West Palm Beach Whistleblower & Fraud Lawyer

Every year, our federal, state and local governments are defrauded out of billions of dollars by dishonest contractors, business people and other cheats. To combat this fraud, lawmakers have enacted laws to encourage people who know about government fraud to “blow the whistle” by reporting this wrongdoing.

Companies who cheat the government are subject to penalties of up to three times the amount of their fraudulent billings. Moreover, the whistleblower who reports the fraud can receive a reward of up to 15% to 30% of the funds recovered by the government. Contact our experienced West Palm Beach whistleblower & fraud lawyers to learn more.

Types Of Fraud

There are three laws that whistleblowers commonly use to report fraud to the Government.

The False Claims Act

First, the False Claims Act, 31 USC §§ 3729 – 3733, prohibits government contractors and other persons or companies who do business with the government from submitting false claims for payment, making false statements in connection with false claims, knowingly retaining or keeping any overpayments of government money, or conspiring to do any of the above.

If a whistleblower knows about government fraud, the False Claims Act allows that whistleblower to file a lawsuit against the wrongdoer under seal. The Government then investigates the whistleblower’s allegations and makes a decision to either (a) take over the lawsuit, or (b) allow the whistleblower to continue the lawsuit on his or her own. In either event, if the lawsuit is successful, the whistleblower receives a share of any proceeds recovered in the lawsuit. To learn more, see the Frequently Asked Questions below.

The SEC Whistleblower Law

The Securities and Exchange Commission, also known as the SEC, has its own whistleblower law at 15 U.S.C. § 78u-6. If a whistleblower knows about a person, business or company that is committing securities fraud, the whistleblower can report that information to the SEC and earn a reward.

Unlike the False Claims Act, the whistleblower need not file a lawsuit to report the information. Instead, the SEC has established a Whistleblower Office to receive and review reports of fraud. If the whistleblower’s information leads to a penalty or fine against the fraudster, the whistleblower can be entitled to a share of any fines or penalties recovered. To learn more, see the Frequently Asked Questions below.

The IRS Whistleblower Law

The Internal Revenue Service, also known as the IRS, has its own whistleblower law at 26 USC § 7623. Under that law, the IRS is authorized to pay rewards to whistleblowers who help detect and prosecute tax cheats, when the amount of unpaid taxes in dispute is more than $2 million. The IRS has established a Whistleblower Office to collect and evaluate information received from IRS whistleblowers. These whistleblowers must report their information using IRS Form 211. If the whistleblower’s information leads to a recovery, the whistleblower may be entitled to a portion of that recovery as a reward. To learn more, see the Frequently Asked Questions below.

Florida Whistleblower Qui Tam FAQs

What is the False Claims Act?

The False Claims Act is a federal law located at 31 U.S.C. §§ 3729-3733 intended to protect the federal government from fraud. Also known as the “Lincoln Law,” Congress first enacted the False Claims Act during the Civil War to protect the federal government from fraudulent overbilling by wartime contractors. More than 150 years later, the False Claims Act continues to serve as a vital tool to protect the government from dishonest contractors, vendors and other recipients of government money.

The False Claims Act works so well because it encourages those who know about fraud to blow the whistle and report wrongdoing. In general terms, the False Claims Act prohibits people or companies who do business with the Government from doing the following:

Submitting, or causing to be submitted, false or fraudulent claims for direct or indirect payment by the Government.
Making, or causing to be made, false statements or records material to a false of fraudulent claim.
Making a “reverse false claim.” This is when a person or company knowingly under-reports an obligation to pay money to the Government or improperly keeps money after an over-payment from the Government.
Conspiring to do any of the above.

If a private citizen knows that somebody has committed one of the above violations, the False Claims Act allow that person to become a whistleblower by filing a lawsuit in federal court. The lawsuit remains under seal for at least 60 days, usually longer. During that time, the Government investigates the allegations of the lawsuit and then makes a decision whether to intervene, which means to take over the case. If the Government declines to intervene, the whistleblower has the option to continue the lawsuit on his or her own in order to prosecute the fraud on behalf of the Government.

The False Claims Act provides powerful remedies for the Government. If a Defendant violates the Act, the Defendant can be held liable for up to three times the amount of damages suffered by the Government, as well as penalties.

The False Claims Act also provides for substantial rewards for whistleblowers, also called relators. In intervened cases, the relator is entitled to an award of at least 15% but not more than 25% of the Government’s recovery. In non-intervened cases, the relator is entitled to a larger share, at least 25% but not more than 30% of the Government’s recovery.

To view the entire False Claims Act, click here.

What does “qui tam” mean?

Cases brought under the False Claims Act are sometimes referred to as “qui tam” actions. This is a legal nod to the days of common law when litigants could ask the Courts to issue a Writ of Qui Tam. “Qui Tam” is shortened version of the Latin phrase “ qui tam pro domino rege quam pro se ipso in hac parte sequitur,” meaning “who sues in this matter for the king as well as for himself.” The ancient writ allowed commoners to sue for economic damages that been inflicted against the King.

American courts no longer issue Writs of Qui Tam, but the False Claims Act allows for the same type of remedy. Thus, the Act allows a private citizen to become a whistleblower and bring a lawsuit “in the name of” the Government (we don’t have Kings anymore) and sue for harm suffered by the government.

Whistleblowers who bring qui tam lawsuits are also called “Relators.” Relators are sometimes employees or ex-employees of the fraudster, but not always. A Relator might be also be a competitor, an independent contractor, or anyone else who knows about the fraud.

A Relator does not sue to recover money for himself or herself. Instead, the Relator stands in the shoes of the Government and asks the jury or court to award money to the Government for damages suffered by the Government.

As an incentive to report fraud, the False Claims Act allows Relators to share in the Government’s recovery and receive from 15% to 30% of the money recovered, depending on a number of factors.

In this regard, the False Claims Act creates a public-private partnership in the fight against fraud. This partnership has been extremely successful, resulting in billions of dollars recovered for the Government through False Claims Act cases.

What is a “Relator”?

A “Relator” is another term for whistleblower. The Relator exposes government fraud by reporting it to the government and filing a False Claims Act lawsuit. When the lawsuit is filed, the Relator’s name appears in the caption of the lawsuit, which stay under seal for at least 60 days, but usually longer, so that the Government can investigate the Relator’s allegations.

If the lawsuit is successful, a Relator can receive a reward of 15% to 30% of the total amount of damages, fines and penalties recovered by the government. The exact amount recovered will depend on a number of factors, including the helpfulness of the Relator’s information, how quickly the Relator came forward to report the fraud, and whether the Relator played any role in the fraud.

Relators come in all shapes and sizes. Some are employees or ex-employees of the fraudster. Some are competitors, tired of watching other companies achieve successes in the marketplace through fraud and dishonesty.

