The Congressional Research Service has released a report on the False Claims Act, Qui Tam: The False Claims Act and Related Federal Statutes. CRS is a department within the Library of Congress that provides policy and legal analysis to Congressional committees and members.
The report summarizes the history of the law, including the 2009 amendments. It outlines key provisions of the law: who may be liable, who may bring and action, basis for liability, penalties and awards, and procedure. Another section considers constitutional concerns that have been raised, such as due process, separation of powers, standing, and the appointments clause.
An abridged version is also available: Qui Tam: An Abbreviated Look at the False Claims Act and Related Federal Statutes.
Wednesday, October 07, 2009
Hospitals settle kyphoplasty fraud suit for $8.3 million
Six hospitals in Indiana and Alabama will pay the United States more than $8 million to settle a whistleblower lawsuit brought under the qui tam provisions of the False Claims Act, the U.S. Dept. of Justice announced on September 22.
The settlement resolves allegations that, from 2000 to 2008, patients who went to these hospitals for a certain type of spinal surgery known as "kyphoplasty" were unnecessarily kept overnight at the hospital and then classified as inpatient cases to boost the hospitals' revenues. The lawsuit said, and the government agreed, that the minimally invasive procedure can usually be performed safely on an outpatient basis.
The settlement resolves allegations that, from 2000 to 2008, patients who went to these hospitals for a certain type of spinal surgery known as "kyphoplasty" were unnecessarily kept overnight at the hospital and then classified as inpatient cases to boost the hospitals' revenues. The lawsuit said, and the government agreed, that the minimally invasive procedure can usually be performed safely on an outpatient basis.
Three hospitals in the St. Paul, Minn. area settled similar allegations in June.
The whistleblowers, Craig Patrick and Chuck Bates, were represented by Phillips & Cohen LLP.
Thursday, September 03, 2009
Pfizer's payment of $2.3 billion is largest healthcare fraud settlement ever, DOJ says
The U.S. Dept. of Justice announced that Pfizer Inc. will pay $2.3 billion in civil False Claims Act damages and criminal fines to resolve allegations that the company illegally promoted a number of its drugs for off-label uses.
Six separate whistleblower suits were filed against the company in this matter.
The bulk of the settlement, $1.8 billion, is due to the company's off-label marketing of Bextra. John Kopchinski, the whistleblower in that suit, was represented by Erika Kelton of Phillips & Cohen LLP.
The FDA had approved Bextra in limited doses for use in treating arthritis and menstrual pain. Kopchinski alleged in his qui tam suit that Pfizer promoted Bextra for uses and in doses that far exceeded what the FDA had approved. Patients were put at risk for serious health problems such as heart attack, stroke and pulmonary embolism. The lawsuit also said that Bextra paid doctors kickbacks in various ways to influence them to prescribe and endorse Bextra for these "off-label" uses. Bextra was withdrawn from the market in 2005.
Of the $1 billion paid to settle False Claims Act claims, $668,514,830 will go to the Federal Government, and $331,485,170 will go to the states.
Six separate whistleblower suits were filed against the company in this matter.
The bulk of the settlement, $1.8 billion, is due to the company's off-label marketing of Bextra. John Kopchinski, the whistleblower in that suit, was represented by Erika Kelton of Phillips & Cohen LLP.
The FDA had approved Bextra in limited doses for use in treating arthritis and menstrual pain. Kopchinski alleged in his qui tam suit that Pfizer promoted Bextra for uses and in doses that far exceeded what the FDA had approved. Patients were put at risk for serious health problems such as heart attack, stroke and pulmonary embolism. The lawsuit also said that Bextra paid doctors kickbacks in various ways to influence them to prescribe and endorse Bextra for these "off-label" uses. Bextra was withdrawn from the market in 2005.
Of the $1 billion paid to settle False Claims Act claims, $668,514,830 will go to the Federal Government, and $331,485,170 will go to the states.
Tuesday, August 25, 2009
Covenant Medical Center settles FCA suit
The U.S. Dept. of Justice announced that Covenant Medical Center will pay $4.5 million to settle a False Claims Act suit.
