A qui tam whistleblower lawsuit filed by Veronica N. Arven and the estate of Theodore Arven III in 2019 alleged that the Florida Birth-Related Neurological Injury Compensation Plan and its administrator the Florida Birth-Related Neurological Injury Compensation Association (collectively referred to as NICA) violated the False Claims Act. NICA will pay $51 million to resolve the allegations in a settlement, and the whistleblowers will receive a $12,750,000 award.
The qui tam provisions of the False Claims Act enable private citizens to file lawsuits on behalf of the government if they know of an individual or company defrauding the government. Qui tam whistleblowers are eligible to receive between 15 and 30% of the government’s recovery, if one occurs.
According to the settlement agreement, “[i]n 1988, the Florida Legislature enacted legislation to create NICA, a not-for-profit entity, to stabilize and reduce malpractice insurance premiums for obstetrician medical services in Florida.” The Florida Birth-Related Neurological Injury Compensation Plan is administered by the Association and “provides compensation, irrespective of fault, for certain birth-related neurological injuries.”
Through the plan, “qualified claimants” can get reimbursed for “medically necessary and reasonable” expenses that stem from “birth-related neurological injuries subject to the terms and conditions of the Act, applicable regulations, and guidance documents.” The settlement agreement states that one source of funding for the plan is “participating and nonparticipating physicians and hospitals licensed in Florida.”
“Both federal and Florida Law general establish Medicaid as the payer of last resort—meaning, subject to various exceptions, Medicaid pays claims for covered health care services only after other responsible third parties have met their burden of costs,” the settlement agreement explains. NICA was established with the goal of reimbursing “[a]ctual expenses for medically necessary and reasonable’ health care items and services. NICA is not required to pay ‘[e]xpenses for items or services that the infant has received, or is entitled to receive, under the laws of any state or the Federal Government, except to the extent such exclusion may be prohibited by federal law.’”
The Whistleblower Lawsuit
The whistleblowers filed a qui tam lawsuit on April 25, 2019 in the U.S. District Court for the Southern District of Florida. They amended the lawsuit on September 9, 2019, and alleged that “NICA violated the FCA by (1) declaring itself as payer of last resort and causing its Plan participants to submit false claims to Medicaid, and (2) avoiding its obligations to repay Medicaid for Plan participants’ medical costs prior to acceptance into the Plan.”
The settlement agreement states that the U.S. “filed a notice informing the Court that it was not intervening in Relators’ case at that time” on January 30, 2020. However, “[b]ased on its review of the Civil Action and its investigation undertaken therefrom, the United States contends that it has certain civil claims against NICA arising from the following alleged conduct, which occurred from April 25, 2013 through August 30, 2021.”
The U.S. Department of Justice (DOJ) press release elucidates this point, stating: “Although the United States did not intervene in this case, it continued to investigate the whistleblowers’ allegations, provided substantial assistance to the whistleblowers in defending against a motion to dismiss, and negotiated the settlement announced today.”
Allegations Against NICA & the Settlement
The U.S. alleged that “NICA held itself out as the payer of last resort” instead of Medicaid, which is established in both federal and Florida laws. NICA “(i) submitted, or caused to be submitted, claims for payment to Medicaid, and (ii) avoided or decreased obligations for payment of money to Medicaid,” according to the settlement agreement.
Allegedly, NICA engaged in False Claims Act violations in a number of ways, including publishing “literature, instructional materials, and other documents, including the Benefits Handbook, that declared itself as payer of last resort.” According to the settlement agreement, NICA also “caused Plan participants’ parents or guardians to submit claims to Medicaid for payment before the Plan paid them and did not prevent Plan participants’ parents or guardians from submitting, and did not advise such parents or guardians not to submit, claims to Medicaid first.” Read the full list of allegations in the settlement agreement here.
The settlement agreement “is neither an admission of liability by NICA nor a concession by the United States that its claims are not well founded.” Additionally, “NICA denied the United States’ allegations” in one paragraph.
NICA will pay $51 million to the U.S. to resolve the allegations. NICA will also pay the whistleblowers’ counsel. The U.S. will pay the whistleblowers $12,750,000.00.
The Importance of Qui Tam Whistleblowers
This settlement — and plenty of other qui tam whistleblower cases — show how whistleblowers are critical to uncovering waste, fraud, and abuse, especially in the medical and health care industry. Fraudulent schemes can be particularly harmful to patients and erode trust in the medical system. In Fiscal Year 2021, qui tam whistleblowers helped the DOJ recover $1.6 billion in settlements. The DOJ highlighted health care fraud as “the leading source of the department’s False Claims Act settlements and judgments.”
Senator Chuck Grassley (R-IA), who has been consistently championed as the “patron saint” of whistleblowers, proposed amendments to the False Claims Act in 2021 that would strengthen protections for whistleblowers and clarify existing law. The amendment was widely supported by whistleblower organizations and advocates. However, WNN sources discovered that the pharmaceutical lobby intervened with the amendment’s passage. The National Whistleblower Center (NWC) is urging Congress to protect the False Claims Act: learn more here.
Read the DOJ press release here.
Read the settlement agreement here.