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Community Health Systems, Inc. (“CHS”) has agreed to settle several whistleblowers’ qui tam lawsuits  that it violated the False Claims Act and the Stark Law. According to its website, CHS is one the nation’s largest operators of acute care hospitals.  An acute care hospital is a short-term hospital that provides diagnosis, care and treatment for a wide range of acute conditions.  Acute conditions are brief, but severe, episodes of illness that are the result of disease or trauma or recovery from surgery.  CHS’s affiliates own, operate or lease hospitals in 29 states, according to its website.

According to the Justice Department, seven different whistleblower lawsuits were filed under the qui tam provisions of the False Claims Act alleging that CHS violated the False Claims Act and that one of its affiliated hospitals, Laredo Medical Center, also violated the Stark Law.   Specifically, the government alleged that CHS knowingly billed government health care programs such as Medicare, Medicaid, and TRICARE for more costly inpatient services that should have been billed as less costly outpatient services.  The government claimed that the inpatient admissions of many government health care beneficiaries  were not medically necessary and therefore, the submission of claims for payment for the inpatient admissions were made in violation of the False Claims Act.   CHS agreed to settle these allegations for $89.15 million.

In addition, the government claimed that Laredo Medical Center wrongfully billed the government for services provided by a physician with whom the hospital had an improper financial relationship in violation of the Stark Law.  CHS agreed to settle the Stark Law claims for $9 million.

The qui tam lawsuits were brought in Texas, Tennessee, Illinois, Indiana, and North Carolina.  The whistleblowers are: Nancy Reuille, former nurse and Supervisor of Case Management in Indiana; Kathleen Bryant, the former Director of Health Information Management in Tennessee; Scott Plantz, a former emergency room physician in Texas; Rachel Bryant, formerly a nurse for CHS in Tennessee; Thomas Mason, a former emergency room physician in North Carolina; Bryan Carnithan, formerly the Emergency Medical Services Coordinator at a CHS hospital in Illinois; Amy Cook-Reska, a former employee of Laredo Medical Center; Sheree Cook, a former nurse; and James Doghramji, a former emergency room physician in Philadelphia.   In accordance with the qui tam provisions of the False Claims Act, the whistleblowers will share in a percentage of the settlement proceeds.

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The United States government has intervened in a whistleblower’s qui tam lawsuit alleging that military contractors Sikorsky Aircraft Corporation (“Sikorsky”), Sikorsky Support Services, Inc. (“Sikorsky Support”), and Derco Aerospace, Inc. (“Derco”) violated the False Claims Act. The whistleblower also alleged violations by the parent company of Sikorsky, United Technologies Corporation, but the federal government declined to intervene with regard to those claims.

According to its website, Sikorsky is engaged in the design, manufacture and service of military helicopters and fixed-wing aircraft for all branches of the U.S. military. Sikorsky’s website reflects that it supplies the U.S. armed forces with Blackhawk helicopters, Seahawk helicopters, CH-53E helicopters, MH-53E helicopters, and MH-60S aircraft, the U.S. military’s first all-new rotary wing aircraft in a decade.

Sikorsky Support, a wholly owned subsidiary of Sikorsky, is headquartered in Stratford, Connecticut. It provides maintenance, logistical, and technical services to customers of Sikorsky, including the U.S. military.

Derco, headquartered in Milwaukee, Wisconsin, is a subsidiary of Sikorsky that primarily provides aircraft spares to Sikorsky’s customers. The whistleblower, Mary Patzer, was employed by Derco as the Assistant Controller of US Government Accounting and Sarbanes Compliance.

According to the qui tam complaint filed in the United States Court for the Eastern District of Wisconsin, the whistleblower alleged that, between July 2006 and September 2010, Sikorsky, Sikorsky Support, and Derco knowingly submitted inflated bills to the federal government for parts and repair services. The whistleblower alleged that the submissions were made in violation of the False Claims Act.

According to the whistleblower, Sikorsky’s contract with the U.S. Navy specifically stated that the cost for parts and services provided by a vendor must be the actual cost, no fee or profit is allowed. The whistleblower alleged that the invoices submitted to the government by Sikorsky and its subsidiaries contained a hidden 20% profit mark-up in violation of the contract. According to the complaint, the whistleblower was terminated shortly after she raised this issue with Sikorsky’s accounting manager on or around September 10, 2010. The whistleblower further claims that her duties were reassigned to another employee with little or no knowledge of the government’s required “at cost” billing under the contract.

In its Notice of Partial Intervention filed on August 8, 2014, the United States stated that it will file its own complaint within 60 days.

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The Supreme Court has agreed to hear an appeal of the reinstatement of a whistleblower’s qui tam case against defense contractor KBR, Inc. alleging violations of the False Claims Act.  The 4th U.S. Circuit Court of Appeals reinstated the case in 2013 after concluding that the whistleblower had not blown the six-year statute of limitations, because the statute was tolled while the country was at war pursuant to the Wartime Suspension of Limitations Act.

The whistleblower, Benjamin Carter, initially filed the underlying qui tam action in the United States District Court for the Eastern District of Virginia.  The district court dismissed the whistleblower’s case, and held that the original qui tam matter had been filed beyond the False Claims Act’s six-year statute of limitations.  The whistleblower appealed the dismissal.

According to the whistleblower, KBR provided logistical assistance to the U.S. military in Iraq pursuant to a government contract.  The whistleblower was employed by KBR as a reverse osmosis water purification unit operator at two camps serving the U.S. military in Iraq from mid-January to April 2005.  The whistleblower’s complaint alleged that KBR did not purify the military’s water in Iraq until May 2005, despite billing the federal government for water purification during the period January to April 2005.  In addition, the whistleblower claimed that KBR instructed its employees to bill the government for twelve-hour work days, regardless of whether they actually worked for twelve hours.

The appellate court reversed the lower court’s decision.  According to the Court of Appeals’ decision, it found that the Wartime Suspension of Limitations Act was applicable because the country was at war when the False Claims Act allegations were presented.  In addition, it held that the whistleblower was not precluded from bringing a new action once the original actions were dismissed.

KBR then submitted a petition for a writ of certiorari to the Supreme Court of the United States. On July 1, 2014, the Supreme Court granted the petition. Oral argument and a decision are expected in the court’s next term which begins in October.

To read about other cases brought under the qui tam provisions of the False Claims Act, click here.