Medicare, Medicaid, and other federally funded health insurance programs lose several billion dollars a year to fraud and improper billing by unscrupulous healthcare providers. Whistleblowers in the healthcare industry help the federal government recover these losses to maintain the programs’ fiscal health – approximately $1.8 billion in fiscal 2019‒20.1

Properly handled whistleblower lawsuits play a critical role in upholding the integrity of Medicare and Medicaid, which are crucial safety nets for tens of millions of Americans.

  • Medicaid and the related Children’s Health Insurance Program cover about 80 million people in low-income families.2
  • Enrollment in Medicare, the health-insurance program for older Americans, was 59.9 million in 2018 and is expected to grow to 79.5 million in 2030.3
  • TriCare covers 9.6 million military service members, veterans, and their families.4

What are Medicare fraud and Medicaid fraud?

Medicare and Medicaid are insurance programs. Like insurance companies in the private sector, they can be defrauded. As with the classic example of a homeowner who defrauds his insurer by burning down his crumbling old house, federal law allows criminal punishment of and monetary recovery from a contractor that defrauds the Medicare and Medicaid insurance programs.5

The federal False Claims Act (“FCA”) allows the U.S. government monetary recovery and fines for improper claims for payment by healthcare providers that participate in these programs. Additionally, the North Carolina False Claims Act allows the state monetary recovery from healthcare providers that defraud its Medicaid program.

What are examples of Medicare and Medicaid fraud?

These laws cover a wide range of improper claims on, billing to, invoicing of, and receipt of government funds, including claims that do not meet the legal definition of “fraud”. Of course, a physician practice violates the FCA if it submits Medicaid claims for treatment that was not actually provided, or a claim for treatment that carries a higher reimbursement rate than the treatment that was actually provided. A healthcare provider can also violate the FCA by failing to refund amounts that it receives from a state Medicaid program through innocent invoicing mistakes if it later learns that its invoices were improper.6

Trickier situations arise when a contractor provides the government goods or services under a contract that requires compliance with certain federal or state statutes. For example, a pharmaceutical company may violate the FCA by covering copayment obligations for Medicare enrollees who use its drugs. In 2020, a large pharmaceutical company paid more than $51 million to resolve an FCA case federal investigators believed that the company funneled money to Medicare enrollees through sham charitable foundations.7 Such payments may violate Medicare’s so-called “Anti-Kickback Statute” and undermine a key purpose of co-pays, the limitation of growth in medical costs.8 A drugmaker or healthcare provider can violate the FCA by leading a government agency to believe that it has complied with laws relevant to Medicare or Medicaid funds, even if it does not explicitly claim that it has complied.9

What should I do if I suspect Medicare and Medicaid fraud?

An attorney can help you file an FCA lawsuit on the government’s behalf. In one recent case, three whistleblowers and their attorneys sued a medical-device company on behalf of the United States and numerous states. The three whistleblowers were employees of the company, which provided components for knee replacements. The three discovered that the company was concealing failures of the knee components when it made claims for reimbursement to Medicare, state Medicaid programs, and the Veterans Administration. A federal judge in Tuscaloosa, Alabama, allowed their lawsuit to go forward in August 2020.10

How can a Medicare/Medicaid fraud attorney help with a claim?

An experienced Medicare/Medicaid fraud attorney can help you take the right steps regarding further investigation and appropriate notice to the relevant government agency. How you proceed could determine whether you have a viable FCA case as the “original source” of the relevant information.11 It can also determine whether you are entitled to a share of the government’s recovery from the lawsuit.12 Finally, your attorney can help you to take advantage of the FCA’s anti-retaliation provisions as well as state and federal laws that limit the legal liability of a whistleblower who was involved in an employer’s false claims for payment.13

Can I tell others I am a potential whistleblower?

A whistleblower lawsuit must be filed “under seal”; that is, it does not immediately become public. Federal and/or state attorneys investigate the allegations. The defendant is not notified or required to respond during this time. The whistleblower must also avoid allowing the information to leak out before the court lifts the seal; at the conclusion of a successful case, a court may reduce the whistleblower’s share of the recovery if he or she failed to keep an appropriate degree of secrecy in the early stages of the case.14 For flagrant and harmful violations of the seal requirement, the court may grant the government’s request to have the whistleblower dismissed from the case.15

What are Medicaid Fraud Control Units?

Each state administers its own Medicaid program for low-income residents and has some latitude in determining eligibility and negotiating reimbursement rates with healthcare providers. However, because these programs receive federal funds, they have to comply with federal law. One federal requirement on states is that they fight fraud and other billing abuses by healthcare providers.16 They do this through Medicaid Fraud Control Units (“MFCU”).17 One such MFCU is the North Carolina Department of Justice’s Medicaid Investigations Division (“MID”), which includes attorneys and State Bureau of Investigations special agents.18 Federal law requires each MFCU to be controlled by or work with the state’s attorney general.19 It must be independent from the state’s Medicaid agency.20

The MID is responsible for investigating healthcare provider submitting fraudulent or inflated requests to the North Carolina Division of Health Benefits, the state’s Medicaid agency. Some of these investigations begin with tips from people working in the industry. Others come from audits. If you are a potential tipster, you and an experienced healthcare fraud attorney may decide to confer with the MID before filing a lawsuit under the North Carolina False Claims Act (“NCFCA”). With or without such pre-suit consultation, the NCFCA requires a lawsuit to be filed under seal and then served on the Attorney General so that the MID can investigate.21

NC Whistleblower Attorneys. Want to Talk?

