By David Caputo
The United States False Claims Act (FCA) allows private citizen whistleblowers to file suit on the federal government’s behalf against companies that are defrauding the government. If the case is successful, the qui tam plaintiff (or “relator”) is entitled to a percentage of the government’s recovery (up to 30% in some cases).1
The person who is usually in the best position to bring a successful qui tam FCA case is a current or former employee of the company committing the fraud – or someone who otherwise has inside information about the company’s scheme. The FCA does not require the whistleblower to be an insider, however, to recover under its qui tam, provisions. Anyone who has knowledge of the fraud, and who can provide reliable evidence to the government to prove the fraud, can be a successful qui tam relator if he or she can otherwise satisfy the FCA’s unique procedural and substantive requirements.
Personal injury cases may expose evidence of health care fraud
So when might a personal injury client also be a potential qui tam relator client? The road is a long one, but it starts with identifying evidence of potential health care fraud in your personal injury client’s file. Here are some illustrations of injury claims that may yield evidence of health care fraud:
Nursing home abuse or neglect cases.
Medicare and Medicaid fraud by nursing homes, skilled nursing facilities, and assisted living facilities is a common subject of False Claims Act litigation. Abuse or neglect of patients in these same facilities is a common subject of personal injury litigation. Lawyers who handle the latter may sometimes have evidence of the former right under their nose.
Most nursing home residents are Medicare or Medicaid beneficiaries (or dual beneficiaries of both programs). If a nursing home bills Medicare or Medicaid for services that it has not provided, that is health care fraud. Likewise, if a nursing home provides medically unnecessary services and bills Medicare or Medicaid for those services, that too is health care fraud.
If you handle nursing home abuse and neglect cases and you make it your regular practice to carefully examine the billing records of both your client and the defendant, you are likely at some point to discover instances of billing for services that were either not provided or not medically necessary. There are countless large FCA settlements involving both types of schemes. In one of the largest FCA recoveries of 2016, Life Care Centers, Inc., a Tennessee-based Skilled Nursing Facility provider, paid $145 million to settle allegations that it systematically provided medically unnecessary therapy in order to bill Medicare for the highest level of Medicare reimbursement. Two relators shared a $29 million award.
Another theory of FCA liability in this context is called “worthless services,” i.e., the care is so substandard that it falls below the minimum level required to qualify for federal health care program reimbursement. In a recent Tennessee case, the relator was the nephew of a nursing home resident who visited his aunt several times at the facility. The relator’s aunt was admitted following a hospitalization for a cardiac illness and she had no condition requiring treatment with any anti-psychotic or anti-anxiety medication, yet her nephew alleged that the facility routinely administered heavy doses of both Seroquel and Ativan as a form of chemical restraint to keep her docile and easier to manage. The patient’s nephew filed a qui tam FCA suit alleging that the facility’s care of his aunt – and, largely on information and belief, of other residents as well – was so substandard that the federal government should not have paid for any of it. The case settled in 2018 for $500,000.3
Medical malpractice cases.
Fraud by health care providers performing medically unnecessary procedures is another common subject of qui tam FCA cases. Medically unnecessary procedures may also cause injuries that give rise to medical malpractice claims. Where the injured patient is a Medicare or Medicaid beneficiary, the lawyer handling the malpractice claim should recognize at least the potential for FCA liability.
Stent placement procedures are a good example of the potential for overlap. High reimbursement rates incentivize physicians to treat coronary and peripheral artery disease by placing stents, and that incentive has led some physicians to implant large numbers of medically unnecessary stents. In such situations, the victims are: (1) the federal government, which has been defrauded by paying for procedures that were not medically indicated;4 and (2) the patients, some of whom have suffered injuries such as blockages or complications of anticoagulation therapy required when stents are placed. A lawyer representing a Medicare or Medicaid beneficiary in a malpractice claim arising from an unnecessary stent placement should at least consider the possibility that his or her client is a victim of a larger fraud scheme.
Indeed, this is true for any type of medical malpractice case involving a Medicare or Medicaid beneficiary injured as a result of a procedure that was not medically indicated. The federal government recovers substantial sums each year in qui tam FCA cases involving all sorts of medically unnecessary treatment. In 2015, for example, nearly 500 hospitals collectively paid $250 million to settle allegations that they were implanting cardioverter defibrillators in patients before the expiration of the required waiting period after a heart attack or heart bypass surgery or angioplasty. Medicare rules required the waiting period because, if given sufficient time to recover, many patients may not have needed the ICDs at all. Two relators shared a $38 million award.
One of the most notorious medical necessity cases involved a Detroit area oncologist, Dr. Farid Fata, who knowingly administered radiation and chemotherapy to hundreds of patients who did not have cancer. A brave physician in Dr. Fata’s practice brought a successful qui tam case against him, and there were numerous patients with injury claims as well. If any of those victims had understood that they were victims of a massive fraud scheme, they would have been potential qui tam relators.
Pharmaceutical or medical device cases.
