FILING QUI TAM ACTIONS AND FALSE CLAIMS LITIGATION
CD: Could you provide a brief overview of the key issues surrounding qui tam litigation? What types of fraud are covered under qui tam claims?
Garinther: The False Claims Act (FCA) is a statutory provision that aims to rectify fraud against the federal government. Under the Act’s qui tam provision, a private citizen with knowledge of a false claim can file an action on behalf of the government. These private citizens, called relators, are eligible to share in the government’s financial recovery. The FCA is utilised to target many types of alleged fraud, including healthcare fraud, housing and mortgage fraud, and procurement fraud. Healthcare fraud, in particular, is a huge area of enforcement, and appears to be growing. FCA issues are commonly litigated. Those issues include what constitutes a “false claim”, the level of detail required to meet civil pleading standards, the limitations period, the FCA’s public disclosure bar, precluding an action when the allegations have already been the subject of a public disclosure, and the first-to-file bar, prohibiting an action “based on the facts underlying the pending action”.
CD: What recent trends have you observed in litigation arising from the FCA?
Garinther: Healthcare fraud continues to be an area targeted under the FCA. In 2014, the government recovered $2.3bn in cases involving false claims against federal programs, making five consecutive years of recoveries exceeding $2bn. Healthcare fraud cases brought under the FCA include allegations of off-label promotion and manufacturing deficiencies against pharmaceutical companies, violations of the Anti-Kickback Statute, and claims of exaggerated patient risk adjustment scores by Medicare Advantage providers. Notably, in 2014, two-thirds of federal qui tam actions initiated by whistleblowers concerned healthcare-related businesses. Eighty percent of plaintiffs’ rewards stemmed from healthcare claims, although non-qui tam healthcare-related actions initiated by the government declined. Additionally, 2014 saw a huge rise in claims in the financial services industry. Banks and financial institutions were charged $3.1bn for false claims for federally insured mortgages and loans in the wake of the mortgage and housing crisis.
Jul-Sep 2015 issue