Billions Of Taxpayer Dollars Recovered By Whistleblowers

Government fraud payments or fraudulent demands for payment in the billions would have gone undiscovered without qui tam whistleblowers under the federal False Claims Act ("FCA") who stepped forward to reveal the fraud.

Qui tam whistleblowers can be rewarded from 15 to 25 percent of the recovery if the government intervenes. If the government declines to join the case and the qui tam attorney prosecutes the matter without the government the relator can received up to 30 percent.

Any Federally Funded Program or Contract

The FCA covers fraud involving any federally funded contract or program. New York and some other states have False Claims Acts.

Among agencies and programs against which fraud can be committed under the law are health care programs including Medicare, Medicaid and Tricare, defense contracting, durable medical equipment ("DME"), pharmaceutical, defense, SBIR, cost reports, kickbacks, NIH grants, education grants, the Federal Highway Administration ("FHWA"), and state and New York City Claims, and others.

Many Types of Fraud

Lifflander & Reich LLP Partner Richard I. Reich is a member of Taxpayers Against Fraud ("TAF"), the Washington, D.C.-based national qui tam bar. According to TAF, a broad range of FCA frauds have been investigated to date, including:

Billing for unlicensed or unapproved drugs, or medical services. (See our settlement with Staten Island University Hospital)
Billing for goods and services that were never delivered or rendered.
Billing for marketing, lobbying or other non-contract related corporate activities.
Submitting false service records or samples in order to show better-than-actual performance.
Presenting broken or untested equipment as operational and tested.
Performing inappropriate or unnecessary medical procedures in order to increase Medicare reimbursement.
Billing for work or tests not performed.
Billing for premium equipment but actually providing inferior equipment.
Automatically running a lab test whenever the results of some other test fall within a certain range, even though the second test was not specifically requested.
Defective testing - Certifying that something has passed a test, when in fact it has not.
"Lick and stick" prescription rebate fraud and "marketing the spread" prescription fraud, both of which involve lying to the government about the true wholesale price of prescription drugs.
Unbundling - Using multiple billing codes instead of one billing code for a drug panel test in order to increase remuneration.
Bundling -- Billing more for a panel of tests when a single test was asked for.
Double billing - Charging more than once for the same goods or service.
Upcoding - Inflating bills by using diagnosis billing codes that suggest a more expensive illness or treatment.
Billing for brand - Billing for brand-named drugs when generic drugs are actually provided.
Phantom employees and doctored time slips: Charging for employees that were not actually on the job, or billing for made-up hours in order to maximize reimbursements.
Upcoding employee work: Billing at doctor rates for work that was actually conducted by a nurse or resident intern.
Yield burning - skimming off the profits from the sale of municipal bonds.
Falsifying natural resource production records - Pumping, mining or harvesting more natural resources from public lands that is actually reported to the government.
Being over-paid by the government for sale of a good or service, and then not reporting that overpayment.
Misrepresenting the value of imported goods or their country of origin for tariff purposes.
False certification that a contract falls within certain guidelines (i.e. the contractor is a minority or veteran).
Billing in order to increase revenue instead of billing to reflect actual work performed.
Failing to report known product defects in order to be able to continue to sell or bill the government for the product.
Billing for research that was never conducted; falsifying research data that was paid for by the U.S. government.
Winning a contract through kickbacks or bribes.
Prescribing a medicine or recommending a type of treatment or diagnosis regimen in order to win kickbacks from hospitals, labs or pharmaceutical companies.
Forging physician signatures when such signatures are required for reimbursement from Medicare or Medicaid.

The False Claims Act

The federal False Claims Act ("FCA"), first signed into law during the Civil War, was designed to stop fraud against the Union by war privateers who were selling substandard supplies or seeking or receiving payment for goods or services never delivered. For that reason it was dubbed, "The Lincoln Law."

The original statute had qui tam provisions which permitted individual citizens to sue on behalf of the government. The term, "qui tam" is a shortened version of the Latin phrase, "qui tam pro domino rege quam pro se ipso in hac parte sequitur," meaning, "he who brings an action for the king as well as for himself."

The original law called for double damages against those found to have violated the statute, and allowed citizens who filed the action to receive 50 percent of the government’s recovery.

The FCA was amended in 1986 to provide enhanced penalties for violators, anti-retaliation protection for whistleblowers and mandated relators' attorneys to be paid by the losing defendant. Additional penalties of $5,000 to $10,000 also were permitted for each false claim the defendant submitted.

Since the FCA was strengthened with the 1986 amendments more than $20 billion has been recovered for taxpayers in Federal civil actions.

Who Are Qui Tam Whistleblowers?

Many whistleblowers who file qui tam lawsuits (legally called "relators") are current or former employees who have inside knowledge and evidence of the fraud committed against the state or federal government. But relators are not limited to current or past employees. A qui tam case may also be filed by a customer, patient, physician, nurse, pharmacist, accountant, subcontractor, even a competitor with original knowledge of the fraud.

Specialized Legal and Industry Knowledge Is Needed

An individual should not file a False Claims Act case acting as his own lawyer, appearing legally as "pro se." In order to guarantee that a qui tam whistleblower case is filed properly a skilled attorney who knows whistleblower law should file the case under seal on behalf of the relator client, then present the case to the appropriate U.S. Attorney's Office for it to decide whether to intervent in the matter.

Specialized legal knowledge of state and federal FCAs; complex case investigative skills, the ability to navigate the twists and turns that whistleblower cases can take, sometimes over many years; excellent working relationships with government prosecutors and investigators who shepherd qui tam cases during their investigation; a thorough understanding of the relator's job and relationship with the defendant, an ability, should the government decline to intervene, to prosecute the case without the government; and the compassion and understanding to support the relator during the entire process are critical factors that are needed in a qui tam whistleblower lawyer.

Successful Whistleblowers: Ones Who File First

In False Claims Act filings the relator who is the first to bring evidence of a particular fraud against a government agency will be rewarded in successful cases. Timing is everything. The second realtor to file the same allegation is out of luck.

Damages and fines

When a qui tam whistleblower case is successful the defendant may pay up to three times the government's losses plus a fine of $5,000 to $11,000 for each false claim. Additionally, as per the 1986 FCA amendments, the defendant must pay the qui tam whistleblower attorneys' fees and case-related expenses.

Lifflander & Reich LLP

Our New York City-based litigation boutique has decades of experience investigating and successfully litigating serious matters. In qui tam, we have been especially successful in the area of health care fraud - helping the government to discourage those who cheat Medicare and Medicaid. Staten Island University Hospital recently settled a $25 million qui tam whistleblower case we initiated for a client. Currently, we have several whistleblower cases pending at various stages.

We are a relatively small firm with highly specialized expertise. Our clients are assured of personal attention because we only take those cases we can really believe in enough to deploy our resources. Our success proves this point.