False claims against the government permeate many industries, including health care, housing and mortgage lending, education and student loan obligations, U.S. Customs, defense contractors, finance — and dozens more. Some of the more common acts of fraud include:

Document iconBilling for goods and services
that were never delivered or rendered
Briefcase iconPerforming inappropriate or unnecessary
medical procedures in order to
increase Medicare reimbursement
Upcoding iconUpcoding - Inflating bills by using
diagnosis billing codes
that suggest a more
expensive illness or treatment
X iconFalse certification that a contract
falls within certain guidelines
(for example, minority or veteran contracts)

Since this country's inauguration, cheaters of the American taxpayer have found innumerable ways to fraudulently obtain money from the government. That is why the federal False Claims Act was introduced in 1778, strengthened during the Civil War, and given even greater force in 1986 during the defense spending boom. It rewards whistleblowers for doing their patriotic duty and coming forward to expose fraud. Senator Chuck Grassley, the author of the 1986 False Claims Act amendments, emphasized in a 2018 address to Congress that the False Claims Act is the most effective tool our country has in rooting out fraud.

Who Are Whistleblowers?

In our opinion, whistleblowers are patriotic heroes because they courageously come forward to expose those who are, in effect, stealing from American taxpayers.

Anyone has the right to report fraud by way of a whistleblower (qui tam) lawsuit as long as the information they provide is original, was not previously known, and is not known to the public. Office managers, bank employees at any level, nurses, medical administrators, and other medical personnel. Employees of any corporation. Defense contractor engineers, procurement, suppliers, and manufacturers. Construction companies and their subcontractors.

Even Medicare Recipients.

Attorney Gary Jackson handled a whistleblower lawsuit* in obtaining more than $5 million** in a settlement with a large national drugstore chain’s pharmacy to recover taxpayer dollars paid on behalf of Medicare Part D participants as the result of defendants’ false submissions.

The fraud was brought to Gary by Medicare recipients who suspected billing fraud.

Gary has participated in several other whistleblower/qui tam cases* both in the federal courts and North Carolina state courts to include:

  • Representing the whistleblower and obtaining a settlement** with a North Carolina clinic as the result of the defendant’s false submissions to Medicare, Medicaid, and TRICARE.
  • Bringing whistleblower claims against a major “big box” retailer against their pharmacies that routinely stored medications improperly, yet procured payment for these adulterated substances from the government.
  • Filing claims against major telecommunications companies on behalf of the State of North Carolina for failing to collect required 911 fees, resulting in the underfunding of 911 services.
  • Pursuing action against a distributor of medical products, which falsified expiration dates and source of origin for sale to Medicare and Medicaid participants.
  • Working with a relator (whistleblower) on a claim against a university that eventually agreed to pay $4 million** to resolve allegations that it violated the False Claims Act in connection with a federal grant and with regard to receiving and disbursing Title IV federal student aid funds.
  • Working on a qui tam claim against a large construction company that made hundreds of millions of dollars allegedly taking kickbacks and fooling the government for years using “sham” companies to win large contracting bids. The whistleblower, who was employed as a supervisor overseeing construction of a large building at an NC military base, alleged that the company lied about their use of small- and minority-owned businesses as subcontractors on Department of Defense (DOD) jobs.
  • Representing a whistleblower in an action against a home healthcare company for double billing Medicare and Medicaid participants.

Shocking Whistleblower Cases

Of the $3.7 billion the U.S. government recovered in 2017 more than half came from the health care industry, which includes drug and medical device companies, hospitals, nursing homes, laboratories, and even physicians. Here are some shocking cases reported by the Department of Justice (DOJ).

Health Care Industry Fraud

In 2017, the DOJ ordered two physician groups, EmCare and Physician's Alliance Ltd (PAL), to pay over $33 million for allegedly accepting monetary kickbacks in exchange for patient referrals to hospitals owned by the now-defunct Health Management Associates (HMA). Many of the patients were Medicare recipients. On average, Medicare pays at least three times as much for an inpatient admission as it does for outpatient care. As part of the alleged scheme, HMA made certain bonus payments to EmCare ED physicians and tied EmCare's retention of existing contracts and receipt of new contracts to increased admissions of patients who came to the emergency department. The EmCare settlement resolves a qui tam lawsuit filed by two North Carolina doctors whose medical practice, MEMA, previously supplied ED physicians to two HMA hospitals in North Carolina.

Drug manufacturers Wyeth and Pfizer paid more than $780 million in 2016 for knowingly reporting false and fraudulent prices on two acid reflux drugs.

Novartis Pharmaceuticals paid $390 million in 2016 for allegedly paying kickbacks to certain pharmacies in return for recommending its iron chelation drug and its anti-rejection drug for kidney transplant recipients.

Hospitals and outpatient clinics were also among those punished for fraud. Tenet Healthcare, a major U.S. hospital chain, paid more than $240 million in 2016 to settle allegations that four of its hospitals engaged in a scheme to defraud the government by paying kickbacks in return for patient referrals.

