It is an unfortunate truth that some individuals and companies steal money from the federal and state governments of the United States by filing fraudulent and false claims seeking and ultimately obtaining money to which they are not entitled. It is an equally unfortunate truth that because our federal and state governments are often stretched so thin, they have limited resources to devote to tracking down and prosecuting individuals and companies who steal from them. Recognizing this fact, the United States government, as well as numerous states throughout the country, have adopted laws that entitle a whistleblower who brings such fraud and theft to the attention of the proper authorities to keep a portion of the proceeds ultimately recovered. This is known as a qui tam lawsuit.
There are companies and entities that engage in unethical and illegal behavior against the government and would get away with it, if not for whistleblowers. Whistleblower is the informal term for individuals who choose to retain private counsel to recover the losses to the government caused by the fraud. They are able to do so under the False Claims Act (also known as the “Lincoln Law”), which provides financial incentive to individual citizens who come forward with knowledge of fraud and secure legal counsel to fight on the government’s behalf. As a result, the whistleblower, or relator, recovers a portion of the damages assessed against the perpetrator. The relator doesn’t have to have been directly hurt by the conduct to pursue litigation.
What are ‘qui tam’ lawsuits?
A qui tam lawsuit is generally defined as an action brought by an informer under a federal or state statute which
- establishes a penalty for the commission of a certain act and
- provides that a portion of the penalty and recovery shall go to the institution to whom it belongs and a portion shall go to the person who brought such lawsuit.
In essence, these qui tam statutes privatize and deputize private citizens to act as private attorneys general allowing them to prosecute fraud against the government.
Initially, qui tam claims primarily came within the arena of government defense contractors who fraudulently billed the government for work never performed and whose fraud was brought to the attention of the government by an employee of the defense contractor or other private citizen. In recent years, no branch of government is safe from fraudulent claims, including NASA, the Department of Health and Human Services, the Department of Homeland Security, the Department of Energy and the Department of Education. Generally speaking, a person who is aware of another person or company who has filed fraudulent claims with a governmental agency and brings such to the attention of proper authorities is often entitled to keep a portion of the recovery obtained.
The United States government has paid billions of dollars to individuals who have brought to their attention cases of fraud and theft in qui tam lawsuits. An estimated 10% of the annual government budget is lost to government fraud, which appears in many forms. According to Taxpayers Against Fraud (TAF), over $28 billion has been recovered since the False Claims Act was strengthened in 1986. Qui Tam litigation is vital to recovering monies fraudulently taken from the government and for discouraging other parties from defrauding the government.
Qui tam lawsuits on behalf of whistleblowers under the False Claim Act often involve Medicare fraud claims, Medicaid fraud claims, fraudulent tax claims (known as tax evasion), federal securities law violations, underpayment of gas and oil royalties from public lands, and claims against governmental vendors (such as suppliers of computers and construction materials). Other common examples of companies making fraudulent claims against the government are instances of health care fraud by drug and pharmaceutical companies, clinical laboratories and hospitals which often times fraudulently bill the government for services or products never provided.
Fraudulent Tax Claims or Tax Evasion
The IRS has its own version of the False Claims Act called The Whistleblower Act. Any person, known as a whistleblower, with knowledge of another person’s failure to pay taxes owed to the United States government can utilize this act. In return for information about the defrauder, the IRS will grant the whistleblower up to 30 percent of monies recovered through tax, penalty and other amounts collected.
Medicare and Medicaid Fraud Claims
Medicare and Medicaid fraud have become two of the most active areas of qui tam litigation. The government is reliant on individuals, companies such as pharmaceutical manufacturers, and healthcare facilities like hospitals, doctors’ offices and dentists’ offices to charge what they professionally know to be the right and fair price for necessary services. When those entities abuse that trust by fraudulently billing the government, the value of the whistleblower is to inform the government of the deception.
Companies and healthcare facilities utilize Medicare and/or Medicaid to defraud the government out of billions of dollars each year, relying on unethical practices such as
- Charging for services not rendered
- Performing unneeded services
- Kickbacks and self-referrals
- False certifying
- Giving false information
- Upcoding schemes – coding in charges for more expensive procedures or products than were actually utilized
- Unbundling – charging for the performance of individual tests when they actually were actually performed together
- Fraudulent cost reports
- Grant or research fraud – receiving monies to perform research that never occurs
- Phantom billing – billing for services not rendered
In 1989, the Stark statute was put into effect to prevent doctors from self-referring. Self-referring is when a doctor refers a patient to an entity in which the doctor has a financial interest or an entity who illegally compensates the physician for referrals. This legislature is intended to prevent physicians from placing financial gain before the best interests of the patient.
If a whistleblower has knowledge of an entity that is using or has used Medicare or Medicaid to fraudulently bill the government, that individual has the ability to blow the whistle on the company. In turn, the informer will be awarded a percentage of the funds collected by the government.
Government Vendor Fraud
Contactors are often in a position to defraud the government out of large sums of money, and, unfortunately, some of them do. This fraudulent behavior can take many forms, such as overcharging for products or services, charging for services not rendered and recommending unnecessary services.
Contractors and manufacturers are also required to give the government the “best price” they would offer any customer. Any inflation or additional charge added to this price is fraudulent.
Heygood, Orr & Pearson files qui tam lawsuits on behalf of whistleblowers
Qui tam lawsuits are typically intricate and require attorneys who are skilled and experienced in complex litigation. An informant only receives an award when a claim leads to the recovery of government funds. It is important for a whistleblower to file a qui tam lawsuit as quickly as possible since the government typically only allows recovery to the first person to file such a lawsuit about a particular fraudulent act.
Heygood, Orr & Pearson has the resources, experience and knowledge to protect the rights of a whistleblower and ensure that not only the government recoups what has been stolen, but the whistleblower also obtains that portion of the recovery that rightfully belongs to them. Contact us today for a free consultation by calling toll-free at 1-877-446-9001 or by following the link to our free case evaluation form located at the top of this page.