PBM Qui Tam Lawsuits

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Pharmacy Benefit Managers (“PBMs”) have positioned themselves as the “middlemen” in the healthcare industry and have exerted significant influence over how Americans receive their prescription medications.  Yet at the same time, PBMs have extraordinarily complex and mercurial business models, with multiple revenue streams, that often create conflicts with one another, and with their stated goal of saving the healthcare system money.  By owning their own pharmacies (including chain pharmacies, mail-order pharmacies, and specialty pharmacies), PBMs often have perverse financial incentives when it comes to drug prices and billing to governmental healthcare payors, such as Medicare and Medicaid.  As direct competitors of the pharmacies in their networks, PBMs routinely treat their pharmacies different than non-PBM owned/affiliated pharmacies, but not always in a way that benefits the ultimate payors.  Finally, as middlemen, PBMs have become increasingly scrutinized in how they “pass along” to the government, the claims that are submitted by independent providers, and the representations made in the process.

With that backdrop, there has been a constant flow of qui tam lawsuits filed against PBMs.  Individuals reporting PBMs’ fraud may be compensated by the Government under the terms of the False Claims Act, which generally provides rewards of between 15 – 30% to relators (i.e., whistleblowers) who bring a qui tam lawsuit that helps recover government money lost due to fraud.

What is the False Claims Act?

The False Claims Act (“FCA”) is America’s first whistleblower law and one of the strongest whistleblower laws in the United States.  The FCA is a powerful tool frequently used by the Federal Government to prosecute stakeholders (including PBMs) in the healthcare industry for the alleged submission of fraudulent claims to government payors, such as Medicare and Medicaid.  In sum, the FCA imposes liability on any person who submits a claim to the federal government that he or she knows (or should know) is false.  Also, it imposes liability upon any person who knowingly makes, uses or causes to be made a false record or statement that is material to a false or fraudulent claim.  Violation of FCA can bring both civil and criminal penalties to the individuals involved in the violation.  

What is a Qui Tam Lawsuit?

The FCA gives whistleblowers, also known as “qui tam relators,” the opportunity to bring suits, in the name of the federal government, against corporations or individuals that knowingly submit false or fraudulent claims to the federal government, or cause such claims to be submitted.  These suits, known as qui tam lawsuits, are filed under seal, which provides the federal government with an opportunity to investigate the qui tam relator’s claims and decide whether to intervene in the action.  In a qui tam lawsuit, while the Government is given the opportunity to take over the prosecution of that lawsuit against the accused parties, the individual that files the lawsuit may receive anywhere from 15% to 30% of the recovered damages if the suit results in a settlement or verdict in the Government’s favor.  The FCA is a complex statute that contains numerous requirements and statutory bars.  For example, in some instances, relators are barred from filing or pursuing qui tam actions, when the allegations set forth in the qui tam are based upon information that had already been disclosed to the public at the time the qui tam was filed. This bar is commonly referred to as the “public disclosure bar.”

Types of PBMs’ Fraud include, without limitation, the following:

  • Increasing prescription drug costs by failing to inform the government about discounts that it kept for itself.
  • Fraudulent reporting of manufacturer rebates that it kept for itself or its Rebate Aggregators.
  • Switching prescriptions to receive rebates or higher reimbursement amount.
  • Illegal rebate and discount agreements with drug manufacturers.
  • Offering kickbacks to payors or healthcare providers.
  • Billing for inflated charges or inflated usual and customary prices.
  • Charging Medicare/Medicaid patients a higher rate than others for the same prescription.
  • Making inappropriate formulary decisions.
  • Billing for drugs not actually provided.

How Frier Levitt Can Help

Frier Levitt represents private citizens and healthcare providers in qui tam lawsuits.  Whether you are an individual with knowledge of fraudulent claims submission practices against a federal government program, or a healthcare provider that has been forced to defend against accusations of liability under the False Claims Act, you need an attorney to represent you that understands the healthcare industry, the practice of healthcare, the applicable healthcare laws and regulations, and how to best represent your interests in a qui tam lawsuit.  If you believe you have witnessed improper or fraudulent claims submission activities to a federal government program, or if you have been accused of improper claims submission activities in violation of the False Claims Act, contact Frier Levitt today