Millennium Health, a medical lab company, paid $260 million in 2016 to settle allegations that it billed Medicare, Medicaid, and other federal health care programs for excessive and unnecessary urine drug and genetic testing, and also that it gave freebies to entice physicians to refer expensive and profitable lab tests to Millennium.

RehabCare Group, RehabCare Group East, and their parent, Kindred Healthcare, the nation's largest contract therapy provider, paid $125 million in 2016 to resolve claims that it induced nursing homes to submit false claims to Medicare for rehab services that were not reasonable, necessary, and skilled, or that were not provided at all.

Housing and Mortgage Fraud

The DOJ recovered more than $543 million from the housing and mortgage industry in 2017.

The DOJ reported that in September 2017, a unanimous jury in Houston found that Allied Home Mortgage Capital Corporation and Allied Home Mortgage Corporation violated the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) and awarded the government over $296 million. The court also entered judgment for over $25 million against Allied's president and CEO.  At trial, the government presented evidence that Allied falsely certified that thousands of high risk, low-quality loans were eligible for Federal Housing Administration (FHA) insurance and then submitted insurance claims to FHA when any of those loans defaulted. The jury also heard evidence that, to evade oversight and disguise default rates, Allied Capital originated FHA-insured loans from more than one hundred "shadow" branch offices without the authorization of HUD.  In addition, the jury received evidence that Allied's quality control department submitted falsified quality control reports to HUD auditors and falsely certified that Allied was in compliance with HUD quality control guidelines.

Fraud in Education, Defense, Customs, Oil & Gas

Education. For-profit schools were exposed for marketing schemes in an effort to reap the financial benefits of federal student loan money. As part of a $95.5 million federal and state settlement, the government ordered Education Management Corp. in 2015 to pay more than $52 million to resolve allegations that it unlawfully recruited students, engaged in deceptive and misleading recruiting practices, and falsely certified compliance with Title IV of the Higher Education Act and state laws that prohibited such conduct. The company is the second largest for-profit education company in the U.S.

Closer to home, the for-profit Charlotte School of Law (which the government shut down in 2017) is engaged in related practices and facing similar allegations in individual and class action law suits. We are currently representing more than 100 former students of Charlotte School of Law in their individual claims filed in state court.

Defense Contracting. L-3 Communications EOTech, Inc. and L-3 Communications Corp. lied to the Department of Defense, Department of Homeland Security, and FBI about the safety and integrity of holographic weapon sites they built. They admitted knowing their sights failed to perform as represented in cold temperatures and humid environments, but did not disclose this important defect to federal authorities for years. In 2015 the companies were ordered to pay $25.6 million.

U.S. Customs. In 2016, the DOJ recovered $50 million in U.S. Customs fraud from importers who seek an unfair advantage over U.S. companies, by knowingly evading or reducing their obligation to pay duties.

Oil & Gas. Remember the April 2010 Deepwater Horizon explosion in the Gulf of Mexico? The government alleged that BP Exploration and Production (BP) provided false reports about its "safe drilling margin" that concealed its improper drilling. This left the oil well in a fragile state and ultimately resulted in the catastrophic explosion. BP was required to pay $82.6 million as a result of their alleged false claims.

Individual Doctors, Medical Personnel, Professionals

There is no shortage of individuals who have been ordered to pay claims for alleged fraud against the government.

A cardiologist became the highest paid Medicare cardiologist in the U.S. by billing Medicare, Medicaid, and TRICARE (healthcare for military families) for medically unnecessary procedures and paying kickbacks to patients by waiving Medicare copayments without regard to financial hardship. In 2016, he was required to pay $2 million for defrauding taxpayers and for putting patients at risk.

In 2015, a former owner and CEO of a drug testing laboratory was ordered to pay more than $9 million for trading physicians free computer software for patient referrals.

In 2016, the owner of a medical equipment company agreed to pay $4 million and was sentenced to 60 months in prison for conspiracy to commit Medicare fraud in a scheme involving power wheelchairs.

In 2016, the former owner, operator, and sole shareholder of Recovery Home Care Inc. (RHC) and Recovery Home Care Services, Inc. was ordered to pay $1.75 million for his fraudulent practices. The government alleged that the owner schemed to pay dozens of physicians thousands of dollars a month to serve as sham medical directors who supposedly conducted quality reviews of RHC patient charts. The government alleged that while little or no work was performed, these physicians received thousands of dollars in kickbacks.

* Results obtained prior to joining the Law Offices of James Scott Farrin.
** Each case is unique and must be evaluated on its own merits. Prior results do not guarantee a similar outcome.

Want to Talk to an Experienced Attorney?

If you suspect fraud against the federal or state government, let's talk. We are here to help put you at ease as we try to help you determine - confidentially and discretely - if you should move forward with a whistleblower/qui tam claim. We appreciate the struggle you may be facing. That is why we have a You-First policy in place. We will try to help protect you regardless of your involvement.

Contact us or call 1-844-520-2889.

If we decide to take your case and you don't get a reward for reporting fraud, you owe us nothing.

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