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False Claims / Whistleblower
Qui Tam cases allow individuals, sometimes referred to as “whistleblowers,” to bring lawsuits against businesses that are defrauding taxpayers. This type of action was created by Congress during the Civil War, after military suppliers provided defective equipment to Union soldiers. 31 U.S.C. § 3729. As a result, Congress empowered anyone who was aware of such conduct to bring an action qui tam pro domino rege quam pro sic ipso in hoc parte sequitier — “who for the king as well as for himself sues in this matter” — on behalf of the government against the wrongdoer.
Qui Tam lawsuits are brought on behalf of the state or federal government, and are usually brought under the state or federal False Claims Act. The whistleblower typically receives 15-33% of the recovery based on their role in unveiling the fraud. CPM has successfully represented numerous Qui Tam plaintiffs against companies that have defrauded the government, resulting in large recoveries of taxpayer money by the government, and substantial awards for whistleblowers. In most cases, CPM works with government attorneys to litigate Qui Tam lawsuits.
RECENT CASES OF NOTE
CPM has several Qui Tam cases that cannot be disclosed because they are currently under seal and being investigated by the state or federal governments. Examples of cases that are no longer under seal include:
Quest Diagnostics Litigation
State of California ex rel. Hunter Laboratories v. Quest Diagnostics, Inc., et al.
Sacramento County Superior Court
CPM represented a whistleblower, Chris Riedel, who owned a small lab company, Hunter Laboratories of Campbell, California. CPM filed a Qui Tam action in 2005. The California Attorney General’s office joined the case in late 2008. The lawsuit alleged that, despite state law requiring that California’s Medi-Cal program receive the lowest price for lab services, Quest Diagnostics, the largest lab in California, and LabCorp, the second largest, routinely billed California prices far above what it was charging others. The case settled in 2011, recovering $301 million in taxpayer money from the lab defendants, including $241 million from Quest Diagnostics, Inc. The $241 million settlement was the largest false claims act recovery in California history, and the largest single-state False Claims Act settlement ever in United States history.
State of California v. Gardens Regional (Tri-City), Pacific Hospital of Long Beach, Michael Drobot, et al.
Los Angeles County Superior Court, Case No. BC534466
CPM represents whistleblowers in a California action under the California False Claims Act and the California Insurance Code, against Paul Richard Randall, Michael Drobot and several other individuals and entities involved in a vast scheme of fraud emanating from Southern California involving spinal surgeries. The case alleges that defendants have defrauded the government, and various California workers compensation insurance carriers, by systematically arranging and performing spinal surgeries that: (1) are medically unnecessary; (2) use non-FDA approved, counterfeit surgical hardware, including rods and screws that are implanted in patients’ back; (3) result from a vast array of kickbacks; and (4) are billed to insurance carriers and government payers at illegally inflated rates. On February 21, 2014, the primary defendant in CPM’s spine surgery qui tam case—Michael Drobot—was indicted on federal charges, along with California State Senator Ronald Calderon, and his brother Tom. Drobot has been indicted for the conduct described in CPM’s whistleblower complaint, filed in May 2012. The case is being handled by Justin T. Berger.
United States v. Vitas
USDC Western District of Missouri, Case No. 4:13-cv-00449-BCW
The federal Department of Justice has intervened in a case brought by CPM against Vitas, the largest hospice company in the United States. The case, brought on behalf of a whistleblower who formerly worked for Vitas, alleges that Vitas routinely placed and kept patients on hospice who did not have a terminal illness. As a result, Vitas billed Medicare tens of millions in taxpayer dollars for services that were not appropriate. CPM is now working with DOJ attorneys to recoup the fraudulent proceeds. The case is being handled by Niall P. McCarthy, Justin T. Berger, and Eric J. Buescher.
State of Michigan ex rel. Hunter Laboratories v. Quest Diagnostics, Inc., et al.
30th Circuit Court - Michigan
This action is very similar to the California action. The case is set for trial on September 8, 2014.
United States, et al. v. Kan-Di-Ki, LLC
USDC Central District of California
In September 2013, CPM reached a $19.4 million settlement of claims against Diagnostic Laboratories, Inc., the largest provider of laboratory and x-ray services to nursing homes on the West Coast. The case was filed in 2010 by two former employees of Diagnostic Laboratories. The California Attorney General’s office joined the case in late 2011. The lawsuit alleged that Diagnostic Laboratories sought to illegally induce the referral of Medicare and Medi-Cal business by providing nursing homes with significant discounts – discounts that were not passed along to Medicare and Medi-Cal. The case settled 10 days before the start of trial in the United States District Court for the Central District of California.
California ex rel. Richardson v. IREF
San Francisco Superior Court, Case No. 964656
CPM filed a Qui Tam California False Claims Act case against research foundation for failure to pay direct and overhead costs in clinical drug studies to its host university. Defendants agreed to pay $25 million to settle the lawsuit that alleged dollars were being misused. A UC-trained physiologist Dr. Charles Richardson, brought the lawsuit.
United States v. Tenet Healthcare Corporation
USDC Central District of California
CPM filed a Qui tam False Claims Act litigation against healthcare provider for overcharging the government. The case involved a hospital in South Carolina and was successfully resolved.