Corporate Liability Blog

Whistleblowers Get $10 Million For Medicaid and Medicare Billing Fraud

  • 09/16/08
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Under federal and state false claims acts, whistleblowers can reap huge windfalls by helping the government to uncover fraudulent practices.

In a recent New York case, a patient and a doctor in a whistleblower suit will receive a total of $9.9 million out of a settlement paid to the federal and state governments. New York’s Staten Island University Hospital will pay $88.9 million to settle allegations that it defrauded Medicare, Medicaid and a military insurance program. According to the suit, the hospital intentionally used false billing codes to obtain reimbursement from Medicare. The whistleblowers (legally referred to as “relators”) will receive about 10% of the total amount recovered for the government, even though they themselves suffered no losses.

The Massachusetts and Federal False Claims Act impose liability on companies that present false or fraudulent claims to the government.

In the health care field, the following activities are examples of conduct prohibited by the false claims laws:

• Billing for services not actually provided;
• Billing for undocumented services;
• Making false entries in medical and other records used to support reimbursement;
• Billing for medically unnecessary services;
• Characterizing non-covered services or costs in a way that leads to reimbursement from a government program;
• Assigning incorrect codes in order to obtain a higher reimbursement;
• Making inaccurate, false or inappropriate entries on cost reports;
• Failing to seek payment from beneficiaries who may have other primary payment sources;
• Participating in kickbacks, bribes, or rebates in exchange for referring goods, facilities, services, or items that are reimbursed by government programs.

A violation of the Federal False Claims Act may result in penalties of up to $11,000 per false claim plus three times the amount of damages the government sustains, and exclusion from the Medicare and Medicaid programs. Individuals, including employees, can bring a civil action on behalf of the Federal government for violations of the Federal False Claims Act. In return, the individual may share a percentage of any monetary recovery or settlement. Generally, individuals who bring the actions receive between 10% and 30% of the amount recovered.

The Massachusetts and Federal False Claims Acts prohibit employers from retaliating against any employee by discharging, demoting, harassing, or otherwise discriminating against him because he has reported violations of the False Claims Acts. This prohibition is what is generally referred to as “whistleblower” protection. If an employee experiences prohibited retaliation, he or she is entitled to all relief necessary to make the employee whole such as reinstatement, two times back pay, interest, emotional distress damages, costs, and attorney’s fees.

Whistleblower statutes give employees an incentive to report fraud on the government and protections from retaliaton. Otherwise, employees with information about government fraud would not step forward because they would lose their jobs.

If you have information about a potential false claim, you should contact an attorney promptly and keep it a secret.  Only the first whistleblower(s) to file suit gets to share in the recovery, and whistleblowers don’t get a share of the recovery if the fraud becomes public knowledge before suit is filed.

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