Category Archives:False Claims Act

Examples of Qui Tam Cases

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New York Non-Profit Serving Developmentally Disabled Children and Adults Settles Whistleblower Complaint

Alleging False Billing at Queens and Brooklyn Day Habilitation Centers (New York City) — A non-profit serving the developmentally disabled in three states falsely billed New York State Medicaid for day habilitation client services for five years even though its own attendance records showed some developmentally disabled clients were not present, according to allegations in separate whistleblower settlements between the provider and New York State and federal governments, Manhattan-based Qui Tam Whistleblower Attorney Timothy J. McInnis of McInnis Law announced. Read More

SBIR Fraud

Medicaid Fraud
Education Fraud

Duty Fraud


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The HHS OIG issued its work plan for 2017.  This is significant to False Claims Act attorneys, relators and litigants because healthcare fraud continues to make up the largest share of FCA recoveries. The Office of Inspector General (OIG) is responsible for maintaining the integrity of the Health and Human Services (HHS) programs, including the Centers for Medicare and Medicaid Services (CMS). It does this by trying to identify, investigate and reduce improper payments and healthcare fraud, waste and abuse.

Here are some of the new and revised issues OIG will be focusing on in 2017:

Medicare Parts A and B

  • Hyperbaric Oxygen Therapy Services – Provider Reimbursement in Compliance with Federal Regulations
  • Incorrect Medical Assistance Days Claimed by Hospitals
  • Inpatient Psychiatric Facility Outlier Payments
  • Case Review of Inpatient Rehabilitation Hospital Patients Not Suited for Intensive Therapy
  • Nursing Home Complaint Investigation Data Brief
  • Skilled Nursing Facilities – Unreported Incidents of Potential Abuse and Neglect
  • Skilled Nursing Facility Reimbursement
  • Skilled Nursing Facility Adverse Event Screening Tool
  • Medicare Hospice Benefit Vulnerabilities and Recommendations for Improvement, A Portfolio
  • Review of Hospices Compliance with Medicare Requirements
  • Hospice Home Care — Frequency of Nurse On-site Visits to Assess Quality of Care and Services
  • Comparing HHA Survey Documents to Medicare Claims Data
  • Part B Services during Non-Part A Nursing Home Stays: Durable Medical Equipment
  • Medicare Market Share of Mail-Order Diabetic Testing Strips: April 1–June 30, 2016 –Mandatory Review
  • Positive Airway Pressure Device Supplies – Supplier Compliance with Documentation Requirements for Frequency and Medical Necessity
  • Intensity-Modulated Radiation Therapy
  • National Background Checks for Long-Term-Care Employees – Mandatory Review
  • Ambulance Services – Supplier Compliance with Payment Requirements
  • Inpatient Rehabilitation Facility Payment System Requirements
  • Histocompatibility Laboratories – Supplier Compliance with Payment Requirements

Medicare Parts C and D

  • Medicare Part C Payments for Service Dates After Individuals’ Dates of Death
  • Extent of Denied Care in Medicare Advantage and CMS Oversight
  • Medicare Part D Rebates Related to Drugs Dispensed by 340B Pharmacies
  • Questionable Billing for Compounded Topical Drugs in Part D
  • Medicare Part D Payments for Service Dates After Individuals’ Dates of Death


  • States’ MCO Medicaid Drug Claims
  • Data Brief on Fraud in Medicaid Personal Care Services
  • Delivery System Reform Incentive Payments
  • Accountable Care in Medicaid
  • Third-Party Liability Payment Collections in Medicaid
  • Medicaid Overpayment Reporting and Collections
  • Overview of States’ Risk Assignments for Medicaid-only Provider Types
  • Health-Care-Related Taxes: Medicaid MCO Compliance with Hold-Harmless Requirement
  • Health Care-Acquired Conditions – Medicaid Managed Care Organizations

