Whistleblower Qui Tam Lawyer Blog
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West Palm Beach False Claims Act | Medicare Fraud

We have blogged in the past about a common Medicare fraud scheme that involves waiving patient copayments and deductibles.   The basic scheme works like this.   Medicare normally requires that healthcare providers collect a copayment equal to 20% of the covered item or service.    Crooked healthcare providers will waive or forgive this 20% copay as a form of hidden kickback to the patient.  “Come to me, and I won’t charge you any copay.”

The government has been wise to this fraud for many years.   Indeed, HHS-OIG warned about this fraud as early as 1994.   Publication of OIG Special Fraud Alerts, 59 Fed. Reg. 65372, 65374 (Dec. 19, 1994).  For that reason, many fraudsters know that the excessive waiver of copays will raise a red flag with insurance company and government auditors.

Fraudsters — ever clever in their schemes to hide and conceal their frauds — have come up with new ways to hide this scheme.  Some fraudsters have taken to “collecting” the copays by means of prepaid credit cards, the kind that can be commonly purchased at any local Walmart or grocery store.   These prepaid credit cards are largely untraceable and, most important for the fraudsters, provide a seemingly valid debit card number that can be inserted into its books and records as the source of the alleged “payment” for the copay or deductible.

This bit of deception satisfies two aims.  First, it relieves any burden from the patient to satisfy the copay.  This allows the fraudster to continue to commit the fraud without any complaint by the patient, who has never been asked to pay for anything.

Second, it provides a reasonably good “CYA” trail in case the government or investigators examine the record of copay collections. With this scam, the copay was not “waived” at all on the books and records.  Instead, it was fully “collected” with a seemingly valid credit card receipt.   Little do auditors know that the credit card at issue was purchased by the fraudster.

The only way to catch this scheme would be for an inside whistleblower to come forward and report it to the government, or for auditors to stumble upon the odd coincidence that multiple patients are paying their copays using the same credit card!

Schemes like this are the reason taxpayers continue to lose billions every year to healthcare fraud.  The government simply cannot catch all of the fraud on its own and relies upon honest employees who are willing to come forward to report the frauds of their employers.

If you know about a healthcare provider that engages in this type of deceptive practice, you may be able to bring a qui tam whistleblower case.   Contact our attorneys for a free consultation.

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West Palm Beach False Claims Act | Medicare Fraud

The U.S. Department of Health and Human Services Office of Inspector General (OIG) recently released a detailed study of ambulance transports billed to Medicare Part B in the first half of 2012 that identified millions of dollars of dubious and potentially fraudulent payments.  Of the $2.86 billion paid by Medicare for ambulance services in those six months, the September report stated that $207.5 million went toward transports associated with questionable billing practices.

At least $30 million of the improper payments were for ambulance rides where the OIG could find no record of the patient ever receiving any kind of medical care – the so-called “mystery rides.” Another $24 million was paid for transports to destinations not covered by Medicare.  The study also determined that more than 1 in 5 ambulance suppliers implemented questionable billing practices.  A copy of the full OIG report can be found here.

Medicare only covers ambulance transports when a patient’s medical condition at the time of transport is such that other means of transportation would endanger the patient’s health. Additionally, the transport must be to receive or return from a medically necessary Medicare service.  If an ambulance transport fails to meet these criteria, it is not billable to Medicare.  Knowingly billing the federal government for fraudulent medical services constitutes a violation of the False Claims Act.

Among the most common kinds of ambulance fraud and false Medicare claims are the following:

  • Billing for medically unnecessary dialysis transportation;
  • Billing for transportation to routine medical appointments, such as radiology or radiation treatment;
  • Billing for a higher level of service than was actually provided, such as coding a basic life support transport as one for advanced life support, which is reimbursed at a much higher rate;
  • Charging for supplies or services that were not actually rendered, such as oxygen and cardiac monitoring; and
  • Entering into agreements with facilities like hospitals and nursing homes where the ambulance company provides reduced-cost transports in exchange for transport referrals, in violation of the Anti-Kickback Statute.

