Our mission is to assist the various states in fighting Medicaid fraud. Medicaid is the insurer of last resort for millions of Americans. As of 2019, approximately 74 million people were receiving Medicaid. The program is administered by the states but funded with both federal and state tax dollars.
Either the affected state or the U.S Department of Justice can prosecute Medicaid fraud. Usually they work together.
Whistleblowers can receive rewards anywhere in the United States for reporting Medicaid fraud. Assuming the feds participate in the case, the rewards are based on the federal matching funds.
Unfortunately, only 29 states and the District of Columbia have a state whistleblower reward law. In those states, whistleblowers can receive a second reward based on the state’s portion of any recovery.
It sounds confusing but really isn’t. Think of Medicaid as having two pots of money. The federal government can always pay rewards anywhere in the nation from their recovery. Slightly over half the states have the ability to do also pay a reward for Medicaid fraud.
Some of the largest cases involve pharmaceutical companies (drug pricing), pharmacy chains (like CVS), big lab companies and hospital chains. Because they cases often cross state borders or also involve Medicare (which is federally funded), the U.S. Department of Justice often prosecutes the biggest of cases.
Despite the deep pockets and tremendous resources of the federal government, our state partners have recovered billions of dollars on their own. The average case doesn’t involve billions or hundreds of millions of dollars but prosecuting these smaller offenders is still critically important.
Every state has a dedicated Medicaid Fraud Control Unit. Most also have dedicated healthcare fraud prosecutors too.
Of the 16 largest state whistleblower recoveries, all are from California, New York, Illinois and Texas. Given their large populations, that should come as no surprise to anyone. For those interested in statistics, the largest state whistleblower law recovery occurred in December of 2018. New York State recovered $330,000,000.00 for unpaid sales tax. The offender was Sprint.
Another Medicaid fraud case in the top 16 was a July 2018 case against pharmaceutical maker AstraZeneca. That case was prosecuted by the Texas Attorney General’s Office and recovered $110,000,000.00. There have been hundreds more.
Sometimes states will ban together. Several states worked together to prosecute multiple pharmaceutical companies ( Abbott, Aventis, Aventis Behring, B. Braun, Forest, GlaxoKlineSmith, Johnson & Johnson, Janssen, McNeil-PPC, Ortho Biotech, Ortho-McNeil, Novartis, Pfizer, Pharmacia and TAP) for anticompetitive practices. That case netted $242 million.
Quest Diagnostics Pays California $241,000,000
In 2011, then California Attorney General Kamala Harris announced the largest whistleblower prosecution in California’s history. Quest Diagnostics agreed to pay $241 million to settle claims that it overcharged Medi-Cal. (Medi-Cal is the name given to California’s Medicaid program.)
Like hundreds of other successful state False Claims Act cases, this case was started by a whistleblower who claimed Quest systematically overcharged the state's Medi-Cal program for more than 15 years and gave illegal kickbacks in the form of discounted or free testing to doctors, hospitals and clinics that referred Medi-Cal patients and other business to the labs.
Medicaid rules require the program get the lowest price on services. In this case, California found that Quest charged Medi-Cal up to six times as much as it charged some other customers for the same tests. For example, Quest charged Medi-Cal $8.59 to perform a complete blood count test, while it charged some of its other customers $1.43.
A few people think Medicaid fraud is a victimless crime. This case shows how taxpayers suffer when a few greedy companies decide to overcharge.
Most Medicaid fraud whistleblowers are insiders – billing clerks, nurses, and even doctors who grow tired of watching billing fraud and illegal bribes and kickbacks. This case was a bit different in that the whistleblower was a competitor that wasn’t getting any business. When he did his own investigation he learned that by overcharging the state, Quest could afford to pay illegal kickbacks.
The whistleblower reward in this case was 70,000,000.00
AstraZeneca Pays Texas $110,000,000
In the summer of 2018, Texas Attorney General Ken Paxton announced that AstraZeneca had agreed to pay $110,000,000 to settle charges brought under Texas’ whistleblower law, the Texas Medicaid Fraud Prevention Act.
AstraZeneca was accused of engaging in false and misleading marketing schemes while under the strict obligations of a 2010 federal “corporate integrity agreement” resulting from prior allegations of Medicaid fraud. The federal agreement prohibited Astra Zeneca from promoting its antipsychotic medication Seroquel and cholesterol-lowering statin drug Crestor for uses not approved by the FDA, but Texas alleged the company brazenly continued to do so anyway. Such illegal pharmaceutical promotion is commonly referred to as “off-label marketing.”
AstraZeneca allegedly promoted its powerful and potentially dangerous antipsychotic drug to Texas Medicaid providers, who primarily treated children and adolescents when those drugs were not approved as safe and effective for use in that vulnerable population. The state also accused AstraZeneca of making hundreds of thousands of dollars in illegal payments to two former state hospital doctors to unduly influence the use of Seroquel in the state hospital system.
The harm in the earlier Quest Diagnostic case was purely economic. Taxpayers were paying too much for testing. As bad as that is, the AstraZeneca case shows that in some Medicaid fraud cases, patient safety is at stake. Paxton said, “The allegations that led to this settlement are especially disturbing because the well-being of children and the integrity of the state hospital system were jeopardized.”
We encourage anyone with information about Medicaid fraud to contact their state Medicaid Fraud Control Unit directly or by calling the national Medicare hotline. (Medicare will accept fraud calls for both Medicaid and Medicare.)
If you are a medical provider or have inside information about Medicare or Medicaid fraud and are interested in collecting a whistleblower reward*, call one of our operators toll-free at 888.742.7248. You can also contact us online. All contacts are entirely confidential.
*The only way to collect a reward is by filing a formal state or federal whistleblower claim. In most states those must be filed with the courts.