Do you have a possible False Claims Act case against a Private Equity (PE) firm?

by Tim McInnis, Esq | Jun 13, 2022 | False Claims Act

It’s no secret that private equity (PE) firms are increasingly acquiring healthcare and life science
businesses. And it is also no secret that when they do, these firms employ typical investment
strategies and practices that may make sense in some industries, but not those involving
patient treatment and care. After all, private equity (PE) firms usually seek to increase the debt
held by their portfolio companies, while trying to ramp up revenues and drastically cut costs.
In the healthcare and life science arenas this can lead to debt-laden balance sheets and
bankruptcies, unethical or unlawful sales and marketing schemes to boost revenues (including
by paying kickbacks) and massive cuts in essential staff and service levels. All of which can result
in underserving and improperly treating the patient population, many of whom are Medicare,
Medicaid and TRICARE beneficiaries. It can also lead to falsely billing government insurance
programs, resulting in False Claims Act violations and substantial rewards for whistleblowers.

Due to increasing fraud and abuse in the healthcare and life science fields, the U.S. Department
of Justice is taking a closer look at charging private equity (PE) firms with False Claims Act
“upstream” liability for the misconduct of their portfolio companies. This has resulted in a
number of large settlements in recent years.

Successfully pursuing False Claims Act cases against private equity (PE) firms requires two
things above and beyond the normal elements of proof in FCA cases. First, you need to show
that one or more members of the private equity (PE) firm had some role in causing the portfolio
company to submit false claims to a government program. This is usually done by showing their
control over, and involvement in, the day to day management and operation of the business.
For example, by controlling the board and through consulting and management service
contracts and the receipt of payments for such services. The second vital fact you need to
establish is that one or more members of the private equity (PE) firm knew about the
fraudulent and improper billing practices of the portfolio business. Often this can be proved by
showing that these investors turned a deliberate blind eye to such misconduct in their quest for
profits and/or that they failed to set up and monitor effective compliance programs.

If you believe a Private Equity (PE) firm might have upstream False Claims Act liability for the
misconduct of one or more of its portfolio companies (whether in the healthcare field or
otherwise), you should immediately contact an experienced qui tam whistleblower attorney.
Time is often of the essence, especially in larger organizations where many people know about the fraud and some may rush to preserve their rights since there is a first-to-file rule that generally bars subsequent whistleblowers from receiving a reward.

HOW TO REPORT CYBER SECURITY FALSE CLAIMS FRAUD

by Tim McInnis, Esq | May 16, 2022 | False Claims Act

HOW TO REPORT CYBER SECURITY FALSE CLAIMS FRAUD

Did you know the Department of Justice introduced a new IT cyber security false claims initiative in 2021?

You might benefit from this IT cyber security false claims program if you report government contractors and grantees who didn’t protect sensitive electronic data from hackers. Reporting such activities in the right way could entitle you to a monetary reward.

What kinds of misconduct is covered by the government’s IT cyber security false claims initiative?

Broadly speaking, it falls into two categories. The first concerns government IT contractors, consultants and auditors who were supposed to provide protection against unauthorized access to government networks, hardware, devices, computer systems, software and electronic files and who knowingly provided substandard cyber security products or monitoring services and then submitted false claims to the government.

The other involves ordinary government contractors and grant recipients, such as those in the defense, aerospace, NASA, GSA and healthcare industries, who don’t meet acquisition and contracting regulations (like FARS, DFARS , NASA FARS, NIST, CMMC, FedRAMP, and HIPAA) requiring them to adequately monitor and provide a certain level of security for the sensitive government data they handle when performing under their contracts. Often the data at stake is unclassified controlled technical information (UCTI), sensitive but unclassified information (SBU), personally identifiable information (PII), personal health information (PHI), or other types of confidential information.

Who might be in a position to bring a cyber security case against an IT Contractor?

The ideal combination is someone who is knowledgeable about the IT products and services, the regulatory and contractual requirements, and the facts concerning the fraud, including, possible security breaches and the failure to accurately report them when submitting false claims to the government. For example, someone who works in a cyber security, compliance and controls unit of a government contractor may be in a good position to bring a successful case.

What do you need to do to benefit from the government’s cyber security fraud initiative?

You can bring a “qui tam” lawsuit under the False Claims Act against the contractor or grantee. If your case is successful and the defendant returns money to the government, you could be entitled to between 15% and 30% of the recovery. To do so, you must hire an attorney and file a lawsuit in federal court. If you even suspect some organization is submitting false claims to the government and think you may want to report it you should immediately contact an experienced and trusted whistleblower attorney to protect your rights.

