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Recent Qui Tam Cases Part 3: Governments Behaving Badly

Are you a state or local government employee? Keep a close eye on your employer--they may be ripping off taxpayers and the federal government-- and setting themselves up for a qui tam suit. Furthermore, guess who ends up footing the bill for all those hours the state or municipality spends on formulating a defense?  Some recent cases illustrate that states and other local governments are not immune from greed when the federal government is doling out the cash.

New York State and New York City recently entered into a record-breaking settlement with the federal government to resolve claims that they submitted false claims for reimbursement for school-based health care services and transportation for Medicaid-eligible kids between 1990 and 2001. In July 2009, the city and state agreed to pay $540 million to settle the fraud allegations. All you New Yorkers out there already being skewered by New York's relentless tax impalements, get ready to help out with the settlement!

Since the 1990s, the federal government has paid billions in reimbursements to New York State and City through the Centers for Medicare and Medicaid Services, a component of the Department of Health and Human Services. New York received these matching funds for services provided to the poor and disabled in the state. According to the allegations, New York State failed to provide proper guidance to the agencies receiving the funds, and later passed on claims for services that the state knew were not covered or properly documented. New York City allegedly submitted false claims to the state for speech therapy reimbursement, which the state submitted to the federal government along with the rest of the mess. The qui tam relator in this case was an astute speech therapist in upstate New York, who will walk away with $10 million as her share of the settlement.

In May 2009, the Maine Department of Education agreed to pay the U.S. $1.5 million to settle allegations that the department submitted false information to the U.S. Department of Education regarding the Maine Department of Education's eligibility to receive federal funds under the Migrant Education Fund. The Migrant Education Fund provides federal financial assistance for the special educational needs of migrant children, but states must follow specific criteria in identifying these children. The Maine Department of Education and other defendants allegedly falsely represented the number of eligible migrant children living in the state over a three year period, thereby defrauding the government.

Finally in March 2009, San Mateo, California, jumped on the Medicare/Medicaid fraud bandwagon when it paid the government $6.8 million to resolve False Claims Act allegations. The allegations were originally filed by a qui tam whistleblower who was also a county employee. According to the government's suit, the San Mateo Medical Center inflated its bed count in order to fraudulently receive higher Medicare payments. In addition, San Mateo County allegedly improperly obtained federal funds under Medicaid for services that were actually ineligible and were supposed to be reported to the California Department of Mental Health as such.