Fraud and Healthcare


Several months ago I wrote a blog about a Medicare fraud committed by a local Frisco company, Novus Health Services and Optim Health Services, known collectively as Novus. An Arlington doctor plead guilty on Tuesday in Federal Court in Dallas for his role in defrauding the government. A story by the Dallas Morning News indicates that this doctor was “horrified” to learn that patient deaths had been linked to his role in the fraud. Apparently, some patients died after receiving high doses of medication to justify higher billings to Medicare.

The civil justice system provides a remedy to an action known as a Qui Tam action when an employee or other insider discovers that the Federal Government has been or is being defrauded. The Qui Tam action not only can protect the employment of the whistleblower, but it provides the whistle blower an ability to participate in the government’s recovery against the bad actor. To be able to claim a percentage of what the government recovers, the whistleblower must be the first to file a lawsuit, under seal, informing the government of the fraud; and the whistleblower must follow several exacting details required by the statute. Because of the “first to file” rule, it is important if you know or suspect fraud against the Federal Government, contact a lawyer conversant in Qui Tam cases immediately if you know or suspect fraud. My firm has successfully pursued these cases and while they can require a significant amount of time on the front end, these cases can be financially viable for the whistleblower.

I have had client’s call asking if similar actions exist for fraud on the State of Texas. The short answer is not yet. In the past several legislative cycles, we have seen attempts in Texas to create a federal style action that has proven effective to save our federal tax dollars from being literally stolen. Those efforts have not been successful. There is apparently a lot of state contractors lobbying to prevent our state from having this powerful fraud deterrent. A new legislative session being in January. We will have to see if such common-sense, market based actions are adopted.

As the Novus case shows, fraud can hurt more than just the taxpayers. People died as a result of a fraudulent healthcare billing scheme in our own back yard. A federal Qui Tam private right of action likely led to the discovery of the criminal activity by the government and likely saved lives. This is just one example of how the civil justice protects us all from harm. When making your decision how to vote in November on our statewide officials, state senators and state house of representatives consider their positions on policies like this one. If they do not support a private action to report fraud on our state, ask them what policy reasons they have for not supporting a private Qui Tam action when our state is defrauded? Our state contracts all Medicaid, enormous educational commitments, highways and other infrastructure. Fraud in these areas can lead to more than just the loss of our tax dollars. Lives are certainly at stake.