whistleblower 375 210 250x140 Health care fraud involving pharmacies, benefit managers opens new front for whistleblower litigation under False Claims ActA growing number of False Claims Act whistleblower lawsuits are taking aim at pharmacies and pharmacy benefit managers, accusing the “middlemen” companies of defrauding Medicare and Medicaid through improper billing practices and kickback arrangements.

Traditionally, most False Claims Act lawsuits involving health care fraud directly target pharmaceutical companies, hospitals, and other health care providers for pedaling prescription drugs for off-label purposes, providing physicians with illegal kickbacks to boost sales, or deliberately overbilling Medicare and other government health care programs.

Now, an expansion of Medicare Part D and Medicaid under the Affordable Care Act and the more complex rules for prescription drug reimbursement that go along with them have opened up a new front in health care fraud litigation involving pharmacies and pharmacy benefit managers, according to a law 360 report. Simply put, there are more ways to cheat the system.

“As the ways in which drugs are reimbursed get more complicated and expand, the ways in which people can defraud the government expand as well,” lawyer David Stone told Law 360.

Whistleblowers are suing pharmacies and pharmacy benefit managers on behalf of the U.S. government for a wide range of fraudulent activity, including “submitting inaccurate paperwork, wrongly billing Medicare for state sales taxes, failing to substitute generics, failing to pass along savings when generics are substituted, supplying fewer pills than prescribed, wrongly billing Medicaid instead of private insurance, manipulating wholesale prices, and misstating expiration dates,” Law 360 reports.

Whistleblower lawsuits are also exposing illegal kickback schemes in which the patient’s needs take a back seat to profit. Such schemes take the form of gift cards to patients, cash to nursing homes for patient referrals, payments to pharmacy benefit managers for favoring certain drugs, and payments to insurers for using a particular pharmacy benefit manager.

Tighter budgets and a growing population dependent on Medicare and Medicaid have helped make the whistleblower’s role more important than ever.

A record number of whistleblowers filed lawsuits under the federal False Claims Act in the last two years, most of which involve fraud against government health care programs. That means the U.S. government is on track to recover billions of dollars in vital health care funds. Without the whistleblower’s inside knowledge and evidence, many health care fraud cases potentially would go unnoticed.

Whistleblowers suing under the False Claims Act are entitled to seek three times the actual damages. Whistleblowers who help the U.S. recover funds fraudulently taken from federal agencies and programs receive up to 30 percent of the total recovery as a reward.

The U.S. Justice Department reported earlier this year that 2013 was the fourth consecutive year that whistleblower cases helped the government recover more than $3 billion in funds taken from government agencies and programs through fraudulent practices. Seventy-six percent of the recovered funds went back to Medicare, Medicaid, and other government health care programs.

For more information about whistleblower statutes under the False Claims Act, contact Beasley Allen attorneys Andrew Brashier at andrew.brashier@beasleyallen.com, Larry Golston at larry.golston@beasleyallen.com, or Archie Grubb at archie.grubb@beasleyallen.com, or call 800-898-2034.


Law 360
U.S. Department of Justice

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