St. Louis Park attorney James Vander Linden represents whistleblowers, company insiders filing claims for money recovered from employers suspected of stealing funds. He has spent years trying to recover Medicaid and Medicare dollars, and he doesn’t think the government has enough muscle to go after the big time health care fraud perpetrators.

 

“The real problem,” he says, “is corporate America.”

Read the rest or listen to the story below.

Medicaid fraud case nets $2.6M award

Friday April 29, 2011
By Barbara L. Jones

A team of lawyers including James G. VanderLinden, seated, and Robert P. Christensen, Brian Wojtalewicz and Neil P. Thompson took on Big Pharma and won. (Staff photo: Bill Klotz)

Once again, a team of Minnesota lawyers has taken on Big Pharma and won.

Neil P. Thompson, Robert P. Christensen, Brian Wojtalewicz and James G. VanderLinden recently settled a qui tam case against the pharmacy chain CVS for $17.5 million.  The whistleblower/relator, pharmacist Stephani LeFlore of Minnesota, alleged that CVS designed a billing software program that consistently overcharged Medicaid for prescription drugs.

LeFlore and her attorneys will receive $2,595,460 under the state and federal False Claims Acts, and are also entitled to receive attorney fees from CVS.  The reward is 16 percent of the settlement, a little bit more than the national average of 15.6 percent.  The amount of the attorney fee is still under negotiation.

The four lawyers also sued Walgreens in 2005 for using a billing system that cheated Medicaid. That case settled in 2008 for $9.9 million with the whistleblowers – Thompson, who is a pharmacist as well as a lawyer, and another man – receiving $1.44 million plus fees.

In the CVS case, the fraud arose in connection with customers who were on Medicaid and also had private health insurance coverage.  In the 10 states involved in the lawsuit – California, Massachusetts, Michigan, Minnesota, Florida, Indiana, Alabama, Nevada, New Hampshire and Rhode Island – CVS was supposed to charge the insurance companies a certain amount for prescriptions, with a limited co-pay charged to the customers. This limited co-pay was assigned to Medicaid.

But LeFlore, who is a pharmacist at CVS, alleged that CVS consistently overcharged Medicaid for the co-pays. She claimed that overcharges occurred on hundreds of thousands of prescription sales for over five years. To support her claims, she first gathered data from CVS’s computers, Christensen said.

LeFlore was told by her attorneys to look to see how much CVS had billed Medicaid, and then contact the state and the insurance companies to see how much CVS was entitled to.

Because the same attorneys had handled the Walgreens case, it was easier to know what to look for, Thompson said.

“She … had a tip as to what to look for, because of the previous cases,” he noted.

Once LeFlore had collected the information, she and her attorneys could run the numbers and see a pattern, Wojtalewicz said.

Before filing their case, LeFlore’s attorneys wanted to make sure they were bringing good information to the table.

“We wanted to have some of the juice before we got to the government to build up our credibility, to prove our case,” Christensen said. “Not only do we have to sell it to ourselves, we have to sell it to the government lawyers and then it has to get sold to the defendant.”

Typically, a relator files a complaint under seal. This allows the government, if it decides to intervene, to investigate though its own channels before informing the object of the investigation.  If the investigation reveals a basis for going forward, a judge partially lifts the seal and advises the defendant of the case. Then the parties may negotiate a settlement, keeping in mind that the law allows for treble damages and a penalty of $5,500 to $11,000 for each claim falsely filed, VanderLinden said.

As the case develops, the relator’s attorneys may find themselves in conflict with the government over their share.

“We often end up negotiating with the government,” Wojtalewicz said.

He said that many private lawyers who work with qui tam cases become frustrated because the federal attorneys are “smothered” in False Claim Act matters.  “We think they cherry-pick.  They take the biggest and most easily proven, and you can’t blame them.”

In this case, the government almost backed away because they didn’t think there were enough damages to make it worth pursing. But LeFlore’s lawyers persisted and the government eventually came around.

Qui tam cases are frustrating for the relator, noted Thompson, because he or she is generally still employed by the defendant.

“One of the important take-aways for lawyers … is to emphasize that the whistleblower should get advice early before he or she reports inside the company,” Wojtalewicz said.  Otherwise, “you’re painting a big target on your back.”