It takes courage to become a whistleblower. Indeed, many successful Relators report that they did not bring their whistleblower cases for the money. Instead, they were motivated to report fraud because they wanted to do the right thing. Many times, fraud does more than merely cheat the taxpayers. Fraud can also create real danger to patients who are exposed to unnecessary medical procedures, to soldiers who are unknowingly supplied with defective equipment, and to other innocent bystanders. Relators frequently report that their internal reports and warnings about fraud were completely ignored by their superiors, and they turned to the False Claims Act after being shunned in the workplace.

The False Claims Act is not like an internal complaint that can be ignored by management. The False Claims Act hits fraudsters where it hurts — in the pocketbook.

What does “Original Source” mean?

In some qui tam cases, the whistleblower, also called a “Relator,” must prove that he or she is the “original source” of the information. In particular, the False Claims Act contains a public disclosure provision, which allows the Court to dismiss a qui tam lawsuit if it involves allegations of fraud or wrongdoing that have already been disclosed to the public or to the Government through certain avenues. The idea is to prevent a person from, for example, reading a newspaper story about fraud and then attempting to claim a qui tam reward for “reporting” the very same fraud to the Government.

Therefore, under the False Claims Act, 31 U.S.C. § 3730(e), the Court can dismiss a qui tam suit if it involves allegations that have already been publicly disclosed in one of the following ways:

(1) in a federal criminal, civil or administrative hearing in which the Government or its agent is a party;

(2) in a Congressional, Government Accountability Office, or other federal report, hearing, audit, or investigation; or

(3) in the news media.

If one of these public disclosures has been made, a whistleblower has only two ways to avoid dismissal of the qui tam suit.

First, the whistleblower can prove that he or she is the “original source” of the information. “Original source” means either (A) a person who, prior to the public disclosure, voluntarily disclosed the same information to the Government, or (B) a person who has knowledge that is independent of and materially adds to the publicly disclosed information. Under (A) or (B), however, the whistleblower must voluntarily provide the information to the Government before actually filing the qui tam lawsuit with the Court.

Second, the whistleblower can avoid dismissal if the Government decides to oppose dismissal of the lawsuit. Specifically, Congress has given the Government special power under 31 U.S.C. § 3730(e)(4)(A) to keep a qui tam case alive, even though it involves publicly disclosed allegations, and even though the whistleblower does not qualify as the “original source.” The Government rarely exercises this power however.

What compensation can a Relator/Whistleblower earn?

Finding fraud against the government can be a difficult business. Many frauds are complex and cleverly concealed by the fraudsters. Entire teams of government auditors and investigators never find the fraud working alone.

Other times, the fraud is more obvious, but the government agents in charge of disbursing funds are so overworked or overburdened that they cannot detect the fraud by themselves.

The False Claims Act has an answer. The Act recognizes that one honest employee can do more to uncover fraud then hundreds of Government auditors or investigators.

But how to motivate that honest employee to come forward? After all, becoming a whistleblower is difficult, and the employee might face ridicule, retaliation, and oppression at work.

One answer lies in the financial incentives offered to whistleblowers. If a whistleblower files a qui tam case, and the Government intervenes in that case, whistleblowers are entitled to recover “at least 15 percent but not more than 25 percent” of the proceeds of the action under 31 U.S.C. § 3730(d). This means the whistleblower gets a portion of the Government’s recovery as reward for blowing the whistle.

If the Government does not intervene, and the whistleblower elects to continue the case on his or her own, the whistleblower is entitled to a larger reward – between 25 percent and 30 percent of the recovery. This is because the whistleblower and his or her lawyers do more work in a non-intervened case.

The money awarded to the whistleblower is usually referred to as the “Relator’s Share.” The Department of Justice determines the exact amount to be awarded to the whistleblower based upon a number of factors, such as the value of the information provided by the whistleblower, and whether the whistleblower came forward immediately or waited for a long time to report the fraud.

The whistleblower and his or her lawyers usually negotiate an agreed Realtor’s Share amount with the Department of Justice. In the event the Relator and Department of Justice cannot agree, the False Claims Act allows the Court to decide the amount of Relators Share.

In all cases, the Court has discretion to reduce the Relator’s Share if it finds that the whistleblower “planned and initiated” the wrongful conduct at issue.

Can a whistleblower be fired?

No. Under the laws of most states, it is illegal for an employer to retaliate against a whistleblower who has reported, or attempted to report, the illegal conduct of the employer. Retaliation is not limited to firing, but also includes demotion, suspension, pay reduction, unfavorable job transfer, harassment, unfavorable changes to job duties, and other forms of adverse treatment in the workplace.

Unfortunately, the fact that retaliation is illegal does not mean that employers won’t do it.

Many whistleblowers make their first decision to consult a lawyer, not because they believe they have a qui tam case, but because they have a retaliation case. The two types of cases are different. In a qui tam case, the whistleblower reports fraud to the government and claims a share of the recovery. In a retaliation case, the whistleblower seeks damages against the employer for retaliating against the employee after he or she reported fraud.

If a qui tam whistleblower suffers retaliation, he or she has a claim against the employer under the False Claims Act, 31 USC § 3730(h). To prevail in a retaliation claim, the whistleblower must prove the following:

The whistleblower brought a qui tam action, reported a false claim to the federal government, or took some other form of action in furtherance of reporting fraud to the government;
The employer knew about the whistleblower’s actions; and
The employer discriminated against the whistleblower as a result of the whistleblower’s actions.

If the whistleblower prevails, the whistleblower is entitled to significant remedies including

double back pay;
interest on the back pay;
reinstatement of job status to the same position the whistleblower maintained before reporting fraud;
any special damages including but not limited to lost commissions, bonuses, raises, vacation pay or other fringe benefits: and
recovery of attorney’s fees.

As stated, many states have their own whistleblower laws, which prohibits employers from retaliating against employees for reporting the illegal conduct of their employers.

Accordingly, an employee who has just been fired for reporting the illegal conduct of their employer has a number of difficult legal decisions to make including

Should I file a state-law retaliation claim in state court?
Should I file qui tam case, which may be under seal for several years?
Should I add a retaliation claim to the sealed qui tam case?

These are difficult strategy decisions that need to be made with the advice and guidance of a lawyer who is skilled in both qui tam cases and retaliation cases.

What is procurement fraud?

In many ways, the Government operates like any other business. Every day, the Government must buy or “procure” billions of dollars worth of goods and services to keep its operations running. Governments procure everything from paperclips and office supplies, to roads, bridges and even fighter planes.

Unfortunately, dishonest contractors find it far too easy to cheat the government in the procurement process. This is called “procurement fraud.”

