Whistleblowing firm Ven-A-Care has recovered billions for taxpayers by suing companies that overcharge the government -- and also has made hundreds of millions for itself.Ven-A-Care, a small company in Key West, Fla., is fighting a crusade against drug companies that overcharge the government. And since waging the war back in 1994, it has recovered more than $2 billion for state and federal governments -- and won roughly $380 million for itself in the process.

Its latest victory hails from Texas, where Ven-A-Care won a $170 million jury verdict against generic-drug maker Actavis earlier this week, the Am Law Litigation Daily reports. The Texas attorney general's office joined Ven-A-Care in the case, which accuses Actavis of overcharging Medicaid for drugs.

First, some background: Pharmacies and other drug providers purchase medicines from drug companies and then distribute them as needed to Medicaid recipients. Medicaid then reimburses the pharmacies for the cost of the drugs, plus a markup to cover the cost of distributing those drugs. (Medicare works the same way.)

But the four Ven-A-Care partners noticed a discrepancy: Some drug companies routinely charge pharmacies one price for a drug, but then tell Medicaid and Medicare that the price was much higher. When the government "reimburses" the pharmacy, the pharmacy makes a windfall profit -- presumably giving it an incentive to buy more drugs from those companies. Essentially, drug companies using this scam use tax dollars to try to bribe pharmacies into buying more of their drugs.

Padding Prices

How big of a markup? Often, a factor of 10 or more. Ven-A-Care lore is the partners were spurred to action by receiving a reimbursement check reflecting a price of almost $500 when it had paid about $50. According to previous lawsuits from the company, as reported by the Los Angeles Times, MediCal was charged $58.37 for a drug that pharmacies had purchased for $6.29, and it was billed $70.30 for a drug that pharmacies had bought for $3.07.

Ven-A-Care has settled at least 18 overcharging suits since 2000, and California alone has recovered $95 million from these types of frauds exposed by the company, the Los Angeles Times notes.

One key reason that Ven-A-Care can afford to do what it does is because of a law that lets people sue on behalf of the government, if they're aware that the government is being ripped off, and win a percentage of whatever damages they recover. If the government wishes, it can participate in the case too, which cuts down on the whistleblowers' awards but also reduces their litigation costs. Unsurprisingly, the overcharging drug companies and their attorneys don't like Ven-A-Care or the law that lets them sue on behalf of the government.

The L.A. Times quotes opponents as arguing that:
  • Ven-A-Care is a professional whistleblower and not a pharmacy, so it shouldn't be able to sue.
  • The awards whistleblowers can reap are too large, and taxpayers should be getting more of the money.
  • Federal participation in these cases is unfair because it could lead to criminal convictions and banishment from Medicaid and Medicare.
Whistleblowing Is OK -- Until You Get Too Good at It

To me, these arguments are nonsense. If a company is ripping off taxpayers, why would criminal convictions and banishment from taxpayer-funded programs be a bad thing? Sounds like justice to me.

Sure, Ven-A-Care has made good money for itself. But taxpayers get most of it, and without the whistleblowing, it's unlikely anything would be recovered. This is money well spent compared to giving illegal windfalls to pharmacies. And it's just offensive for the companies involved to say going after us for scamming the taxpayer is OK, but not if you do it too often or get too good at it. (I guess that's what "professional whistleblower" means.)

What amazes me is how many pharmacies must be taking the bribes gleefully. We need more Ven-A-Cares to reduce drug-price fraud, which is yet one more reason that U.S. health care costs are so high.

The idea of rewarding whistleblowers seems to be spreading. One of the big recent financial reforms has been setting up whistleblower awards for people who report securities crimes to the Securities and Exchange Commission, and the corporate defense bar is irate. Given Ven-A-Care's effectiveness, I hope its equivalents will soon emerge in the securities field.

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Jack

The only one way to save on your health insurance is to use insurance comparison sites.If you try to search google you will find only big promises, but nothing more ...I didn't believe it, but I tried and I saved more than 30%.That is possible because once people register, they receive free quotes from many insurance companies, so they are able to compare and to save money.

The site I used is:

---CompareHealthInsurances.Info---

January 12 2012 at 5:02 AM Report abuse rate up rate down Reply
Levin

False Claims Act covers many types of fraudulent activity against the federal government, it does not apply to tax fraud. The Tax Relief and Health Care Act of 2006 amended the Internal Revenue Code to provide financial rewards for individuals to report tax fraud just like the False Claims Act promotes the disclosure of fraud against the government by its contractors.
http://www.law29.com/pages/practice-areas/qui-tam-whistleblower-cases.php

September 27 2011 at 5:16 PM Report abuse rate up rate down Reply
blah

Here is the scenario in a Dr's office...A non-English speaking digit comes in & presents a Unison Advantage card: this is a Medicare benefit/ I thought Medicare was for the elderly and disabled? Since when did not being able to speak English in America become a disability? Reason #1 why our Medicare is going under, giving it to people who don't need it.
Then, thru the interpreter that has to accompany him because he can't understand our language.. this digit proceeds to complain about his "insurance" to the person that is paying for it thru their hard earned taxes! Oh yeah, and that interpreter..the Dr's are responsible for his fee not the patient. It used to be when people immigrated to America, they brought skills with them and used these skills to support themselves & their families. Now, the immigrants are coming over and sitting on their laurels, collecting the benefits we are working for. This is also fraud and it needs to stop! America can not be "BIG BROTHER" anymore. I was raised and raised my kids that charity begins @ home..

