Quit Tam Whistleblower Statute - Report Governmental Fraud 

A new report released by Taxpayers Against Fraud, concludes that every dollar invested by the government in Qui Tam investigation and prosecution of Federal False Claims Act claims with respect to health care fraud returns $15 back to the American people.

Qui tam is a provision under the False Claims Act (31 U.S.C. § 3729 et seq.), which allows for a private individual, or whistleblower with knowledge of past or present fraud on the federal government to bring suit on behalf of the government. Its name is an abbreviation of the phrase “qui tam pro domino rege quam pro seipse,” meaning “he who sues for the king as well as for himself." This provision allows a private person, known as a “relator,” to bring a lawsuit on behalf of the United States, where the private person has information that the named defendant has knowingly submitted or caused the submission of false or fraudulent claims to the United States. The relator need not have been personally harmed by the defendant’s conduct.

MEDICARE: Billing errors and billing fraud are costing Medicare billions of dollars.

On April 24, 1998, the OIG issued its 1997 Financial Statement Audit of the Health Care Financing Administration (HCFA).  They estimated that the dollar value of improper Medicare fee-for-service benefit payments made during  1997 totaled approximately $20.3 billion nationwide. This $20.3 billion represents about 11 percent of the $177.4 billion in fee-for-services payments made by HCFA in 1997. The improper payments for hospital inpatient and outpatient services in 1997 was estimated to be $6 billion. These numbers compare with our estimates that approximately $23 billion in Medicare fee-for service payments in 1996 were improper, with improper inpatient and outpatient services payments estimated at $8 billion.

Simply put, Medicare is highly vulnerable to fraud and other improper billing practices. One problem is the program's sheer size. Today, Medicare outlays exceed $200 billion annually; it has 38 million beneficiaries, and its contractors process and pay well over 800 million claims per year. Since only about 9% of Medicare claims are reviewed, the program is highly dependent on the care and honesty with which providers prepare and submit claims. Providers have a duty to prepare true and accurate claims for their goods and services.

Medical Fraud
Hospitals -  In 1995, a component of a large east coast university health system agreed to pay $30 million to the U.S. Government to settle allegations that the institution submitted false Medicare bills for faculty physician services. The institution's own internal memos showed it knew that for a physician to bill for a service performed by a resident, the physician had to be physically present, "at the elbow" of the resident. However, the institution encouraged its physicians to bill for services performed by others. The second questionable practice was billing by faculty physicians for in-patient services at the highest levels of the 5-tier coding system for hospital visits, without reference to the services actually performed. In fact, the institution printed forms for physician billing which left off the two lowest-reimbursed codes altogether.

In 1997, two east coast billing consultants settled charges that they enlisted more than 100 hospitals in schemes to aggressively and inappropriately manipulate Medicare's billing rules to increase payments. Some hospitals did the right thing, and told the consultants that their advice promoted fraud and would not be followed. Unfortunately, many hospitals used the consultants to make a quick buck at the Medicare program's expense. As part of the settlement with the U.S. Attorney's Office, the consultants have agreed to cooperate in the Government's ongoing investigation of these hospitals.

In 1997, a Midwest medical center agreed to pay $17.5 million arising out of allegations that it paid two physicians over $1 million to refer an estimated $42 million in Medicare business to the hospital. The hospital designed sham "consulting agreements" with the physicians and paid them over an 11-year period in exchange for patient referrals. The doctors did not perform the services specified in the agreements and were paid far more than market value for those they did perform.

In all of these hospital cases, the False Claims Act was an essential component of the Government's enforcement effort. The AHA proposal to amend the False Claims Act would adversely affect enforcement efforts with respect to all health care providers, not just hospitals.

Here's a sample of what was uncovered in other health care industries:

Laboratory Fraud - During 1997, OIG concluded "Labscam," a multi-year interagency initiative targeted at abusive marketing and billing practices by the nation's largest independent clinical laboratories. They  found a number of improper activities, including unbundling clinical laboratory tests, billing for tests not performed, inserting false diagnosis codes to obtain reimbursement, double billing for laboratory tests for patients with end stage renal disease, payment of kickbacks, and billing for calculations which were both unordered and medically unnecessary. The Federal Government's case against the abusive laboratories, all told, resulted in three corporate criminal convictions, and will ultimately produce recoveries of more than $800 million.

