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Cases Covered by Qui Tam

The situations that most often result in qui tam actions generally involve false claims presented to the government, directly or indirectly, for payment or approval. These claims can be generated through the submission of false records, fabricated statements, or other deceitful representations made to the government in order to obtain reimbursement.

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Some common types of qui tam cases include:

  • Mischarging. Mischarging cases generally involve filing claims for goods or services that were never delivered or performed. A common mischarging scenario is overstating the quantity of goods delivered against a government contract. Another frequently reported mischarging scheme involves billing the government for medical services not rendered, or billing for a service with the claim that it was performed by a physician when the service in fact was performed by a nurse or other provider that should have been billed at a lower rate. Mischarging is the most common type of qui tam case filed.
  • False negotiation or defective pricing. This fraud involves the submission of false cost and pricing data to the government, usually during the negotiation of a contract, in order to inflate the total value of the contract.
  • Product and service substitution. A substitution case is when a supplier provides an inferior product or service while falsely certifying that that the product meets specifications, or falsely certifies that reliability testing was conducted when in fact it was not.
  • False certification of entitlement for benefits. This type of fraud occurs when false information is provided for FHA mortgage guarantees and price supports.

The 1986 qui tam amendments expanded the definition of fraud to include “reverse false claims.” A reverse false claim occurs when a false record is used to decrease an obligation or debt owed the government. An example of this would be if a company falsely classified products imported into the U.S. in order to reduce or avoid tariffs and import duties.

Although the 1986 qui tam amendments clearly cover a wide variety of fraudulent conduct, one type of deceit not covered is that related to tax returns. A qui tam case may not be initiated on the basis of falsified income tax data.

The earliest qui tam cases in the United States dealt principally with military suppliers delivering faulty goods or inflating invoices. In recent years, the following companies have paid restitution to the government as a result of such actions:

  • Boeing, for performing defective work on military aircraft ($25 million settlement). This case involved the KC-10 Extender fleet, which is a mainstay of the Air Force’s aerial refueling fleet in the Iraq and Afghanistan war theaters. Boeing defectively installed insulation blanket kits in KC-10 aircraft while performing depot maintenance at the Boeing Aerospace Support Center in San Antonio, Texas.
  • American Grocers, for changing expiration dates and inflating weight of food sold to the military ($13.2 million settlement). The firm bought deeply discounted products whose freshness dates had expired or were nearing expiration, then altered those dates and resold the supplies to the government for hefty markups.
  • Maersk, for overcharging freight on shipments to U.S. forces in Iraq and Afghanistan ($31.9 million settlement, $3.6 million to the relator).
  • Alliant Techsystems, for delivering flares known to be defective ($36,967,160 settlement). Between 2000 and 2006, Alliant Techsystems delivered LUU-2 and LUU-19 illuminating para-flares to the Defense Department. These flares, which burn in excess of 3,000 degrees Fahrenheit for over five minutes, are used for nighttime combat, covert missions, and search and rescue operations. They were used extensively by American forces in Iraq and Afghanistan. The flares delivered by Alliant were incapable of withstanding a 10-foot drop test without exploding or igniting, as required by specifications. Alliant Techsystems was aware of these failures when it submitted claims for payment
  • Northrop Grumman, for selling faulty military satellite components ($325 million settlement, $48.7 million to the relator)

Increasingly in recent years, qui tam actions have centered on fraud in health care, medical devices and pharmaceuticals. These cases often arise because the company defrauds the government through procurement activities; however, they may also be brought on the basis of other illegal business practices.

  • Pfizer, Inc., paid $2.3 billion for off-label promotion of the drug Bextra to government programs including Medicare and Medicaid. Six relators who initiated the qui tam claim divided $102 million in rewards, with the largest share, $51.5 million, going to a single whistleblower who provided evidence for the majority of the claim.
  • ROTECH paid $2 million to settle charges it engaged in fraudulent Medicare billing. The suit was won by a former employee who pursued the claim on her own after the government declined intervention.
  • GlaxoSmithKline paid $2 billion for promoting drugs for non-FDA approved uses, or “off-label” marketing.
  • AmMed Direct LLC paid the United States and the state of Tennessee $18 million to settle allegations that it submitted false claims to Medicare and Tennessee Medicaid.
  • LifeWatch Services Inc. paid $18.5 million to resolve allegations that the company submitted false claims to federal health care programs for ambulatory cardiac telemetry (ACT) services.
  • South Texas Health System paid the United States $27.5 million to settle claims that it paid illegal compensation to doctors to induce them to refer patients to hospitals within the group.
  • Quest Diagnostics paid $253 million for selling faulty blood test kits to medical testing companies over six years, despite substantial evidence the product obtained inaccurate results. The California biochemist who initiated the qui tam case was awarded 18 percent of the $253 million settlement.
  • Warner-Lambert paid $430 million for off-label promotion of the drug Neurontin.
  • Eli Lilly paid $1.42 billion for illegally marketing the drug Zyprexa to children and advising excessive doses to adults.

You may be eligible for a significant reward if you have whistleblower information against a company involved in government fraud. An attorney with qui tam expertise will help you move forward in your qui tam case.

We Can Help You

If you or a loved one have suffered because of a dangerous drug or device, or have been injured, you may be entitled to financial compensation. Recovery may include compensations for your medical bills, pain and suffering, and loss of wages. Please contact Avram Blair & Associates, P.C. immediately. We will spend time evaluating any potential claims. Call us toll-free (888) 384-5745 or fill out the form below and a Legal Intake Specialist will reach out to you.

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