Earlier this month, the Department of Justice (DOJ) released its annual update of the Fiscal Year (FY) numbers regarding the False Claims Act filings and it showed that recoveries during this past year, ending in September 30, 2015, exhibited an excess of $3.5 billion from settlements and judgments in civil cases alleging fraud and false claims against the government. This is the fourth year in a row that the total compensation has exceeded $3.5 billion from cases filed under the False Claims Act.
To break that number up into industries with such claims filed against them, $1.9 billion came from the health care industry, $1.1 billion came from payments under government contracts and $365 million came from housing and mortgage fraud . Of these lawsuits against the corporations, more than $2.9 billion of the $3.5 billion were filed as qui tam lawsuits. It should be noted that since the beginning of the Administration’s time in office, its total recovery has been more than $26 billion.
Principal Deputy Assistant Attorney General Benjamin C. Mizer was quoted in the Department’s False Claims Act press release and noted that the “False Claims Act has again proven to be the government’s most effective civil tool to ferret out and return billions to taxpayer-funded programs.” 
Health Care Claims the Top Position Again
In the previous year, claims and recoveries were focused in the financial industry because of the weak economy in 2008 and 2009. However, after regulations were put forth, health care became the top qui tam lawsuit claim–as it has in the past. The Department’s False Claims report helped to highlight several types of investigations into the health care industry that yielded recoveries this year as outlined in the Business Advisor:
- Kickback schemes involving patient referrals in one form or another accounted for nearly $600 million in recovery;
- Purposeful waste in administrating drug therapy resulted in a settlement of more than $450 million;
- Hospitals collectively accounted for nearly $330 million in settlements and judgements in FY 2015, including one deal with more than 500 hospitals totaling more than $250 million for allegedly implanting cardiac devices in Medicare patients contrary to criteria established by the Centers for Medicare and Medicaid Services;
- Claims involving the pharmaceutical industry netted nearly $100 million in settlements and judgments and involved a range of drug use and drug prescription kickback schemes and schemes designed to underpay rebates,
- The skilled nursing home and rehabilitation industry was singled out as “fertile ground” for civil fraud and false claims actions based on cases involving deficient nursing services and billing for medically unreasonable and unnecessary rehabilitation therapy .
What are Qui Tam Lawsuits?
Qui tam lawsuits are a type of legal actions where individuals with insider information regarding fraud against the government bring a lawsuit on behalf of the government. The types of claims were created by the False Claims Act, which in itself, is a federal law that was enacted in response to rampant fraud in government contracts during the Civil War. These individuals who have the insider information regarding the fraud are informally referred to whistleblowers. To make things more encouraging, the False Claims Act allows them to reap some of the compensation that the government is handed once the case is settled. Continually, the act prohibits employers from retailing against employees who file or consider filing a qui tam action.
In these actions, the government has the option of intervening and prosecuting the case or declining to intervene and allowing the whistleblower to pursue the claim on behalf of the government. Either way, if the government or the whistleblower wins, the plaintiff receives an award up to 30 percent of the recovery. Furthermore, once the government declines intervention, this does not mean that the claim is to be dropped. If the whistleblower takes on the case, there’s still a great chance that there will be an outcome in the plaintiffs favor.
As such, in the 632 qui tam lawsuits that were filed at the federal level in the FY 2015, recovery by whistleblowers filed in these cases where the government opted out were at an all-time high of over $300 million. This increase could be due to the differentiating opinions out of the many courts and jurisdictions in the United States as well as the provisions of the False Claims Act that allow for whistleblowers to continue on. The government may not need the money but the individuals filing the claim may .
The U.S. Supreme Court Case
A current case within the legal system has the potential to shake the amount of qui tam lawsuits enacted because of the question of whether implied certification liability is permissible under the False Claims Act. If it is decided that it is permissible, the court will outline the circumstances in which implied certification liability takes center stage. Many of the courts of appeals have already accepted implied certification liability for years and it has been a common basis for False Claims Act settlements concerning all of the different government programs. If the decision by the Supreme Court rejects that implied certification liability or restricts the circumstances in which it is acceptable, the decision could markedly reduce the number of False Claims Act suits brought by both whistleblowers and the government.
In the case, Universal Health Services v. United States ex rel. Escobar, No. 15-7. The whistleblowers are the parents of a woman who died of a seizure after being treated by allegedly unlicensed and unsupervised staff at a provider of mental health services. Their argument states that because the provider allegedly failed to hire and supervise its staff properly, in violation of state regulations, its submission of reimbursement claims to the state Medicaid agency violated both the False Claims Act and its state equivalent. The original court dismissed the case stating that there’s a distinction between the conditions of payments and the conditions of participation. Furthermore, the court determined that the conditions of the defendant’s participation in the relevant programs were not congruent with the conditions of its receiving payments.
However, the First Circuit reversed the ruling, holding that “any payment/participation distinction is not relevant here,” due to the fact that “the provisions at issue in this case clearly impose conditions of payment.” The court also exclaimed that “although the record is silent as to whether [the mental health center] explicitly represented that it was in compliance with conditions of payment with it sought reimbursement from” the state Medicaid agency, the First circuit has “not required such ‘express certification’ in order to state a claim under the False Claims Act.” 
Until this case is decided upon in early January, the accepted implied certification terms of the False Claims Act will continue to be the one of the most common claims. The ruling thereafter will affect the amount of claims presented.
Dolman Law Group
While the understanding of ‘implied certification terms” under the False Claims Act is being called into question, the numbers of the past FY year show how important the whistleblower’s role is in confronting fraud in America’s top industries—especially the health care industry. We at the Dolman Law Group understand the nuances of qui tam cases and are dedicated to helping our clients do the right thing in case of fraud. Therefore, if you or someone you know is thinking about coming forward with information about false claims, please contact the Dolman Law Group at (727) 451-6900.
Dolman Law Group
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Clearwater, FL 33765