CMS: Health Insurance Marketplaces

  • CMS Oversight and Issuer Compliance in Ensuring Data Integrity for the ACA Risk Adjustment Program
  • CMS Monitoring Activities for Consumer Operated and Oriented Plan Loan Program

For more information read


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The U.S. Department of Justice announced False Claims Act Recoveries totaling $4.7 Billion in 2016 from successful False Claims Act cases. Of this overall amount, $2.5 billion came from the health care industry, primarily pharmaceutical companies, medical device equipment & equipment companies, hospitals, nursing homes, laboratories, and physicians. The second largest recoveries came from the financial services industry, with $1.7 billion, mainly involving underwriting and lending fraud in the residential mortgage markets.

According to DOJ, whistleblowers filed 702 qui tam suits under the False Claims Act in fiscal year 2016, and DOJ recovered $2.9 billion from these and earlier filed qui tam lawsuits. As a result, whistleblowers were awarded $519 million for cases that settled or were decided in court during 2016.

For more information read

$3 Million Settlement for False Claims Act Suit Alleging Evaded Customs Duties

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On Monday, February 22nd, 2016, the Department of Justice announced that four Pennsylvania-based companies and two individuals had agreed to pay $3 million to settle a False Claims Act Suit involving customs duties. The companies—Ameri-Source International Inc., Ameri-Source Specialty Products Inc., Ameri-Source Holdings Inc., and SMC Machining LLC—and the individuals—Ajay Goel and Thomas Diener – were accused with evading customs duties on imports of small-diameter graphite electrodes from China, which are used as fuel in electric arc and ladle furnaces. The U.S. government alleged that the companies had deliberately misclassified the electrodes as a larger size from December 2009 to March 2012; because larger size electrodes are not subject to antidumping duties, the misclassification allowed the companies to evade the necessary customs duties for smaller size electrodes. The allegations resolved by the settlement were originally brought by whistleblower Graphite Electrode Sales Inc. under the qui tam provisions of the False Claims Act. Graphite Electrode Sales Inc., a competitor of the named defendants, will receive approximately $480,000 as its share of the settlement.

CMS Overpayment Rule

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On February 11, 2016, HHS published the long-awaited final CMS OVERPAYMENT RULE. 42 CFR Parts 401 and 405.  The rule requires providers and suppliers receiving Medicare Part A and Part B funds to report and return overpayments by the later of 60 days after the date on which the overpayment was identified; or any corresponding cost report is due, if applicable.

Here are some significant provisions that could affect False Claims Act litigation for reverse false claims based on wrongful retention of Medicare funds due to the failure to report and return overpayments:

  1. The rule is limited to Medicare and does not include Medicaid.
  2. The rule covers only “providers” and “suppliers” (Part A and Part B); MAOs, Medicaid MCOs and PDPs (Part C and Part D) were already addressed separately in a rule issued in 2014.
  3. The look back period would be 6 years (from when the overpayment was received), not 10 years as in the proposed rule from 2012.
  4. The overpayment would have to  be properly reported and refunded within 60 days of when it  is “identified.”
  5. “ Identified” means when a person “has, or should have, through the exercise of reasonable diligence, determined that the person has received an overpayment and quantified the amount of the overpayment.”  (Or 60 days from when  cost report reconciliation is filed, if applicable and if later).
  6. A reasonable amount of time to investigate an overpayment was received and to quantify the amount should not exceed 6 months, except in extraordinary circumstances.
  7. Overpayment Liability exists even if the overpayments were the result of inadvertence or innocent mistakes or errors; fraud conduct is not required.
  8. The amount of an overpayment is generally “the difference between the amount that was paid and the amount that should have been paid.” However, for claims tainted by violations of the Anti-Kickback Statute or Stark Law, CMS typically will view the overpayment as the full amount received by the provider.
  9. Sufficient documentation and medical necessity are longstanding and fundamental prerequisites to Medicare coverage and payment and can be the basis of overpayment liability.
  10. Providers cannot offset identified overpayments with identified underpayments.
  11. The rule becomes effective March 12, 2016.