Common procurement fraud schemes include the following:

Billing for goods and services that were never delivered or rendered
Double billing – charging more than once for the same goods or service
Billing for marketing, lobbying or other non-contract related corporate activities
Submitting false service records or samples
Presenting broken or untested equipment as operational and tested
Shifting expenses from one fixed-price contract to another
Billing for premium equipment but actually providing inferior equipment
Defective testing – certifying that something has passed a test, when in fact it has not
Falsifying natural resource production records — pumping, mining or harvesting more natural resources from public lands than is actually reported to the government
Being over-paid by the government for sale of a good or service, and then not reporting that overpayment
False certification that a contract falls within certain guidelines (i.e. the contractor is a minority or veteran)
Billing in order to increase revenue instead of billing to reflect actual work performed
Failing to report known product defects in order to be able to continue to sell or bill the government for the product
Billing for research that was never conducted and/or falsifying research data that was paid for by the U.S. government
Winning a contract through kickbacks or bribes

What is set-aside contract fraud?

Government Set-Aside Programs

An area of federal spending ripe for fraud is the government procurement process for small and disadvantaged business enterprises (DBEs). The United States government is the world’s largest consumer of goods and services. Federal statutes dictate that a percentage of government purchases and contracts must go to small, minority-owned, women-owned, veteran-owned, and service-disabled-veteran-owned businesses. These federal regulations require that a portion of government procurement contracts be reserved or set aside for these types of businesses without putting the contracts up for competitive bid. The dual purpose behind these federal set-aside requirements is to forbid gender or racial discrimination in government contracting and to level the competitive playing field for disadvantaged businesses as to traditional more-established businesses in securing government contractual work.

When unscrupulous business owners falsely claim that they qualify to obtain government contracts under these set-aside programs, both taxpayers and the legitimately-qualified disadvantaged businesses suffer. In general, to qualify for a small or disadvantaged business government set-aside contract, a business must have less than 500 employees and less than $5,000,000 annual revenue. In addition, to further qualify for set-aside contracts as a minority-owned (MOSB), women-owned (WOSB), veteran-owned (VOSB) or service-disabled-veteran-owned small business (SDVOSB), a business must certify that it meets certain enumerated criteria, such as: a minority, woman, veteran or service-disabled veteran owns at least 51% of the business and unconditionally controls the day-to-day operations and management of the business. For the most part, these statutory criteria have been self-reported and self-certified, leaving the area open to fraud and abuse.

The False Claims Act

The dollar amount of fraud against United States taxpayers is staggering. Many mechanisms are in place to attack and deter government fraud, including criminal prosecutions and administrative and civil penalties and fines. One of the most effective tools to combat government fraud is found in the False Claims Act (FCA), 31 U.S.C. Sections 3729 to 3733. Under the FCA, a wrongdoer can be held liable for up to three times the amount of fraud it committed against the government. Cases brought under the FCA are often called qui tam or whistleblower actions.

The Presumed Loss Rule

With the recently enacted changes (August 27, 2013) to the Presumed Loss Rule of the Small Business Administration Act, qui tam whistleblowers have even more power to hold contractors who pretend to be small businesses accountable for fraudulently obtained government contracts. Under the amended Presumed Loss Rule, a contractor misrepresenting itself as a qualified small business (a false certification) can be held liable for three times the amount it received under a government contract EVEN IF the government received the full benefit of the contractor’s services.

Prior to the enactment of these changes, unqualified contractors who misrepresented themselves as small businesses and who illegally obtained set-aside contracts were only subject to civil penalties of $5,500 to $11,000 per false claim (or false invoice). These fraudulent contractors would often successfully claim as a damages defense that there was no loss to the government because the contractor had provided the services contracted for by the government. This defense did not take into account the loss suffered by small and disadvantaged businesses who were cheated out of the government contract work specifically set aside for them. The defense also gave an unfair advantage to unscrupulous contractors over legitimate contractors who followed the rules and complied with the requirements for set-aside contracts and competitive bidding processes. The amended Presumed Loss Rule combined with the False Claims Act now holds businesses liable for three times the amount of the contract dollars they falsely obtained from the government.

Whistleblower Criteria

If you know of a business, contractor, or subcontractor taking unfair advantage of set-aside government contracts for small or minority-owned, women-owned, veteran-owned, or service-disabled-veteran-owned businesses, you may qualify as a whistleblower. Whistleblowers who report the fraud can recover a monetary percentage of up to thirty percent (30%) of the amount of loss recovered by the government (calculated with triple damages).

What is healthcare fraud?

Approximately 80% of all False Claims Act cases involve Healthcare Fraud. Every year, federal and state governments reimburse billions of dollars to healthcare providers through the Medicare and Medicaid programs.

Unfortunately, many healthcare providers find it easy to defraud Medicare, Medicaid and other government programs. While the range of fraud schemes can be infinite, healthcare fraud commonly falls into one of four categories.

Lying About Service Performed or Goods DeliveredFirst, many healthcare providers lie to the government about the goods and services they have delivered to patients. As an example, providers might manipulate the current procedural terminology or “CPT” codes in order to bill the government for more expensive procedures, when in fact, less expensive procedures have been performed. Providers might also manipulate records to show a physician performed certain work, when in fact, the work was performed by someone else, such as a nurse or medical assistant.
Unnecessary Medical ProceduresNext, many healthcare providers perform unnecessary medical procedures on patients in order to increase their billing to the federal government. This is one of the most dangerous frauds since it puts patient safety at risk. In extreme cases, the government has even prosecuted physicians for performing surgeries that were medically unnecessary — the physician performed the surgery solely to generate revenue.
Stark LawNext, healthcare providers must comply with important federal laws when delivering healthcare services and billing the government. One of these laws is the Stark Law. In general, the Stark Law protects patients by prohibiting healthcare providers from making certain referrals of medical services to entities that the healthcare provider owns or in which he or she has a financial interest. In other words, a physician should make referrals in the best interest of the patient, not in their own financial best interests. When healthcare providers violate the Stark Law, it gives rise to fraud.
Anti-Kickback LawHealthcare providers must also comply with the Anti-Kickback Law. This law prevents physicians and other healthcare providers from receiving any money, gifts, or other kickbacks in exchange for referring a patient for certain medical services. Again, the goal is to protect patients by ensuring that medical referrals are made in the patient’s best interest, not in exchange for kickbacks between medical providers. When doctors get a kickback for referring a patient to another doctor, this may give rise to an action under the False Claims Act

What is the Stark Law?

The Stark Law is a federal law found at 42 U.S.C. § 1395nn that prohibits doctors from making referrals of Medicare and Medicaid patients for certain “designated health services” to entities in which the doctor (or an immediate family member of the doctor) has a financial relationship.

The purpose of the law is to make sure doctors make referrals that serve the best interest of their patients, rather than the best interest of their own wallets. Thus, a doctor cannot refer a patient to get a CT scan or X-ray at an imaging center owned by the doctor (or the doctor’s family). A referral is defined broadly as a request by a doctor for the patient for some designated service payable by Medicare or Medicaid, or a request by a doctor for the “establishment of a plan of care” that includes any designated service.

