At Jeff Newman Law, we represent whistleblowers in healthcare fraud qui tam cases, and we have a long track record of recovering multi-million dollar settlements on behalf of our whistleblower clients in the healthcare industry. Click here to read some our success stories.
Whistleblowers play a crucial role in ensuring that healthcare frauds are exposed and stopped, and that ill-gotten gains from these frauds are returned to the government on behalf of the American taxpayers who fund federal and state healthcare programs.
If you have unique, detailed evidence about a company that has engaged in healthcare fraud, please contact us to discuss the viability of your claim.
Healthcare fraud cases account for the majority of all False Claims Act cases, and there are many types of healthcare and pharmaceutical frauds that generate whistleblower qui tam cases.
The perpetrators of healthcare fraud may include:
- pharmaceutical and medical device companies
- mental health clinics
- skilled therapy facilities
- lab companies
- urgent care centers
- nursing homes
Meanwhile, the government programs at issue may include:
- Veterans Affairs
- Federal Employees Health Benefits Program
The False Claims Act
The federal False Claims Act (or FCA) authorizes qui tam lawsuits against individuals or companies that have defrauded the government. Qui tam lawsuits are unique in that the FCA allows private individuals to sue on behalf of the government to recover money that was fraudulently obtained by a person or entity.
Healthcare fraud whistleblowers
A person who files a qui tam action is called a qui tam whistleblower or qui tam relator. They must have knowledge of fraudulent activity to bring a lawsuit on behalf of the federal or state governments.
Qui tam whistleblowers play a vital role in the fight against healthcare fraud. If you have firsthand knowledge of fraudulent activity, you can provide valuable evidence and testimony that can help the government prosecute the case.
In return, qui tam whistleblowers are entitled to a portion of the recovery if the claim is successful. The amount of the whistleblower reward is usually between 15-30%, and is determined by the court based on the whistleblower’s contribution to the case.
Whistleblowers may be current or former employees of the organizations committing fraud, or may be competitor healthcare providers. Their willingness to come forward with information can help save taxpayers billions of dollars and ensure that government healthcare programs are used to provide necessary and quality care to those who need it.
The Department of Justice (DOJ) and the Office of Inspector General (OIG) play a vital role in investigating and prosecuting healthcare fraud cases. Depending on the facts, these agencies may also work with state or local law enforcement agencies.
The DOJ is responsible for enforcing the False Claims Act and other laws that prohibit healthcare fraud.
The OIG, which is an independent arm of the Department of Health and Human Services, is responsible for investigating fraud, waste, and abuse in government healthcare programs.
When a whistleblower brings forward information about potential fraud, the DOJ and the OIG will often work together to investigate the allegations. The OIG may conduct its own investigation, or it may refer the case to the DOJ for further action. If the investigation finds that fraud has occurred, the DOJ may file or intervene in a lawsuit against the individuals or organizations responsible.
The OIG also has the authority to exclude individuals and entities from participating in federal healthcare programs, which can be a powerful deterrent against future fraudulent activities.
Types of Healthcare Fraud
Healthcare fraud can take many forms and can be committed by a wide range of individuals and organizations.
Understanding these different types of fraud can help identify potential red flags and generally detect and prevent fraud.
Medicare fraud involves billing Medicare for reimbursement to which a claimant is not legally entitled. Medicare fraud is routinely committed by individuals, pharmaceutical companies, medical teams, and healthcare facilities.
Medicare fraud negatively affects taxpayers, the government, and the health care system as a whole, which is why the government encourages those with knowledge of Medicare fraud to report it upon discovery.
Medicare fraud can include forms of healthcare fraud noted below, such as upcoding, billing for medically unnecessary services, or paying / receiving kickbacks.
Pharmaceutical and Medical Device Kickbacks
Illegal kickbacks involve pharmaceutical manufacturers and medical device companies making payments to induce physicians to prescribe the manufacturers’ drugs or devices.
These improper payments to medical providers are often disguised as compensation for legitimate activities, such as time spent giving speeches, consulting, or participating on advisory boards.
