The Department of Justice has secured a $1.85 million False Claims Act settlement with a former Department of Veterans Affairs (VA) outpatient clinic operator.

Sterling Medical Associates Inc. reportedly operated two VA outpatient clinics in Minnesota starting in March 2013 after being awarded a contract from the government. Allegedly, the company failed to schedule patient appointments in compliance with contract requirements.

According to the Department of Justice, the company’s VA contract required routine appointments to be scheduled within 14 days of the date requested by the patient. Sterling allegedly failed to follow these requirements. Instead, veterans’ requested appointment dates were changed by the contractor to make wait times seem shorter on paper.

“We expect companies doing business with the government to comply with their contractual obligations, particularly when they relate to the health of our veterans,” Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division said in a statement.

“The Department is committed to ensuring that our veterans receive the timely medical care that they need and deserve.”

Sterling agreed to pay $1.85 million to resolve claims that it violated the False Claims Act with these practices between July 2013 and April 2014.

“Today’s settlement exhibits the importance we place on the health and welfare of our veterans,” said U.S. Attorney Erica H. MacDonald for the District of Minnesota.  “The women and men who have bravely served our country deserve to receive timely care without exception.”

False Claims Act: Overview

The False Claims Act (FCA) was passed in the United States during the Civil War due to concerns that contractors were defrauding the Union Army by selling sick horses, injured mules, faulty guns and ammo, and even rancid provisions while passing them off as high quality of work more money.

Under the FCA, people and businesses are prohibited from submitting false claims to government programs. Some examples of fraudulent healthcare claims under FCA include:

• Upcoding in medical billing by charging for a higher price service or a service that was simply not provided
• An ambulance company filing a claim for emergency service when only a transport service was provided
• Providers entering into a kickback arrangement in which undisclosed benefits are provided for directing patients toward a specific physician, product, pharmacy, etc.
• Overcharging for medical goods and services
• Providing services to consumers which are not medically necessary and only serve to increase claim amounts
• Billing for services as if they were provided by a physician when they were actually provided by a less qualified employee such as a physician’s assistant or nurse practitioner

Examples of FCA violations can also be found in government contractor situations if the contractors overcharge for goods and services, bill for services that are not provided, perform sub-standard work, or provide inaccurate information about the goods or services provided.

The FCA also includes a qui tam provision, referencing a Latin legal phrase meaning “he who brings a case on behalf of our lord the King, as well as for himself.” Under the provision, private citizens are able to take legal action under the FCA on behalf of the federal government. The government can later intervene in the case or unseal the complaint without intervening.

According to the Department of Justice, many of its fraud cases are filed under the FCA’s qui tam provision due to the attractive benefits provided to relators, or citizens who take action on behalf of the government.

Relators are entitled to a portion of the government’s recovered compensation. These plaintiffs can receive between 15 percent to 30 percent of the government’s award. Although federal authorities still receive the majority of any recovered compensation, relator awards can be significant when settlements are reached for millions of dollars.

This article is not legal advice. It is presented
for informational purposes only.