Whistleblower Tips

Back to School Fraud?

It has been quite a summer, here at Bracker & Marcus LLC. We kicked things off with a nice False Claims Act settlement against a Compound Pharmacy, alleged to have defrauded Medicare and Medicaid by using bulk ingredients but billing for name-brand. We then attended the national conference for the National Employment Lawyers Association in N’awlins, where this Tulane grad got his fair share of etouffee, po’boys, and beignets. And now if you can believe it, it’s already time to go back to school. At least it is here in Marietta, GA, where the county operates on a quarter system. Which brings us to another area rife with fraud: for-profit education.

Many attendees of for-profit colleges obtain money from the federal government to help pay for their schooling, such as Pell or VA grants or loans. In order for schools to qualify to accept these grants, they must abide by certain rules. For example, colleges are not permitted to pay recruiters based on how many students they enroll; this is called the “incentive compensation ban.” The 90/10 rule requires for-profit schools to obtain at least 10% of their revenue from private payors or financial aid sources besides the federal government. And the schools may only admit students who actually qualify, meaning having high school diplomas or speaking the language the classes are taught in, but some schools have been caught helping unqualified students falsify Pell grant applications. Any of these violations could form the basis of a False Claims Act case.

In addition to the for-profit colleges, there are other privately-run, but publicly-funded, schools that may fall under the umbrella of the False Claims Act as well. One example is schools that are educating boys and girls in juvenile correction facilities or behavioral health institutions.

And there are also private universities that receive federal grant funds for research projects. If the university does not follow the requirements of the grant or the results are frauded up, it may be liable under the FCA. Just a few months ago, Duke University paid $112.5 million to settle claims that they falsified scientific data in order to obtain additional grants.

So as the summer comes to an end, remember to wear sunscreen, study hard, and look out for potential fraud!

What Does the Government Shutdown Mean to my False Claims Act Case?

When a relator files a False Claims Act case, it engages two branches of the Government: the federal courts in which the case is filed and the executive departments and agencies that work the case—including the Department of Justice and U.S. Attorney’s Office. These offices generally rely on funding from the federal Government. So what happens when that funding runs dry?

As anyone who hasn’t already moved into their doomsday bunker can tell you, the federal Government is partially shutdown until the legislature and president can agree on a budget. Over 800,000 federal employees are either furloughed or working without pay. As a result, False Claims Act cases are in limbo until funding is restored, with potential long-lasting and devastating effects.

As of December 21, when funding was cut off for the U.S. Attorney’s office, much of its staff was sent home. In fact, the government attorneys and investigators who work the qui tam cases are often prohibited from working, even voluntarily and without pay, with priority given to the criminal division. And so the majority of sealed investigations grind to a halt until an appropriation bill funds the office again.

The federal courts have additional sources of funding, such as filing fees and court costs, that allow them a grace period to remain open while the funding issues are resolved. In years past, this has been sufficient, as most shutdowns have lasted only days, not weeks. This year, the judiciary will continue to operate fully staffed until January 11. What happens after that has yet to be determined.

However, because FCA cases are brought on behalf of the Government, and the Government’s attorneys are not allowed to work those cases, many courts have taken preemptive measures to address this situation. The Northern District of Georgia, for example, where our firm is located and many of our cases are filed, has issued an Order staying all civil cases in which the United States is a party, meaning that whether our cases are sealed or unsealed, intervened or declined, the cases are temporarily frozen.

Other courts are less forgiving. During past shutdowns, some courts have required the Government to meet its deadlines regardless of staffing. This had led to decisions not to intervene in promising cases because there was nobody to work them.

But even once funding is restored, an impact will be felt. Because even as pending cases and investigations are put on hold, bad guys continue to commit fraud, whistleblowers continue to step forward, and qui tam attorneys continue to prepare and file cases. Most U.S. Attorney’s offices are already overworked and understaffed; “lack of resources” is one of the leading causes of declination. And so when the Assistant U.S. Attorneys return to work and find a number of brand new cases on their desks, they may have to triage their cases, potentially limiting investigations and moving more quickly to decline to intervene in cases. And in general, investigations across the board will undoubtedly slow down until the office has had a chance to catch back up.

But all is not lost! First, obviously, if your case has merit and was brought by competent counsel, it will remain high on their list. Second, your qui tam counsel can continue to work cases in the absence of the Government, particularly those in active litigation or with extensive document review projects. And third, the state governments are not affected by the shutdown, and so states with False Claims Acts of their own and MFCU (Medicaid fraud) offices will continue to work those cases.

And so it is business as usual here at Bracker & Marcus. We will continue to work hard on our existing and new cases so that when the shutdown is over, we will be prepared to move them forward without further delay!

Beware of "Speaker Fees" and other Kickbacks

Speaker programs are a widely used marketing tool in the pharmaceutical business. Drug makers enlist doctors to give paid talks about the benefits of a product to other potential prescribers, at a clinic or over dinner in a private room at a restaurant. But Krane and some fellow rookie reps were already getting a clear message from Burlakoff, she said, that his idea of a speaker program was something else, and they were concerned: It sounded a lot like a bribery scheme.

