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Whistle-blower to Receive $23.375 Million From False Claims Act Settlement

by Greg Marcum, JD, PE on March 22nd, 2011

Illinois-based medical products company Medline Industries agreed on March 11, 2011 to pay $85 million in settlement of a False Claims Act case filed by former employee Sean Mason. Mason’s suit alleged that Medline provided fraudulent kickbacks to hospitals and health care companies to induce them to buy its products which were paid for by Medicare and Medicaid. The federal government did not intervene in the case. Under the Act, settlement funds will be paid to the federal government which will then pay Mason a 27.5% share or $23.375 million. Mason’s law firm will receive $6 million.

Mason’s suit alleged Medline provided kickbacks in the form of rebates, junkets, expensive gifts, and charitable donations. Under the False Claims Act, a health care provider can be liable for submitting a false claim for reimbursement, i.e. services not actually rendered, services not medically necessary, inflated costs, or higher reimbursement levels than service codes provide. In addition, companies and medical device makers are prevented from paying inducements to companies or doctors to generate patient referrals, drug or device prescriptions or medical services.

Medline denies liability and contends there were no allegations that its conduct financially harmed its customers or that government programs were charged a higher rate for its products.

The False Claims Act permits a person with knowledge of fraud against the United States Government, referred to as the “qui tam plaintiff,” to file a lawsuit on behalf of the Government against the person or business that committed the fraud. If the action is successful, the qui tam plaintiff receives a percentage of the recovery.

Find more information on the case here.

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From → Health Law