February 06 2011 at 8:25 AM Report abuse rate up rate down Reply
PoliticalPost

Great work by Ven-A-Care but that only tip of iceberg that we see. There is so much more fraud going out their by suppliers of medical equipment and accessories. If only these loop holes closed we will begin to see cost of healthcare go down.

February 04 2011 at 5:15 PM Report abuse +1 rate up rate down Reply
djparker

Isn't it about time the perpetrators of fraud on the Government, at any level, be prosecuted to the full extent of the law? These so called "white collar" criminals need to spend time in the "pokey" with Bubba. That would bring their fraudently ways to a stop.

February 04 2011 at 5:12 PM Report abuse +3 rate up rate down Reply
dwuzze

Just one more PUBLIC benefit from Obamacare and the Dodd-Frank finance reforms.. Good work fellas

February 04 2011 at 11:59 AM Report abuse +1 rate up rate down Reply
DUTCHBASTARD

JUST ANOTHER EXAMPLE OF RACKETEERING! OXYGEN GENERATORS, GOVT PAYS $400 A MONTH..MORE THAN $4000 A YEAR...ACTUAL COST OF OXYGEN GENERATOR..$350 BUCKS...MILLIONS MAYBE BILLIONS WASTED!! ELECTRIC CHAIRS...MOVE AROUND FOR IN HOUSE USE ONLY..SKOOTERS...GOVT COST 12 - 15 THOUSAND DOLLARS EACH!! ACTUAL COST LESS THAN 2 THOUSAND..NOW THEY WILL BE PAYING RENT FOR FIRST YEAR BEFORE ACTUALLY PURCHASING AT EXORBITANT FEE..MORE BILLIONS WASTED!! ITS RAMPANT IN THE GOVT SYSTEM..WASTE AND OVER CHARGING..INCOMPETENCE HIDES A MULTITUDE OF SINS!! THERE WAS A REASON WHY FBI AGENTS USED TO BE REQUIRED TO HAVE A CPA OR LAW DEGREE!
DOUBLE THE NEEDED FBI AGENTS, RECOVER THIS MONEY..REDUCE HEALTH CARE COSTS BY OVER 50%...

February 04 2011 at 11:38 AM Report abuse +1 rate up rate down Reply
conceptsiw

Now every State needs to take this Medicaid fraud to new levels. There are 12 - 20 million invaders on our soil who we call illegal immigrants. These invaders, through the use of falsified documents and through the offices of people who just conveniently look the other way, are accessing out taxpayer funded Medicaid and Medicare system. If they are not doing that then they are just registering as indigents and still accessing free medical care without paying a dime. This is just wrong and it is bankrupting hospitals and our Medicaid / Medicare system. It must be stopped. I am not saying refuse medical care. I am saying require some minimum payment and while they are being cared for discover their immigration status and if illegal ship them home and bill their home country for the costs.

February 04 2011 at 11:04 AM Report abuse +2 rate up rate down Reply
2 replies to conceptsiw's comment
DUTCHBASTARD

ITS NOT THE VICTIMS THAT SHOULD BE BLAMED! ITS THE HEALTH CARE PROVIDERS, THE DRUG COMPANIES, MEDICAL SUPPLY CORPORATIONS THAT ARE STEALING AND DEFRAUDING THE SYSTEM BLIND!! AND THE GOVT APPROVES THE FRAUD!!

February 04 2011 at 11:41 AM Report abuse rate up rate down Reply
almagayle50

The states will never get rid of the fraud as long as they benefit from it. I was absolutely clueless in NC as to why they were not acting swiftly and forcefully on the medicaid fraud I had documented. Then when the budget debates started last year, one of our state legislators was screaming in the floor that we couldn't cut Medicaid because we get $4 for every $1 the state spends. Why would NC stop fraud when they are paid so well. Even our HHS secretary has publicly stated that the problem is with the provider agencies, but he has not moved to ban any of the agencies I reported from doing future medicaid business. The people who head these provider agencies have acquired second houses at the beach to avoid having contact with their clients. Unbelievable.

February 04 2011 at 1:44 PM Report abuse +1 rate up rate down Reply
almagayle50

Whistleblowing doesn't work in NC. I've documented and submitted claims for years about my son's medicaid services. To date the state has only proceeded against drug companies and medical supplies companies. The medicaid fraud that is in case management and provider agencies is left alone. The reasoning is that these companies serve alot of people and can't be put out of business. In actuality they bill for alot of people but the services never come. Handicapped children usually end up with the mother and when she loses her job because respite doesn't show up and she can't look for a new job when there's no care for her child, then both mother and child spiral down. If the government isn't going to ensure this help is available, they need to be tougher on fathers in family court.

February 04 2011 at 10:16 AM Report abuse +1 rate up rate down Reply
1 reply to almagayle50's comment
DUTCHBASTARD

THE POLITICIANS AND THE POWERS THAT BE ARE IN COLLUSION WITH THE FRAUD!! THERE ALL CRIMINALS!! BEEF UP THE FBI..THE MORTGAGE FRAUD IS ONLY THE BEGINNING!!

February 04 2011 at 11:42 AM Report abuse +1 rate up rate down Reply