Home Health Care Fraud - First American Health Care of Georgia, Inc. was the largest privately held home health care provider in the country. When the OIG’s investigation began, the company was known as ABC Home Health, and Jack and Margie Mills were the majority shareholders and chief officers of the company and its subsidiaries. Offenses included shifting unallowable costs to Medicare. The company and its owners claimed items and services that benefitted the owners personally as reasonable and necessary "general and administrative" expenses related to the care of Medicare patients. These fraudulent claims included golf course memberships, greens fees, a family vacation, and a BMW for a son in college. After extensive investigation and audits by the Office of Inspector General, the Mills and the parent company were convicted in 1996 of several Medicare-related criminal offenses and received significant prison time. In a related settlement, $255 million was returned to the United States.

On a smaller scale, the co-owner of a Washington, D.C. home health agency billed for 1,450 skilled nursing visits for which there was no evidence that the visits were made. It also billed for home nurse visits when patients were actually hospitalized. The co-owner was sentenced to 27 months in prison and ordered to pay full restitution of $100,000 defrauded from the Medicare and Medicaid programs.

Medical Equipment and Supplies Fraud -  One of the highest-reimbursed Medicare suppliers of incontinence care products, Ben Carroll, agreed to plead guilty to conspiracy to defraud Medicare of more than $70 million. He had actually collected $45 million. He distributed adult diapers (which are not covered by Medicare) but billed Medicare for female urinary collection pouches. He agreed to forfeit $32 million in seized bank accounts, paid $2.5 million in restitution, and was sentenced to 10 years imprisonment.

Other types of governmental fraud includes, Defense Contractor Fraud, Airport Construction, Building and Roadway Construction, Military Contractor Billing, Contractor billing for supplies never ordered, Energy Contract Fraud, Foreign Military Sales, Fraudulent cost reports, shipbuilding Fraud, Telecommunications Fraud, Utilities Fraud and Yield burning.

The qui tam provisions of the False Claims Act, also amended in 1986, have provided the incentive for whistle blowers to overcome the substantial detriment and obstacles to speaking out. Most of the time, a whistle blower is a health care employee with inside knowledge of wrongdoing.  The qui tam provisions allow such whistle blowers to act as private attorneys general and bring suit under the False Claims Act seeking recoveries against defrauders of government programs. The Department of Justice then determines whether or not to intervene in the case; the case may proceed without DOJ. In either case, the whistle blower, or "relator," may share in any later recoveries. In just the hospital industry alone, from January 1, 1995 to April 17, 1998, OIG's figures show that 199 qui tams were filed against hospitals. The law is working as intended. Whistle blowers are stepping forward, and billions in false claims are being recovered as a result. In the last ten years, qui tam cases in which the government has intervened have produced approximately $1.8 billion in recoveries. About half of these recoveries were in health care cases.

During fiscal year 1997:

•   $1.087 billion was collected in criminal fines, civil judgments and settlements, and administrative impositions.
• $968 million was actually transferred to or restored to the Medicare Trust Fund , and $31 million was recovered as the federal share of Medicaid restitution.
•  More than 2,700 individuals and entities were excluded from federally sponsored health care programs, a 93% increase over 1996.
•   Federal prosecutors opened 4,010 civil health care matters, an increase of 61 percent over 1996.
•   At the same time, it is important to keep these results in perspective. Hospitals paid approximately $73.2 million last year to settle potential False Claims Act liabilities with the government, while they received over $100 billion in Medicare payments.

The bottom line is that the problem of governmental fraud is real and it is massive in scope. People who "blow the whistle" on governmental fraud may be able to collect an award for their efforts under the Qui tam provisions of the False Claims Act (31 U.S.C. § 3729 et seq.).  This "whistleblower statute" which allows for a private individual, or whistleblower with knowledge of past or present fraud on the federal government to bring suit on behalf of the government.

If you think you have discovered governmental or contractor fraud, please fill out the form below.  An attorney will review your claim and may contact you to discuss your rights.