If you have knowledge of any of the above schemes or other fraud in connection with ambulance transports, contact our attorneys for a free consultation at (877) 915-4040.


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West Palm Beach False Claims Act & Whistleblower Cases

Yes, whistleblowers can bring group claims in qui tam cases.  Indeed, this is a somewhat frequent occurrence and often is a successful strategy once the pros and cons are considered.

What are the pros of bringing a group qui tam claim?

A number of pros exist for bringing a group qui tam claim with one or more other whisteblowers.  First, having more than one whistleblower allege similar wrongdoing can strengthen the credibility of the facts alleged because the allegations stem from multiple sources.  Second, the wrongdoing reported by multiple whistleblowers often is broader in scope and may spark an investigation of more than one scheme that can strengthen a case.  Third, with more than one claimant and multiple schemes alleged, the probabilities increase of alleging a successful claim.  This is because the Government often picks and chooses specific schemes that bear out after its investigation.  Fourth, with more than one claimant and multiple schemes alleged, the damages often are higher than they would be with a single claimant.  Fifth, because there is a first-to-file rule in qui tam cases, filing a case jointly on behalf of multiple claimants prevents a race to file competitive claims between whistleblowers where one claim may bar another. Finally, when there is more than one whistleblower involved, once the defendants learn the whistleblowers’ identities, it becomes more difficult for the defendants to challenge a specific whistleblower’s credibility or motive as the defendants now have to focus on multiple whistleblowers.

What are the cons of bringing a group qui tam claim?

Several cons exist for a whistleblower to join claims with other whistleblowers in a qui tam case.  First, the whistleblower will have to share the award with the other whistleblowers, which is 15 to 25% of the Government’s recovery in cases where the Government intervenes in the action.  For example, if the Government agrees that two whistleblowers jointly should receive 20% of a Government settlement, after the attorney’s contingency fee is deducted, the two whistleblowers typically each would receive 6% of the Government’s settlement (instead of 12% with one whisteblower).  Second, having more than one whistleblower can present conflicts of interest between the whistleblowers that can harm the potential success of the case or require the withdrawal of the attorney jointly representing the whistleblowers. Third, whistleblowers may have different expectations as to what they deem to be a reasonable settlement, which can create conflicts in settlement strategy and challenges in working with the Government in a cohesive manner.  Fourth, when multiple schemes are alleged and the whistleblowers have varying knowledge about each scheme, it may create entitlement issues between whistleblowers when the Government recovers a settlement on one whistleblower’s scheme but not on the other’s.


Bringing a joint qui tam claim on behalf of multiple whistleblowers is permitted in most circumstances.  The whistleblowers, however, need to be consulted on the pros and cons of joining forces in the same action.  The whistleblowers also need to be counseled on existing or possible conflicts of interest and waive such conflicts after an informed consultation from counsel.  While there are compromises that come with filing a joint qui tam claim, often the likelihood of success from filing a joint claim increases and outweighs the downside.

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urine cup

West Palm Beach False Claims Act | Urine Drug Testing Laboratory Fraud

On October 19, 2015, the United States Department of Justice announced that Millennium Health, formerly Millennium Laboratories, had agreed to pay $256 million to resolve allegations of Medicare fraud in connection with urine drug testing and genetic testing.

Millennium is a nationwide company engaged in the lucrative and highly competitive business of urine drug testing and genetic testing.   The extremely competitive nature of this business prompts many unscrupulous players to engage in illegal activities to generate business.   The recent $256 million settlement highlights some of the activities that take place in this industry

Kickbacks to Doctors.  Referrals are the lifeblood for any laboratory testing company.  Laboratories hire salespeople, usually known as “Reps” to visit doctors’ offices to persuade doctors to use their laboratory rather than competitor laboratories.  The more referrals the Rep generates, the money the Rep makes and the more money the laboratory makes.

