Archive for March, 2011
Monday, March 28th, 2011
The ACLU lost its most recent attempt to strike down the seal provisions of the False Claims Act. The ACLU had lost its case in the Eastern District of Virginia and then appealed to the Fourth Circuit. The Appellate Court affirmed the district court’s decision to dismiss the ACLU’s case.
The American Civil Liberties Union filed the lawsuit in 2009, making a facial constitutional challenge to the long standing seal provisions of the FCA. The False Claims Act allows the qui tam plaintiff/relator to file the civil complaint under seal, which means the complaint is not served on the defendant until the seal is lifted by judicial order. The seal allows the government time to investigate the complaint without alerting defendants to the specific allegations. Depending on where the case is filed, the government frequently asks the judge for extensions of a sealed complaint to allow it more time to conduct its investigation. At some point, the complaint becomes unsealed.
The seal makes filing False Claims actions more attractive to whistleblowers because the whistleblowers enjoy anonymity while the government is conducting its investigation of the defendants. If the complaint is under seal, the defendant does not know that a whistleblower is involved and many times, does not know that it is being investigated. Whistleblowers who are current employees of a defendant that is committing government fraud are able to assist the government in its recovery of fraudulently obtained government funds without worrying unduly about retaliation for reporting the illegal conduct.
Oddly, the ACLU sought to strike down the seal provisions on the grounds that they acted against the whistleblower’s right to free speech, that the seal violated the public’s right of access to judicial proceedings, and that the seal impermissibly violated the doctrine of separation of powers. The ACLU was not able to point to a single whistleblower that agreed with the ACLU’s position, however, and admitted that it did not have much familiarity with the workings of a qui tam action.
The Fourth Circuit pointed out that seals are often ultimately lifted in qui tam cases and that the United States has a compelling interest in protecting the integrity of ongoing fraud investigations. Kenney & McCafferty applauds the Courts’ rulings in this matter and looks forward to continuing working with qui tam relators in sealed government fraud investigations.
Tags: abuse, corruption, False claims, False Claims Act, FCA, fca seal, FERA, fraud reward, government fraud, government fraud recovery, Qui Tam, relator reward, whistle blowing, whistleblower, whistleblower reward
Posted in Corporate Tax Fraud, False Claims Act, Recent News, retaliation, Uncategorized, Whistleblower Protection | Comments Off
Wednesday, March 16th, 2011
In the fight against Medicare fraud, whistleblowers remain a strong weapon in the government’s arsenal. Last year, the federal government recovered $4 billion stolen from U.S. taxpayers through Medicare fraud. Much of that money was recovered through qui tam cases initiated by whistleblowers under federal and state false claims acts.
In 2010, Medicare covered 47 million beneficiaries, and had estimated outlays of $509 billion, of which the federal government lost nearly $48 billion on improper payments for Medicare. The Center for Medicare and Medicaid (CMS)- the agency within the Department of Health and Human Services that administers Medicare- estimates that nearly 10% of all Medicare payments are fraudulent
To combat Medicare fraud, the federal government is now stressing prevention. According to Peter Budetti of CMS, the focus is now on stopping bad actors from enrolling in Medicare.
Yet, as fraudulent schemes become more sophisticated and more difficult to detect, the federal government likely has no choice but to continue its current “pay and chase” method of fighting healthcare fraud. Under the “pay and chase” method, the government reimburses Medicare claims and, then, chases down those claims which are fraudulent. As long as those defrauding the government remain one step ahead of those chasing them, whistleblowers remain a key tool in the fight against Medicare fraud.
In the coming years, the federal government is going to rely on the sharp eyes and inquisitive minds of Medicare beneficiaries. Currently, the government is asking Medicare recipients to look closely at their Medicare bills, explanation of benefits and credit reports to determine if service tests, medications, or medical equipment listed on the documents was never administered or delivered. The government is also requesting those recipients pay attention to names of unknown physicians, therapists, or other healthcare providers charging Medicare services for services allegedly performed.
