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$111 Million Award Against BlueWave Healthcare in False Claims Act Case

July 23, 2018

A South Carolina court entered a $111 million False Claims Act award to the government and whistleblower against BlueWave Healthcare Consultants.  The defendants are a former medical testing lab head and two marketing consultants. The Department of Justice intervened in the whistleblower suit.  The complaint alleged that the defendants paid kickbacks to induce physicians to order medically unnecessary tests. Medicare and Tricare ultimately paid for those tests.

It is unusual for an FCA case to get to trial, let alone verdict and judgment, as this one did. It is also unusual for DOJ to prosecute not only the company, but also responsible individuals, but here it did. The case is instructive for whistleblowers and their lawyers in several ways.

DOJ Put its Money Where its Mouth is In False Claims Act Lab Award

First, DOJ “put its money where its mouth is” by prosecuting the BlueWave marketing individuals. DOJ had promised to focus more on individuals in the so-called Yates Memo and here it followed through, prosecuting not just BlueWave, but the responsible individuals. The companies had earlier settled, but DOJ nevertheless pressed on to hold the individuals accountable.

The jury’s liability finding and court’s award of substantial damages against the individual defendants is instructive when deciding whom to name as defendants.

Textbook Example of False Claims Act Treble Damages and Civil Penalties In Lab Award

Second, our clients often ask us how the treble damages and civil penalties provisions of the False Claim Act apply. Well, this case is a textbook example. The jury determines whether the defendants are liable. If liable, it determines the single damages sustained by the government and the number of false claims submitted.

It is up to the judge to treble the damages, the amount of civil penalties, and whether the defendant is entitled to any “set-offs.” See court order. The BlueWave Penalties Order is instructive.  It provides a road map on how to navigate the defenses and arguments defendants raise.  It also illustrates the correct application of the law in cases such as these.

Illustrates Importance of Filing in the Right District

Third, our clients often ask us where we should file their case. We and they have choices about where to file: since the False Claims Act provides for nationwide jurisdiction and venue, we could file it in virtually any district court in the United States.

Many factors go into our analysis and recommendation of where to file a given case, including where our client is located, where the defendants are located, where the fraud occurred (i.e. is it local or nationwide), the resources, expertise and track record of the local U.S. Attorney’s Office that would be handling the case, and the False Claims Act law that applies in the Circuit where the district court is located.

While South Carolina, where the BlueWave case was filed and prosecuted, is not one of the better-known districts for False Claims Act litigation, we have found that such districts can do just as good as job as their higher-profile counterparts.

Conclusion

It is always exciting to see “the good guys” win! Every win is a win for the taxpayers, not just in money recovered, but future fraud prevented or deterred. Every win strengthen DOJ’s hand in enforcing the FCA and obtaining settlements. And last, but not least, every win encourages whistleblowers to keep coming forward!

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