Articles Posted in Qui Tam

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In a previous blog post, we explained the concept of “qui tam.” The private individuals who file qui tam actions — “relators” — usually work for federal contractors. A qui tam action is only used to assert fraud against the government. People who file qui tam actions do so under the False Claims Act, which aims to stop fraudulent billings to the government. If their action is successful, relators stand to benefit personally by collecting 15 to 25% of any money amount awarded by the jury, as well as attorney’s fees. So if you are in Illinois and believe that your employer (a federal contractor) is committing fraud against the government, find an Illinois qui tam lawyer to help you file a qui tam action as soon as possible.

In United States ex rel. Stone v. OmniCare, Inc., Relator John Stone charged Defendant OmniCare with submitting false claims not only to the federal government, but also to several states. OmniCare was the nation’s largest provider of pharmaceuticals to long-term health care institutions, including assisted living facilities, retirement centers, and hospices. The company also provided related services such as respiration therapy and nutritional products. As a result, in 2008, 60% of defendant’s revenue came from Medicare and Medicaid.

Relator worked as Vice President for Internal Audit and conducted two key audits of OmniCare’s Medicare and Medicaid claims. The first set was submitted between 2000 and 2005, and consisted of 39 claims from 18 facilities per year. The second set took place in 2008, from newly acquired pharmacies only, and consisted of 30 claims from 15 facilities. Relator’s intent was to inform OmniCare of systematic problems that might exist regarding the claims and to prompt further claims-level investigation if needed. Both audits showed systematic problems, which relator relayed to OmniCare. Instead of inquiring further, OmniCare merely provided a limited repayment to Medicare that did not reflect the extent of overpayments and falsely claimed that the problem had been resolved. OmniCare also stockpiled certain medications in an effort to gain greater Medicare reimbursement. After relator presented these “deficiencies” in a formal document, OmniCare’s CEO allegedly told him to “begin looking for other employment.” Relator believed that his discharge was retaliation for lawful conduct under the FCA.

Judge James Zagel of the Northern District of Illinois noted that under the amended FCA, an overpayment must be reported and returned within 60 days of when the overpayment was identified. The question was whether relator’s discoveries of overpayment qualified because the statute could not be applied retroactively. Relator claimed that liability could be pinned to May 22, 2010, and thus all of the false claims from 2000 through 2005 and 2008 automatically attached. Judge Zagel disagreed. He felt that relator’s was too loose an interpretation of the FCA, permitting any overpayments — no matter what the year — to be subject to liability as long as some money from that claim is still in the company’s coffers. Therefore, the judge dismissed relator’s qui tam claim.

However, Judge Zagel did not dismiss relator’s retaliatory discharge claim. Retaliatory discharge under the FCA was met when 1) the relator’s actions were taken in furtherance of an FCA enforcement action; 2) the defendant “knew” that relator was engaged in the protected conduct; and 3) the discharge was at least partly motivated by the protected conduct. A fraud-alert employee such as the relator would need to put the defendant on notice of fraud by stating “magic words” such as “fraud,” “illegal,” or “improper.” Relator claimed that he spoke of “fraud” to the company, which Judge Zagel determined was enough to suggest retaliatory discharge. The judge allowed the retaliatory discharge claim to move forward.

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A “qui tam” action is one where a private individual unaffiliated with the government files a “whistleblowing” action against federal contractors that claims fraud against the government. People who file qui tam actions do so under the False Claims Act (also known as the “Lincoln Law”), which has the purpose of stopping fraudulent billings to the government. Those who file qui tam actions are usually people with inside knowledge of the false billings, which tend to come from health care, military, or other government programs. Qui tam “relators,” as these whistleblowers are called, stand to benefit by collecting 15 to 25% of any money amount awarded by the jury. So while helping the government might be first and foremost on the relators’ mind, the money reward surely adds incentive as well. Plus, those who bring qui tam actions also have their attorney’s fees paid for — so if you are in Illinois and want to file a qui tam action, don’t hesitate to find the best Chicago qui tam lawyer possible.

In U.S. ex rel. Wildhirt v. AARS Forever, Inc., the relators brought a suit alleging that their former employers, AARS and Acquisition, violated the False Claims Act and the Illinois Whistleblower Reward and Protection Act by allegedly submitting false and fraudulent claims to the state and federal government. The relators also brought individual claims stating that in violation of the FCA and IWRPA anti-retaliation provisions, their employment was terminated due to their whistleblowing.

AARS had entered into a contract with the Veterans Administration to provide both home health care services and medical equipment to patients with respiratory illnesses in Illinois, Wisconsin, and Michigan. In early 2008, Acquisition took over AARS’s business under the VA Medicare and Medicaid programs. Together, they were known as “Total Home Health.” Relators Wildhirt and McArdle worked as respiratory therapists for both companies from 2007 until September 2008. During this time, both relators observed the defendants allegedly breaching several performance requirements under the contract and allegedly violating regulatory provisions of Medicare and Medicaid. As a result, nearly all of the claims sent by the defendants to the federal or state government were alleged “false” claims. The relators allegedly repeatedly informed their supervisors, but were ignored. Relator McArdle finally had a “run-in” with a senior official at Acquisition, which left her so upset that she informed her direct supervisor that she would not be coming in the following week because she was uncertain whether she could continue working under existing conditions. When McArdle did not come in the next week, she was terminated. Wildhirt was likewise terminated for “abandonment” even though he was home due to illness.

Judge Feinerman of the Northern District of Illinois weighed the relators’ claims. Qui tam actions are subject to a heightened pleading standard compared to normal claims, which means that the qui tam relators must allege that the defendant actually submitted a claim for payment to the government and that the claim was knowingly false. The court found that the relators had failed to meet this standard. For instance, while the relators claimed that the defendants had “impermissibly billed the VA for follow-up visits” and “knowingly failed to return overpayments to the VA,” they did not identify specific instances where this happened. The court also found that there was no specific evidence linking the relators’ termination to their whistleblowing. The defendants showed no sign that they were aware of a pending lawsuit, or that the relators were investigating facts. In the end, the court dismissed the relators’ claim, but gave them room to amend their complaint so that it conformed better to qui tam standards.

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