Posted and filed under Fraud, FWA, Healthcare.

The Fraud Spotlight series is a long-form examination of current fraud trends and investigative strategies from our team of retired OIG agents and expert fraud investigators. Stay tuned for weekly insights, updates, and information on healthcare’s most expensive crimes.

If you are keeping a scorecard on healthcare fraud prosecutions and settlements, you undoubtedly saw that Novartis signed a settlement for over $600 million with the Southern District of New York (and coincidentally investigated by my old office). The settlement resolved allegations regarding kickbacks and payments for copayment assistance. 

The kickbacks were actual monies paid and “in-kind” payments in return for writing prescriptions for Novartis manufactured drugs. The copayment assistance related frauds were for the payment of monies to charitable foundations that paid co-payments on behalf of federally covered beneficiaries who were otherwise financially responsible for those copayments. 

None of this is new, and none of this is novel. What got me was that there was considerable discussion on the various social media platforms about it, and more notably, that there were comments made that people knew healthcare providers who were solicited by Novartis sales representatives, and turned down the offers. I applaud those who do not and did not, succumb to the greed that is unfortunately entrenched in the healthcare industry. The case was brought to the attention of the government via the filing of a Qui Tam. 

For those not entirely aware of the process (I did a short blog some time ago on Qui Tams), a Qui Tam is a civil action filed by a Relator on behalf of the government. The Relator, also known as a Whistleblower, has to have what is known as “Original Source” information. That essentially means that it has to be firsthand knowledge of the fraud. Relators can receive compensation that is a percentage of the settlement amount. I have seen instances where Relators have received tens of millions of dollars. Back in 2007, Relators shared $50 million from a Qui Tam filed in Boston against Bristol Myers

The unfortunate problem is that in today’s world, those with information on these fraudulent schemes are often nervous about making the complaint or filing the Qui Tam for fear of social castigation. Circling back to the social media postings about people knowing healthcare providers who turned down the kickbacks; why not continue the discussion with the sales representatives, alert the authorities, file the Qui Tam, and help to stop the perpetuation of fraud? Yes, this is a rhetorical question, and one that I sincerely hope sparks additional discussions on social media.

I have blogged previously about the difficulties in prosecuting kickbacks cases in general, as it requires the payer or receiver of the kickbacks to tell on themselves. This, however, is likely negated by early intervention by the government, competent counsel representing the Relator, and an understanding that the Relator is merely engaging with the sales representatives to foster the filing of the Qui Tam. In my career as an OIG Agent, I investigated and worked with many Relators on cases that had both civil and criminal implications. The provisions of the False Claims Act concerning the filing of a Qui Tam have a long history, and the payment of what could be considered a “bounty” is entirely reasonable. 

It should be clearly understood that when settlement monies are paid, the Relator gets a portion (of which they have to pay their attorneys). Other monies that are part of the overall settlement amount go to reimburse the Medicare Trust Fund (or Medicaid if there is Medicaid money implicated), investigative costs from the OIG for the investigation, costs associated with the US Attorney’s Office involvement, and anything left over to the general treasury. 

The calculation of settlements and the “loss” amounts are a complicated process (I have blogged about that as well), and there are arguments that “loss” amounts for criminal and/or civil resolution are not the true fraud amount. There are no real correct answers on that front, as the government must weigh the costs of a prosecution (civil and criminal) vs resolving the matter and working to return money to the programs that were defrauded. 

At Advize, we have worked with law firms who are seeking to vet facts of a potential Qui Tam and have worked with potential Relators on potential areas where fraud may be occurring. It helps to ensure that a law firm does not expend too many resources, time, effort, and expense on something that will not likely be of interest to a US Attorney’s Office. It is, as it is with compliance related matters, always best to be in front of things before it is too late; from a compliance perspective and from the potential of filing a Qui Tam that will not be looked at positively by the prosecutor. 

Advize Health LLC is a healthcare advisory and consulting company that provides a breadth of healthcare industry services in the payer, provider, and legal communities. Contact the lead of our former OIG and Fraud Investigation team, Eric Rubenstein, for more information on our Fraud Spotlight series.