Examples of Qui Tam Cases

by Author | May 2, 2017 | False Claims Act

New York Non-Profit Serving Developmentally Disabled Children and Adults Settles Whistleblower Complaint

Alleging False Billing at Queens and Brooklyn Day Habilitation Centers (New York City) — A non-profit serving the developmentally disabled in three states falsely billed New York State Medicaid for day habilitation client services for five years even though its own attendance records showed some developmentally disabled clients were not present, according to allegations in separate whistleblower settlements between the provider and New York State and federal governments, Manhattan-based Qui Tam Whistleblower Attorney Timothy J. McInnis of McInnis Law announced. Read More

SBIR Fraud

Medicaid Fraud
Education Fraud

Duty Fraud

HHS OIG ISSUED ITS WORK PLAN FOR 2017

by Author | Jan 29, 2017 | False Claims Act

The HHS OIG issued its work plan for 2017.  This is significant to False Claims Act attorneys, relators and litigants because healthcare fraud continues to make up the largest share of FCA recoveries. The Office of Inspector General (OIG) is responsible for maintaining the integrity of the Health and Human Services (HHS) programs, including the Centers for Medicare and Medicaid Services (CMS). It does this by trying to identify, investigate and reduce improper payments and healthcare fraud, waste and abuse.

Here are some of the new and revised issues OIG will be focusing on in 2017:

Medicare Parts A and B

• Hyperbaric Oxygen Therapy Services – Provider Reimbursement in Compliance with Federal Regulations
• Incorrect Medical Assistance Days Claimed by Hospitals
• Inpatient Psychiatric Facility Outlier Payments
• Case Review of Inpatient Rehabilitation Hospital Patients Not Suited for Intensive Therapy
• Nursing Home Complaint Investigation Data Brief
• Skilled Nursing Facilities – Unreported Incidents of Potential Abuse and Neglect
• Skilled Nursing Facility Reimbursement
• Skilled Nursing Facility Adverse Event Screening Tool
• Medicare Hospice Benefit Vulnerabilities and Recommendations for Improvement, A Portfolio
• Review of Hospices Compliance with Medicare Requirements
• Hospice Home Care — Frequency of Nurse On-site Visits to Assess Quality of Care and Services
• Comparing HHA Survey Documents to Medicare Claims Data
• Part B Services during Non-Part A Nursing Home Stays: Durable Medical Equipment
• Medicare Market Share of Mail-Order Diabetic Testing Strips: April 1–June 30, 2016 –Mandatory Review
• Positive Airway Pressure Device Supplies – Supplier Compliance with Documentation Requirements for Frequency and Medical Necessity
• Intensity-Modulated Radiation Therapy
• National Background Checks for Long-Term-Care Employees – Mandatory Review
• Ambulance Services – Supplier Compliance with Payment Requirements
• Inpatient Rehabilitation Facility Payment System Requirements
• Histocompatibility Laboratories – Supplier Compliance with Payment Requirements

Medicare Parts C and D

• Medicare Part C Payments for Service Dates After Individuals’ Dates of Death
• Extent of Denied Care in Medicare Advantage and CMS Oversight
• Medicare Part D Rebates Related to Drugs Dispensed by 340B Pharmacies
• Questionable Billing for Compounded Topical Drugs in Part D
• Medicare Part D Payments for Service Dates After Individuals’ Dates of Death

Medicaid

• States’ MCO Medicaid Drug Claims
• Data Brief on Fraud in Medicaid Personal Care Services
• Delivery System Reform Incentive Payments
• Accountable Care in Medicaid
• Third-Party Liability Payment Collections in Medicaid
• Medicaid Overpayment Reporting and Collections
• Overview of States’ Risk Assignments for Medicaid-only Provider Types
• Health-Care-Related Taxes: Medicaid MCO Compliance with Hold-Harmless Requirement
• Health Care-Acquired Conditions – Medicaid Managed Care Organizations

CMS: Health Insurance Marketplaces

• CMS Oversight and Issuer Compliance in Ensuring Data Integrity for the ACA Risk Adjustment Program
• CMS Monitoring Activities for Consumer Operated and Oriented Plan Loan Program

For more information read https://oig.hhs.gov/reports-and-publications/archives/workplan/2017/HHS%20OIG%20Work%20Plan%202017.pdf