The suit alleged that Covenant violated the Stark Law, which prohibits a hospital from profiting from referrals of patients made by a physican with whom the hospital has an improper compensation arrangement. In this instance the government alleged that Covenant paid five physicians who referred their patients to Covenant compensation that was far above fair market value.
The suit alleged that Covenant violated the Stark Law, which prohibits a hospital from profiting from referrals of patients made by a physican with whom the hospital has an improper compensation arrangement. In this instance the government alleged that Covenant paid five physicians who referred their patients to Covenant compensation that was far above fair market value.
Monday, July 20, 2009
Whistleblower suits target fraud by ablation companies
Endoscopic Technologies Inc. (Estech), a medical device manufacturer, will pay the federal government $1.4 million to resolve a whistleblower suit alleging violations of the False Claims Act, the U.S. Dept. of Justice announced.
The suit claimed that Estech promoted its surgical ablation devices for treatment of atrial fibrillation, a use that is not approved by the U.S. Food and Drug Administration (FDA). The government also alleged that the company promoted expensive heart surgeries using the company’s devices, advised hospitals to up-code surgical procedures, and paid kickbacks to healthcare providers to use its devices.
The suit was filed in the Southern District of Texas, which has unsealed four additional qui tam lawsuits against other surgical ablation device manufacturers.
One of those companies is AtriCure Inc., which said in an SEC filing that it had received a copy of the qui tam complaint. The company says that the relator is a former employee of one of the other medical device companies.
Other companies named, according to the Wall St. Journal, include Medtronic, St. Jude and Boston Scientific, all of whom say they are cooperating with federal authorities.
The suit claimed that Estech promoted its surgical ablation devices for treatment of atrial fibrillation, a use that is not approved by the U.S. Food and Drug Administration (FDA). The government also alleged that the company promoted expensive heart surgeries using the company’s devices, advised hospitals to up-code surgical procedures, and paid kickbacks to healthcare providers to use its devices.
The suit was filed in the Southern District of Texas, which has unsealed four additional qui tam lawsuits against other surgical ablation device manufacturers.
One of those companies is AtriCure Inc., which said in an SEC filing that it had received a copy of the qui tam complaint. The company says that the relator is a former employee of one of the other medical device companies.
Other companies named, according to the Wall St. Journal, include Medtronic, St. Jude and Boston Scientific, all of whom say they are cooperating with federal authorities.
FINRA acts to protect municipal bond investors
The Financial Industry Regulatory Authority (FINRA) announced that it will be surveying retail sales practices in the municipal securities market.
FINRA investigators are conducting sweeps to gather information in three distinct areas: industry sales to retail investors; municipal securities involving swaps and derivatives for small municipalities; and sales of certain so-called municipal Gas Bonds that were underwritten and guaranteed by the now-defunct Lehman Brothers and quickly became distressed.
FINRA is an industry-funded group that polices Wall Street.
FINRA investigators are conducting sweeps to gather information in three distinct areas: industry sales to retail investors; municipal securities involving swaps and derivatives for small municipalities; and sales of certain so-called municipal Gas Bonds that were underwritten and guaranteed by the now-defunct Lehman Brothers and quickly became distressed.
FINRA is an industry-funded group that polices Wall Street.
Sen. Grassley has questions for medical journals
Sen. Chuck Grassley, the ranking Republican member of the Finance Committee, wants leading medical journals to outline their policies on ghostwriting.
Sen. Grassley has sent a letter to eight medical journals as part of his inquiry into whether drug and medical device companies are paying for draft articles and getting prominent doctors and researchers to sign on as authors, even though they may have had minimal involvement in the writing.
The letter continues, "Concerns have been raised... that some medical literature may be little more than subtle advertisements rather than independent research. The information in these articles can have a significant impact on doctors’ prescribing behavior and, in turn, on the American taxpayer, as the Medicare and Medicaid programs pay billions of dollars for prescription drugs and medical devices."
Grassley had previously sent similar letters to several pharmaceutical companies and medical publishers.
