Minneapolis-based law firm Foley & Mansfield has expanded into Grand Rapids with an experienced team of qui tam — whistleblower laws — health care and employment law experts it hired away from the Frank Haron Wiener firm in Troy.
Joining the firm as partners are David L. Haron and Melinda A. Balian, with attorneys Mercedes V. Dordeski and Maro E. Bush also coming from Frank Haron Wiener with expertise in health care and qui tam. The group will be anchored in the Foley & Mansfield office in Ferndale but working out of the new office in Grand Rapids Township at 3280 East Beltline Court NE.
Haron will lead Foley & Mansfield’s new qui tam practice. Nationally recognized for its work with False Claims Act whistleblowers, his team has recovered hundreds of millions of dollars on behalf of the government for fraud and abuse. The practice group currently represents individuals across the country in a variety of fraud cases including Medicare and Medicaid fraud, governmental contracting fraud, tax fraud, mortgage fraud and SEC fraud.
The firm’s health care law practice, led by Balian, represents physicians, health care professionals, home health agencies and other health care entities in relating to health law and regulations, including whistleblower actions, contracts, licensing and employment-related matters.
Foley & Mansfield has approximately 135 attorneys; its other offices are in Chicago, Los Angeles, Oakland, Miami, New York, St. Louis and Seattle.
Haron said March 5 was the 150th anniversary of what is called the Lincoln Law — the original False Claims Act. The body of law is known within the profession as qui tam, part of a Latin phrase that means “one who sues on behalf of the king as well as himself,” under English common law.
“Lincoln signed the first federal False Claims Act,” said Haron, explaining that it provides a reward to private individuals who prove in court that a fraud was committed against the government.
“In 1863, it was (military) contractors defrauding the Union” in its efforts to defeat the Confederacy in the Civil War, he said, and today it is defense contractors defrauding the Department of Defense — “we have two wars going on,” he noted.
However, today it also prominently involves medical care providers who are defrauding Medicare and Medicaid, including doctors, hospitals, clinics and other health care professionals. But anyone in a position to obtain federal funds fraudulently is subject to the law.
Any person with knowledge of a fraud can initiate a civil lawsuit against that person or company on behalf of the government, Haron said, and 29 states and some cities have similar laws to protect the state and local governments.
Once a suit is filed, the government launches an investigation of the allegations and may or may not choose to intervene, before it goes to trial. If the suit against the fraudster is successful, the individual whistleblower, or “relator” in legal parlance, who brought the case is rewarded with up to 30 percent of the amount collected. The federal government can collect triple damages of the amount stolen by fraud, and the fraudster can be fined and must pay the legal costs of the relator.
As of May, Haron will have been involved in qui tam cases for 20 years, “and in those suits, helped the government recover almost 300 million dollars,” he said.
According to the Taxpayers Against Fraud Educational Fund (taf.org), the 150-year-old False Claims Act is “more robust than ever and is spawning new whistleblower laws modeled after itself.”
"The core idea behind the False Claims Act is both simple and brilliant," notes Kristin Amerling, president of Taxpayers Against Fraud, an organization dedicated to popularizing the law. "If you incentivize integrity by paying whistleblowers who come forward, you are likely to get more integrity, better information and less fraud. That's not only good for taxpayers, that’s good for American business, as well."
The act was passed during the Civil War to stop price-gouging and the selling of defective munitions and goods to the Union Army, but it was several years before the law actually was published in legal texts and then long ignored. The law was gutted at the urging of defense contractors at the start of World War II.
As defense spending shot up in the Cold War, however, the act was updated and signed into law by President Ronald Reagan in 1986. Since then, the FCA has yielded more than $35 billion in federal civil recoveries, and another $15 billion in associated criminal fines and state recoveries, according to TAF.
New whistleblower laws modeled on the False Claims Act have been passed that cover securities trading, commodities trading and the Internal Revenue Service.
“The need for incentivized whistleblower programs is greater than ever," notes Amerling. "The securities and commodities whistleblower programs established in the wake of (the stock market decline) will help prevent financial frauds against consumers in the future. In addition, the IRS whistleblower program serves as an important tool for addressing significant tax frauds. As we face rising debt and sequestration, it is worth remembering that the 'tax gap’ — the difference between taxes required by law and those actually paid — is estimated at $400 billion.”
Amerling said cases initiated by whistleblowers and their private lawyers now account for 80 percent of False Claims Act recoveries. Last year, federal and state False Claims Acts collected more than $9 billion in civil recoveries and associated criminal fines, while the IRS reported more than 10,000 whistleblower cases now under investigation, according to TAF. The organization also claims that thousands of “high-quality whistleblower tips are flooding in” related to securities and commodities trading, and the first awards are in the process of being made.
Haron said many individuals who initiate a qui tam case seek legal representation outside of their region because they are whistleblowers and worried about all the possible interconnected relationships in that community. He said he was retained a couple of years ago to represent a qui tam relator in Dallas who was suing the city regarding fraudulent ambulance billings and was reluctant to hire a local attorney to represent him.
“He got about as far away as he could, even calling a Yankee to handle a case down in Dallas,” said Haron, who won the case.
Balian said another reason Foley & Mansfield has expanded into West Michigan is that, despite the large medical community here, there doesn’t seem to be a large number of attorneys here who specialize in those areas of law. She said there is a wide range of situations involving health care professionals, ranging from HIPPA patient privacy violations to employment contracts.
Balian said employment contracts are still a relatively new phenomenon among physicians because most new doctors traditionally went right into private practice, and it is only recently that hospital systems began their strategy of buying physician groups and offering full-time employment contracts to individual physicians.
In addition to the False Claims Act, two other well-known federal laws pertaining to the health care industry are the Anti-Kickback Statute and the Physician Self-Referral Law, also known as the Stark law, originally sponsored by U.S. Congressman Pete Stark of California.
According to the U.S. Department of Health & Human Services, the AKS is a criminal law that prohibits the knowing and willful payment of kickbacks in return for patient referrals or the generation of business involving any item or service payable by the federal government for Medicare or Medicaid patients.
“As a physician, you are an attractive target for kickback schemes because you can be a source of referrals for fellow physicians or other health care providers and suppliers,” states the website of the Office of Inspector General at HHS. “You decide what drugs your patients use, which specialists they see, and what health care services and supplies they receive.”
The Physician Self-Referral Law prohibits physicians from referring Medicare or Medicaid patients to health care entities in which the physician or an immediate family member has a financial interest (with some exceptions). The Stark law was originally designed to prevent overutilization of medical services, according to Balian.