Venue is an important issue in qui tam cases. In the LeFlore case, one of the first strategic decisions the team made was to sue in federal court in Wisconsin, which is in the Seventh Circuit. “Eighth Circuit opinions on false claims really are oriented to the corporations, not the whistleblower,” Wojtalewicz explained.

CVS, the giant retail pharmacy chain, has agreed to pay $17.5 Million to settle a whistleblower lawsuit accusing it of Medicaid fraud (“welfare fraud”).

THE FRAUD

According to her False Claims Acts lawsuit, CVS pharmacist Stephani LeFlore of Minnesota brought evidence to the government that CVS used a billing system for years that was designed to overbill Medicaid on prescription charges. Ms. LeFlore is represented by Minnesota attorneys Neil Thompson, Brian Wojtalewicz, Robert Christensen, and James VanderLinden, with local counsel Aaron Halstead of Madison, Wisconsin, where the case was filed in federal court.

It was done in relation to dual-eligible customers – those legitimately on Medicaid who also maintained their private health insurance coverage. The insurance coverages required CVS to charge the insurance company a smaller amount for prescriptions, and limited co-pay from the customer. When a person is allowed Medicaid coverage, the government always obtains an assignment of the person’s rights under their private health insurance coverage. The government essentially takes over the citizen’s rights under the coverage. This includes the common right to pay a smaller co-pay amount on prescriptions.

Ms. LeFlore claimed in her federal and state lawsuits that CVS should only have billed the Medicaid program the same limited co-pay on prescriptions that it would have normally billed the customer under the insurance plan. She alleged that CVS designed a billing software program for its pharmacies that consistently overcharged Medicaid on these co-pays. She claimed that these overcharges occurred on hundreds of thousands of prescription sales for well over five years.

The $17.5 Million settlement covers over-billings by CVS in the states of Minnesota, California, Massachusetts, Michigan, Florida, Indiana, Alabama, Nevada, New Hampshire and Rhode Island.

Ms. LeFlore first complained internally, but she was told by a supervisor that “corporate took care of the billing” and that she need not be concerned. She then retained her attorneys and commenced the False Claims Acts (qui tam) lawsuit in September, 2008. The lawsuit stayed under seal (non-public), according to the False Claims Acts and court orders, until the announcement of this settlement.

Ms. LeFlore and her attorneys will receive $2,595,460.00 as the reward under the federal and state False Claims Acts. They are also entitled to receive attorney fees from CVS.

STATE MEDICAID AGENCIES

Only CVS had the information necessary to reveal the correct, legal price established by the contracts of CVS with the insurance companies or related pharmacy benefit manager companies (PBMs). The states’ Medicaid agencies did not have this information. The Medicaid program is jointly financed by the Federal and State governments. It is administered by an agency in each state. Some state Medicaid agencies were aware of this wrongful billing potential, and directly addressed it in their rule making. Other states, particularly those states not included in the settlement, have missed the overbilling and are still paying it.

GOVERNMENT ATTORNEYS AND AGENTS

The government team on the investigation, negotiations and settlement was led by Leslie Herje, Assistant United States Attorney in Madison, Wisconsin, and Allie Pang, Trial Attorney in the Department of Justice, Civil Division, in Washington, D.C., with assistance from Nancy Mahoney, Assistant Attorney General in Massachusetts, and Elizabeth Valentine, Assistant Attorney General in Michigan.

Special Agents Jennifer Bowers and Gary Nelson of the federal Health and Human Services Office of Inspector General, and Joni Connell and Tom Gomach of the U.S. Attorney office in Madison, Wisconsin, provided good assistance to the lawyers for the government in the investigation.

CVS PHARMACY, INC.

CVS, the nation’s largest retail pharmacy giant, operates with over 7,100 stores across America.

THE FALSE CLAIMS ACT

The original federal False Claims Act was made law by Abraham Lincoln and the Civil War Congress, to enlist citizen whistleblowers in the fight against fraudulent war industry profiteers. It empowers citizens by giving them a reward, and substantial legal rights against retaliation by employers. In its present form, the government and whistleblowers can recover up to three times the amount of the fraud, plus substantial penalties and attorney fees. Whistleblowers (who are called “relators” under the law) may recover from 15% to 30% of the amounts collected from the frauding corporation. At least 29 states have passed their own similar false claims acts, and many other states are in the process. The government has recovered over $5.5 Billion against frauding corporations just since 2009. Medicaid and Medicare fraud, along with military contracting fraud, are the largest areas for recoveries, but ethical citizens have exposed fraud in the education, environmental and transportation fields, and in other areas of federal and state spending. The new state laws will help honest citizen whistleblowers and the government bring corporations cheating state taxpayers to account. More citizens are also using the newer IRS whistleblower reward law to bring tax cheating corporations to justice.