The Stark Law only prohibits doctor referrals regarding certain “designated” services, such as the following:

durable medical equipment;
prosthetics, orthotics, and prosthetic devices and supplies;
home health services;
inpatient and outpatient hospital services;
clinical lab services;
physical therapy services; and
radiology and imaging services.

This list is not exhaustive. The specific services are either designated in federal regulations (42 C.F.R. § 411.351) or are published by the Centers for Medicare & Medicaid Services in an annual list of CPT and HCPCS codes.

The doctor’s financial relationship with the entity may be an “ownership” or an “investment interest,” or it may be a so-called “compensation arrangement.” These terms have highly technical definitions under Medicare regulations. An ownership or investment interest includes things like stock or ownership shares, as well as loans, bonds, or other financial instruments that are secured with the entity’s property or revenue. The ownership or investment interest may be owned directly or indirectly. An indirect ownership or investment interest may exist where there is an “unbroken chain” of persons or entities having an ownership or investment interest in the entity providing health services, provided that the entity has actual knowledge, recklessly disregards, or deliberately ignores the fact that the doctor has some indirect ownership interest.

A compensation arrangement is defined by Medicare regulations as any arrangement involving direct or indirect remuneration (i.e., any payment or benefit exchanged) between a doctor (or the doctor’s immediate family) and the entity. As with an indirect ownership or investment interest, an indirect compensation arrangement exists when there is an “unbroken chain” of compensation arrangements between the doctor and the entity. In addition, the indirect compensation arrangement must vary with or take into account the number of referrals made, and the entity must have actual knowledge, must recklessly disregard, or must deliberately ignore the fact that the doctor receives indirect compensation as a result of the referral.

Violations of the Stark Law may give rise to a claim under the False Claims Act, because no entity may submit a claim for payment by Medicare or Medicaid for services rendered pursuant to a prohibited referral. Any amount paid by Medicare or Medicaid for improperly referred services must be returned to the government. Such suits are frequently pursued by qui tam plaintiffs on the government’s behalf.

The Stark Law is complicated, however, and contains numerous exceptions. If you suspect a violation of the Stark Law, contacting the right attorney can be critical.

To view the Stark Law, click here.

What is the Anti-kickback Statute?

The Anti-Kickback Statute is a federal law (codified at 42 U.S.C. §1320a-7b.1395nn) that prohibits healthcare providers from giving, or taking, bribes and kickbacks in exchange for referring Medicare patients for other medical services. Like the related Stark Law, the purpose of the Anti-Kickback Statute is to make sure doctors make referrals of Medicare and Medicaid patients that are in the patients’ best interest, rather than the best interest of the doctors’ own wallets. The law discourages doctors from making referrals for medically unnecessary or inappropriate services and, in the process, it reduces fraud on the government.

Specifically, the law prohibits the willful solicitation or receipt of remuneration in return for referrals of patients for services for which payment may be made in whole or in part under Medicare or Medicaid. The law also bars any offer or payment of remuneration to induce such referrals. “Remuneration” may be direct or indirect, and courts applying the Anti-Kickback Statute have interpreted the term broadly to mean “anything of value.”

Kickback and bribes come in all varieties. Some are obvious, like doctors who accept cash or untraceable gift cards in exchange for referrals. (Yes, this really happens). Others are more subtle. For instance, it could be an illegal kickback if a hospital gives a doctor free or reduced rent in exchange for the doctor’s “unofficial” agreement to refer patients to the hospital.

Medicare regulations provide for several, often confusing, exceptions to the “remuneration” rule. If you suspect a violation of the Anti-Kickback Statute, it is important to find a lawyer who has experience interpreting the Medicare regulations in order to evaluate your case.

Violations of the Anti-Kickback Statute may give rise to a claim under the False Claims Act. Whistleblowers who disclose violations of the Anti-Kickback Statute to the federal government may recover up to 25% or 30% of the fraudulent damages caused by the violations, depending on whether the federal government decides to intervene in the case.

To view the Anti-kickback Statute, click here.

What are some common healthcare fraud schemes?

The number and variety of Healthcare Fraud schemes is limited only by the imagination and cunning of the fraudsters who commit them. Common healthcare fraud schemes include the following:

Performing inappropriate or unnecessary medical procedures in order to increase Medicare reimbursement
Billing for work or tests not performed
Automatically running a lab test whenever the results of some other test fall within a certain range, even though the second test was not specifically requested
Unbundling – Submitting multiple billing codes instead of one billing code for a drug panel test in order to increase remuneration
Bundling — billing more for a panel of tests when a single test was asked for
Upcoding – Inflating bills by using diagnosis billing codes that suggest a more expensive illness or treatment
Billing for brand — billing for brand-named drugs when generic drugs are actually provided
Phantom employees and doctored time slips: charging for employees that were not actually on the job, or billing for made-up hours in order to maximize reimbursements
Upcoding employee work: billing at doctor rates for work that was actually conducted by a nurse or resident intern
Prescribing a medicine or recommending a type of treatment or diagnosis regimen in order to win kickbacks from hospitals, labs, or pharmaceutical companies
Billing for unlicensed or unapproved drugs
Forging physician signatures when such signatures are required for reimbursement from Medicare or Medicaid

What is a medical necessity claim?

The “medical necessity doctrine” refers to medical treatment that is justified as reasonable, necessary, and appropriate based on clinical standards of care. Medicare, however, does not pay for items or services that are not “reasonable and necessary for the diagnosis or treatment of illness or injury….”

Because the providing of a certain medical item or treatment is often considered a subjective “judgment call” for the treating physician, Medicare has established standards that determine what “indications” a patient must exhibit in order for Medicare to pay a claim. The Centers for Medicare and Medicaid Services (“CMS”) routinely publishes policy guidance materials for healthcare providers concerning reimbursement issues, including National Coverage Determinations (“NCDs”) and Local Coverage Determinations (“LCDs”). NCDs and LCDs contain specific guidelines regarding appropriate billing and coding procedures and the proper indications for providers to follow to be legally reimbursed by Medicare.

Providers who knowingly provide items or services to patients without following the applicable NCD and LCD guidelines for medical necessity may find themselves defending a qui tam case under the federal False Claims Act. The provision of unnecessary medical procedures is an increasingly common area for Medicare fraud and ensuing whistleblower claims.

The central reason that the provision of medically unnecessary items or services is increasingly common is that most patients go along with a provider’s recommended plan of care without questioning the recommendation. Instead, the patient just trusts the provider. It is not uncommon, however, for providers to bill thousands, and sometimes millions, of dollars to Medicare for unnecessary medical procedures without the patients knowing that the treatments were unnecessary in the first place.

When certain medical procedures are systemically or routinely billed by a provider to a level that is much higher than the average number of procedures for a given geographic area, there may be indicia of a lack of medical necessity and, as a result, signs of Medicare fraud.

