False Claims Act

Recent amendments to the federal False Claims Act have expanded whistleblower protections and increased penalties for violators.  The amendments came in the form of the federal Deficit Reduction Act, the Fraud Enforcement and Recovery Act, the Affordable Care Act, and the Dodd-Frank Act.

California revamped its own False Claims Act earlier this year to bring it into compliance with federal law—and qualify for a 10 percent increase in its share of False Claims Act recoveries in cases relating to the submission of false or fraudulent claims to California’s State Medicaid program.  If a State obtains a recovery as a result of a State false claims action relating to fraudulent claims under the State Medicaid program, it must share the recovery with the federal government in the same proportion as the matching funds provided by the federal government for the state’s Medicaid program, called the federal medical assistance percentage. However, when states, such as California, enact state False Claims laws that are in compliance with federal law, those states get to keep an additional 10% of the recovery, thus sharing 10% less of any recovery in proportion to the federal medical assistance percentage.

For example, if the federal medical assistance percentage for a state is 60%, then the state would retain 40% of the recovery and the federal government would be entitled to the remaining 60% of the recovery.  But if the state has its own False Claims Act that is in compliance with federal law, that state would retain 50% of the recovery, and the federal government would receive the remaining 50%.

Under the qui tam, or whistleblower, provisions of the U.S. and California False Claims Acts, a private citizen with knowledge of fraud can sue on behalf of the government and claim a share in the recovery.  Many state and federal probes into Medicare and Medicaid fraud, and government contract fraud are initiated by whistleblower complaints. 

New York’s False Claims Act law was determined to no longer be in compliance with federal law.  New York has since submitted a revised statute to the Inspector General for the U.S. Department of Health and Human Services, and awaits word on whether the revised statute meets federal requirements and qualifies for the 10% incentive.

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.

Parkland Memorial Hospital of Dallas, Texas has agreed to pay a $1.4 million settlement to resolve allegations that they knowingly submitted or caused the submission of false claims to Medicare and Medicaid, the Dallas Morning News reported recently.  Parkland has also agreed to enter into a corporate integrity agreement with federal health regulators to monitor future claims, bills, clinical quality, patient safety, ethics, and compliance.  This represents the fourth time the government has prosecuted Parkland in recent years, according to the Dallas Morning News.

Parkland allegedly submitted claims for rehabilitation consultations that were never ordered and that exposed some patients to risk of further injury.  Medical residents also allegedly performed certain procedures without the required supervision.

The lawsuit was originally filed by Dr. Lien Kyri, formerly a medical resident at Parkland Memorial Hospital, under the whistleblower provisions of the False Claims Act.  The False Claims Act allows private citizens with knowledge of fraud to sue on the behalf of the government and receive a share of the recovery.  Dr. Kyri’s share of the settlement has not yet been determined.

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.

In the largest drug safety settlement of its kind to date, generic drug manufacturer Ranbaxy USA Inc. pleaded guilty to felony charges relating to the manufacture and distribution of adulterated drugs, as well as violation of the False Claims Act, the U.S. Department of Justice announced this week.  Ranbaxy agreed to pay a criminal fine and forfeiture amounting to $150 million and another $350 million for the False Claims Act violations.

Ranbaxy admitted to distributing certain batches of adulterated drugs made at two of Ranbaxy’s manufacturing facilities in India, including Sotret, an acne medication; gabapentin, a drug used to treat epilepsy and nerve pain; and ciprofloxacin, a broad-spectrum antibiotic.  Under the federal Food, Drug, and Cosmetic Act (FDCA), a drug is adulterated if the methods used in, or the facilities or controls used for, its manufacturing, processing, packing, or holding do not conform to, or are not operated or administered in conformity with, current Good Manufacturing Practice (cGMP) regulations.  Ranbaxy acknowledged that Food and Drug Administration (FDA) inspections found incomplete testing records, inadequate stability programs, and cGMP deviations in the manufacture of certain active pharmaceutical ingredients and finished products.

Ranbaxy also failed to file timely “field alerts” to the FDA for batches of drugs that had failed certain tests.  Ranbaxy admitted to making false, fictitious, and fraudulent statements to the FDA regarding the dates of stability tests and failed to conduct stability tests at prescribed intervals, resulting in unreliable test results regarding the shelf life of the drugs.  