Fraud on federal health insurance programs such as Medicare, Medicaid, and TriCare costs these programs billions of dollars each year. Whistleblowers in the industry, including doctors, nurses, and contractors – initiate most of the qui tam lawsuits that expose and redress this fraud.

If you suspect fraud against the federal or state government, give us a call. We are here to help you move forward with a whistleblower/qui tam claim. We appreciate the struggle you may be facing. That is why we are discreet and have a You-First policy. We will help you take advantage of appropriate federal and state law that protects you from employer retaliation and – if you were involved in your employer’s fraud – may also protect you.

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.

1 United States Dep’t Just., Justice Department Recovers Over $2.2 Billion from False Claims Act Cases in Fiscal Year 2020 (Jan. 14, 2021), https://www.justice.gov/opa/pr/justice-department-recovers-over-22-billion-false-claims-act-cases-fiscal-year-2020. The $1.8 billion figure includes false claims related to Medicare, Medicaid, and other healthcare programs.

2 Ctrs. Medicare and Medicaid Servs, November 2020 Medicaid & CHIP Enrollment Data Highlights, https://www.medicaid.gov/medicaid/program-information/medicaid-and-chip-enrollment-data/report-highlights/index.html (viewed Apr. 13, 2021).

3 Ctrs. Medicare and Medicaid Servs., 2019 Annual Report of Bds. of Trustees of Fed. Hosp. Ins. and Fed. Supp. Med. Ins. Trust Funds 173 (Apr. 22, 2019), https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/TR2019.pdf.

4 Mil. Health Sys., Patients by Beneficiary Category, https://www.health.mil/I-Am-A/Media/Media-Center/Patient-Population-Statistics/Patients-by-Beneficiary-Category (viewed Apr. 13, 2021).

5 18 U.S.C. §§ 286287; 31 U.S.C. § 3729 et seq.

6 United States v. Compassionate Home Care Servs., Inc., 7:14-CV-113-D, 2017 WL 1030706, at *2 (E.D.N.C. Mar. 15, 2017) (unpublished opinion partially granting plaintiffs’ motion for summary judgment).

7 See Settlement Agreement 23 (June 30, 2020), https://www.justice.gov/usao-ma/press-release/file/1356851/download; United States Dep’t Just., Novartis Agrees to Pay Over $51 Million to Resolve Allegations that It Paid Kickbacks Through Co-Pay Foundations (July 1, 2020), https://www.justice.gov/usao-ma/pr/novartis-agrees-pay-over-51-million-resolve-allegations-it-paid-kickbacks-through-co-pay; United States Dep’t Just., Novartis Pays Over $642 Million to Settle Allegations of Improper Payments to Patients and Physicians (July 1, 2020), https://www.justice.gov/opa/pr/novartis-pays-over-642-million-settle-allegations-improper-payments-patients-and-physicians.

8 See 42 U.S.C. § 1320a-7b.

9 Universal Health Servs., Inc. v. United States, 136 S. Ct. 1989, 1999 (2016).

10 United States ex rel. Wallace v. Exactech, Inc., 2:18-CV-01010-LSC, 2020 WL 4500493, at *918 (N.D. Ala. Aug. 5, 2020).

11 See 31 U.S.C. § 3730(e)(4).

12 See 31 U.S.C. § 3730(d).

13 See 31 U.S.C. § 3730(h); N.C. Gen. Stat. §§ 1-613; 108A-70.15.

14 See 31 U.S.C. § 3730(b)(1); Opinion and Order, United States ex rel. Koo v. GS Caltex, 2:18-CV-00174, ECF No. 65, 2020 WL 8477217, at *7 (S.D. Ohio Mar. 23, 2020). The court imposed sanctions of $693,847 on the whistleblower for showing his brother-in-law, an employee of one defendant, a draft of the complaint that initiated the lawsuit. That left Byoung Jin Koo with a net award of $27,060,023 where the government recovered $120,669,000 in a settlement with defense contractors who allegedly rigged bids for oil delivery services.

15 United States ex rel. Lyon v. Am. Med. Resp., 04-CV-4119, ECF No. 13, at 6, 2011 WL 13377407, at *3 (E.D.N.Y. Jan. 19, 2011) (citing United States ex rel. Pilon v. Martin Marietta Corp., 60 F.3d 995, 99899 (2d Cir. 1995).

16 See 42 U.S.C. § 1396b(a)(6); 42 C.F.R. §§ 1007.2; 1007.7.

17 42 C.F.R. §1007.1 et seq.

18 N. Carolina Dep’t Just., Health Fraud, https://ncdoj.gov/responding-to-crime/health-fraud (last viewed Apr. 14, 2021); see Dep’t Health & Human Servs., Ofc. Inspector Gen., North Carolina State Medicaid Fraud Control Unit: 2016 Onsite Review (Sept. 2016), https://oig.hhs.gov/oei/reports/oei-07-16-00070.pdf; see also N.C. Gen. Stat. § 114-2.5A (requiring NCDOJ’s MIU to make annual reports to the General Assembly).

19 42 C.F.R. §1007.7.

20 Dep’t Health & Human Servs., Ofc. Inspector Gen., North Carolina State Medicaid Fraud Control Unit: 2016 Onsite Review (Sept. 2016), https://oig.hhs.gov/oei/reports/oei-07-16-00070.pdf; see 42 C.F.R. §1007.7.

21 N.C. Gen. Stat. § 1-608(b)(2); see also N.C. Gen. Stat. § 108A-70.10 et seq.

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