The Growth of Healthcare Fraud Qui Tam Lawsuits

Healthcare fraud cases under the False Claims Act have grown significantly in recent years.

The FCA is the government's primary civil remedy to redress false claims for federal money or property. Most actions are filed under the FCA's whistleblower, or qui tam, provisions. These allow private citizens, or relators, to file suits alleging false claims on behalf of the government. If the plaintiff or government prevails in the action, the whistleblower then receives a portion of the recovery.

There were 62 healthcare qui tam cases recorded from 1987 to 1992. In 2011 alone, there were 417. Another 412 were recorded in 2012, according to a study from Washington, D.C.-based Taxpayers Against Fraud.

This rate of qui tam cases is not expected to slow down, especially since whistleblowers may have even more incentive to bring charges. In April 2013, CMS proposed a rule that would increase the incentive program for whistleblowers who provide information that leads to the recovery of improper Medicare payments. The rule would expand how much CMS can reward whistleblowers under its Medicare Incentive Reward Program, which is separate from the FCA.

Under the Medicare Incentive Reward Program, CMS can pay whistleblowers 10 percent of the amount recovered or $1,000, whichever is less. The rule would expand that amount to 15 percent of the final recovery amount applied to up to the first $66 million recovered. This means a person could earn up to $9.9 million if CMS recovers $66 million or more from their tip.

"Providing potential rewards for 15 percent of the final amounts collected applied the first $66,000,000 for the sanctionable conduct sends a clear message to individuals trying to defraud Medicare — we are using all available tools to root out systematic and widespread fraud from the program," CMS wrote in the proposed rule.

This proposed reward would be supplementary to FCA rewards for whistleblowers, as the act awards 15 to 30 percent of recoveries to whistleblowers bringing cases. Relators are entitled to rewards of 15 percent to 25 percent of what the government recovers if the government decides to pursue the case. The reward can grow from 25 percent to 30 percent of the recovery if the government declines intervention and the relator continues to pursue the case.

Some of the largest hospital cases making headlines were brought by whistleblowers, including a $1 billion case against Daytona, Fla.-based Halifax Health that is headed to trial. The case against Sumter, S.C.-based Tuomey Healthcare System — in which a federal judge ordered the system to pay roughly $237 million in fines — also stemmed from a qui tam suit. One of the system's specialists filed suit after an unsuccessful contract negotiation with the system.  

The government's increased intervention in a larger percentage of FCA cases compounds the substantial growth rate of qui tam suits. The government has also consistently increased its budgetary requests and allocations to combat healthcare fraud, meaning there are more resources put toward the qui tam suits in which the government intervenes.  

More Articles on Legal Issues in Healthcare:

5 Interesting Anti-Kickback and Stark Law Issues in Healthcare
7 Notable Developments in Hospital Fraud & Abuse Enforcement
Emerging Trends in Stark, False Claims and Anti-Kickback Cases for Health Systems

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