When a witness (often a current or former employee of the provider) observes frequent provision or prescription of unnecessary medical items or treatments, there might be a “false claim” each time that item or treatment is submitted to Medicare for reimbursement. When the problem is systemic and involves a large provider, this often results in millions of dollars in false claims. Witnesses with firsthand knowledge or evidence of a medical-necessity fraud should consider filing a whistleblower qui tam claim under the False Claims Act. If the claim results in a settlement or recovery, the whistleblower may receive 15-30% of the damages that the Government recovers from the recipient of the Medicare reimbursement.

What is Upcoding?

Upcoding is a form of healthcare fraud that involves manipulation of Current Procedural Terminology or CPT codes. Healthcare providers, such as doctors and hospitals, use CPT codes to bill Medicare or Medicaid for their services. Each medical service has its own unique CPT code. A healthcare provider’s bill to Medicare or Medicaid includes a list of these CPT codes for the services supposedly rendered to patients.

The government reimburses different amounts of money for different CPT codes. Reimbursement means the amount of money the provider receives from the government.

As an example, a brief visit to the doctor might call for reimbursement of X, while a longer, more complex visit to the doctor might call for reimbursement of 2X. There are different CPT codes for short routine visits and longer more complex visits.

As another example, a magnetic resonance imaging or MRI test might call for reimbursement of X. But an MRI test with contrast might call for reimbursement of 2X. Contrast is a procedure whereby the patient is injected with a contrast agent that allows the MRI machine to produce additional data, which is necessary for some, but not all, patients. Adding contrast to the MRI test increases the amount of money the healthcare provider receives for giving the test.

A healthcare provider engages in upcoding when he or she lies to the government about the services he or she rendered by using a false CPT, in other words, a CPT code that calls for a higher level of reimbursement (more money). Using the above examples, a provider might lie to the government about the amount of time that was spent with the patient during a visit, or a provider might lie about the type of MRI test that was given to the patient.

This type of fraud not only cheats the taxpayers, it also endangers patient safety since it puts false information into the patient’s medical file.

Whistleblowers who know about upcoding may be able to bring a False Claims Act case to help the government recover its losses from this type of fraud.

What is pharmaceutical fraud?

The pharmaceutical industry is one of the biggest and most powerful industries in the United States. Each year, the federal and state governments reimburse pharmaceutical companies for billions in pharmaceuticals. These reimbursements create a heavy temptation for fraud, which many pharmaceutical companies cannot resist.

“Off-label marketing” is a common pharmaceutical fraud scheme. Pharmaceuticals are heavily regulated and normally require FDA approval for usages and treatments. Oftentimes, pharmaceutical companies, knowing that their drug has been approved for only certain usages, nevertheless market the drug to physicians and the public for treatment of other uses, so-called “off-label” usages. When a pharmaceutical company pushes its product for Government reimbursement for treatments not authorized by the FDA, this is fraud.

The Department of Justice has been vigorous in prosecuting off-label pharmaceutical fraud, resulting in billions and billions of dollars of recoveries.

Other common pharmaceutical fraud schemes include:

Illegal marketing of prescription drugs and devices through kickbacks
Billing for non-FDA approved drugs or devices
Marketing drugs that do not contain the amount of ingredients claims on their labels, so-called “sub-potent” drugs.

What is a CGMP Violation?

CGMP stands for Current Good Manufacturing Practices. These are the rules and regulations that pharmaceutical companies must follow when manufacturing human drugs, medicines and other pharmaceutical products. These rules are intended to make sure that pharmaceutical products are safe, fit for consumption, and meet label claims.

The federal government has published the cGMP rules at 21 CFR parts 210 and 211. The rules set forth the minimum standards for the manufacturing of pharmaceuticals, including the following:

Companies must ensure that the people engaged in the manufacturing of pharmaceuticals have the proper training and background to do their jobs.
Companies must have ongoing training for employees regarding cGMP standards.
Companies must have a procedure to ensuring that the raw ingredients used on the assembly line are actually what they purport to be.
Companies must use, maintains and follow a master formula for each and every pharmaceutical product.
Companies must use and maintains batch records to record the precise ingredients, amounts of ingredients and processes followed in the manufacture of each batch of pharmaceutical products.
Companies must have a testing process in place that tests the product for purity and strength, in the middle of the manufacturing process and at the end of the manufacturing process.
Companies must have procedures to test the active ingredient in each pharmaceutical product. If the product contains two little active ingredient, the product is sub-potent. If the product contains too much active ingredient, the product is super-potent.
Companies must have procedures to ensure that manufacturing facilities are clean and not contaminated.
Companies must have procedures to ensure that machines used in the manufacturing process are properly maintained and calibrated.
Companies must have scientific testing procedures and data to determine pharmaceutical stability. This refers to the amount of time that a given pharmaceutical maintains its strength.
Companies must have procedures to ensure proper labeling. In other words, the company must have procedures to make sure the right label gets on the right bottle.
Companies must have quality control personnel responsible for supervising the manufacturing process for compliance with cGMP rules.

If a pharmaceutical company violates the CGMP rules, the end result product can be considered adulterated within the meaning of the law.

Moreover, a violation of cGMP rules could lead to a qui tam whistleblower lawsuit under the False Claims Act. This is particularly true if the violations are so extensive or severe that the product does not meet label claims. In that scenario, the representations on the label are false. Moreover, in the case of government programs such as Medicare and Medicaid, the pharmaceutical company has caused others, namely, pharmacies, doctors and other healthcare providers, to submit false claims to the government for reimbursement of adulterated pharmaceutical products.

Most importantly, this type of fraud puts patients at serious risk. Doctors and patients trust that pharmaceutical products are safe and that they actually contain the proper amounts of active ingredients listed on their labels.

Does the False Claims Act apply to state and local government?

It depends on where you live. Many states, including Florida, have adopted False Claims Act laws to protect state government from fraud.

Click here for a list of states with False Claims Acts.

Click here to view Florida’s False Claims Act.

Many municipalities, including Broward County, Florida, and Miami-Dade County Florida have enacted False Claims Ordinances to protect county government from fraud.

Click here to view the Broward County False Claims Ordinance.

Click here to view the Miami-Dade County False Claims Ordinance.

What is state government fraud?

Many states, including Florida, have adopted False Claims Act laws to protect state government from fraud. The Florida False Claims Act was modeled after the federal False Claims Act, and it gives many of the same protections to State Government. Fraud against State Government generally follows the same pattern as fraud against the Federal Government, falling into the categories of Procurement Fraud and Healthcare Fraud.

If you think you know about a fraud on State Government, contact us.

What is education fraud?