The federal Anti Kickback Statute, 42 U.S.C. § 1320a-7b (AKS), prohibits payment of remuneration to physicians to induce them to provide services paid for by government health care programs. Any violation of the AKS gives rise to potential FCA liability. There have been many large FCA settlements involving drug or med ical device manufacturers accused of violating the AKS, including some in our own back yard (e.g., a 2009 Eastern District of Pennsylvania case in which Eli Lilly paid $1.42 billion to settle allegations involving the drug Zyprexa). As the federal government’s enforcement efforts have increased, companies have become more creative in their kickback schemes, but illegal “remuneration” under the AKS is defined very broadly. If you handle drug and device cases and you discover any sort of untoward relationship between the company that manufactures the product at issue and the physician who is prescribing or using it, you may want to explore a possible FCA claim.
Investigating whether your client’s case is part of a larger pattern
An isolated instance of health care fraud will not cause sufficient financial harm to the government to warrant any investment of resources by either the government or private relator’s counsel to litigate the case. Therefore, in any situation like those described above, the key to assessing whether there is a potentially viable qui tam False Claims Act case is to evaluate whether there is evidence that the fraud in your client’s case is part of a much larger pattern.
This is rarely easy, and it may not be possible depending on the circumstances of a particular case and the information available, but experienced whistleblower attorneys have various tools at their disposal, including increasingly sophisticated methods for analyzing both publicly available and commercially acquired health care reimbursement data to look for patterns. Other more old fashioned methods involve trying to identify additional witnesses or potentially even individuals to partner with as co-relators, although each approach requires a careful cost-benefit analysis and attention to the ethical rules (including those unique to qui tam FCA practice). In addition, because such investigation can involve a healthy investment of both time and money, it only makes sense to undertake where the potential FCA defendant has sufficient resources to pay a significant settlement or judgment.
While it is difficult to build a successful qui tam health care fraud case from the experience of a single victim, the right case is worth the effort. One of the most successful single-victim qui tam relators in FCA history was Richard West, a Medicaid beneficiary from New Jersey. Mr. West received home nursing services through Maxim Healthcare Services, Inc. When he was told that he had reached his maximum benefit under Medicaid rules that conflicted with his detailed records. He filed a qui tam FCA case, and Medicaid investigators determined not only that Maxim had fraudulently billed Medicaid for 700 hours of services for Mr. West that were never provided, but that Maxim had done the same to many other patients. The qui tam FCA case settled for $150 million and Mr. West received $15.4 million as his part of the settlement. 5
Uncle Sam wants you!
The United States Attorney’s Office for the Eastern District of Pennsylvania has a well-earned reputation as a national leader in criminal and civil health care fraud enforcement, and the current United States Attorney, William McSwain, has made prosecuting health care fraud a priority. The commitment of our local USAO gives Philadelphia trial lawyers, working with experienced whistleblower lawyers, a unique opportunity to engage public-private partnership that the False Claims Act encourages. In the end, if a qui tam case is successful, both your client and the American taxpayer reap the benefits. •
1 31 U.S.C. § 3729 et seq.
2United States and Tennessee ex rel Godwin v. Memphis Operator LLC d/b/a Spring Gate Rehabilitation and Healthcare Center. Civil Action No. 2:15-CV-2090 (W.D. Tenn.)
3Another successful qui tam action brought by inury claimants is United States ex rel Arven v. The Virginia Birth Related Neurological Injury Compensation Fund, Civil Action No. l:15-CV-870 (E.D. Va.). In that case, a Virginia couple exposed a fraudulent scheme by the defendant Fund to shift med ical expenses for children with birth injuries to federal health care programs. The case settled in 2018 for $20.7 million, and the relators (parents of a birth-injured child and fund claimants) received more than $4 million.
4Examples abound of qui tam FCA settlements involving medically unnecessary stent procedures. See, e.g., United States ex rel. Lincoln et al. v. St. Joseph Medical Center, Inc. et al., Civil Action No. 01:10-CV 01632 (D. Md.) ($22 million settlement) United States ex rel. Jones et al. v. St. Joseph Health System et al., Civil Action No. l l-CV-81 (E.D. Ky.) ($16.5 million settlement); United States ex rel. Loughner v. EMH Regional Medical Center, Civil Action No. l:06-CV-2441 (N.D. Oh.) ($4.4 million settlement). In March 2018, the government announced a small settlement with a University of Pennsylvania Health System (UPHS) cardiologist involving unnecessary stent procedures following a voluntary disclosure of the illegal conduct by UPHS.
5United States ex rel. Richard West v. Maxim Healthcare Services, Inc., Civil Action No. 04-4906 (D.N.J).
Editor’s Note: David J. Caputo, Esq. is a founding partner of Youman & Caputo, LLC and a former Assistant United States Attorney in the United States Attorney’s Office for the Eastern District of Pennsylvania, Government and Health Care Fraud Section. His practice includes both catastrophic injury and qui tam False Claims Act cases. You can reach Mr. Caputo at: firstname.lastname@example.org.
*This article was originally published in Philadelphia Trial Lawyers Association’s semi-monthly “Verdict” publication.