A South Texas hospital will pay $27.5 million to the U.S. Justice department as part of a settlement of claims that the hospital, South Texas Health Systems, bilked money from the US government. The allegations include charges that the hospital entered into a kick-back scheme with various doctors. The plan was that the hospital would provide indirect payments to doctors who referred patients to the hospital chain. This was a qui tam lawsuit. It started with a report by a former South Texas Health Systems employee, Bruce Moilan, in 2005. Mr. Moilan will receive $5.5 million as part of the settlement. See the San Antonio Express News story.
“Qui tam” lawsuits refer to claims based on the False Claims Act. Under the False Claims Act, a person who reports fraud, waste or abuse is paid some monies if the report leads to a recovery of monies owed to the federal government. If someone bilks the federal government, as South Texas Health Systems allegedly did, then private citizens who assist the government in recovery of that money receive a share of the recovery. The False Claims Act was first passed soon after the Civil War. It was passed in response to the massive fraud committed against the federal government in purchasing supplies and equipment for the war effort. Today, medicare and medicaid fraud is a large part of the qui tam lawsuits being filed.