Qui Tam 101

Archive for September, 2006

Another Qui Tam case to be heard by the Supremes

This term, the U.S.Supreme Court just announced that it has agreed to decide the extent to which would-be relators seeking a bounty under the federal False Claims Act must have “direct and independent knowledge” of the specific details of fraud and false claims.   The FCA “requires that an `original source’ must have `direct and independent knowledge of the information on which the allegations are based.” At issue, among other items, is the inappropriate proposed defense advocated requirement that requires that an `original source’ must personally observe the fraud, in whole or in part, as it is occurring.  The court is expected to render its decision by July 2007 in the case, Rockwell International Corp. v. U.S. ex rel. James S. Stone, No. 05-1272.

Horizon West, Inc. Paying $14.7 million for Inflating Costs to Medicare

Horizon is paying $14.7 million to settle civil False Claims Act violations for falsely inflating nursing costs to the Medicare program from 1991 to 1998. Horizon will also pay a $500,00 criminal fine for two counts of submitting falsely inflated cost reports to Medicare. Horizon has a nursing home chain with approximately 30 facilities in California and Utah. Cost reports are an under-enforced area of violations, where hiding improper costs without checks and balances, is made easy by current cost reporting law, regulations, and protocol. For more information click here.

Kellogg, Brown & Root Involved in a Super Fraud?

Millions of dollars were charged to the federal government according to a federal whistleblower for a military Super Bowl party that never was…at least not for the troops.  According to the lawsuit, Kellogg, Brown & Root used the money for its own football party.  The goodies included giant tubs of chicken wings and tacos, a widescreen TV and cheese sticks.  For more information click here.

OIG Guidelines for Evaluating State False Claims Acts

The Office of Inspector General has issued guidelines on whether a State has in effect an adequate (qui tam) law relating to false or fraudulent claims submitted to the State’s Medicaid program.

To read more click here. http://oig.hhs.gov/authorities/docs/06/waisgate.pdf

University of Phoenix Gets an “F” for Fraud Allegations that now stand

The Ninth Circuit Court of Appeals in San Francisco, California reinstated a federal qui tam case filed by two former employees of the University of Phoenix alleging that the school enrolled unqualified students to get federal funding. Recruiters were rewarded based on the number of students they enrolled.  The lower court had previously dismissed the suit stating that the False Claims Act did not cover such conduct. Of note was the fact that the United States Department of Justice filed an amicus brief stating that the ruling by the district court “could impair enforcement of the False Claims Act…”.  While a federal appeals court in New Orleans had previously dismissed three cases that were similar to the University of Phoenix case, a Chicago federal court of appeals ruled consistently with the Ninth Circuit. To read more click here.