This leads to an incentive for the Rep and the laboratory to offer kickbacks to the doctor.  The situation is even worse when multiple laboratories are offering kickbacks to the same doctor.

Some kickbacks are blatant, like free, virtually untraceable gift cards in exchange for every referral.  Other laboratories might offer the doctor free point-of-care testing cups. These are small cups used to do a preliminary screening in the doctor’s office, which the doctor must purchase on his or her own.  The quid pro quo works as follows:  if you keep using my lab, you’ll never have to pay for point-of-care cups again. This is a kickback.

Other labs might offer free computer software or free patient tracking software under the guise that the doctor is merely “testing” the software for the lab.  In reality, the lab is simply giving the doctor something of value that the doctor would otherwise have to pay for on his or her own.

Excessive Testing.  Once a kickback relationship is established, the doctor often loses his or her objectivity in ordering tests.  The doctor gets a kickback for every test. The more tests, the more kickbacks.

This frequently results in the doctor ordering more tests than are medically necessary.

Nobody objects, not even the patient.  Patients rarely pay co-pays for urine drug tests so the patient has no incentive to complain about the large number of tests being ordered.

At the end of the day, the taxpayers pay the bill for all of these unnecessary tests.

The allegations in the Millennium case involved some of the above activity.  However, Millennium is by no means the only player in the laboratory business engaged in this type of illegal conduct.

The complete Department of Justice press release can be found by clicking here.

If you know about illegal kickbacks, excessive testing, or other fraud in connection with laboratory drug testing, contact our attorneys for a free consultation at (877) 915-4040.

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West Palm Beach False Claims Act & Whistleblower Cases

Reverse mortgage fraud is on the rise, and taxpayers are paying the bill.  How?

A reverse mortgage is a type of home equity loan available only to elderly borrowers who have a large amount of equity in their homes.  Essentially, the borrower cashes out the equity by taking a loan, usually paid to the borrower in a lump sum by a lender.   The borrower puts up his or her home as collateral, and the borrower must repay the loan once he or she moves, sells the home, or passes away.   (Usually, the borrower’s estate sells the home and uses the proceeds to pay off the loan).

Contrary to popular belief, it is possible for a borrower to default on a reverse mortgage.  This is because the terms of the loan require the borrower to stay current on property taxes and insurance.   If the borrower fails to pay taxes or insurance, he or she places the collateral at risk and the lender is allowed to foreclose the loan and seize the house.

Most importantly, reverse mortgages are insured by the federal government through the Federal Housing Administration or FHA.   If a reverse mortgage loan defaults, and the lender cannot recover the full value of the loan by way of foreclosure proceedings, the lender can submit an insurance claim to the federal government to cover its losses, including interest dating back to the date of default.

The federal government has enacted a variety of regulations to ensure that lenders act quickly and take steps to minimize the government’s potential losses in the event of a default.  For example, federal regulations require the lender to obtain an appraisal within 30 days of the date a reverse mortgage comes due, whether by default or otherwise.  24 CFR 206.125(b).  The appraisal allows the government to determine the market value of the collateral and to assess its options.

Likewise, once a reverse mortgage is in default, the lender must, within six months, take first legal action towards foreclosure.  24 CFR 206.129.   These measures are intended to protect the government by requiring lenders to act promptly. The lender cannot simply sit back, for months or years, and then file an insurance claim with the government, expecting to receive all of the back interest that has accrued.

Reverse mortgage lenders or servicers who fail to follow federal regulations and then submit insurance claims to the government, claiming that the regulations were in fact followed, commit a fraud against the government.

In fact, the federal government recently collected more than $29 million against a reverse mortgage servicer, Walter Investment Management Corp. for committing fraud against the government in connection with the servicing of reverse mortgages.  A link to the Department of Justice press release can be found by clicking here.

If you know about reverse mortgage fraud, contact our attorneys for a free consultation.

