Consumer Fraud

Nurse’s whistleblower lawsuit leads to $7.3-million health care fraud settlement

osha whistle Nurse’s whistleblower lawsuit leads to $7.3 million health care fraud settlementA Plano, Texas-based health care provider has agreed to pay $7.3 million to settle allegations that a company it recently acquired violated the False Claims Act (FCA) by intentionally overbilling Medicare for an anemia drug used to treated dialysis patients.

Laura Davis, a nurse, filed the whistleblower lawsuit on behalf of the federal government against U.S. Renal Care. The “qui tam” lawsuit alleges that Dialysis Corporation of America (DCA), which became part of U.S. Renal Care in June 2010, submitted false claims to Medicare when it charged the program for the “overfill” in vials of the drug Epogen.

Overfill is an extra amount of a drug product manufacturers include in the drug’s packaging free of charge to compensate for the portion of drug that adheres to the packaging during use and can’t be withdrawn by a standard syringe. Overfill also ensures the full dosage is available.

According to the lawsuit, from January 2004 through May 2011, DCA billed the federal government 10-11 percent overfill each time it administered Epogen. The lawsuit also claims that DCA care providers were not able to extract and administer the overfill because the syringes’ design prevented it. Thus, the lawsuit concluded, DCA’s billing Medicare for Epogen overfill amounted to the company submitting false claims.

“Health providers billing for phantom services cheat taxpayers, cheat programs straining to pay for vitally needed care, and cheat patients who pay inflated copayments,” said Nick DiGiulio, Special Agent in Charge, Office of Inspector General, U.S. Department of Health and Human Services for the region including Maryland.  “We will continue to work with the Department of Justice to ensure health professionals get reimbursed only for services they actually provide.”

Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division, said that Tuesday’s settlement “shows that the Justice Department will aggressively pursue those health care providers who cut corners at the expense of the American taxpayers, such as by billing for items and services that were not provided.”

“We will continue to protect scarce Medicare dollars,” Mr. Delery added.

Under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to file lawsuits on behalf of the U.S. government when they witness fraud, waster, mismanagement, and other wrongdoing, Ms. Davis will receive $1,314,000 as part of the settlement.

The case underscores the need for strong whistleblower laws, which encourage people to call out wrongdoing when they witness it. Because government regulators can’t effectively expose and prosecute all instances of fraud, witnesses who report wrongdoing and file a lawsuit for the federal government may collect between 15 and 30 percent of the recovery.

The U.S. government has recovered about $14.2 billion under the False Claims Act since January 2009. According to the U.S. Justice Department, about 72 percent of that money involved health care fraud by private companies and individuals against Medicare and Medicaid programs.


U.S. Department of Justice