THE LAWYERS

Ms. LeFlore’s attorneys Neil Thompson, Brian Wojtalewicz, Robert Christensen, and James VanderLinden have years of experience confidentially advising and representing citizen whistleblowers in false claims act cases.

Their website is false-claims-act.com

Neil P. Thompson

Law Offices of Neil P. Thompson

2249 East 38th Street

Minneapolis, MN 55407-3083

612-246-4788

nptrxlaw@gmail.com

Brian Wojtalewicz

Wojtalewicz Law Firm, Ltd.

139 N Miles St.

Appleton, MN 56208

1-800-377-1812

brian@wojtalewiczlawfirm.com

Robert P. Christensen

Robert P. Christensen, PA

670 Park Place East

5775 Wayzata Blvd.

St. Louis Park, MN 55416

612-333-7733

bob@rpcmnlaw.com

James G. VanderLinden

LeVander & VanderLinden, P.A.

5775 Wayzata Blvd.

670 Park Place East

St. Louis Park, MN 55416

952-767-6841

jim@vanderlindenlaw.com

Aaron N. Halstead, Esq.

Hawks Quindel, S.C.

222 W. Washington Ave., Suite 450

Madison, Wisconsin 53701-2155

Tel: 608-257-0040

ahalstead@hq-law.com

• Neil P. Thompson

Neil P. Thompson is uniquely qualified to observe and analyze fraud in

the pharmaceutical industry, as a licensed attorney experienced with class

action litigation involving pharmacy pricing and the Federal and State

False Claims Acts, and a licensed pharmacist for 34 years, both as a

pharmacy owner and working for over 130 different chain pharmacy

locations.

• Brian Wojtalewicz

Brian Wojtalewicz is the President-elect of the Minnesota Association for

Justice (formerly the Minnesota Trial Lawyers Association). For over a

decade he has been voted a Super Lawyer by his civil trial attorney peers

in Minnesota.

• Robert P. Christensen

Robert P. Christensen, P.A. is the Plaintiff/Consumer member of the

International Society of Primerus Law Firms in the State of Minnesota.

He is currently the Dean-Elect of the Academy of Certified Trial Lawyers

of Minnesota and Member of. the American Board of Trial Advocates.

• James G. VanderLinden

Jim VanderLinden has been an experienced and respected Minnesota trial

lawyer for decades. He is a member and past Dean of the Academy of

Certified Trial Lawyers of MN. He is also a member of the American

Board of Trial Advocates, an international organization of highly qualified

trial lawyers. He has been fighting corporate America for more than 3

decades.

• Aaron Halstead

Aaron Halstead is the past Chair of the Wisconsin State Bar Association’s

labor & employment law section, with over 20 years of success in the

labor and employment law fields. He is also on the Board of Directors of

the Workers’ Rights Center in Madison, Wisconsin.

St. Paul whistleblower gets $2.6M in CVS case
The company routinely overbilled the government for copays in 10 states, including Minnesota. CVS has agreed to pay $17.5 million.

A CVS pharmacist in St. Paul who blew the whistle on the drugstore chain for overbilling on Medicaid prescriptions will get $2.6 million in a settlement.

The retail pharmacy division of CVS Caremark Corp. agreed last week to pay $17.5 million to settle allegations that it routinely overbilled the government’s Medicaid prescription programs in 10 states, including Minnesota. CVS was allegedly inflating claims for the prescription co-pays that Medicaid picks up for those patients who are primarily covered by private health insurance.

Whistleblower Stephani LeFlore, who started as an overnight pharmacist in 2008, alerted authorities to the alleged overbilling after noticing billing discrepancies in CVS’ customized pharmacy computer system. She called the private health insurers covering the prescriptions to determine the actual copay Medicaid patients were supposed to pay. In one example, CVS submitted a claim for $26.75 for a co-pay that was supposed to be $25.

