Pharmacy False Claims Act
- Jul 02, 2017
- By appa
- In False Claims Act Liability
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Pharmacy False Claims Act
Most of the pharmacies, pharmacists, and other organizations involved in Medicaid and Medicare Fraud schemes were taken down and persecuted with the help of whistleblowers, also called “relators” under the law. In the case of pharmacy Medicare fraud, most whistleblowers are former or current employees of pharmacies or pharmaceutical companies. Under the Pharmacy False Claims Act, anyone who blows the cover on fraudulent activities and companies is awarded a handsome amount. Who would say no to that?
What you need to know about the Pharmacy False Claims Act
It was Abraham Lincoln and the Civil War Congress that first passed the original federal False Claims Act. The goal was to enlist the help of citizen whistleblowers in a bid to fight against fraudulent profiteers in the war industry. It permits or authorizes anyone to initiate legal actions on behalf of the government, even when they have no affiliation with the federal government. In return, they get rewards and substantial legal rights.
The False Claims Act entitles the government and whistleblowers to recover three times the amount of the fraudulent act committed and proven true. 15% to 30% of the amount collected from fraudulent companies, including substantial penalties and attorney fees, will be awarded to whoever blew the cover on them. The recovered amount is called the qui tam provision.
Right up to the 1980s, the False Claims Act was linked to war-related activities. But in the late 90s, the focus shifted to healthcare fraud. This is when reports of false claims in healthcare provisions increased and became a majority of cases filed under the statute. This resulted in individual pharmacies, pharmacy chains, and the pharmaceutical industry being scrutinized under the federal False Claims Act.
Similar false claims act have been passed by at least 22 states, which contributed largely to the government recovering billions of dollars from fraudulent corporations and organizations. With Medicare and Medicaid fraud one of the largest areas for recoveries, the Pharmacy False Claims Act has now become a weapon against pharmacies, pharmacists, and pharmaceutical companies.
There are several ways that pharmacy fraud can happen, such as auto-refilling of prescriptions that patients never requested, pharmacy kickbacks and bribes, fraud committed by pharmacy benefit managers, and drug switching. All these nefarious acts can be the basis of a whistleblower lawsuit, a term used for a case filed by a whistleblower.
Understanding the Effects of the Pharmacy False Claims Act
Save taxpayers and the government a lot of money
Medicare reports that, every year, billions of dollars are paid off to pharmacies and individuals who commit pharmacy fraud. Unless someone tells on these corporations and individuals, the government will continue to pay services and products that never went to the designated recipients. With more whistleblowers coming forward, however, Medicare has taken down huge corporations and collected penalties in the vicinity of hundreds of millions.
Ensure everyone operates with integrity
Now that the Pharmacy False Claims Act is strictly imposed and more people are coming forward to point fingers, concerned corporations and individuals would have to operate with integrity and find ways to avoid qui tam actions and false claims act liability. It will encourage them to establish a compliance department, encourage employees to report concerns within the company, perform regular checks for internal problems, consider self-disclosure of complaints that have merits, and to respond to a complaint in a timely manner.
Encourage people to be mindful of possible fraudulent activities
Although most whistleblowers work as a current or former employee of a pharmacy or pharmaceutical company, anyone can actually take a qui tam action against suspected fraudulent institutions. This encourages patients and other individuals to be watchful of any transactions they make with pharmacies or physicians. In doing so, pharmacy fraud will be reduced and discouraged.
Some of the companies that settled after being held liable of Pharmacy False Claims Act
- Nashville Pharmacy Services agreed to pay up to $7.8 million
- Walgreens Pharmacy agreed to pay $7.9 million dollars
- Respironics Inc., a medical supply company, agreed to pay $34 million
- Signal Mountain Pharmacy, LLC settled $117,000
- Zwanger-Pesiri Inc., a radiology company in Long Island, agreed to pay $1.35M to settle kickback claims
Big company names have also made settlements in previous years – GlaxoSmithKline and Ranbaxy Pharmaceuticals made a settlement with the government at $750 million and $500 million, respectively. Major takedowns on companies have resulted in government recoveries amounting to billions.
With whistleblowers receiving 15% to 30% of such settlements, you should seriously consider being on a lookout for pharmacy fraud. Regardless of your motivation, however, it is important to note that there are rules to follow and possible implications for the qui tam actions you take or the whistleblower lawsuit you file.
Is it worth becoming a whistleblower?
A 15 to 30% reward from a fraud case can be substantial, depending on the amount recovered. But there are pros and cons to being a whistleblower. Sure, you get to experience extreme gratification, especially if a case is proven true resulting in a recovery, but it takes a huge amount of courage to file a whistleblower lawsuit, what with you fighting against major corporations. Your identity will become public knowledge once the government’s investigation is complete, which puts a huge question mark on your privacy and safety.
There's also a possibility that a fraud case would take years to resolve, which will keep your reward way out of your reach. And because the result is uncertain, the chances of you receiving a reward is also uncertain.
However, if you only want to do what’s right and ensure no one else falls victim to fraudulent acts, any reward or possible consequence would not be much of a problem.
Help keep taxpayers, which likely includes yourself, from picking up the tabs of small to large pharmacies and pharmaceutical companies by reporting fraudulent activities. Check out the State False Claims Act Reviews of Office of Inspector General (OIG) to learn more about how to file a report under the statute of the Pharmacy False Claims Act.
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