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In America today, many hospitals are owned and controlled by massive corporations that operate large chains of hospitals throughout the country.  As a result, your local hospital may not be locally owned or controlled.  Instead, it might be more akin to a McDonald’s restaurant, owned and controlled by some large corporation with a faraway headquarters.

Although this type of “chain” ownership can often lead to efficiency, it can also lead to serious problems.  More and more often, the day-to-day decisions of running hospitals are made by business people who work in the corporate suites, not doctors and nurses who actually deliver care to patients.

Many times, these decisions are made to drive profits rather than to serve the best interests of the patients.  Many times these decisions can also lead to Medicare and Medicaid fraud.

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While we’ve written about the whistleblower programs administered by the IRS and the SEC on this blog, one has been consistently neglected – the CFTC Whistleblower Program.

The Commodities Futures Trading Commission (CFTC) regulates futures and option markets.  Futures contracts are, in their basic form, agreements to purchase and sell assets at a price agreed-to today with delivery and payment at a future date.  Exchanges for trading futures contracts were originally used to trade grain futures; later, people began trading futures contracts on other agricultural products and later for natural resources.   Today, people trade futures in foreign currency, government securities, and stock market indices.  Futures exchanges are regulated by the Commodities Exchange Act.

The CFTC Whistleblower Program

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HIPPA and Whistleblower Cases

Most people in the healthcare industry know that documents covered by HIPAA must be treated with utmost secrecy and care.   Protecting patient privacy is a big deal.  Thus, questions frequently arise when a healthcare worker wants to blow the whistle on fraud.  Can he or she use HIPAA protected documents to support their claims?

The short answer is yes, with certain qualifications.   The government wants to encourage people who know about fraud to come forward and report it.   Therefore, the government has enacted a specific HIPAA exception for whistleblowers.

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The United States is currently at war with the People’s Republic of China – a trade war.  The False Claims Act has an important role to play in this battle.

Every year foreign countries, but most particularly China, engage in a practice of “dumping” goods into the U.S. market.  Generally, this occurs when a foreign country exports goods into the U.S. at a sales price below the producer’s own cost of production.  Often, this takes place because the foreign manufacturer is receiving an unfair subsidy from its own country that makes the U.S. sales price extremely low.   The bottom line is that Chinese manufacturers can sell goods at prices so cheap that it creates an unfair advantage and materially harms U.S. producers of the same goods.

When the government determines that U.S. domestic industries are being materially injured by this type of “dumping,” the government can impose anti-dumping duties or countervailing duties to offset the unfair advantage enjoyed by the foreign manufacturer.  In plain language, this means the importer of these foreign goods must pay an extra fee in order to bring these cheap goods into the United States.   The extra fee is designed to make the foreign goods more expensive so that U.S. industry can remain competitive.

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False Claims Act Attorney in West Palm Beach: What is a violation of the False Claims Act?

Any fraud on a federal government agency could potentially be a violation of the federal False Claims Act.  Not every government fraud involves millions of dollars.  Take, for example, a recent settlement announced by the Department of Justice’s Office of the Inspector General.

According to the DOJ’s press release, Douglas daCosta of Livermore California, a former federal law enforcement agent in the San Francisco field office of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), has agreed to settle allegations that he submitted false claims to the federal government for paid sick leave when he wasn’t sick. Wait. What? An employee got in trouble with the federal government for playing hooky from work?  Yes.

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West Palm Beach Business Litigation Attorney Explains: I.R.S. Whistleblower Awards Expanded by U.S Tax Court

The statute governing whistleblower claims, I.R.C. § 7623, grants awards to private citizens who provide information to the IRS that leads to the collection of at least $2 million in taxes, penalties, interest, and “additional amounts.”  The whistleblower can get an award of “at least 15 percent but not more than 30 percent of the collected proceeds.”

This week, the United States Tax Court issued an opinion that expands the definition of “collected proceeds” for purposes of an IRS whistleblower claim.  The IRS has generally taken the position that so-called “tax restitution,” or repayment of back taxes and interest, qualified as “collected proceeds,” but any criminal or civil fines or forfeitures did not.  For instance, the IRS’s Internal Revenue Manual explains that criminal fines cannot be used for a whistleblower award, because the entirety of the fine must be deposited into the Victims of Crime trust fund.  Likewise, a civil forfeiture must be placed in its entirety into a Treasury Department trust fund.

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If you are not part of a low-income family with small children, you may not have heard of the Child Care and Development Fund (CCDF).  Similar to the Medicaid program, CCDF is a joint program between the federal government and the states that provides child care subsidies to eligible low-income families so the parent(s) or legal guardian can work or attend school.

In 2015, under the CCDF program, the federal government paid $5.4 billion and the states contributed a combined $2.2 billion to provide child care to 1.5 million children per month.  Of those monies, Florida received nearly $274 million in federal funding and provided child care subsidies to 213,000 eligible children.

As with any government program, there is a potential for fraud.  A report recently issued by the Department of Health and Human Services, Office of Inspector General estimates that in 2015, $311 million in false claims were submitted to the CCDF program.   The potential for fraud includes false claims made by both clients receiving the subsidies and child care providers.

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When is a Whistleblower Case Barred by the Public Disclosure Rule: West Palm Beach Business Litigation Attorneys Explain

The False Claims Act contains a provision commonly known as the public disclosure bar.  This provision, in certain circumstances, prevents whistleblowers from bringing qui tam cases if those cases are based upon facts or fraudulent schemes that have already been disclosed to the public in certain limited ways.  The underlying goal of the rule is to prevent a would-be whistleblower from claiming “credit” for information that the Government already knows or already had the opportunity to know.  A person cannot learn about a fraud from watching the local TV news, for example, and then claim a qui tam reward for reporting that same fraud to the Government.

Under the public disclosure rule, a whistleblower’s lawsuit might be barred if substantially the same allegations or transactions were publicly disclosed in the following places:  (1) in federal civil, criminal or administrative hearings where the Government was a party, (2) in Congressional or federal reports, hearings, audits or investigations, or (3) in the news media.

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Increased Civil Penalties Under the False Claims Act – West Palm Beach Business Litigation Attorneys Explain

On June 30, the Department of Justice announced that it is adjusting the civil monetary penalties imposed under the False Claims Act, effective August 1, 2016.  This follows a similar increase announced by the Railroad Retirement Board back in May of this year.

Currently, each false claim submitted for payment to the federal government subjects a defendant to a minimum monetary penalty of $5,500 to $11,000 per claim, in addition to an amount equal to three times the actual damages suffered by the government as a result of the claim.  As a result of this inflationary adjustment, the penalty range increases from a minimum of $10,781 to a maximum of $21,563 per claim – nearly double the prior range!

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Ralph Nader is often credited with coining the modern term “whistleblower” to refer to an employee who reports illegal, unethical or wrongful conduct at his or her place of employment.   At our firm, we have had the privilege to represent many courageous whistleblowers who have had the integrity to stand up and report fraud and abuse against government programs when no one else at their workplaces would do so.  Here are a few of many reasons our country needs more such whistleblowers:

 1.     Fraud is Everywhere.

Politicians often differ on the amount of money that the government should spend.  But regardless of whether you believe in “big government” or “small government,” we all agree the government should not spend money on fraudulent goods and services.  The government loses billions each year to fraud and abuse against federal spending programs such as Medicare, Medicaid and defense contracting.  This hurts everyone (except for the fraudsters of course).