IN MAY this year, Quest Diagnostics Inc., the biggest provider of medical lab services in California agreed to pay $241 million to settle a lawsuit that accused it of overcharging the state Medi-Cal program while charging doctors, hospitals and clinics lower rates for their non-Medi-Cal patients. The lawsuit claimed that Quest Diagnostics engaged in this illegal kickback scheme in exchange for business referrals.
From the $241 million settlement, the whistleblowers will receive $70 million.
In the Quest Diagnostics case, Quest competitor Chris Riedel, and his company Hunter Laboratories of Campbell, California, were the whistleblower plaintiffs. Because of their lawsuit, California’s Attorney General launched a three-year investigation, which eventually resulted in the $241 million recovery. The State will get $171 million of the settlement. Riedel and Hunter Laboratories, as the original whistleblowers, will receive 30% of the settlement.
In a related case, Laboratory Corporation of America (LabCorp), considered the second biggest provider of medical lab services, agreed to pay $49.5 million to settle similar claims against it. Of the $49.5 million settlement, $14.4 million will go to the whistleblower.
The above lawsuits were brought under California’s False Claims Act, also known as California’s whistleblower law, and which is modeled after the federal False Claims Act (also called the “Informer’s Act,” or the “Qui Tam statute). The law provides individuals or companies the right to sue in the name of the State of California to recover damages, penalties and costs when government contractors or vendors defraud the state or local government.
Any knowing submission of a false claim to a public state agency may be considered a
violation. These unlawful acts may include:
(1) presenting a false claim to the government for payment (e.g., phantom billing);
(2) making or using a false record;
(3) conspiring to commit any violation of the false claims law
(4) delivering of less property than bargained for ;
(5) making or delivering a false receipt
(6) making a false purchase;
(7) making a reverse false claim (using a false claim or record to decrease what is owed to the government); and
(8) inadvertently being a beneficiary of a false claim.
The whistleblower law was created to ultimately protect the public by authorizing private citizens who discover fraudulent claims to file a civil action on behalf of the government. Individuals who bring these actions are known as “whistleblowers” or “qui tam plaintiffs.”
A defendant found to have violated the false claims law may be liable for treble damages or three times the amount of damages the State suffered. The violator will also have to pay civil penalties and the plaintiff’s costs and attorneys’ fees. The actions of the whistleblowers benefited the federal and state governments, which have recovered billions of dollars as a result.
In exchange for their efforts to stop corruption and fraud against the government, whistleblowers receive between 15% and 33% of any recovery in the event the government joined the lawsuit. If the whistleblowers had to prosecute the lawsuit alone, by law they are entitled to receive between 25% and 50% of the overall recovery plus attorneys’ fees and costs.
False claims lawsuits are filed not only against violators in the healthcare industry. Violations have also been found in other industries which have perpetrated a fraud against the state or federal government. These include financial institutions such as banks, lending companies, and transportation service providers.
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C. Joe Sayas, Jr., Esq. is an experienced trial attorney who has successfully obtained significant results, including several million dollar recoveries for consumers against insurance companies and big business. He is a member of the Million Dollar-Advocates Forum—a prestigious group of trial lawyers whose membership is limited to those who have demonstrated exceptional skill, experience and excellence in advocacy. He has been featured in the cover of Los Angeles Daily Journal’s Verdicts and Settlements for his professional accomplishments and recipient of numerous awards from community and media organizations. His litigation practice concentrates in the following areas: serious personal injuries, wrongful death, insurance claims, unfair business practices, wage and hour (overtime) litigation. You can visit his website at www.joesayas law.com or contact his office by telephone at (818) 291-0088.
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