Each year, the federal government spends billions of dollars in student loans and other aid programs to help people attend colleges, universities and other higher education programs. Many for-profit colleges and institutions take advantage of government aid by committing various forms of fraud against the government. Common fraud schemes include the following:

Falsifying that the institution is “accredited” when it is not.
Lying to the accrediting body to become accredited when, in truth, the school has not met the criteria for accreditation.
Paying commissions, bonuses, or other incentives to professional “recruiters” who recruit students to enroll in the school.
Encouraging students to falsify their academic credentials to obtain federal funding.

Are whistleblowers protected?

A. What is a Whistleblower Retaliation Claim under the Federal False Claims Act?

One of the realities of a whistleblower bringing or reporting a qui tam claim against his or her employer is the potential retaliation against the whistleblower. Retaliation may include the whistleblower getting fired, demoted, suspended, a reduction in pay, denial of a bonus, a job transfer, harassment, a change of reduction of job duties, among other examples. Fortunately, the False Claims Act, 31 U.S.C. 3730(h), protects the whistleblower from this type of retaliation with significant remedies for discrimination. To win a qui tam retaliation case, the whistleblower must prove the following:

The whistleblower brought an action, reported a false claim to the federal government, or took some other action in furtherance of reporting fraud on the government;
That the employer knew about the whistleblower’s actions in reporting false claims that were submitted to a government program; and
That the employer discriminated against the whistleblower as a result of the whistleblower’s actions or reports of the fraud.

Notably, the whistleblower may receive protection against employer retaliation even if the whistleblower has not yet filed a court action under the False Claims Act. A whistleblower’s investigation or research into an employer’s false claims is sufficient to merit protection under the anti-retaliation provisions of the False Claims Act, if the whistleblower’s actions were performed “in furtherance of” a qui tam action. It does not matter the whistleblower ultimately filed the qui tam action; it only matters that the whistleblower was acting in furtherance of bringing an action or reporting fraud.

The remedies available to the whistleblower are significant and a powerful deterrent to employer retaliation. These remedies to the whistleblower include:

Double back pay;
Interest on the back pay;
Reinstatement of seniority status at the same position the whistleblower maintained before reporting the fraud;
Any special damages, including but not limited to possible lost commissions, bonuses, raises, vacation pay, or other fringe benefits; and
Recovery of attorney’s fees and costs.

B. Proving Your Whistleblower Retaliation Claim

If you are concerned about retaliation for bringing a whistleblower qui tam claim, the best thing the you can do is keep a detailed diary, notes or calendar of the employer’s pattern and actions of retaliation.

Here are some suggestions for recording facts that will support a retaliation claim:

List how your job duties have changed or been reduced after you reported the false claims to a supervisor(s);
Take contemporaneous notes of the reaction of your supervisor(s) when you reported the false claims, including the dates, persons met with, and substance of each conversation on the topic;
Keep a hard-copy or electronic calendar (not on your work computer) of important meetings, conversations, and developments that occurred after you reported the false claims;
Keep copies of any performance reviews, including reviews given both before and after you reported the false claims;
Gather payroll, bonus, and/or commission records, including both before and after you reported the false claims;
Document how you have been excluded from certain meetings, projects, duties, conversations, information, documents, or e-mails in which you formerly participated or had access;
Identify any promotions for which you were in line and a less qualified person received the promotion after you reported the false claims; and
Prepare a notebook to keep all records, notes, e-mails, calendars, and reviews organized and in one place.

C. Hiring a Whistleblower Lawyer for Your Retaliation Claim

If you have a retaliation claim against your employer or former employer, Rabin Kammerer Johnson’s Florida whistleblower lawyers have assembled a fantastic team to evaluate and pursue your case. Our qui tam attorneys consist of former federal prosecutors, business litigation specialists, former federal appeals and district court law clerks, investigators of Medicare fraud cases at the United States Attorney’s Office, attorneys who have achieved a multi-million dollar settlement in favor of their whistleblower clients, the former chair of the U.S. District Court for Southern District of Florida Bench and Bar Conference, and the President of the local chapter of the Federal Bar Association.

Should a whistleblower sign a severance agreement?

Many qui tam whistleblowers are asked to sign a severance agreement before they depart from their employment. A severance agreement is a contract between the employee and the employer. In most cases, each side agrees to give something to the other side. Many times, the employer offers to give a lump sum payment, called a severance payment, to the employee. In exchange, the employee must sign a release.

A release is a legal document whereby the employee surrenders his or her legal rights to sue the employer. Most employers draft the release in very broad terms, such that the employee gives up his or her rights to sue the employer for any reason whatsoever, whether known or unknown, arising from any act from the beginning of the world until the present date.

If an employee thinks he or she may have a potential qui tam whistleblower claim arising from fraud committed by the employer against the government, the whistleblower should be very careful about signing a release. Most courts have found that these types of releases violate public policy because their aim is to prevent employees from reporting fraud to the government. However, a small number of courts have found that a release can be enforced, in certain circumstances, to prevent a whistleblower from receiving his or her reward for reporting the fraud. In other words, while the release cannot bar the government from pursuing a claim based upon the whistleblower’s information, the release may prevent the whistleblower from receiving any money for reporting that information.

This is a common defense tactic used by companies who are committing fraud against the government. If the company suspects it has a whistleblower in its midst, the company may offer a severance package that includes an overly broad release. The severance payment can be a cheap way to nip a qui tam case in the bud.

If you are potential qui tam whistleblower and you are being asked to sign a severance agreement or a release, you may wish to consult a lawyer who is skilled and knowledgeable in qui tam cases. Signing a release may have an impact on your future legal rights.

What is the IRS Whistleblower Program?

The Internal Revenue Service (IRS) operates a whistleblower program under the authority of 26 U.S.C. 7623. The purpose of the program is to encourage private citizens to report tax cheats and fraudsters to the government. The program applies only when the amount of unpaid taxes in dispute is more than $2,000,000.

A whistleblower who knows of unpaid taxes in an amount greater than $2,000,000 may file an IRS Form 211 with the IRS Whistleblower Office. The IRS Form 211 should provide detailed information about the tax fraud scheme, the unpaid taxes at issue, and the details of the whistleblower’s evidence.

Unlike the False Claims Act, the whistleblower has no power or authority to press the case without the government. The IRS makes the decision alone. The IRS Whistleblower Office evaluates the Form 211 and makes a decision whether to refer the case for further investigation to one of the IRS’s many investigative offices.

If the whistleblower’s information substantially contributes to a decision by the IRS to take an administrative or judicial action against the tax cheat, and that action later results in the collection of tax, penalties interest or other fines, the IRS may pay an award to the whistleblower of at least 15% but not more than 30% of the government’s recovery. The Whistleblower Office can reduce the award if it finds that the whistleblower planned and initiated the actions that led to the underpayment of tax.

By law, the IRS must report to Congress each year on the activities of the IRS Whistleblower Office and the results obtained. In 2013, the IRS Whistleblower Office received more than 9,000 claims filed by whistleblowers. Claims typically remain open for more than a year. In 2013, the IRS paid 122 awards to whistleblowers for a total of approximately $53 million. The average IRS whistleblower award in 2013 was 14.6% of the IRS’s recovery.