The company, based in Woonsocket, R.I., said in a statement that it didn’t intentionally overcharge any state Medicaid program. It also noted that the group of patients at issue, who qualify for both Medicaid and third-party insurance, make up a small percentage of the overall Medicaid population.

The case was filed in 2008 under the federal False Claims Act and sealed. It was unsealed Friday when the settlement was reached.

Court documents describe LeFlore as an experienced pharmacy manager, a graduate of the University of Minnesota’s pharmacy college who worked as an overnight pharmacist for CVS in St. Paul. She could not be reached for comment.

One of her four lawyers, Bob Christensen in Minneapolis, called the $17.5 million “a significant amount of money recovered for the taxpayers.”

“This person took a risk to bring this to the attention of the government,” he said.

CVS will pay the federal government $7.9 million plus interest, and the states $9.5 million plus interest. The states include Alabama, California, Florida, Indiana, Massachusetts, Michigan, Minnesota, New Hampshire, Nevada and Rhode Island.

The U.S. Department of Justice announced the settlement Friday, saying it is emphasizing combating health care financial fraud.

“Medicaid covers the poorest, most vulnerable people in American society. Overcharging this needed government program for prescriptions is a disservice to everyone and won’t be tolerated,” said Daniel Levinson, inspector general of the U.S. Department of Health & Human Services, in the statement.

In 2008, CVS agreed to pay $36.7 million to settle charges that it overbilled Medicaid by substituting more expensive capsules of a popular generic antacid instead of the prescribed tablets.

At least two other national drugstore chains, including CVS rival Walgreen Co., settled similar drug-switching cases that year.

Jennifer Bjorhus • 612-673-4683

Whistleblowers play the central role in ensuring corporate compliance with their ethical and financial obligations to the government and the American public. As false and fraudulent claims in the pharmaceutical industry continue to eat deeper into Medicare and Medicaid funds and threaten to derail health care funding in the U.S., the crucial role of whistleblowers in exposing health care fraud and abuse is receiving renewed attention from Washington. Recent studies indicate that 90% of health care fraud cases are uncovered and prosecuted by whistleblowers, leading to a recovery of over $ 3 billion from false claims lawsuits in the last three years.

Sen. Grassley, who has long recognized the role of employees in uncovering enormous health care fraud in the pharmaceutical sector, commenced a laudable effort on June the 28th to verify the compliance of 16 major pharmaceutical companies with laws protecting their direct employees and indirect employees (employees of agents and contractors) and other whistleblowers from retaliation for exposing fraud on the government and taxpayers. Sen. Grassley’s letters to the 16 pharmaceutical companies request updated data on their compliance with the law requiring a written FCA policy and employee training and education on the FCA, including the whistleblower provisions and anti-retaliation protections of the FCA, as well as State civil or criminal laws on exposing health care fraud and protecting the whistleblower.

Sen. Grassley’s efforts are meant to make it easier for individuals with knowledge or evidence of fraud to come forward without risking their career in the process, as well as to ensure that corporate policies have been updated to reflect changes in the law, and truly further the goals of the FCA by educating employees on the FCA and encouraging them to expose health care fraud. According to the senator, “drugmakers have a public responsibility to safeguard the tax dollars that pay for their products,” and to promote “a culture where those who speak up about possible fraud are rewarded rather than retaliated against.”

The 16 pharmaceutical companies targeted by the Senator are:

• Abb0tt Laboratories
• AstraZeneca Pharmaceuticals LP
• Amgen Inc.
• Boehringer Ingelheim Corporation
• Bristol-Myers Squibb Company
• Eisai Corporation of North America
• Eli Lilly and Company
• Forest Laboratories, Inc.
• GlaxoSmithKline
• Johnson & Johnson
• Hoffmann-La Roche, Inc.
• Merck & Co., Inc.
• Novartis P Corporation
• Pfizer, Inc.
• Sanofi-Aventis, and
• Takeda Pharmaceuticals North America, Inc.