One of the most common varieties of False Claims Act cases, resulting in some of the biggest judgments, are kickback cases. Doctors, pharmacies, hospitals, etc. are not allowed to take gifts, including cash, that may influence their medical judgment. Patients are entitled to unbiased advice. But, for example, if a doctor gets a cut every time he sends a patient to John Doe Hospital, he is probably going to direct his patients to that hospital.

The ostensible purpose of a pharma-speaker program, as Krane understood it, was to spread the word about the drug through peer-to-peer marketing. With “honorariums” changing hands, the potential for a subtle corruption is clear, but Burlakoff was not subtle. He told Krane, she said, that the real target was not the audience but the speaker himself, who would keep getting paid to do programs if and only if he showed loyalty to Subsys. It was a quid pro quo or, as the Department of Justice later called it, a kickback. “He boiled it right down,” Krane recalled: We pay doctors to write scripts. That’s what the speaker program is.

If a doctor is receiving benefits from a pharmaceutical company, he is more likely to prescribe drugs from that company, even if the patient doesn't need them. And if the doctor is seen as prescribing more drugs, then the pharmaceutical company may be inclined to give even more benefits. It is this type of kickback that has not only defrauded Medicare and Medicaid out of millions of dollars, but, as this investigative report from Evan Hughes of the New York Times delves into, it has helped to fuel pill mills and the national opioid crisis.

The speaker events themselves were often a sham, as top prescribers and reps have admitted in court. Frequently, they consisted of a nice dinner with the sales rep and perhaps the doctor’s support staff and friends, but no other licensed prescriber in attendance to learn about the drug. One doctor did cocaine in the bathroom of a New York City restaurant at his own event, according to a federal indictment. Some prescribers were paid four figures to “speak” to an audience of zero.

If you are in the medical field, be on the lookout for such arrangements that appear to pay a medical practitioner something for nothing, or that are out of whack with what you would expect for the service being provided, especially if the payments are based on volume (e.g., the more referrals/prescriptions, the bigger the payment). These agreements frequently violate federal Stark and Anti-Kickback laws and can be the basis of a False Claims Act case.

When do I need counsel?

Of course, since you are asking a lawyer when you need a lawyer, I am going to tell you “as soon as possible”! But really, there are many reasons why you will want to find a knowledgeable, experienced FCA attorney very early in the process if you think you are witnessing fraud against the government.

First, it’s a good idea to have a free consultation with us and make sure that you are correct in what you suspect. Sometimes, there are things companies do wrong that, although against the rules, don’t really belong in an FCA case. We can help you sort out what is an FCA issue, what should be taken to a different sort of attorney, or maybe reported to a hotline.

Second, assuming that you have an FCA issue, we will want to advise you about what evidence you may want to gather to prove your case.  Making such decisions on your own is fraught with peril, and could even land you with criminal or civil liability if you make the wrong move. For example, there may be documents you want to bring, but there are important guidelines about what you can and cannot bring to show us. This is a complicated issue, and we very much encourage you to speak with us before you make any decisions about what to take. Similarly, some would-be relators contemplate making a recording of the workplace. Again, this is not a simple issue and we would prefer to have the opportunity to discuss it with you before you make any actual recordings.

Third, by the time they are contemplating an FCA action, many relators are on the verge of being let go. If they are terminated, there are important steps you will want to take to preserve your rights. You may also be asked to sign a release in order to receive a severance package – the issue of releases is very complex, varies from district to district, and can result in our being unable to help you. Do not sign away any of your rights without consulting an experienced qui tam attorney!

For all of these reasons and more, if you think you are a witness to fraud against the government at any level, we encourage you to take advantage of our free consultations.

Relator’s Interview Part V: FAQs

How do I prepare?

We will have a preparation session with you, telephonically or in person, where we will review the type of things discussed in this blog series (but specifically focused on your case). Other than that, you may want to review your complaint and disclosure statement. That’s about it – this isn’t a memory test! Just get a good night’s sleep and come in ready to respond as fully as possible.

Do I bring anything?

Nope. In your prep session, we will go over the documents you will be reviewing with the team, and I will bring a copy for your reference, but you need not bring a thing. For some that expect to go longer, for one reason or another, I may suggest you pack a snack. That’s about it.

Who will come with me?

The Relator’s Interview is one of those rare moments when a non-executive, non-celebrity gets to say “Pardon me, I want to consult with my attorney” any time that you like! We will be there with you the whole time – in fact, it would be improper for the team to talk to you without us around.

You will not be able to bring others with you – like spouses, parents, etc. – because of the federal seal. If you need to arrange a ride, let us know so we can strategize how not to leave someone stranded during an all-day interview that they are not allowed to know anything about!

What if I don’t know an answer?

This is an easy one: just say so! As we mentioned before, this is NOT a memory test. There’s no penalty for not knowing the answer – in fact, the team will respect you for not being embarrassed when you are not sure of something and overstating your knowledge.

In a similar vein, if you are not sure what the answer is, but you have a reasonable idea, just be sure that you are clear that you are speculating. This is not a situation where the team will not want to hear your ideas – just be clear that you are guessing and why you have arrived at your “best answer” and don’t imply that you are sharing facts rather than guesses. This goes a long way to making you credible to the team.

Do you have another question you would like to see answered here? Email Julie@FCACounsel.com with your ideas! When we collect enough, we will do another installment.