Kenney & McCafferty would like to help you assess whether you have a viable whistleblower claim. If you have knowledge of Medicare fraud, call K&M for a free consultation.
Wednesday, March 9th, 2011
In response to a formal inquiry by Senators Charles Grassley (R-IA) and Patrick Leahy (D-VT), on January 24, 2011, the Department of Justice (“DOJ”) and Health and Human Services (“HHS”) issued a joint response detailing the nature and scope of False Claims Act cases both under seal and resolved by the Department of Justice as of January 4, 2011.
According to the response letter, as of January 4, 2011, there were 1,341 qui tam cases under investigation, 885 of which allege some form of health care fraud. Of those 885 cases, 867 actually involve Medicare or Medicaid. Although, there have been no intervention decisions as to any of the aforementioned cases, the sheer volume of cases pending appears to suggest that Americans are becoming less tolerant of fraud and more willing to step forward.
Impressively, over the course of the last five years, the Civil Division of the Department of Justice, in connection with United States Attorneys’ offices, has obtained 541 settlements and judgments in qui tam actions totaling approximately $9.6 billion. Further, since the beginning of the 2011 fiscal year alone, the Civil Division has obtained 19 settlements and judgments totaling more than $1.2 billion.
In addition to the civil fines and penalties, the joint response also addresses DOJ’s tendency to favor parallel civil and criminal proceedings when it is in the best interest of the United States. By way of example, the response points to the area of pharmaceutical fraud which, since January 2009, has resulted in the recovery of more than $3 billion in criminal fines, forfeitures, restitution, and disgorgement, as well as 26 convictions.
While there is always room for improvement, ultimately, FY 2010 rendered impressive statistics in the ongoing effort to combat health care fraud, including a 16% increase over FY 2009 in the number of defendants charged.
Monday, March 7th, 2011
In a report that was prepared for the House Ways and Means Subcommittee on Oversight, one of the three congressional committees that held hearings last week to discuss healthcare fraud, it was reported that nearly 10% of all Medicare payments are fraudulent. These fraudulent claims and other improper payments caused the federal government to lose $48 billion in 2010. That estimate only includes Medicare fee-for-service and Medicare Advantage plans — not Medicare’s Part D drug benefit, or any other government health insurance program such as Medicaid.
During its hearing on Wednesday, the oversight committee heard a much higher estimate from Louis Saccoccio, executive director of the National Health Care Anti-Fraud Association, who estimated that monetary losses from healthcare fraud range from $75 billion to $250 billion annually. Saccoccio’s estimate included fraud in the private insurance market as well; he noted that those who take money from the government pull the same scams on private insurers.
Also at the hearing, a convicted felon told lawmakers that Medicare fraud is not only a crime that pays and pays, but is also a crime that is “incredibly easy” to implement and commit. According to Aghaegbune “Ike” Odelugo, who was convicted in April and is cooperating with authorities while he is awaiting sentencing, it took him less than a month to put his scheme into practice, eventually swindling Medicare out of nearly $10 million over a three year period.
Although some fraudulent schemes can be very complex, many schemes, such as Odelugo’s medical equipment scam, are very simple to put into action. Odelugo testified that “the primary skill required to do it successfully is knowledge of basic data entry on a computer.”
In his case, Odelugo dealt with fourteen different providers of durable medical equipment, or DME, which includes wheelchairs, power scooters, and knee braces. “Marketers” would provide names of patients who supposedly needed DME and physicians would write phony prescriptions for the medical equipment. Odelugo said DME providers often “maintain an appearance of legitimacy” by filing real claims, but he estimated that those legitimate claims constituted only about 40% of all billings.
Odelugo said that high reimbursement rates make this area a particularly attractive area for those seeking to scam the system. He also offered lawmakers various ideas on how to reduce the number of fraudulent claims in the Medicare system.