A hospital or physician routinely performs procedures that are not medically indicated or necessary and then bills Medicare or MassHealth. A government contractor charges for goods or materials that were never delivered. A pharmaceutical company artificially inflates the wholesale price for a prescription drug and then bills the inflated price to Medicare or MassHealth. A government vendor charges for a superior (and more expensive) product while actually providing an inferior (and cheaper) version. A toy manufacturer fraudulently represents to the federal government that a product passes a government certification test required to sell the product to the public.
All the above are examples of private industry defrauding either the federal or Massachusetts government. What remedies are there for an “insider” at a company who knows of this fraudulent activity and who wishes to expose the fraud or scam?
The Massachusetts and federal governments recognize that importance of encouraging individuals to come forward and report fraud against the government. Both have enacted False Claim Act (FCA) statutes that not only punish companies or individuals who defraud the government, but also create incentives for “insiders” or “whistleblowers” to report evidence of fraud. These FCA statutes are commonly referred to as Whistleblower laws. Whistleblower laws allow citizens with direct and independent knowledge of fraudulent practices to file lawsuits through their own private attorney on behalf of the government (qui tam lawsuits) to recover fraudulently obtained money. Should the government choose to intervene and prosecute the case (the process of these lawsuits will be discussed in a forthcoming blog), Whistleblower laws allow a whistleblower to receive a portion of any damages, fines and penalties the government collects from the wrongdoer.
For claims involving fraud against the federal government, the False Claims Act (FCA) subjects people and companies to liability for knowingly submitting false claims for payment of government funds. The FCA essentially covers any act committed with the purpose, effect or intent to defraud the federal government of money. The FCA provides for the imposition of civil fines of $5,500 to $11,000 per false claim and allows the government to recover up to three times its actual monetary damages. The FCA allows for a whistleblower to receive a portion of any funds recovered, typically 15 to 25 percent of the government’s total recovery. The Massachusetts False Claim Act (MFCA) is similar to its federal counterpart and also contains a Whistleblower provision. The MFCA subjects wrongdoers to civil penalties of between $5,000 and $10,000 for each violation and establishes that whistleblowers are entitled to receive between 15 and 25 percent of the proceeds Massachusetts recovers and collects, although these percentages can vary depending on the type of case and how the case proceeds. Both Massachusetts and federal whistleblower laws allow for recovery of attorney’s fees and expenses.
In subsequent blogs, we will discuss in more detail the particulars of both federal and Massachusetts Whistleblower law, the mechanics of whistleblower cases, examples of whistleblower cases in various industries and recent important decisions and settlements in the field. If you have questions regarding a potential whistleblower case, please call Benjamin Zimmermann or David McCormack at 617-542-1000 or e-mail firstname.lastname@example.org or email@example.com.