The prevalence of Medicaid fraud and other ongoing attempts to defraud the government are the reason for the federal False Claims Act (FCA). This legislation, originally signed by President Abraham Lincoln, protects employees and other private individuals from retaliatory action when they report acts of fraud against the government.

There are incentives for reporting Medicaid fraud: a person who has strong evidence of fraud may file a “qui tam,” or whistleblower lawsuit against a company or organization on behalf of the government. If the Court determines that fraud did take place, that individual is entitled to a percentage of any recovery.

Because the United States government is considered to have very deep pockets, it is frequently targeted by dishonest business owners who have contracts or other financial arrangements with a federal agency. A recent case involving a  privately owned and operated elder care services company highlights the scope – and the consequences – of the problem.

A Recent Case of Medicaid Fraud

On Nov. 27, sisters Arlinda Moriarty and Daynelle Dickens were indicted by a federal court in Pennsylvania. The sisters owned four different companies that were involved in home-delivered services to Medicaid recipients.

Included in the indictment were 10 former employees, as well as Moriarty’s ex-brother in law, a cousin and former executive, and an accountant who processed claims and billing for the operation. They stand accused of conspiring to defraud the federal Medicaid program of over $87 million dollars between January 2011 and April 2017.

Allegedly, the operation submitted claims to Medicaid for services that were never provided, or were reportedly done for clients who were being hospitalized or were deceased at the time.

The services their businesses offered included transportation, meal preparation and other elder and disabled care services. According to the indictment, the defendants’ Medicaid fraud scheme involved falsification of documents, improper use of clients’ personal information and the creation of non-existent employees.

Qui Tam Law and the False Claims Act

The history of whistleblower laws dates back 700 years. In 1318, King Edward II of England began offering large rewards to subjects who could prove that servants of the Crown were operating as wine merchants on the side.

Current US whistleblower protections came about during the American Civil War, when contractors frequently sold defective armaments, tainted food and sick and aged horses and mules to the Union Army.

Historically, the FCA has been used primarily against private military contractors engaged in fraud. However, the profit-driven nature of healthcare in the US has provided many opportunities and great temptation for dishonest individuals and companies attempting to pad their bottom line.

By 2008, Medicaid fraud and illegal activities related to state and government-funded health care programs accounted for 40 percent of recoveries under the FCA.

Filing a Qui Tam Lawsuit

Successfully uncovering Medicaid fraud and other illegal activities depends on “insiders” who are willing to come forward and file a lawsuit on behalf of the government (“qui tam” is an abbreviation of a Latin phrase meaning “he who sues in this matter for the king as well as for himself”).

The individual who brings such a lawsuit, known as a “relator” or whistleblower, is legally protected from employer retaliation that includes “[being] discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment.” If the lawsuit is successful, the relator is eligible for up to 30 percent of any recovery.

Note that in order to be eligible for federal protections and rewards, the case must go through a qualified qui tam attorney and a formal complaint filed in a court of law. If you are an employee of a healthcare provider and are aware of Medicaid fraud or other attempts to defraud the government, your first step is to contact a lawyer with experience in dealing with whistleblower cases.