Indiana Attorney General Invites Qui Tam Whistleblower Cases by Health Care & Pharmaceutical Employees To Stop Health Care Fraud

Smart and effective state Attorneys General have fought fraud against their citizens through encouraging greater use of the country’s major whistleblower law, the False Claims Act, and state versions of that law.

Texas AG Greg Abbott, for example, has a staff that has long distinguished itself for recovering millions of stolen taxpayer funds in health care fraud cases, under the leadership of Pat O’Connell and, more recently, Ray Winter.

Following this tradition, Indiana AG Greg Zoeller is urging employees of pharmaceutical companies and heath care entities to help stop health care fraud, and possibly share in the recovery as qui tam whistleblowers under the state and federal False Claims Acts.

While we have discussed in detail how the False Claims Act operates, AG Zoeller’s announcement gives a succinct summary. We have reprinted it below, and applaud his efforts.

For immediate release: Aug 19, 2010
Posted by: [Attorney General]
Contact: Bryan Corbin Phone: (317) 233-3970 Email:
Attorney General Zoeller: Whistleblowers urged to step forward Health care, pharmaceutical workers can file lawsuits to stop fraud; financial reward possible
INDIANAPOLIS – To crack down on tax-dollar-wasting fraud in the health care and pharmaceutical industries, Indiana Attorney General Greg Zoeller is alerting Hoosiers who work in those fields that they can file whistleblower lawsuits if they know of fraud and they can collect a portion of any damages awarded to reimburse public funds wrongly paid out.

With fraud on Medicare and Medicaid estimated by the federal government to be a multi-billion-dollar problem nationwide each year, Zoeller today is reaching out to health care and pharmaceutical workers to advise them of their rights as whistleblowers to stop fraud under the state and federal versions of the False Claims Act.

A whistleblower action under the False Claims Act starts when an individual such as an employee files a private lawsuit — using his or her own attorney — against a provider or company. By alleging the company committed fraud on a government contract, the private plaintiff brings the suit on behalf of the government as the “relator” of the allegation. The case is sealed while the state and federal governments investigate; and the seal may be extended for up to three years for good cause. The suit becomes public when the court lifts the seal, usually when the government entities join the case as intervenors.

If the governments reach a monetary settlement with the provider or company where fraud occurred or win the case at trial, then the whistleblower may receive 15 to 30 percent of the proceeds.

“If individuals on the inside are aware of fraud involving a government contract, and reporting it internally has not stopped the fraud, they may be reluctant to come forward for fear of being ostracized from future employment in their chosen profession. While we would hope people would report fraud because that’s the right thing to do, we understand that the potential of a substantial financial reward may be necessary to prompt insiders to come forward,” Zoeller said.

The False Claims Act has existed in federal and state law for years and applies to fraud on all government contracts such as highway and defense contracts, not just health care and pharmaceutical companies. While the federal False Claims Act exists to collect federal funds, the similar Indiana statute is for recovering state funds. Although there are basic notice requirements for employees, the availability of filing whistleblower actions is not well known to the general public or health care workers.

To encourage whistleblowers to file and in turn expose health care fraud, Zoeller is raising public awareness of the False Claims Act through informational meetings, a promotional handout, Web content and outreach to plaintiffs’ attorneys who file such cases initially. The effort is supervised by Deputy Attorney General Allen K. Pope, director of the Attorney General’s Medicaid Fraud Control Unit (MFCU).

To reach workers in the health care field, Deputy Attorney General Steve Hunt and Deputy Attorney General Nicholas Gonzales this year have made several presentations about whistleblower lawsuits to meetings of health care employee associations and gatherings of nursing students entering the workforce. Today, Zoeller and Hunt addressed a group of nursing students attending the Indiana Board of Nursing meeting.

“The idea is to persuade workers already concerned about fraud to raise those claims under the False Claims Act. The private citizen acts, in effect, on behalf of the government to recover public funds wrongly paid out due to fraud. That in turn triggers our office to investigate and join the suit. It is often a lengthy process, but it can achieve great results in reimbursing the taxpayers — and it’s a necessary tool to discourage and stop health care fraud,” Zoeller said.

In previous False Claims Act cases – also called qui tam cases (pronounced “key tam”) in legal jargon – the multimillion-dollar settlement payments made by companies to reimburse public funds that were lost to fraud meant whistleblowers also received millions of dollars individually. Zoeller noted some recent whistleblower cases:

. In September 2009, the federal government, Indiana and other states settled a lawsuit with Pfizer Inc. over the illegal marketing of its drugs Bextra, Lyrica and others, and over illegal kickbacks to induce physicians to prescribe them. That included $1 billion in civil penalties and a $1.3 billion criminal fine. The total obtained for the Indiana Medicaid program was $9.52 million, including $3.69 million for the state’s share of the restitution. As part of this nationwide settlement, six whistleblowers shared approximately $102 million from the federal portion of the civil recovery.

. In January 2009, the State of Indiana entered into a federal and multistate whistleblower settlement with Eli Lilly & Co., to settle allegations that Eli Lilly marketed Zyprexa illegally. Indiana’s total recovery was $19.8 million, including $7.5 million for the state’s share of the Medicaid loss and the remainder for the federal government’s share. Plaintiffs in four whistleblower lawsuits shared in $78.8 million of the federal civil settlement.

. In April 2010, the State of Indiana entered a settlement with AstraZeneca Pharmaceuticals LP over illegal off-label marketing of its antipsychotic drug Seroquel. Indiana received $4.4 million as part of the overall $520 million federal-and-state settlement to reimburse Medicaid and other programs. One whistleblower received $45 million out of the federal civil share of the nationwide recovery.

. In June 2010, the State of Indiana officially joined a whistleblower case originally filed in 2005 by two former employees of a South Bend mental health services facility, Madison Center. They had alleged that Madison Center fraudulently billed Medicaid for a day treatment program for troubled children that was allegedly unnecessary or insufficiently documented. By intervening in the lawsuit, the State’s own complaint alleges the company overbilled Medicaid by $10 million by submitting fraudulent claims.

Once the State joined the case, the original sealed complaint filed by two former employees – psychologist Jean Marie Thompson and therapist Kathleen McCoy – then was unsealed. The lawsuit is ongoing and no settlement has been reached. “In this case, the courage of the two whistleblowers is even more commendable since there is no guarantee of a financial reward, but their private litigation alerted the State to fraudulent activity so that we could intervene on behalf of taxpayers,” Zoeller said.

“Filing a case pursuant to the False Claims Act was a lifesaver. It is a path to take when all else fails,” Thompson said. “The False Claims Act empowered us, ordinary employees without much money or power, to have a meaningful voice. It is people, not faceless organizations, that create these problems and it is individual people who are the solution.”

Health care and pharmaceutical workers who know about fraud and are interested in filing a whistleblower action should first contact a private attorney who specializes in bringing lawsuits under the False Claims Act. Filing a private lawsuit is a necessary step in order for the state and federal governments to investigate the fraud case and intervene.

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