They are expected to respond by the 20th of July with specific information on:

• Changes or updates to corporate policy on educating employees about the FCA
• Employee education on the whistleblower anti-retaliation provisions of the FCA, including avenues for filing false claim lawsuits
• Corporate process for handling employee complaints about possible FCA violations
• Performance of the corporate FCA compliance program in encouraging employees to come forward with allegations of possible FCA violations
• Corporate policies to ensure fair treatment of employee complaints of possible FCA violations
• Any complaints of unfair treatment or retaliation made by whistleblowers
• Any modification of FCA compliance policy in light of the extension of whistleblower protections to contractors and agents.

If you are seeing fraud on the government, contact us by calling 800-377-1812 for strictly confidential advice from experienced counsel, with no fee obligation.

Relevant Links:

Bloomberg News July 1, 2010 report
Press release from Senator Grassley’s office on the letters

Secret, double life of a Walgreens druggist

In law school, Thompson had read about the False Claims Act. It dates to the Civil War, when President Abraham Lincoln wanted to encourage people to turn in war profiteers defrauding the government. Under the law, a tipster can get a cut of any money the government recovers with their help.

“I would have done it even if there wasn’t a reward,” said Thompson, 54. It’s patriotic. You should do it. It saves taxpayers’ money.”

More recently, that law has been used against drug companies, health care providers and others who have skimmed millions from immense federal entitlement programs such as Medicare and Medicaid. It’s an unusual process. A lawsuit is filed in secret, and the whistleblower becomes a federal informant. The law offers protection against retaliation if the company discovers the insider.

Thompson and Bieurance enlisted the help of three lawyers: Brian Wojtalewicz, James VanderLinden and Robert Christensen. In February 2005, they contacted the U.S. attorney in Minneapolis. The nation’s largest pharmacist, they said, had been overcharging taxpayers for at least six years. An investigation was started.

Read the entire article here.

by Michelle Lore Associate Editor

Qui tam actions allow whistleblowers to share in the government’s fraud recoveries

Attorneys Brian Wojtalewicz (top left), Robert Christensen (top right) and James VanderLinden (bottom left) represented whistleblower Neil Thompson in a Medicaid fraud “qui tam” action against retail pharmacy giant Walgreen Co. Not pictured is Dan Bieurance, also a whistleblower in the case. (Photo: Bill Klotz)

Qui tam isn’t just a foreign phrase, it’s a foreign concept to many trial lawyers around the state. But, as evidenced by the $9.9 million settlement of a Medicaid fraud claim against retail pharmacy giant Walgreen Co. late last month, qui tam cases can be very lucrative.

Qui tam cases are brought under the federal False Claims Act provision that permits whistleblowers who discover that fraud is being committed on the federal government to bring suit on behalf of the government and to receive a percentage of the recovery. The law is becoming a powerful litigation tool, particularly in the fight against Medicare and Medicaid fraud, although its also used in many other areas.

Appleton attorney Brian Wojtalewicz, who represented the whistleblowers in the Walgreen case, said that the case represents the third time the company is paying a multimillion dollar settlement on Medicaid fraud allegations.

“It’s just stunning how much Big Pharma is paying out in these settlements and the average American has no clue,” he said.

A team approach

The False Claims Act was enacted during the Civil War, primarily to enlist the help of citizens in the fight against fraudulent war industry profiteers. The act has been amended twice, and currently allows the government and whistleblowers (or relators) to recover up to three times the amount of the fraud, plus penalties and attorney fees.
Prior to filing a qui tam claim, the relator must bring the case to the government. According to St. Louis Park attorney Robert Christensen, an attorney for the relators in the Walgreen case, it can be a challenge to convince the Department of Justice that the claim has viability.

“There is a lot of work that needs to be done before you even approach the government,” he said. “Because they have limited resources and time, you’ve got to have your case lined up real well before you go to the government.”

The suit is filed under a 60-day seal and served on the DOJ and the U.S. Attorney in the jurisdiction it’s filed. Unless the federal government immediately decides not to be involved, it invariably requests an extension of the seal.

“[The government] takes a good look at us to see if this is just sour milk or if there is some negative motive on the part of the whistleblowers that really doesn’t have to do with fraud,” said Wojtalewicz. “Then they will investigate it to see if it’s a solid case, a big case, a little case, what problems there are with it.”

If the government declines to intervene, the relators may proceed on their own. If the government decides it’s a good case, however, it requests a partial lifting of the seal, allowing it to confront the defrauding company, and, if possible, negotiate a settlement.

“It is the government’s [job],” said Christensen. “They make it very clear to you that its their money and their case.”

