Thursday, September 28, 2006

Supreme Court will hear False Claims Act case on "original source"

The U.S. Supreme Court has agreed to hear an appeal by Boeing which turns on the False Claims Act's requirement that a relator be the "original source" of the information if the claims have been publicly disclosed.

The company's Rockwell unit is seeking to overturn an award to a whistleblower who accused Rockwell of making false statements about environmental, health and safety activities at its Rocky Flats nuclear-weapons facility outside Denver.

The U.S. Court of Appeals for the Tenth Circuit found that the whistleblower qualified as an original source, but Rockwell contends he had only "background" information.

Additional information can be found in the Bloomberg News report published in the September 27, 2006 issue of the Seattle Times.

Horizon West settles qui tam case

Horizon West Inc. and its wholly owned subsidiary, Horizon West Healthcare Inc., have agreed to pay the United States $14.7 million to settle allegations that the companies violated the civil False Claims Act.

The settlement resolves a qui tam suit brought under the whistleblower provisions of the False Claims Act. The suit alleged that the nursing home chain falsely inflated the number of nursing hours spent on Medicare patients from 1991 to 1998.

A September 26, 2006 press release is available at U.S. Newswire.

HHS OIG releases report on state Medicaid fraud control units

The Inspector General for the Dept. of Health and Human Services has released a report on the operation of State Medicaid Fraud Control Units for fiscal years 2004 and 2005.

Over that period the units collected nearly $1.3 billion in court-ordered fines, restitutions, penalties and settlements. Forty-eight states and the District of Columbia have MFCUs, which investigate and prosecute Medicaid provider fraud and patient abuse and neglect. Most of the units are located within each state's attorney general office.

The report can be found at the website of the HHS OIG.

Monday, September 25, 2006

Pediatrix, a neonatal care group, will pay $25 million to settle qui tam suit

Pediatrix Medical Group Inc., a network of affiliated physician groups providing services in neonatal intensive care units, will pay the government over $25 million to settle claims that Pediatrix improperly billed government health services for neonatal care provided by their doctors.

The suit, which originated as a whistleblower suit brought under the qui tam provision of the False Claims Act, alleged that Pediatrix billed the government for critical care services when in fact the infants were not critically ill.

The whistleblower will receive $1,557,588 from the total federal recovery as his relator's share.

More details are available in the September 21, 2006 press release at U.S. Newswire.

Saturday, September 23, 2006

Dept. of Interior auditors accuse agency of blocking efforts to collect underpayments

Four auditors who monitor leases for oil and gas on federal property say the Interior Department blocked their efforts to pursue more than $30 million in fraudulent underpayments of royalties for oil produced in publicly owned waters in the Gulf of Mexico.

The auditors brought their suits under the False Claims Act, which was created to allow individuals to expose fraud against the government. As explained in the New York Times article of September 21, 2006, people who successfully recover money for the government in such cases are entitled to a portion. A losing company is required to pay triple the amount of recovered money as well as back interest — potentially more than $120 million in the cases brought by the auditors.

The auditors contend that they had no choice but to go outside the agency because their supervisors ordered them to “cease work” on five separate investigations and drop their claims.

Friday, September 15, 2006

Merck unit accused of bilking U.S. health plans

The U.S. Dept. of Justice has joined a whistleblower lawsuit that accuses Merck's U.S. generic-drug unit, Dey, of overcharging Medicaid and Medicare.

The government’s complaint alleges that Dey reported prices that were more than five times the actual sales prices on many of the drugs it manufactures, causing the federal government to reimburse Dey’s customers in excess of $500 million for these drugs.

The difference between the inflated government reimbursement rates and the actual price paid by healthcare providers for a drug is referred to as the “spread.” The larger the spread on a drug, the larger the profit or return on investment for the provider. The government alleges that Dey used artificially inflated spreads to market, promote and sell the drugs to existing and potential customers.

The Dept. of Justice press release was issued on September 11, 2006.

Friday, September 08, 2006

Appeals court reinstates FCA suit against University of Phoenix

The Ninth Circuit Court of Appeals has reinstated a whistle blower suit against the University of Phoenix. The suit, brought under the qui tam provisions of the federal False Claims Act, alleges that school officials violated federal rules barring incentive payments to employees who recruit students to enroll in the college.

Most of students at the University of Phoenix use federal loans and grants to pay their tuition, but many never complete their education and are unable to repay their loans. Last year the university obtained $1.7 billion in federal education funds.

A report by the Dept. of Education said the company promoted an intense sales culture that rewarded recruiters who encouraged the most students, even if they were unqualified, to enroll.

A district court had ruled that the whistle blowers' allegations were beyond the scope of the False Claims Act, but the Ninth Circuit reversed.

Additional details can be found in the September 6, 2006 article published in the Los Angeles Times.

Monday, September 04, 2006

San Francisco can't sue as a whistle-blower, state Supreme Court rules

The California Supreme Court ruled unanimously that public agencies, such as cities and school districts, can't sue as whistle-blowers under the California state False Claims Act, nor can they be sued under the same law for allegedly defrauding the state. The law applies to suits by or against individuals, organizations and corporations, categories that do not include government agencies, the court said.

The suit had been brought against PriceWaterhouseCoopers, the accounting firm that audited Old Republic Title Company. Old Republic paid San Francisco $7.5 million as its whistle-blower share when it settled charges that it failed to forward funds in unclaimed customer accounts to the state. That settlement is final and will not be affected by the ruling.

The suit against PriceWaterhouseCoopers contended that the accountant should have told the state that the title company was wrongfully withholding the unclaimed customer funds. An Unfair Competion Law suit, based on the same allegations, can proceed.

The San Francisco Chronicle ran a story on the suit on September 2, 2006.