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In most cases, Medicare does not pay for 100% of covered medical items or services.  Most commonly, Medicare covers only 80%.  The remaining 20% must be paid by the Medicare beneficiary as a form of co-insurance or co-payment.   Medicare beneficiaries might have supplemental insurance policies that pay for part or all of this 20% obligation, but even supplemental insurance policies usually have their own co-payment or deductible obligations.

The result is that Medicare beneficiaries almost always have some payment obligation when receiving a covered item or service.

One common form of Medicare fraud is to waive these payment obligations on a routine basis.     Provider A essentially says to a patient, “If you use me instead of my competitor, Provider B, I will not charge you that co-payment or deductible.”  By doing so, Provider A offers an illegal discount – a kickback — to the patient in exchange for using his or her services.

Waving co-pays and deductibles is fraudulent for two reasons.

First, it gives the patient a financial incentive or kickback to choose Provider A instead of Provider B.  Patients should be able to make decisions based upon quality of care, rather than on which provider pays a kickback.

Second, by waiving co-payments and deductibles, Provider A lies to the government about the amount charged for its services.  Provider A tells the government it is charging $100 to the patient, when in reality Provider A is charging only $80.

This is fraud.  HHS has opined that “[r]outine waiver of deductibles and copayments by charge-based providers, practitioners or suppliers is unlawful because it results in (1) false claims, (2) violations of the anti-kickback statute, and (3) excessive utilization of items and services paid for by Medicare.”  Publication of OIG Special Fraud Alerts, 59 Fed. Reg. 65372, 65374 (Dec. 19, 1994).  “When providers, practitioners or suppliers forgive financial obligations for reasons other than genuine financial hardship of the particular patient, they may be unlawfully inducing that patient to purchase items or services from them.”  Id. at 65375.  HHS continues to maintain this position.   See Medicare Claims Processing Manual, ch. 23, § 80.8.1 (rev. Feb. 6, 2015) (“Physicians or suppliers who routinely waive the collection of deductible or coinsurance from a beneficiary constitute a violation of the law pertaining to false claims and kickbacks.”).

As one court explained:

Once approved as a provider, a DME supplier may be reimbursed 80% of the allowed amount for qualified equipment it provides to Medicare beneficiaries.  The beneficiary is required to pay the remaining 20% of the allowed amount, and the DME supplier may not represent to a potential beneficiary that the DME is free.  The only exception to the copayment requirement is when the beneficiary can prove, based on detailed financial information, that he or she cannot afford it.

See United States v. Turner, 561 F. App’x 312, 315 (5th Cir. 2014).  In Turner, a case where the provider “rarely collected the required 20% copayment,” the court found the evidence sufficient to sustain a conviction for conspiracy to commit health care fraud.  Id.

If you know about a healthcare provider that engages in a practice of routinely waiving co-payments and deductibles, you may be able to bring a qui tam whistleblower case.   Contact our attorneys for a free consultation.

West Palm Beach Securities Fraud Lawyer

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A recent case in Illinois highlights a common battleground in qui tam whistleblower cases namely, the whistleblower who keeps and relies upon company documents to prove the fraud allegations of his or her complaint.

In Shmushkovich v. Home Bound Healthcare, Inc., 2015 WL 3896947 (N.D. Ill. June 23, 2015), a whistleblower brought a qui tam complaint against his employer, a home health agency.   As part of his job, the whistleblower had retained numerous company computer files on his personal computer at his home.   The whistleblower was still employed at the home health agency at the time he filed the qui tam complaint, and he was still employed their when the complaint became unsealed.

As soon as the employer learned of the qui tam complaint, the employer immediately demanded the return of any company files in the whistleblower’s possession, including computer files.   The whistleblower deleted all files from his computer but made two copies, one delivered to the employer and one delivered to his attorney.

The employer then filed a motion demanding that the attorney return the company’s computer files.  In a well-reasoned opinion that can be found by clicking here, the court denied the employer’s motion.

The court first cited the long line of authority for the proposition that public policy and the False Claims Act encourages whistleblowers to investigate and report fraud against the government, even when that means violating confidentiality agreements or taking company documents that would otherwise be confidential.

