Defendants & Schemes in False Claims Act Lawsuits

Congress intended for the False Claims Act to be read broadly, so the Government could reach all fraud schemes that potentially impact the public fisc. In turn, the courts have placed few limits on who falls under the ambit of the False Claims Act, allowing the government to effectively reach all who seek to illegally drain government funds. The False Claims Act and its qui tam provisions have proven especially effective against dishonest healthcare providers and companies that target limited government healthcare dollars. In fact, since 1986, these powerful fraud-fighting weapons have been used to recover over $26 billion in ill-gotten gains from some of the largest and most profitable companies in the healthcare sector.

At first glance, Medicare fraud and other healthcare fraud schemes appear varied and individually crafted. Upon closer inspection, it becomes readily apparent that wrongdoers tend to employ the same basic fraud schemes. The following list identifies typical defendants in cases involving the False Claims act & what kinds of fraud schemes are utilized by providers and companies in the healthcare industry.

FDA Regulated Manufacturers

1. Pharmaceutical Manufacturer Fraud

  • Reporting inflated pharmaceutical prices to Medicare
  • Overstating the efficacy to drive off-label sales
  • Paying kickbacks to providers
  • Knowingly violating FDA specifications for manufacturing

2. Medical Device Manufacturer Fraud

  • Using post-market studies and device registries as vehicles to pay illegal kickbacks
  • Marketing medical devices even though the use has not been approved by the FDA
  • Manufacturing unapproved medical devices
  • Knowingly violating FDA specifications for manufacturing

3. Biotechnology Manufacturer Fraud

  • Providing unlawful kickback payments to surgeons
  • Reporting inflated pharmaceutical prices to Medicare
  • Overstating the efficacy to drive off-label sales
  • Knowingly violating FDA specifications for manufacturing
  • Managed Care Companies

4. Medicare Advantage Company Fraud

  • Signing letters of agreement with health care providers for service or product discounts and then failing to give Government Health Care Programs the benefit of the negotiated discounts
  • Misleading customers about the scope of the Medicare Part C coverage plans
  • Deliberately avoiding insuring late-term pregnant women and other potential insureds with a high health-risk status

5. Medicaid Managed Care Plan Fraud

  • Failing to process or pay providers’ health claims in a timely fashion
  • Failing to apply a market price adjustment

6. Health Maintenance Organization Fraud

  • Refusing to insure late-term pregnant women and other people with a high health-risk status
  • Failing to report coordination of benefits (COB) recoveries and overpayments received from third-party health care providers
  • Retail Level Pharmaceutical Providers

7. Prescription Drug Plan Provider Fraud

  • Falsely classifying patients as dually eligible for Medicare and Medicaid
  • Altering or discarding documents that would disclose errors
  • Rigging purportedly random samples of files

8. Pharmacy Benefit Manager Fraud

  • Performing cursory and inadequate audits
  • Retaining overpayments
  • Falsifying data submitted to Government Health Care Programs

9. Specialty Pharmacy Fraud

  • Reporting inflated drug prices
  • Reselling returned drugs
  • Submitting false reports about prescription filling time

10. Retail Pharmacy Fraud

  • Submitting duplicate claims to the respective federal and state health care programs for patients who were dually-eligible for Medicare Part D and Medicaid
  • Systematically failing to dispense drugs to Government Health Care beneficiaries

11. Long-Term Care Pharmacy Fraud

  • Overcharging government programs as compared to private health insurers
  • Illegal paying kickbacks in exchange for Medicare and Medicaid referrals

12. Copayment Patient Assistance Charity Fraud

  • Acting as an illegal conduit to funnel funds from pharmaceutical companies to Government Health Care Program beneficiaries
  • For-profit ventures improperly disguised as bona fide charitable organizations
  • Offering inducements or kickbacks to patients and providers to keep patients on certain drugs

Hospital and Other Systems

13. Hospital Fraud

  • Misclassifying patients as inpatients when they were more appropriately classified as outpatients
  • Improperly structuring physician recruitment agreements
  • Ordering medically unnecessary overnight admissions

14. Hospital Management Company Fraud

  • Including unallowable costs in Medicare cost reports
  • Receiving reimbursements for health care services that were not provided
  • Billing take-home drugs as infusions

15. Academic Medical Center Fraud

  • Submitting false grant progress reports
  • Withholding critical information in applying for government grants
  • Improperly billing government agencies while receiving a non-governmental research grant for the same procedure

16. Hospice Provider Fraud

  • Providing hospice care to Medicare beneficiaries who were not eligible for hospice benefits under the Medicare regulations
  • Providing hospice care without obtaining the required written certifications of terminal illness
  • Misrepresenting the purpose of Medicare’s coverage of hospice services to patients and their families in order to continue to keep them admitted for hospice care

17. Home Healthcare Provider Fraud

  • Including Medicare-covered visits and non-covered visits in calculations of the average cost of home health care visits
  • Billing for fees which result in profit when there is a controlling relationship

18. Skilled Nursing Home Facility Fraud

  • Overcharging Medicare for reimbursement of car mileage
  • Billing Medicare for medically unnecessary supplies
  • Submitting claims for partial hospitalization of patients who suffer from dementia and other symptoms of Alzheimer’s disease, even though such patients do not benefit from that type of treatment