Some examples of illegal kickbacks by pharmaceutical and medical device companies include:
- Paying excessive royalties to physicians who ostensibly assist in the design of medical devices;
- Payments or other favors to members of pharmacy and therapeutics committees who can influence drug formulary placement decisions at health plans and hospitals;
- Allowing commercial co-pay cards to be used by federally-insured patients;
- Payments and discounts to drug distributors who pass that money through to physician customers who purchase the distributors’ drugs.
Over time, pharmaceutical and medical device companies have found more creative ways to pay illegal kickbacks to physicians, pharmacies, and even patients.
Urgent Care Fraud
Another type of healthcare fraud is urgent care fraud, which involves fraudulent billing practices at urgent care centers.
As for-profit urgent care centers have become an increasingly large player in the delivery of medical services, so has fraud by these centers when they prioritize profit and revenue targets ahead of patient care and ethical billing practices.
Fraudulent billing at urgent care centers can arise in several ways, including:
- Directing staff to perform unnecessary examinations;
- Directing staff to bill all or most visits at a certain level without regard to patient need;
- Requiring that patients who come in for discrete services, such as Covid-19 tests, also agree to full medical examinations.
Jeff Newman Law represented a nurse practitioner whistleblower in a False Claims Act lawsuit against CareWell. The lawsuit revealed upcoding of urgent care visits by CareWell in Massachusetts and Rhode Island at the expense of Medicare and Medicaid. CareWell was ordered to pay more than $2.1 million to settle the claims.
Pharmaceutical Price Reporting Fraud
Federal healthcare programs, such as Medicare, have rules to prevent overcharging for drugs, but pharmaceutical companies sometimes attempt to circumvent these rules to increase profits at the expense of the taxpayers who fund the programs.
Under the Medicaid Drug Rebate Program, pharmaceutical manufacturers must pay quarterly rebates to each state whose Medicaid program purchases the manufacturer’s drugs. For each drug, the size of the quarterly rebate depends on factors including:
- whether the drug is branded or generic;
- the difference between the average manufacturer price (AMP) and the best price given to any commercial customer;
- whether the price of the drug has risen faster than the rate of inflation.
Pharmaceutical price reporting fraud thus takes place when companies use inflated best prices to underpay Medicaid rebates or misclassify drugs as generic rather than branded.
Similarly, pharmaceutical companies sometimes commit fraud under Medicare Part B, which requires pharmaceutical manufacturers to make quarterly reports of a drug’s Average Sales Price (ASP) for any physician-administered drug covered by the program. But healthcare fraud occurs when pharma companies attempt to give physicians hidden discounts by passing them through distributors who do not have to report ASP.
Laboratory Kickbacks and Unnecessary Testing
Some of the earliest major healthcare fraud cases involved diagnostic testing laboratories. Fraud schemes by unscrupulous laboratories include:
- Unnecessary confirmatory urine-drug tests
- Paying commissions to independent (or “1099”) sales reps in violation of the anti-kickback statute
- Paying illegal kickbacks to referring physicians
- Performing and billing for unnecessary panels of tests
- Bundling Covid-19 tests with unnecessary respiratory pathogen panel tests
- Medically unnecessary genetic testing performed on a routine and preemptive basis, without an individualized assessment of need
Lab companies often enable their fraud schemes by paying illegal kickbacks to physicians who then agree to send samples to the labs for unnecessary or excessive testing.
Defective and Unapproved Medical Devices
Another form of health care fraud occurs when medical device companies market defective or unapproved devices. In doing so, these companies not only put patient health at risk, they also cause illegal billing to taxpayer-funded federal healthcare programs.
For example, Attorney Newman represented a whistleblower in two related settlements that resulted in a recovery of more than $48 million over allegations that the companies involved marketed a product as a chemotherapy drug delivery device, even though they knew that the Food and Drug Administration had refused to approve the device for that use. The companies also allegedly instructed physicians to bill for the device under a separate approved use, even when the physicians used it for its unapproved use.
Nursing Home Rehabilitation Therapy Fraud
Patients in nursing homes and skilled nursing facilities are among the most vulnerable members of society. Unfortunately, these facilities often take advantage of their patients’ difficult circumstances to submit false and fraudulent claims to Medicare.
Nursing homes and their rehabilitation therapy providers sometimes bill Medicare for therapy that was either unnecessary or not provided at all.