The court then addressed a more practical concern.  The whistleblower, in the context of litigating the qui tam case, would be entitled to request documents relevant to the fraud anyway. To the district court, it made little sense to require the whistleblower to return electronic documents, only to then request the exact same electronic documents in discovery from the employer.  As the court explained, “requiring [whistleblower] to return documents that he will inevitably receive in discovery is a formality that has been obviated by the circumstances of this case (i.e. [whistleblower] already has copies of the documents and [employer] knows what documents he has) and will only serve to unnecessarily increase the expense and extend the length of the litigation.”

The district court added two caveats.  First, the whistleblower could only retain documents that were relevant to his claims, and he had to delete the remainder. Second, the court acknowledged that the computer files might contain attorney-client privileged documents. In the event that the whistleblower’s lawyers gained access to these privileged documents, the court might have to hold a hearing in the future to determine whether the employer had been injured and what remedies might be necessary.

West Palm Beach Investment Law Firm

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As recently reported by CBS News, federal authorities are currently investigating widespread fraud occurring in the area of compounded pharmaceuticals and compounding pharmacies.

Compounding refers to the process by which medications can be turned into topical creams, ointments and gels.  Many pharmacies specialize in the manufacture of compounded medications, especially compounded pain and scar medications.  These are commonly sold and marketed as migraine creams, pain creams, or scar creams.

The cost of these medications is extremely high and they carry high reimbursement rates from government healthcare programs.  As an example, one month’s worth of compounded pain medication can cost as much as $15,000, or more.

According to the CBS report, federal regulators have noted an extreme spike in government spending on compounded medications through TRICARE, which covers healthcare for the U.S. military, and through Medicare and Medicaid, the traditional healthcare programs for the elderly and the poor.

Typical scams work as follows:

Cold calling beneficiaries:  Fraudsters will obtain a list of military personnel or elderly persons and cold call them to ask if they are in pain or in need of pain medication.  The cold caller will then promise a fantastic and free pain medication offered to them by the government.  The cold caller will request the patient’s TRICARE and Medicare information as well as information about the patient’s doctor. The cold caller will then fax a prescription to the doctor.  Many doctors sign these prescriptions, either because they assume the patient needs it or because they are too busy to check.   If the doctor signs the prescription, the medication is mailed to the patient and billed to the government.

Dishonest doctors:  Thankfully, many doctors refuse to sign dubious prescriptions faxed to their offices.  To overcome this hurdle, fraudsters frequently make use of a bogus or dishonest doctor who will authorize prescriptions without ever seeing the patient.  These doctors are usually paid a kickback for their “services.”

Waiver of co-payments.  Most insurance policies, even policies offered through government healthcare programs, require the patient to make a co-payment.  This can be a hurdle to a fraud scheme, where the key is to convince the patient to keep (and not complaint about) thousands of dollars of medications being shipped to them.   If the patient has to pay anything – even a small co-payment – the patient might refuse to accept the medications.

To overcome this, unscrupulous pharmacies simply waive or fail to collect the co-payment.  This is illegal if done on a routine basis.  More creative fraudsters will even pay the co-payment themselves in order to cover their tracks in the case of an audit.  If the government comes to check, the auditor will see the co-payment was paid – little does the auditor know it was paid by the pharmacy itself.

Paying kickbacks.  Many pharmacies will also pay kickbacks to sales agents, contractors and others who agree to locate patients and funnel them to the pharmacy.  Paying kickbacks is illegal under the federal Anti-Kickback Statute.

Our law office has seen an increase in the number of potential whistleblowers calling with stories of various scams in the world of compounded pain medications.  If you know of fraud being committed in this area, contact one of our attorneys at 877-915-4040 for a free consultation.

West Palm Beach Investment Law Firm

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Whistleblowers often face a difficult decision when they suspect fraud at their place of employment.   The whistleblower knows that fraud is being committed, but he or she will never be able to prove it without keeping or retaining documents and records that might be protected by the Health Insurance Portability and Accountability Act, more commonly known as HIPAA.   In broad terms, this law prevents certain businesses and people from disclosing confidential patient data to third parties.

