TYPICAL CLAIMS UNDER THE CALIFORNIA FALSE CLAIMS ACT

This year the State of California will expend over One Hundred Billion Dollars ($100,000,000,000.00), through all of its agencies and offices.

Virtually any situation within which “the Government” (which includes the State of California, or a County, City, Town or Village) is paying someone money, or collecting money, can give rise to a claim under the State’s False Claims Act.

Some of the most typical types of claims are as follows:

Sales Fraud: Where an individual or private company contracts to sell goods or services to the Government, and defrauds the Government by:

Charging the Government for goods or services which were not provided.

Overcharging the Government for more goods or services than were actually provided.

Charging the State for defective goods, or goods other than what was required under a contract with the Government.

Selling the Government used equipment as new equipment.

Presenting broken or untested equipment as operational and tested.

Providing a false certification that a product meets specifications required by the Government.

Providing a false certification that products being supplied are being subjected to testing procedures in accord with Government requirements, when such testing had not been performed.

Providing a false certification that minority or female contractors are providing services, or are the true principals of the company or companies providing services, when they are not.

Submitting false service records or samples to show better than actual performance.

Mischarging the Government for labor or services expended on other matters.

Billing the Government for non-contract related activities.

Billing for services which were not reasonable or necessary, in frequency, duration, or at all.

Upcoding Employee Work – Billing the Government at rates for higher qualified or certified employees, for work that was actually performed by a lesser qualified or non-certified employee.

Upcoding Services/Goods - Billing the Government for a more expensive service or product than the one provided.

Medi-Cal or Medicare Fraud: Providers of medical services, medical supplies and/or medical equipment often engage in a wide variety of fraudulent practices. Some of the most common fraudulent practices include, but are not limited to, the following:

Unwarranted Billings - Billing for services which were not reasonable or necessary, in frequency, duration, or at all. Billing for medically unnecessary tests. Automatically running a lab test whenever the results of some other test fall within a certain range, even though the second test was not specifically requested.

Double Billing - Charging more than once for the same goods or service.

Upcoding Diagnoses - Inflating bills by using diagnosis billing codes that suggest a more expensive illness or treatment.

Upcoding Employee Work - Billing at doctor rates for work that was actually performed by a nurse or resident intern.

Upcoding Services/Goods - Billing for a more highly reimbursed service or product than the one provided.

Signature Fraud - Forging physician’s signatures when such signatures are required for reimbursement from Medi-Cal or Medicare.

Unapproved Billing - Filing claims for reimbursement of expenses and for services while knowing that such reimbursements and services were not covered by Medi-Cal or Medicare. Billing for unlicensed or unapproved drugs or devices.

Phantom Billing - Billing for tests, goods and services that were never delivered or rendered.

Phantom Labor - Charging for employees that were not actually on the job, or billing for made-up hours to maximize reimbursements.

Bundling - Billing more for a panel of tests when a single test was asked for.

Unbundling - Using multiple billing codes instead of one billing code for a drug panel test in order to increase remuneration.

Concealment - Failing to disclose, or taking affirmative acts to conceal billing errors which resulted in overpayment for services or goods provided.

Equipment Billing Fraud - Billing for the use of new equipment, or premium equipment, when either used or inferior equipment is provided.

Billing for Brand - Billing for brand name drugs when generic drugs are actually provided.

Shorting - Charging for full quantities of prescriptions, when actually dispensing partial or short prescriptions.

Kickback Fraud - Prescribing a medicine or recommending a type of treatment or diagnosis regimen in order to win kickbacks from hospitals, labs or pharmaceutical companies.

Inflated Management Fees - Artificially inflating management fees in situations where the government pays management fees in connection with any provision of medical services, or in the conduct of government-sponsored medical research.

Shelling - Setting up a shell company, or manipulating the mode or receiving payments for the purpose of inflating the rate of reimbursement to be received.

Marketing The Spread - Where the manufacturer of a drug or medical device provides a false inflated price for their product to the government, and then actually sells their product at a lower price to hospitals, clinics and/or doctors.

This enables the hospitals, clinics and doctors to pocket the difference (known as “the spread”) between what the manufacturer charged them for the sale of the drug or device, and the higher amount which the government reimbursed the hospital, clinic or doctor for the drug or device.

Manufacturers can also defraud the government and market the spread, by providing rebates or substantial “free samples” of their drug or product to providers of medical services, thereby reducing the net price which the medical provider paid for the drugs or device, again enabling them to keep the difference between what they paid, and the amount of the reimbursement which they receive from Medi-Cal or Medicare.

Procurement Fraud: Where an individual or private company provides false information or data to the Government in applying for any grant, to obtain a contract with, or to secure funding from, the Government. Common examples include: providing false information to obtain a grant from the State, or setting up a shell company to bid on a Government contract which the true principals could not otherwise bid upon.

Misappropriation: When an individual or private company uses funds received from the Government for any purposes other than the specific purpose for which such funds had been given to them by the Government.

Noncompliance with Grant or Funding Guidelines: When an individual or business fails to comply with the restrictions which govern the permitted use, method and manner of expending monies they have received from the Government.

Evasion: When an individual or business provides false information or data to the Government to reduce or eliminate any required program contribution or the payment of any sums which might otherwise be due and owing to the State.

When an individual or business fails to disclose material information or data to the Government to reduce or eliminate any required program contribution or the payment of any sums which might otherwise be due and owing to the Government.

Retention of Overpayments: When an individual or business receives an overpayment of Government funds, and the individual or business fails to report the overpayment or excess to the Government.

These examples are, by no means, all inclusive, but are merely provided as illustrative of some of the common frauds which may serve as the basis for filing a claim under the California False Claims Act.

 To read about actual cases, go to the NEWS section of this web site.