Healthcare qui tam cases are some of the most common types of cases brought under the False Claims Act. Healthcare fraud is most common because of the amount of money the government pays for healthcare. The state and federal governments pay hundreds of billions of dollars each year for:
- pharmaceutical drugs,
- medical devices,
- hospital care,
- outpatient services,
- physician visits, and
- nursing home care.
The government relies on companies and individuals to obey laws and to submit accurate reimbursement requests. Unfortunately, many companies and individuals violate this honor system. Companies and individuals submit false or fraudulent requests for payment. The false submission of claims leads to a healthcare qui tam cases. Indeed, whistleblower lawsuits in the health care fraud area have resulted in billions of dollars in recoveries. Examples of healthcare False Claims Act cases follow.
Healthcare Qui Tam Cases Against Pharmaceutical Companies
- “Off-label” marketing or promotion. This occurs when a company seeks increase sales by marketing its product for uses not approved by the FDA. Please note that doctors may prescribe for off-label uses, but drug companies may not market for off-label uses.
- “Best Price” fraud. Pharmaceutical manufacturers have to give the government the lowest or “best” price. This takes the form of a “rebate” paid by the drug manufacturer to the federal and state governments. Generally, the lower a drug’s “Best Price,” the larger the rebate will be. For example, a company provides grant of $100,000 to a hospital that purchases its drug. However, the hospital does not conduct any research and the company does not factor the “grant” money into its best price calculations. By failing to subtract the $100,00 from the drug prices reported to the government, the company could be submitting false claims. This can result in a healthcare False Claims Act case if a whistleblower decides to report the fraud.
- “Nominal Price” fraud. A “nominal” drug price is a steeply discounted price (less than 10% of average manufacturer’s price). In certain circumstances “nominal” prices can be excluded by drug manufacturers when calculating the “Best Price” for rebate purposes. A fraud occurs when a company improperly relies on the nominal price exclusion to avoid reporting a low “Best Price.”
Healthcare Qui Tam Case Against Medical Device Company
- Defective Devices. If a device is defective yet the company, knowing about the defect, bills and is reimbursed for the device, the government has been defrauded. This is a healthcare False Claims Act case.
Healthcare Qui Tam Cases Against Hospitals and Physicians
- Billing for Services Not Rendered. This is obvious fraud. This occurs when a provider bills the government for a service which was not provided to the patient.
- Billing for Unnecessary Services. –This scheme involves providing a service and billing for that service despite the patient not needing the service. For example, a patient only needs a basic eye exam which costs $75 However, the physician orders a CAT scan and related testing which costs hundreds of dollars more.
- Kickbacks. These are classic qui tam cases. Kickbacks occur when items of value (money, gifts, trips, meals, etc.) are provided by one party in exchange for referrals or business from the other party. For example, a hospital reimburses a neurologist at twice the “going rate” for his services in exchange for the neurologist referring all of his patients to the hospital. This is one of the largest types of healthcare qui tam schemes to date. Another kickback scheme involves sham registries such as the qui tam case settled against Covidien for $13 million.
- Stark Violations. There are complex rules regarding the ownership interests that doctors and hospitals have with respect to referrals. It is generally illegal for a doctor to make a referral to a business which he owns or in which he has a vested interest. For example, unless a “safe harbor” applies, a doctor may not refer one of his patients to a physical therapy business that the doctor also owns.
- Up-coding. All medical procedures and diagnoses have an assigned “code. The code determines how much the physician or hospital is going to get paid by the government. If a doctor or hospital knowingly bills for a higher “code,” and is paid more by the government, fraud has been committed. For example, a patient is seen for a short time in the Emergency Room The hospital bills the government for a complex medical visit. This is a very simple but legitimate healthcare qui tam case.
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