IRS whistleblower cases can last for many years and can be very challenging. Because the whistleblower has little power to push the case once it is filed, the whistleblower should take great care and caution at the outset to present the most compelling case possible by way of the IRS Form 211.

What is the SEC Whistleblower Program?

The U.S. Securities and Exchange Commission (SEC) operates a whistleblower program that incents private citizens to report suspected securities fraud. A tip, if it leads to a successful enforcement action by the SEC, can lead to a multi-million dollar award.

Under the whistleblower program, a whistleblower who voluntarily provides information to the SEC leading to recovery of monetary sanctions over $1 million is entitled to an award of ten to thirty percent of whatever the government recovers. 15 U.S.C. § 78u-6(b)(1). The amount of the bounty is within the discretion of the SEC, but the Act requires the agency to consider the following:

The significance of the information provided to the success of the SEC’s suit;
The degree of assistance provided by the whistleblower; and
The SEC’s interest in deterring violations.

15 U.S.C. § 78u-6(c)(1)(B)(i).

The SEC may also, in its discretion, consider as follows: a) whether the whistleblower’s assistance was ongoing; b) whether the whistleblower provided the information in a timely manner; c) whether the whistleblower experienced any unique hardships by reporting the information; and d) whether the whistleblower shared in culpability for the illegal acts. 17 C.F.R. § 240.21F-6(a)-(b).

A whistleblower will be disqualified from receiving an award if he or she is criminally convicted for any of the securities law violations giving rise to the recovery or if he or she knowingly provides false information. 15 U.S.C. § 78u-6(c)(2)(B), (i). In the event that the SEC makes awards to multiple whistleblowers, the aggregate amount of the awards cannot exceed thirty percent of the amount recovered. 17 C.F.R. § 240.21F-5(c).

If a whistleblower reports the possible violations to his or her company prior to or at the same time as he or she reports the suspicious acts to the SEC, the award may be increased. 17 C.F.R. § 240.21F-6(a)(4). Conversely, if the whistleblower “undermine[s] the integrity” of a corporate internal compliance system or interferes with a company investigation, the amount of the award may be reduced. 17 C.F.R. § 240.21F-6(b)(3). A whistleblower has 120 days from the date of providing his or her company with the information to provide the same information to the SEC. The whistleblower will receive credit for the tip if the company later reports the same information (or the results of an investigation initiated as a result of the information) to the SEC. 17 C.F.R. § 240.21F-4(c)(3).

The information provided must be “original,” as in not known from any other source, and the whistleblower must have “independent knowledge” of the suspected securities law violation. Knowledge gained through an attorney-client relationship, an internal audit or investigation, or a violation of a state or federal law will not qualify an individual for an award. 17 C.F.R. § 240.21F-4(b).

Submissions may be made online at the Office of the Whistleblower’s website or by mail. Tips may be sent to the Office of the Whistleblower anonymously, but anonymous whistleblowers must be represented by an attorney. 15 U.S.C. § 78u-6(d)(2)(A). Each submission must be sworn under penalty of perjury; otherwise, the reporting individual will be disqualified from recovering an award. (In the event the tip is submitted anonymously, the attorney must keep the sworn statement.) 17 C.F.R. § 240.21F-9.

The Dodd-Frank Act also protects whistleblowers from retaliation by employers. The Act specifies that an employer may not “discharge, demote, suspend, threaten, harass . . . or in any other manner discriminate” against a whistleblower for providing information to the SEC and creates a private cause of action against employers for retaliation.

What protections are there if I alert the authorities that my employer is cheating on Medicare or Medicaid?

The law encourages whistleblowers to come forward and report Medicare and Medicaid fraud to the proper authorities. If the whistleblower is an employee of the wrongdoer, the law provides several protections for employees who report fraud.

First, the False Claims Act contains an anti-retaliation provision, 31 USC § 3730(h). This means an employer cannot fire, demote, or take other adverse employment action against an employee in retaliation for reporting fraud. If a whistleblower prevails in a retaliation claim, the whistleblower may be entitled to significant remedies including:

double back pay;
interest on the back pay;
reinstatement of job status to the same position the whistleblower maintained before reporting the fraud;
any special damages including, but not limited to, lost commissions, bonuses, raises, vacation pay or other fringe benefits; and
recovery of attorney’s fees.

Next, many states have their own whistleblower laws, which also prohibit employers from retaliating against employees for reporting the illegal conduct of their employers. These laws, and the remedies they afford to victim employees, vary from state to state.

Many whistleblowers ask whether they can bring their whistleblower claim anonymously. In other words, can they file the claim in such a way that their employer will never learn the identity of the whistleblower?Under the False Claims Act, the answer, in almost all cases, is no. When a False Claims Act case is first filed, it remains under seal for at least 60 days, but more often several months or even years. In most cases, therefore, the employer does not learn the identity of the whistleblower until long after the case is filed. Eventually, the case must come unsealed, however, and the employer can learn the identity of the whistleblower.

If I inform on my employer, am I entitled to a reward?

The journey of a whistleblower is almost always long and difficult. As an incentive to come forward, the False Claims Act offers financial rewards for successful cases. Thus, if a whistleblower files a qui tam case, and the Government intervenes in that case, the whistleblowers may recover “at least 15 percent but not more than 25 percent” of the proceeds of the action under 31 U.S.C. § 3730(d). This means the whistleblower gets a portion of the Government’s recovery as a reward for blowing the whistle. Often times, this reward can be millions of dollars, depending on the size of the fraud.

If the Government does not intervene, and the whistleblower elects to continue the case on his or her own, the whistleblower may receive a larger reward – between 25 percent and 30 percent of the recovery. This is because the whistleblower and his or her lawyers do more work in a non-intervened case than in an intervened case.

Keep in mind that whistleblower awards are far from certain. Less than 25% of False Claims Act cases result in a recovery for the Government (and a resulting whistleblower award). Before filing any claim, a potential whistleblower should consult with a lawyer who is knowledgeable about False Claims Act cases and carefully consider the pros and cons of bringing the case.

How do I know if I have a whistleblower case?

Each year the Government recovers billions of dollars from successful qui tam whistleblower cases. Every successful case begins with one honest person who has the courage to come forward to report the fraud. If you believe you might have a whistleblower case, ask yourself the following questions.

1. Does your employer receive money from, or do business with, any Governmental Agency?

Federal, State, Local, Medicare, Medicaid, etc.

