Plaintiffs Can Receive Millions Under False Claims Act

July 29, 2014

The False Claims Act allows plaintiffs to file what are known as qui tam suits on behalf of the government, alleging the defrauding of government programs. If the Department of Justice decides that a case has merit, it may join the lawsuit. Generally, when the DOJ signs onto a case, it is a good sign for the plaintiff, as nearly all of those cases result in settlements or judgments.

While the government retains most of the money in any case, whistleblowers can collect 30 percent of the total recovery, reports Peter Loftus for the Wall Street Journal. 

Most False Claims Act cases involve health care. In 2013, 753 of these lawsuits were filed, two-thirds of which concerned the health care industry. The cases range from allegations of billing fraud in Medicare or Medicaid to misleading claims about drug safety to the promotion of drugs for unapproved uses.

Critics of the law say that it encourages excessive lawsuits that have little merit:

  • Of False Claims Act suits filed from 1987 to 2010, 5,400 lawsuits resulted in outcomes.
  • Of those, only one-quarter resulted in a settlement or a judgment.

Additionally, some serial plaintiffs have emerged:

  • Ven-A-Care, a former pharmacy, specializes in filing qui tam actions. The company has sued at least 35 health care companies, and, after 20 settlements, has received $425 million.
  • According to law professor David Freeman Engstron of Stanford Law Schoool, there are at least 25 people or groups that have filed at least five False Claims Act suits since 1986.

One man, Dr. William LaCorte of Louisiana, has received $38 million under the law. Over the course of 20 years, LaCorte has filed 12 fraud lawsuits and has been successful in five of them. LaCorte's most successful case came when he realized that patients to whom he was prescribing a specific heartburn drug were being issued Pepcid, a Merck product, instead. After some investigation, LaCorte found that Merck was giving hospitals a major discount to distribute their product, a violation of Medicaid law because the discount was larger than the discount given to Medicaid.

Exposing that violation resulted in $23 million for LaCorte. He purchased a boat with the winnings, which, Loftus reports, he named Pepsid.

Source: Peter Loftus, "Invoking Anti-Fraud Law, Louisiana Doctor Gets Rich," Wall Street Journal, July 24, 2014.  

 

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