Sen. Grassley has sent a letter to eight medical journals as part of his inquiry into whether drug and medical device companies are paying for draft articles and getting prominent doctors and researchers to sign on as authors, even though they may have had minimal involvement in the writing.
The letter continues, "Concerns have been raised... that some medical literature may be little more than subtle advertisements rather than independent research. The information in these articles can have a significant impact on doctors’ prescribing behavior and, in turn, on the American taxpayer, as the Medicare and Medicaid programs pay billions of dollars for prescription drugs and medical devices."
Grassley had previously sent similar letters to several pharmaceutical companies and medical publishers.
Monday, July 06, 2009
SEC whistleblower program should emulate FCA, lawyer says
In an letter to the Financial Times, attorney Erika Kelton says that the proposed bounty program for SEC whistleblowers could be more effective.
Kelton, a partner at Phillips & Cohen LLP, recommends that the program include an "action-forcing mechanism." Under the False Claims Act, the Department of Justice is required to decide with a specified time whether or not it will intervene in a qui tam action. Without such a mechanism, Kelton says, the SEC bounty program will be less effective.
Kelton, a partner at Phillips & Cohen LLP, recommends that the program include an "action-forcing mechanism." Under the False Claims Act, the Department of Justice is required to decide with a specified time whether or not it will intervene in a qui tam action. Without such a mechanism, Kelton says, the SEC bounty program will be less effective.
Tuesday, June 23, 2009
Supreme Court to hear FCA case on public disclosure bar
The U.S. Supreme Court has agreed to hear a case on whether whistleblower lawsuits are restricted if the information behind the lawsuits came out in state or local agency reports or audits, rather than in a federal proceeding. The False Claims Act includes a "public disclosure bar," making it more difficult for individuals to bring qui tam suits when the information has been publicly disseminated. Lower courts have disagreed as to whether state reports and audits were intended by Congress to raise that bar.
The underlying lawsuit alleged fraud by a water conservation district in the use of federal disaster assistance.
The case is Graham County Soil & Water Conservation District v. United States ex rel. Wilson, 08-304. The Scotus Blog has posted the filings in the case.
The underlying lawsuit alleged fraud by a water conservation district in the use of federal disaster assistance.
The case is Graham County Soil & Water Conservation District v. United States ex rel. Wilson, 08-304. The Scotus Blog has posted the filings in the case.
Monday, June 22, 2009
Increased FCA exposure for broker-dealers who advise public entities?
The Obama Administration has released a blueprint for regulatory overhaul, Financial Regulatory Reform: A New Foundation.
Among the changes proposed is one that could have False Claims Act ramifications: the establishment of a fiduciary duty for broker-dealers offering investment advice.
If enacted, this change could make sales of investments to public pension funds or in connection with municipal finance transactions more readily subject to scrutiny and state FCA enforcement. To the extent brokers are overpricing investments on sale, undervaluing them on purchase, or burdening transactions involving public funds with fees, a FCA action may provide a remedy. This proposal could shift the investment landscape from “Buyer Beware” to “Broker Beware.”
The adminstration's white paper highlights five primary objectives:
(1) Promote robust supervision and regulation of financial firms.
(2) Establish comprehensive supervision of financial markets.
(3) Protect consumers and investors from financial abuse.
(4) Provide the government with the tools it needs to manage financial crises. (5) Raise international regulatory standards and improve international cooperation.
Among the changes proposed is one that could have False Claims Act ramifications: the establishment of a fiduciary duty for broker-dealers offering investment advice.
If enacted, this change could make sales of investments to public pension funds or in connection with municipal finance transactions more readily subject to scrutiny and state FCA enforcement. To the extent brokers are overpricing investments on sale, undervaluing them on purchase, or burdening transactions involving public funds with fees, a FCA action may provide a remedy. This proposal could shift the investment landscape from “Buyer Beware” to “Broker Beware.”
The adminstration's white paper highlights five primary objectives:
(1) Promote robust supervision and regulation of financial firms.
(2) Establish comprehensive supervision of financial markets.
(3) Protect consumers and investors from financial abuse.
(4) Provide the government with the tools it needs to manage financial crises. (5) Raise international regulatory standards and improve international cooperation.
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