April 25, 2024

Medicare Fraud, The False Claims Act, and Healthcare Qui Tam

Supreme Court of the United States

The Federal False Claims Act is important in protecting healthcare services, where a qui tam lawyer provides legal advice in combating fraudulent activity. This statute empowers both the government and whistleblowers (a qui tam relator) to file a lawsuit against individuals and entities that defraud governmental programs, with a significant focus on Medicare and Medicaid fraud. The healthcare industry, due to its complex billing systems and the substantial federal funds it receives, has been a focal point for FCA litigation. This blog delves into the legal intricacies of the FCA, elucidating its mechanism through specific case examples involving billing fraud, off-label marketing, and other healthcare-related violations.

The Legal Framework of the False Claims Act and Health Care Qui Tam Cases

Under the State False Claims Act, liability arises when any person or entity knowingly submits a false claim to the government for payment or approval. The term “knowingly” encompasses actual knowledge, deliberate ignorance, or reckless disregard of the truth or falsity of the information, thereby setting a broad spectrum for establishing culpability. The FCA’s treble damages provision and per-claim penalties underscore its punitive and deterrent objectives.

Moreover, the FCA’s qui tam provision is a distinctive feature that permits private individuals (relators) to sue on behalf of the government and share in a portion of the recovered damages from qui tam cases. This whistleblower mechanism in qui tam lawsuit cases significantly enhances the government’s capacity to uncover and prosecute fraud.

Billing Fraud in Healthcare

Billing fraud represents a prevalent form of healthcare fraud addressed by the FCA. It includes practices such as upcoding, billing for non-rendered services, and unbundling of services to inflate reimbursement false claim situations.

One landmark case illustrating the FCA’s application to billing fraud is United States ex rel. Drakeford v. Tuomey Healthcare System, Inc. In this case, the Fourth Circuit Court of Appeals upheld a judgment against Tuomey Healthcare System for submitting false claims based on Stark Law and Anti-Kickback Statute violations. Tuomey was accused of entering into compensation arrangements with physicians that improperly took into account the volume or value of referrals. The case culminated in a $237 million judgment against Tuomey, highlighting the severe penalties for billing fraud under the FCA.

Off-Label Marketing Violations

The FCA has also been employed to address off-label marketing practices, where pharmaceutical companies promote drugs for use that are not approved by the Food and Drug Administration (FDA). Such conduct can lead to false claims if these off-label uses are billed to federal healthcare programs.

A notable instance of the FCA’s use in combating off-label marketing is the case against Pfizer Inc., which resulted in a $2.3 billion settlement in 2009. Pfizer was accused of promoting the drug Bextra for off-label uses and dosages that the FDA had specifically declined to approve due to safety concerns. This case stands as one of the largest healthcare fraud settlements in U.S. history and underscores the FCA’s role in curtailing unlawful marketing practices within the healthcare industry.

Other Healthcare-Related Violations

The FCA’s reach extends beyond billing fraud and off-label marketing to other forms of healthcare fraud, including kickback schemes and substandard care claims. The Anti-Kickback Statute (AKS) prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by federally funded programs. Violations of the AKS can serve as a basis for FCA liability.

In United States ex rel. Kurnik v. Amgen Inc., Amgen and other defendants agreed to pay $24.9 million to resolve allegations that they engaged in kickback schemes to promote the sale of their drugs. The case exemplifies how the FCA and AKS intersect to combat unethical practices in the healthcare industry.

“We will continue to pursue pharmaceutical companies that pay kickbacks to long-term care pharmacy providers to influence drug prescribing decisions,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division. “Patients in skilled nursing facilities deserve care that is free of improper financial influences.”

“By this agreement we are making important strides in holding drug manufacturers accountable for fraudulent and abusive practices not only in South Carolina but nationwide,” said the U.S. Attorney for the District of South Carolina. “I am proud of the tireless work of this office to investigate this case across the country.”


The False Claims Act is a potent tool in the U.S. government’s arsenal to combat healthcare fraud. Through its provisions for treble damages, penalties, and whistleblower incentives, the FCA and qui tam cases deter Medicare fraud and hold perpetrators accountable. The cases of Tuomey Healthcare System, Pfizer, and Amgen illustrate the Act’s broad applicability and its critical role in maintaining the integrity of federal healthcare programs. These precedents serve as a stark reminder of the legal and financial repercussions that healthcare providers and pharmaceutical companies face when engaging in fraudulent practices.

For those navigating the complex terrain of healthcare law, understanding qui tam action, Medicare fraud, and the FCA’s nuances with its implications for compliance and litigation strategies is indispensable. The ongoing evolution of healthcare fraud schemes necessitates vigilant enforcement of the FCA, underscoring the need for a robust legal framework to safeguard public funds and ensure the equitable provision of healthcare services.