19. Long-Term Acute Care Provider Fraud

  • Submitting claims for services not provided
  • Paying illegal kickbacks in exchange for Medicare and Medicaid referrals

20. Inpatient Rehabilitation Facility Fraud

  • Billing Medicare for unnecessary treatments
  • Admitting patients whose medical conditions do not warrant inpatient rehabilitation or who will not benefit from the rehabilitation on account of their conditions

21. Health Care Consulting Company Fraud

  • Advising hospitals to falsely inflate charges
  • Helping providers to conceal illegal Medicare billing practices

Diagnostic, Clinical, and Other Laboratories

22. Independent Diagnostic Testing Facility Fraud

  • Paying kickbacks to providers to induce them to refer Medicare business
  • Ordering improper drug screens

23. Clinical Laboratory Fraud

  • Performing medically unnecessary blood tests
  • Improperly charging tests
  • Unbundling a single series of blood tests into separate tests to receive higher reimbursements

24. Drug Testing Company Fraud

  • Billing the Government for unnecessary analyses
  • Systematically charging the Government higher prices than those charged for private patients

25. Diagnostic Laboratory Fraud

  • Improperly charging tests
  • Performing medically unnecessary blood tests

26. Pathology Laboratory Fraud

  • Billing the Government for unnecessary analyses
  • Charging the Government higher prices than those charged for private patients

DME Providers

27. DME Supplier Fraud

  • Repeatedly filing claims for equipment that is never actually provided
  • Failing to pass through discounts to the Medicare program
  • Using or causing falsified documents to support claims of medical necessity

28. Home Infusion Service Provider Fraud

  • Charging Medicare for each day a patient used a portable pump instead of billing only for the day the pump was installed by a physician
  • Billing for self-administered home infusion therapy as outpatient hospital services

Skilled Therapy Providers

29. Outpatient Rehabilitation Facility Fraud

  • Double billing Medicare for costs associated with the delivery of physical, occupational and speech therapy services

30. Occupational Therapy Facility Fraud

  • Upcoding and double billing Medicare for costs associated with the delivery of occupational therapy services

Various Outpatient Providers

31. Medical Transportation Company Fraud

  • Billing Medicare for non-reimbursable items
  • Submitting claims for non-emergency ambulance transportation that is not medically necessary or lacks valid documentation of medical necessity

32. Psychiatric Treatment Facility Fraud

  • Providing substandard psychiatric counseling and treatment in violation of Medicaid requirements
  • Falsifying the attendance rosters of outpatient psychiatric group meetings
  • Billing the Government for a higher level of service than actually provided

33. Outpatient Surgery Center Fraud

  • Improperly increasing charges for Medicare patients
  • Systematically upcoding bills and charges

34. Outpatient Radiology Center Fraud

  • Billing Medicare for ultrasound procedures, reconstruction procedures, and MRI’s not ordered by the patients’ treating physicians

35. Outpatient Infusion Clinic Fraud

  • Falsifying documents to categorize patients as inpatient rather than outpatient
  • Improperly billing for self-administered medications

36. Sleep Disorder Clinic Fraud

  • Misclassifying patients as inpatients when they were more appropriately classified as outpatients

Miscellaneous Healthcare Providers

37. Medicare Administrative Contractor Fraud

  • Falsifying audit activity dates
  • Submitting false information regarding the accuracy and timeliness of processed claims
  • Knowingly failing to recover money owed to the Government

38. University Research Facility Fraud

  • Submitting  false grant progress reports
  • Billing government healthcare programs while receiving a research grant for the same procedure

39. Group Purchasing Organization Fraud

  • Requiring improper payments and fees from manufacturers

Kathleen Hawkins

Dignity Health
$37 million

Kathleen Hawkins, RN MSN, had been employed by Defendant, Catholic Healthcare West (CHW) for approximately 6 years when she decided she had had enough of trying to change the hospital system from within.

CHW, a California not-for-profit corporation that operated hospitals in California, Arizona, and Nevada, was at the time the eighth largest hospital system in the nation and the largest not-for-profit hospital provider in California.


Joe Strom

Johnson & Johnson
$184 Million

Joe Strom contacted us in 2005. We were very grateful that he did. We immediately formed an all-star legal team and a process to stop a very harmful pharmaceutical marketing strategy. It was this process we set into motion that ultimately returned hundreds of millions of dollars to the U.S. Treasury, and a portion of that, very well-deserved, into Joe’s bank account.

Joe told us a very troubling story about the off-label promotion of a pharmaceutical drug for patients who already suffered from chronic heart failure.


Bruce A. Moilan Sr.

$27 Million

Bruce Moilan was a seasoned hospital systems expert by the time he contacted our Firm. At the time he decided to file his qui tam lawsuit, he was employed by South Texas Health System as a System Director for Materials Management. In this position, he oversaw $24 million in annual purchases of supplies and equipment and helped determine budget, reduction and cost analysis throughout the contract bidding and negotiations process. His job was to insure proper implementation for purchasing, receiving and management of inventory, for McAllen Hospitals, L.P.


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