2. If so, has your employer cheated the Government in any way?

Over-billing, double-billing, submitting false invoices
Falsifying records required for payment
Lying about compliance with terms and condition of the contract
Being overpaid and not returning the over-payment
Knowingly delivering defective or sub-standard products or services
Winning a contract through kickbacks or bribes

3. Has your employer lied in order to obtain a Government contract?

Status as a Small Business, Minority-Owned Business, or Veteran-Owned Business
Qualifications to perform the contract

4. Do you work in the healthcare industry?If so, have you seen any of the following:

Billing for services not performed
Upcoding – performing one procedure then billing for another
Bundling or unbundling – manipulating CPT codes for maximum billing
Performing unnecessary medical procedures to generate bills
Forging doctor signatures or records
Paying kickbacks or bribes in exchange for referrals

5. Do you work in the pharmaceutical industry?If so, have you seen any of the following:

Promoting a drug for uses not approved by the FDA.
Payment of kickbacks or incentives to induce doctors to prescribe a drug.
Payment of kickbacks or incentives to induce favorable medical research for a drug.
Violation of manufacturing or testing procedures, resulting in sub-standard, weak or adulterated drugs.

6. If You Know About Fraud,

Which Government Agency is being defrauded?
Who is committing the fraud?
How does the fraud scheme work?
How long has it been going on?
How much money has been defrauded?
What evidence do you have to prove the fraud?

If you believe you have a valid qui tam whistleblower case, you should contact an attorney with knowledge and experience in handling these types of case.

What are some common areas of fraud that are prosecuted under the False Claims Act?

It is impossible to predict all of the various ways fraudsters can and will cheat the Federal Government. However, here are some common areas of fraud prosecuted under the False Claims Act each year.

Procurement Fraud

Procurement is the process by which the Federal Government buys all of the goods and services it needs to conduct its business. The Federal Governments procures everything from office supplies to military equipment.

Dishonest contractors violate the False Claims Act when they cheat the Government in the procurement process. Common procurement fraud schemes include billing for goods and services that were never delivered, over-billing for goods and services, falsifying invoices, winning a procurement contract by way of a bribe, and knowingly delivering substandard, defective or non-conforming goods.

Healthcare Fraud

The Federal Governments pays billions of dollars each year to healthcare providers through the Medicare and Medicaid programs. Medicare is a federal program that provides health care to the elderly. Medicaid is a joint federal and state program that provides health care to the poor and disadvantaged.

To qualify for government funds, healthcare providers must conform to important federal laws governing healthcare services, including the Stark Law and the Anti-kickback Law, both designed to ensure that healthcare providers make referrals that serve the best interest of their patients, rather than the best interest of the providers’ own wallets. When healthcare providers violate the Stark and Anti-kickback laws, they commit fraud.

Healthcare providers also committed fraud by engaging in bogus and dishonest billing schemes. These might include billing for services never performed, performing medically unnecessary procedures in order to generate billing, or manipulating CPT codes in order to fraudulently maximize billing.

Set Aside Contract Fraud

Doing business with the Federal Government can be very profitable. Each year, the Federal Government reserves a certain number of contracts, for public policy reasons, to be awarded to disadvantaged groups, such as small businesses, minority-owned businesses, veteran-owned businesses, and service-disabled veteran-owned businesses. In order to qualify for these set-aside contracts, the contract applicant must meet the criteria for membership in the specific group for whom the contract is reserved.

Unfortunately, many fraudsters lie about their status in order to receive one these set-aside contracts. When a contractor lies about its status, or its ongoing right to receive a set-aside contract, this constitutes a fraud on the taxpayers and may form the basis of a False Claims Act case.

Education Fraud

The Federal Government also spends billions of dollars in aid programs to help people attend colleges, universities and other higher education programs. Many for-profit colleges and institutions take advantage of these programs by committing various forms of fraud.

These frauds might include lying in order to become accredited, paying commissions, bonuses, or other incentives to professional recruiters to recruit students, or lying to the Federal Government about the qualifications of students to receive federal funds.

What is a Sham Medical Director Agreement?

Many healthcare facilities, such as home health agencies, nursing homes and skilled nursing facilities are required by law to have a “Medical Director.” A Medical Director is usually a licensed physician with oversight responsibility for the healthcare facility. A Medical Director need not be a full-time employee. More often than not, the Medical Director is typically a physician with his or her own private practice who agrees, on a part-time basis, to serve as Medical Director in exchange for a fee.

For most healthcare facilities, the lifeblood of revenue consists of referrals from physicians. This creates a powerful incentive for healthcare facilities to offer kickbacks to physicians in exchange for referrals. For this reason, the federal healthcare laws, including the Stark Law and the Anti-Kickback Statute, have set up a variety of prohibitions to make sure that physicians make referrals based on the best interests of the patient, rather than the best interests of their own pocketbooks.

Unfortunately, many unscrupulous healthcare facilities seek to circumvent the Stark Law and the Anti-Kickback Statute by hiding kickbacks in the form of sham Medical Director agreements. The scheme typically works as follows:

Healthcare facility hires physician to become a “Medical Director.”
In return, physician refers patients to healthcare facility.
Healthcare facility then pays Medical Director fees to the physician, even though the physician performs few, if any, of the actual duties of the Medical Director.

From the standpoint of the healthcare facility, paying bogus Medical Director fees, i.e., bribes, can be very profitable. The healthcare facility stands to make far more money by billing Medicare for the new patients than it pays to the physician in sham Medical Director fees. Not all Medical Director agreements are kickbacks, of course. The Government has enacted a variety of regulations to determine whether a Medical Director agreement qualifies as a valid employment relationship. In general, to be valid, an agreement must meet the following requirements:

The agreement must cover specific and identifiable services;
The amount of compensation paid to the physician must be consistent with fair market value;
The compensation must not be determined in a manner that takes into account the volume or value of Medicare referrals generated by the physician; and
The compensation must be commercially reasonable even if no Medicare referrals were made to the healthcare facility.

If a healthcare facility enters into a bogus or sham Medical Director agreement as a means to pay kickbacks to a physician, then all claims submitted to the government related to those referrals are “false claims” within the meaning of the False Claims Act. Whistleblowers who report sham Medical Director agreements could be entitled to a reward based on a percentage of damages recovered by the Government.

Do I Have A Case?

If you know about government fraud, you should contact a qualified lawyer to discuss whether you have a viable whistleblower case. Find a lawyer who has handled these types of cases in the past. The False Claims Act is not a “tip line.” You will need a lawyer who knows how to evaluate your case, prepare False Claims Act pleadings, and shepherd your case through the Department of Justice, the United States Attorney’s Office, and other governmental agencies.

When you call, be prepared to discuss the following:

Which government agency is being defrauded?
Who is committing the fraud?
How does the fraud scheme work?
How long has it been going on?
What evidence do you have to prove the fraud?

Contact Experienced West Palm Beach Whistleblower & Fraud Lawyers Today

Our Florida whistleblower & fraud lawyers are knowledgeable and experienced with these types of cases. We handle most of these cases on a contingency basis, meaning there are no fees unless we recover money for you. If you would like to discuss your case, call us at 561-659-7878 or toll free at 1-877-915-4040.