$237,454,195 Award in South Carolina Whistleblower’s Suit Brought under the Federal False Claims Act Affirmed on Appeal – Drakeford v. Tuomey

dollar signThe United States government is a huge entity that cannot possibly be aware of every instance of fraud of which it is a victim. To increase the odds in the government’s favor, Congress passed the False Claims Act, which contains a qui tam provision through which a whistleblower may initiate a lawsuit on the federal government’s behalf, seeking recovery for alleged fraud committed against the government. The federal government may or may not join in the suit at some point.

If the suit is ultimately successful, the whistleblower is awarded a percentage of the recovery. The possibility of this award serves as an incentive for those who are aware of potential fraud against the government to act on its behalf by filing suit under the False Claims Act. Some qui tam actions can be lengthy and complex, especially when large sums of money are at stake.

Facts of the Case

In the recent case of Drakeford v. Tuomey, the plaintiff was a doctor who filed a qui tam action alleging that the defendant health care system violated the federal False Claims Act. After the federal government intervened, the case was tried to a jury. The jury found in the defendant’s favor on the False Claims Act allegations (but in the government’s favor on claims under the Start Act), determining that the health care system had not violated the False Claims Act. The district court vacated the verdict after concluding that it should have allowed certain deposition testimony into evidence. In a second trial, the jury found in the plaintiff’s favor on the basis that the healthcare system had knowingly submitted some 21,730 false claims to Medicare for reimbursement. The district court awarded damages and civil penalties totaling $237,454,195.

The Decision on Appeal

The United States Court of Appeals for the Fourth Circuit found that the district court had erred in granting a new trial based upon its exclusion of the deposition testimony but found that a new trial was nevertheless warranted on other grounds. The court then affirmed the district court’s order, holding that there was sufficient evidence for the jury to identify the prohibited referrals and that each UB-92/04 form constituted a separate claim.

The court disagreed with the defendant’s assertion that the district court had erred in its calculation of actual damages. Insofar as compliance with the Stark Law was a condition precedent to reimbursement of any claims submitted to Medicare, the damages from the false statement in the current case came from the government’s payments to an entity that was not entitled to any payments at all.

Finally, since the court found the ratio of punitive damages to compensatory damages was just under the constitutionally suspect ratio of 4-to-1, the court concluded that the damages award was not in violation of either the Fifth or Eighth Amendments to the United States Constitution.

If You Know of Fraud Against the Government

If you are aware of fraud of which the federal government is a victim, or if you suspect that such fraud is occurring, you need to speak to an experienced whistleblower lawyer about the possibility of filing a qui tam action. The law firm of Patrick E. Knie is knowledgeable about such suits and will be glad to discuss your potential case with you. Call us at 864-582-5118 to schedule an appointment. We handle lawsuits arising in Spartanburg, Greenville, and elsewhere in South Carolina.

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