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26May/100

A Fraud By Any Other Name Would Be As… Expensive

This post was written by Josh

The False Claims Act provides for treble damages and a penalty between $5,500 and $11,000 for anyone who submits a false claim to the United States. With treble damages and penalties, committing fraud against the government can become a very expensive proposition. It's hard to see how high-level executives at the companies being sued in qui tam suits could think that fraud is a good way to do business, but this seems to be the logic that was followed in several cases.

In looking at the top 27 FCA cases, 93% of them have to do with some type of healthcare fraud. In fact, among the top 5 FCA cases, each one is related in some way to the healthcare industry.

At the top of the list is drug-making mastodon Pfizer. In the fall of 2009, Pfizer agreed to pay $2.3 billion to settle claims, including claims brought under the FCA. $1.3 billion of the settlement constituted criminal penalties. This penalty sounds like it would be the final straw for Pfizer, but when you consider Pfizer's 3rd quarter 2009 profit alone was $2.88 billion, you have to wonder whether even an enormous fine like this is enough to deter a drug company from potentially engaging in fraud. Pfizer was sued for allegedly marketing certain popular drugs like Bextra and Lipitor for unapproved uses. The company made huge profits off of these drugs, and legal experts are not convinced that fines will prevent drug makers from going down the same road in the future.

The FCA keeps drug companies on their toes, but it remains to be seen whether fraud will be completely eliminated. Our society does love its drugs--prescription drugs are so ubiquitous that they are even showing up in trace amounts in public drinking water supplies--and as long as profits outweigh fines, the temptation to engage in fraud to increase those profits will probably endure.

This article is brought to you by The Qui Tam Team, the epicenter for whistleblowers and people interested in the False Claims Act, Qui Tam Provisions, and Medicare and Medicaid fraud. To discuss a potential case, please call Eric Young at 1 (800) 590-4116.

Tagged as: corporate fraud, drugs, False Claims Act, FCA, fraud, hospital, medicaid, medicare, Pharmaceutical, qui tam, whistleblower No Comments

19May/100

Pharma Whistleblowers Under Stress

This post was written by Josh

New findings from a New England Journal of Medicine (NEJM) study entitled “Whistle-blowers' experiences in fraud litigation against pharmaceutical companies” confirm what most whistleblowers already know: whistleblowers who report health care fraud experience substantial stress and receive little support. This appears to be in line with other recently released studies which confirm that, in the words of Rodney Dangerfield, the majority of whistleblowers "just don't get no respect."

The NEJM study examined the experiences of 42 pharmaceutical whistleblowers, and an interesting profile of the whistleblowers emerged. All but six of the relators in the study did not specifically intend to use the qui tam mechanism when they decided to seek legal redress for the frauds they observed. Rather than being motivated by collecting a monetary reward, the main motivations of the whistleblowers were integrity, altruism or public safety, justice, and self-preservation.

The whistleblowers shared certain common experiences in bringing frauds to light. Most of the whistleblowers became active participants in the investigation, such as by wearing a wire. The whistleblowers also reported spending inordinate amounts of time working on the investigation, sometimes meeting with FBI agents in risky locations or being forced to devise hasty covers for agents visiting the whistleblower's workplace on short notice. Many relators were frustrated with the government at various points during the investigation.

Another common theme among the relators was the personal toll of becoming a whistleblower. Most of the whistleblowers reported experiencing financial difficulties. Some experienced divorce or other family problems. In addition, whistleblowing took a physical toll, with several whistleblowers reporting health problems ranging from asthma to migraines.

When it was all over, most of the relators felt that what they did was important for ethical or psychological reasons, despite dissatisfaction with the financial reward. Notably, the advice offered to potential whistleblowers by some of these seasoned, war-weary whistleblowers? Hire an experienced attorney!

This article was sponsored by The Qui Tam Team, the epicenter for whistleblowers and people interested in the False Claims Act, Qui Tam Provisions, and Medicare and Medicaid fraud. To discuss a potential case, please call Eric Young at 1 (800) 590-4116.

Tagged as: corporate fraud, drugs, False Claims Act, fraud, government, how to, Pharmaceutical, qui tam, whistleblower No Comments

1Apr/100

New Restrictions on Whistleblower Suits a la the Supreme Court

This post was written by Josh

If you're thinking about blowing the whistle on your corrupt little local government after you heard about their having misspent funds from a state audit, think again. The Supreme Court has just handed down a decision which holds that the provision of the False Claims Act prohibiting whistleblower lawsuits when the information was obtained through an administrative report or audit applies to reports prepared by all governments—not just the feds. Whistleblower suits based on public disclosure of fraud through news reports, court hearings, and congressional/administrative audits were already prohibited against the federal government, but the law regarding local/state governments was murky.

The case is Graham County Soil and Water Conservation District v. U.S ex rel. Wilson, 08-304.

A variety of interested parties filed amicus briefs in the case, and it would have been quite a scene if all of them had ended up in the same room, considering some of them are usually fighting each other. Parties filing amicus briefs in support of the Petitioner (Graham County Soil and Water Conservation District) included good ol' boys (State of Alabama), Green Mountain Boys (State of Vermont), several other states, the U.S. Chamber of Commerce, the Pharmaceutical Research and Manufacturers of America, and the American Hospital Association. Hopefully the states got to share some litigation pointers with each other before they went home to file their latest False Claims Act cases against the hospitals and drug makers! But seriously, we're sure a good time was had by all.

Unfortunately for the amici brief writers (and certain fragile Supreme Court egos) the decision is not likely to remain law for very long. In the new health care reform legislation, an amendment to the FCA was included which clarifies that private lawsuits under the FCA are barred only if the public disclosure was federal in nature, i.e., from a proceeding in which the federal government is a party or from a federal report, etc. This amendment appears to overrule the decision in the Graham County case, and Justice Stevens acknowledged the law in a footnote. A fight may still loom over whether the new law is retroactive to pending cases or state reports/audits made publicly available prior to the health care bill's passage.

The upshot of all this is that there is movement on the part of legislators to bar whistleblower lawsuits that are deemed "parasitic" and are based essentially on a relator's luck of the draw in hearing about the misspending of funds. Until the issue of whether Graham County applies to pending cases involving state/local reports/audits, it may be wise to avoid getting entangled in this tricky area.

Tagged as: drugs, False Claims Act, FCA, fraud, hospital, qui tam, whistleblower No Comments

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