. If someone has actual knowledge that a false or fraudulent claim has been submitted, that knowledge can create liability for the offending entity. In these instances, a signature from the person sending the fraudulent information is sufficient. 

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