Supreme Court False Claims Act Decision

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A recent SUPREME COURT FALSE CLAIMS ACT DECISION was handed down on May 26, 2014.  Ending a trend of anti-relator rulings, this time, in Kellogg Brown & Root Services, Inc. v. United States ex rel. Carter, the Court handed out a split decision.  It favored defendants by ruling that the Wartime Suspension of Limitations Act (WSLA) does not apply to civil actions under the False Claims Act.  But, it gave relators new hope by holding that the so-called “first to file” bar, 31 U.S.C. § 3730(b)(5), applies only when there is a case that is “pending” at the time a related case is filed.  If the prior case is dismissed for whatever reason, the first to file bar is not applicable to a second filed case.

What are the implications of this Supreme Court False Claims Act Decision?  With respect to time bar limitations, one has to continue to be vigilant about pursuing meritorious FCA cases as soon as possible and certainly within 6 years under the FCA’s statute of limitations period, 31 U.S.C. § 3731(b).  As for the new interpretation of the first to file bar, relators and their counsel should be more willing to consider filling cases even when there is reason to believe that a similar case has already been filed because it might have been dismissed.  Relators and counsel may also want to review former cases that were dismissed on first to file grounds to make sure the correct standard was applied.  Even if the first to file bar does not preclude a second filed action, however, there may still be a number of procedural hurdles that a second in time relator will face.  These include the public disclosure bar, the statute of limitations and principles of res judicata.  An already complicated issue just became more so.

FCA Settlement Gone Wrong

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Because of a series of mishaps, two deserving whistleblowers recently became victims of an FCA Settlement Gone Wrong.  In Dora Figueroa, et al. v. United States of America, two co-relators tried to get relief in a negligence lawsuit alleging that the Government had not properly protected its ability to recover an agreed upon settlement amount that was to be paid over time.  The underlying FCA case involved healthcare fraud.  There, the defendant ended up defaulting on its obligation to the Government and declaring bankruptcy.  Turned out the Government did not properly record a real property deed securing the FCA obligation (it was in the wrong person’s name).  After the FCA defendant defaulted on the settlement agreement obligation and declared bankruptcy the Government recovered only part of the agreed upon settlement amount.  As a result, the co-relators did not receive their expected relator’s share.  In response, they brought the negligence action against the US for not properly securing the FCA debt.  On March 27, 2015, United States District Judge Philip S. Gutierrez, in the Central District of California, decided the lawsuit against the relators on summary judgment.  The reason: the broad release language in the relator’s share agreement amounted to a waiver.

How could this have been prevented?  Relator’s counsel could have taken an active role in ensuring that the deed was properly recorded before signing the relator’s share agreement and/or relator’s counsel could have included language in the release provision saying it did not cover a subsequent action premised on the Government’s negligence in recovering the full settlement amount.

See: Dora Figueroa, et al. v. United States of America, CV 14-2255 PSG (MRWx), United States District Court, Central District Of California.

Whistleblowers Violate The Seal

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What happens when Whistleblowers Violate The Seal in qui tam cases?  Recently, two relators in Georgia found out the hard way: they were lucky to get away with paying a penalty of only $1.61 million for their indiscretions.

Frustrated by the Government’s slow investigation of their allegations, the relators contacted Fox News and shared confidential information with the news organization.  Once the defendant found out that the relators had broken the seal order of the court, it sought to get the relators dismissed completely from the case.  (Such results are rare but not unheard of in False Claims Act cases.).  That would have cost them the entire $43,161,500 they were slated to receive for pursuing a successful non-intervention case against Wells Fargo for allegedly defrauding the Veterans’ Administration by overcharging on closing costs for residential mortgages for veterans.

The lesson here is a simple one: do not discuss your case with anyone other than your attorney because loose lips can cost you $ millions.