The United States contends that Ranbaxy knowingly caused false claims to be submitted to Medicaid, Medicare, the Department of Veterans Affairs, and other federally funded healthcare programs.

The suit was originally filed by Dinesh Thakur, a former Ranbaxy executive, under the whistleblower provisions of the False Claims Act.  The False Claims Act allows a private citizen with knowledge of fraud to sue on behalf of the government and share in the recovery.  Thakur will receive approximately $48.6 million from the federal share of the settlement amount.

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.

A federal jury has found South Carolina-based Tuomey Healthcare System violated the Stark Law and the False Claims Act when it collected nearly $40 million in fraudulent Medicare claims, reported Sumter, S.C.’s The Item.

Tuomey Healthcare System was accused of signing 19 doctors to lucrative part-time contracts that paid well above fair market value in order to continue to receive the referral fees associated with those doctors’ procedures.  Paying doctors out of their referral fees constitutes an illegal kickback under Medicare law, and the U.S. government sought to recover all of the Medicare claims filed as a result of procedures performed by those 19 doctors between 2005 and 2009.

The lawsuit was originally filed by Dr. Michael Drakeford under the whistleblower provisions of the False Claims Act, which allows private citizens with knowledge of fraud to sue on behalf of the government and share in a portion of the recovery.  Drakeford’s share of the reward has yet to be determined, but according to The Item, he has said that his portion of the award will go toward charitable health care efforts in the Sumter community.

The settlement amount, including fees, fines, and penalties, has yet to be determined.  Tuomey has 28 days to file an appeal.

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.

The United States filed a second false claims action against Novartis Pharmaceuticals Corp. alleging that they paid kickbacks to doctors to induce them to prescribe Novartis pharmaceutical products that were reimbursed by federal health care programs, the Justice Department announced last week.

The government alleges that from January 2001 through November 2011, Novartis systematically violated the Anti-Kickback Statute, which prohibits payment of remuneration to induce referrals of items or services covered by Medicare, Medicaid, and other federally funded programs.  Novartis allegedly violated its own internal policies concerning speaker programs, which require that the programs have an educational purpose and that slides about the company’s drugs be presented.  Novartis allegedly violated the Anti-Kickback Statute by paying doctors to speak about certain drugs, including its hypertension drugs Lotrel and Valturna and its diabetes drug Starlix, at events that were often little or nothing more than social occasions for the doctors.  The payments and lavish dinners given to the doctors were, in reality, kickbacks to the speakers and attendees to induce them to write prescriptions for Novartis drugs.  In many instances Novartis made payments to doctors for purported speaker programs that either did not occur at all or that had few or no attendees, and thousands of programs were held all over the country at which few or no slides were shown and the doctors who participated spent little or no time discussing the drug at issue.

The government claims that Novartis was well aware that its speaker programs created opportunities to provide kickbacks to doctors.  In September 2010, Novartis entered into a settlement with the U.S. Department of Justice to settle False Claims Act lawsuits based in part on violations of the Anti-Kickback Statute due to illegal remuneration paid to doctors through such mechanisms as speaker programs, and signed a corporate integrity agreement with the U.S. Department of Health and Human Services Office of Inspector General agreeing to implement a rigorous compliance program.  Nonetheless, even after entering into the corporate integrity agreement, Novartis’s compliance program allegedly failed to prevent kickbacks from being paid in conjunction with Novartis’s speaker programs.

As a consequence of its alleged violations of the Anti-Kickback Statute, Novartis has caused the submission of numerous false claims for drugs to federal health care programs, including Medicare, Medicaid, TRICARE and the Department of Veterans Affairs health care program, resulting in millions of dollars in reimbursements. Novartis’s unlawful conduct caused those false claims to be made to and paid by the federal health care programs.  

The lawsuit was originally brought by former Novartis sales representative Oswald Bilotta under the whistleblower provision of the False Claims Act.  The False Claims Act allows private citizens with knowledge of fraud to sue on behalf of the government and share in the recovery.  The U.S. seeks treble damages and penalties under the False Claims Act as well as damages under the common law.

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.