|January 10, 2013|
Previously published on January 8, 2013
The Department of Justice has netted $4.9 billion in financial settlements and judgments from civil fraud cases in Fiscal Year 2012 (ending September 30, 2012), according to a recent DOJ announcement. This is the DOJ’s largest financial recovery for a single year, eclipsing the previous record by more than $1.7 billion and bringing the agency’s total recoveries under the False Claims Act (“FCA”) since January 2009 to $13.3 billion. Continuing this enforcement trend, the DOJ announced that three separate companies and a physician group agreed in the first week of 2013 to pay a total of $31.1 million to resolve FCA suits brought against them.
The FCA establishes a civil cause of action for the recovery of damages and fines from those who submit false or fraudulent claims to the United States. 31 U.S.C. § 3729. Under the statute, individuals, called “relators,” may proceed with an individual, or qui tam, action, which the government can then elect to join if it chooses. Relators are required to file qui tam actions in federal district court under seal. The seal remains in place for at least 60 days. The DOJ must choose either (1) to intervene in the matter and take over the litigation, (2) to decline to intervene and allow the relator to pursue the litigation in the name of the United States, or (3) to dismiss the matter so that the relator cannot recover. 31 U.S.C. § 3730(b)(1).
In the first of the three recent matters, the DOJ accused a company of improperly billing Medicare for sleep diagnostic services that were ineligible for federal reimbursement. According to the DOJ, the company used non-certified technicians to conduct sleep disorder diagnostic testing and billed Medicare for their services when Medicare covers such services only from certified technicians. The matter was initiated by a qui tam action brought by a former employee who now stands to receive $2.6 million under the FCA’s provisions.
The second action involved a pharmaceutical company that agreed to pay $11 million to resolve alleged liability under the FCA arising from the marketing of the company’s drug products. The company allegedly promoted its pharmaceuticals through the payment of inducements to physicians and, in return, the physicians would write prescriptions for the drugs. The payments or kickbacks allegedly included expensive dinners, tickets to sports events, spa trips, golf and ski fees and other outside events. The DOJ sought damages for violations of the Anti-Kickback Act, which prohibits kickbacks to physicians of the type alleged, which in turn create liability under the FCA when reimbursement is presented for government payment. This second settlement was the result of a qui tam action brought by a former sales representative of the company, who now will receive $1.7 million.
The third action involved an Ohio-based hospital and cardiac physician group accused of billing Medicare for unnecessary medical angioplasty procedures. This case also involved a qui tam action that alleged physicians regularly performed procedures unprepared, had patients exaggerate their symptoms, or required patients to return for additional medical procedures because of improper initial procedures, thereby increasing the billing for such patients. This case also involved allegations under the Anti-Kickback Act and resulted in a settlement of $4.4 million.
As these settlements illustrate violations of the FCA can lead to sizable financial exposure for businesses. With FCA enforcement on the rise, companies who bill the U.S. government for goods or services should consider reviewing their reimbursement systems and compliance programs to assure that proper controls are implemented and are working. DOJ saw a record 647 qui tam suits filed in Fiscal Year 2012 and we expect DOJ to continue on this course. From January 2009 through the end of the 2012 fiscal year, DOJ used the FCA to recover more than $9.5 billion in federal health care dollars alone - another record and a warning for employers in the health care industry. Now is a good time to review policies, practices and implement strong compliance programs.