For example, Attorney Jeffrey Newman brought a qui tam lawsuit that resulted in a $125 million settlement over allegations that RehabCare engaged in a variety of schemes to bill for therapy that was not reasonable and necessary, causing its nursing home customers to submit fraudulent claims to Medicare for the therapy.
Hospitals may engage in healthcare fraud in a variety of ways, including by over-billing federal healthcare programs and by paying illegal kickbacks to physicians to induce them to refer patients to their hospitals for expensive procedures.
Whistleblowers who have brought successful False Claims Act qui tam cases against hospitals include patients, physicians, and employees who have worked in hospitals or for health care providers that do business with hospitals.
Pharmacies may engage in a variety of illegal fraud schemes to make profits from selling expensive drugs at the expense of a federal healthcare program like Medicare, Medicaid, or TRICARE.
Such schemes have included:
- Dispensing drugs and other products without a proper prescription
- Paying kickbacks to nursing homes to get prescription referrals
- Paying kickbacks to physicians and others who are in a position to direct prescriptions for expensive drugs to the pharmacies
- Submitting fraudulent prior authorization requests to health plans and pharmacy benefit managers (PBMs) to get reimbursement for expensive drugs
Electronic Health Records Fraud
Providers of electronic health records (EHR) technology can engage in fraud by misrepresenting the capabilities of their medical records software, by paying illegal kickbacks to get or keep customers, or by accepting kickbacks from pharmaceutical companies in exchange for recommending the prescribing of the companies’ drugs.
Upcoding and Provider Billing Fraud
Upcoding is a type of healthcare fraud that occurs when a healthcare provider bills for a more expensive medical service or procedure than what was actually provided.
In the healthcare industry, medical services and procedures are assigned codes for billing purposes. These codes are based on a standardized system called the Current Procedural Terminology (CPT) system which was developed by the American Medical Association for describing medical, surgical, and diagnostic services.
Each CPT code corresponds to a specific medical service or procedure and has a corresponding reimbursement rate.
Upcoding occurs when a healthcare provider submits codes that are intentionally incorrect for a given service or procedure in order to receive higher payment from an insurer or federal healthcare programs such as Medicare or Medicaid services.
- billing for a higher level of service than was necessary
- using a more expensive code for a service than was justified
- billing for a service that was not actually performed
The impact of healthcare fraud
Financial impact of healthcare fraud on government and taxpayers
Healthcare fraud can have a significant financial impact on the government and taxpayers. Tens of billions of dollars are lost each year to fraudulent activities, which can result in higher taxes and reduced funding for important programs.
Additionally, fraudulent billing practices to Medicare or Medicaid can lead to overpayment for healthcare services, resulting in higher health insurance premiums for individuals and costs for private health insurance companies. The financial impact of fraud also affects the quality of care, as resources that could be used for necessary and legitimate treatments are instead being siphoned off by fraudsters.
Impact on quality of health care
Fraudulent activities in health care not only drain the financial resources of government healthcare programs, but also can have a direct impact on the quality of health care provided to patients.
For example, kickbacks and self-referral schemes can incentivize healthcare providers to make decisions based on financial gain rather than what is best for the patient. Fraudulent billing practices can also lead to over-utilization of services, which can put patients at risk for procedures and treatments that were not a medical necessity.
Furthermore, healthcare providers that engage in fraud may not meet the necessary standards of care, putting patients at risk of harm. Fraudulent activities can also undermine public trust in the healthcare system, which can make it harder for people to access the health care they need.
Contact a healthcare fraud whistleblower attorney today
Contact us for a free confidential assessment of whether you might have a potential healthcare fraud lawsuit that could result in a whistleblower award:
- Contact us for a free confidential consultation
- Call us at (617) 823-3217
For more information about the various types of healthcare fraud cases we handle, click these links:
- Pharmaceutical and Medical Device Kickbacks
- Urgent Care Fraud
- Pharmaceutical Price Reporting Fraud
- Laboratory Kickbacks and Unnecessary Testing
- Defective and Unapproved Medical Devices
- Nursing Home Medicare Fraud: What is it and how to spot it?
- Hospital Fraud
- Pharmacy Fraud
- Electronic Health Records Fraud
- Upcoding and Provider Billing Fraud
- Managed Care Fraud: A Whistleblower’s Guide