For more on this case see: United States ex rel. Bibby v. Wells Fargo Bank, N.A., 2015 U.S. Dist. LEXIS 636 (N.D. Ga. Jan. 5, 2015)


Whistleblower Protection from Retaliation?

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“Is there Whistleblower Protection from Retaliation?” is a question I am frequently asked as a Qui Tam Attorney.


Tim McInnis Esq.

The answer is “yes” provided you can meet some basic requirements. Here are ten important questions that will help you and your whistleblower lawyer know if you might have a viable whistleblower retaliation case against a current or former employer.

1. Did your current or former employer (or someone you did work for) do something harmful to you at your job? (Were you: fired, suspended, cut in pay, demoted, not promoted, transferred, ostracized or harassed?)

2. Did at least one of these things happen within the last three years?

3. Prior to the first harmful event had you done at least one of the following: (1) Ask questions or look for evidence about possible fraudulent or unlawful conduct that involved financial or business transactions with an agency or department of the U.S. Government? (2) Tell or report to your employer you thought they were committing fraud or doing something illegal? (3) Refuse to go along with something you thought was improper or illegal or tell others not to do so? (4) Contact government authorities? (5) Threaten or actually start a lawsuit alleging your employer had committed fraud or acted unlawfully?

4. Did your employer know or suspect that you had done any of the things listed above before they took the first adverse action against you?

5. Will you be able to rebut your employer’s likely explanation that what they did to you was for legitimate business reasons? (Saying you were part of a RIF or downsizing, or that you were sanctioned for misconduct, incompetency or not getting along with others.)

6. Do you have witnesses or documents (for example emails) or recordings to corroborate your allegations?

7. Are you sure you didn’t sign anything that might prevent you from suing your employer? (For example: an arbitration agreement, employment agreement, severance agreement, litigation/prior lawsuit release or union contract.)

8. Did you suffer financially and/or in some other way because of what your employer did to you? Have you kept records documenting any losses or expenses or medical issues? And, have you tried to mitigate your losses (such as diligently looking for a new job)?

9. Does your current or former employer still exist and have the resources to pay a judgment? (For example, they are not in bankruptcy or dissolved/out of business.)

10. Are you willing to go through a potentially long and stressful process to get legal redress?

Note: This is limited to whistleblower protection under the federal False Claims Act. There are state and city whistleblower protection laws, as well as ones for specific industries, like transportation, banking and finance, healthcare, energy and environmental protection. Each has its own requirements.

FCA Counterclaim Case

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In yet another FCA Counterclaim Case a federal judge in Philadelphia refused to throw out counterclaims against a former employee who took patient health care information to support her False Claims Act case.  United States ex rel. Notorfransesco v. Surgical Monitoring Assoc., 2014 U.S. Dist. LEXIS 172044 (E.D. Pa. 12/12/2014).  What is particularly troubling about this case is that the defendant was allowed to proceed on a breach of an “implied fiduciary duty” theory.  That would seem to apply to just about any employee working in the healthcare field.  However, there is one aspect of Notorfransesco that distinguishes it from most other FCA cases: the relator there may have had other ideas in mind when she originally took the confidential information.  The defendant alleged (and the judge had to accept for now) that initially she did so to pass the information along to competitors—not her whistleblower attorney or the government.

Also, bear in mind that just because the judge let the counterclaims go forward to the next phase of litigation does not mean the defendant will prevail on them.  The judge himself expressed skepticism that the defendant will ever be able to prove damages.  Still, no relator likes having even a meritless counterclaim hanging over his or her head.  Unfortunately, the bringing of these counterclaims and the courts’ refusal to dismiss them summarily may become increasingly likely in non-intervened cases.

Practice point: careful thought and planning should go into any effort to obtain and use employer and customer or patient information when developing and filing False Claims Act cases.  Quite often there is a better approach that can and should be chosen.  One that can substantially minimize the risks of counterclaims like those filed in Notorfransesco.