If the government reaches a settlement, the relators can ask the judge to reject it, although that’s an uphill battle.

“Historically those requests by the whistleblowers and their lawyers are rarely if ever granted, and ordinarily the federal judges OKs what the federal government wants to do,” said Wojtalewicz.

Under the law, whistleblowers recover between 15 percent and 30 percent of the amount collected from the corporation. If the government intervened, the relator gets between 15 and 25 percent of the recovery. But if the government did not intervene and the relator goes on to settle the case or take it successfully to trial, the relator gets 25 to 30 percent. The exact percentage is up to the judge.

“It’s very common for the government and the whistleblower to end up fighting, or at least negotiate [the percentage],” said Wojtalewicz. “Sometimes its gets to an outright fight and they go in front of a judge and shoot it out.”

Walgreen case

In the Walgreen case, two pharmacists, Neil Thompson (who is also a practicing lawyer) and Dan Bieurance, alleged that in 1999 the company began a billing system designed to cheat Medicaid on prescription charges.

The two notified the government of their allegations and in early 2005, sued Walgreen in U.S. District Court in Minnesota under the federal False Claims Act. (They also brought suit in state court in three states where the alleged fraud also took place — Massachusetts, Michigan and Florida — which have their own have false claims act statutes.)

Over the next several years, the U.S. government requested numerous extensions of the order sealing the file while it investigated, intervened and negotiated a settlement with the company. According to Wojtalewicz, the most time-consuming aspect of the case for the relators and their attorneys was conducting the damage analysis, particularly finding and working with the medical and pharmaceutical billing experts.

Under the settlement, Minnesota will get $1.47 million, while Thompson and Bieurance will receive $1.44 million plus attorney fees. The relators contemplated challenging the settlement but decided against it.

“That’s not unusual. Whistleblowers very often think the settlement should be larger than what the government ultimately reaches with the defendants,” Wojtalewicz noted.

Sidelined

Those who handle qui tam claims say it’s tough to give up control of their cases to the government.

“You put work into it, especially at the outset, and then you turn it over and if the feds take it they are running the show,” said Wojtalewicz. “And you don’t always agree with what they’re doing so it can be frustrating that way.”

St. Louis Park attorney James VanderLinden, who also worked in the Walgreen case, explained that once the government takes over, the role of the relators and their attorneys is primarily to feed information to the government attorneys. “We’re just giving this stuff to the U.S. Attorney and that continues into settlement negotiations, right up to the very end,” he said.

Sitting on the sidelines during the negotiation phase is probably the most difficult part, especially for seasoned trial attorneys.

“It’s really odd for trial lawyers to have to do that, sit there,” said Wojtalewicz. “And, of course, we are constantly second-guessing the federal lawyers — are they being aggressive enough?”

Despite that lack of control, attorneys say the claims are worthwhile,  especially since they usually involve widespread fraud schemes.

“These cases always have the potential of being multimillion dollar cases, with the penalties and the trebling of damages,” said VanderLinden.

Moreover, knowing they are helping to end a fraud that’s costing taxpayers millions of dollars is personally rewarding.

“You have whistleblowers who are sticking their necks out professionally, and you have large corporations essentially pulling off fraud schemes and getting away with it until they get turned in,” Wojtalewicz said.

Christensen said the Walgreen case, his first qui tam claim, was a reminder to him of the personal risks that relators — in these and other types of whistleblower cases — take to pursue their claims.

“You could say that this is all about the money but that’s not true,” he said. “There is a huge investment of emotion and risk, and need to do the right thing. Our clients are going to carry that with them well beyond this settlement.”

From the Press Release:

Stop & Shop…discovered during an audit in 2006 that it had not reported the lowest price it had accepted for certain prescription drug products to MassHealth.  By not reporting the lower prices to MassHealth, Stop and Shop was overpaid by $269,000.  Massachusetts law requires pharmacies to charge Medicaid no more than the lowest price they are willing to accept from any “payer.”  If the pharmacies’ price is lower than the price calculated by the state’s pricing formula, then the state will pay the lowest price.

It is encouraging to see companies self-policing themselves and doing the right thing for their companies and American tax payers. When companies do engage in fraud, either as a mater of practice or oversight, whistleblowers must come forward to do the right thing for them.