Fortunately, HIPAA contains an exclusion for disclosures made by whistleblowers, provided certain conditions are met.  Specifically, 45 CFR 164.502 (J) (1) provides that “a covered entity is not considered to have violated the requirements of this subpart if a [whistleblower] . . . discloses protected health information, provided that . . .  The [whistleblower] . . . believes in good faith that the covered entity has engaged in conduct that is unlawful.”   This section allows the whistleblower to make such disclosures to the government, regulators, or to “an attorney retained by or on behalf of the [whistleblower] for the purpose of determining the legal options of the [whistleblower].”

A recent case shows how the provision applies.  On July 1, 2015 a federal district court judge in the Eastern District of Arkansas decided a case, Howard ex rel United States v. Arkansas Children’s Hospital, 4:13CV00310JLH.  In this case, a former hospital employee filed a qui tam whistleblower action against a hospital.  Upon her termination, the whistleblower retained certain protected health information which she used to help back up her lawsuit.  She showed these documents to her attorneys for the purpose of seeking legal advice.

Upon learning that the whistleblower retained this HIPAA information, the hospital moved for summary judgment, arguing that the employee did not qualify as a “whistleblower’ within the meaning of the HIPAA regulations.

The District Court rejected this argument, finding that: (1) the hospital was a covered entity under HIPAA, (2) the whistleblower was a member of the hospital’s workforce within the meaning of HIPAA; (3) the whistleblower believed in good faith that the hospital had been engaged in unlawful conduct, and (4) that the whistleblower was therefore allowed to disclose the HIPAA information to her attorneys for purposes of seeking a legal opinion.

In short, HIPAA, while serving important goals of protecting patient privacy, does not stand in the way of honest employees who want to blow the whistle on healthcare fraud.

West Palm Beach FL False Claims Law

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According to the Department of Justice, LB&B Associates, Inc. (“LB&B”) has agreed to settle a qui tam lawsuit alleging it violated the False Claims Act by claiming it qualified as a Small Disadvantaged Business when it did not. LB&B is a North Carolina corporation that was formed in 1992 and is headquartered in Columbia, Maryland.

According to its website, LB&B provides a variety of contractor services to federal and state government agencies, the military, NATO, hospitals, churches, research centers, educational facilities, and other commercial business entities. Its business divisions include facilities management, operations and maintenance services; logistical support; systems and technology support; base operations support; and commercial support.

The U.S. Small Business Administration, created by Congress in 1953, runs the 8(a) Business Development Program (“8(a) Program”). The 8(a) Program assists small and disadvantaged businesses with competing in the marketplace, by giving them access to government contracts that are set aside specifically for small and disadvantaged businesses.

To be eligible to participate in the 8(a) Program business, the business must meet specific criteria, including the following:

  • It must be majority owned, controlled, and managed by socially and economically disadvantaged individual(s);
  • The control person(s) must be American citizen(s);
  • It must be a small business able to demonstrate the potential for success; and
  • The principals of the business must demonstrate good character.

For purposes of the 8(a) Program, minority individuals are presumed to be socially disadvantaged.  The socially disadvantaged control person(s) must provide documentation to the Small Business Administration demonstrating that he or she is also economically disadvantaged.  They must provide a narrative statement of economic disadvantage and personal financial information such as income tax returns.

According to the government, two former employees of LB&B filed a whistleblower lawsuit under the qui tam provisions of the False Claims Act alleging that LB&B falsely certified that Lily Brandon, a socially and economically disadvantaged person, controlled the operations of LB&B when she did not.  The whistleblowers further alleged that LB&B was improperly awarded government set aside contracts as a result of its false certification.

LB&B has agreed to pay $7.8 million to settle the allegations.  The whistleblowers will share in $1.5 million of the settlement proceeds as their reward under the qui tam provisions of the False Claims Act.


West Palm Beach FL False Claims Law