U.S. Government Joins Michigan Medical Whistleblowers in Qui Tam Action

In January 2012, The United States government filed a suit in the United States District Court for the Eastern District of Michigan, seeking $150 million in damages under the Federal False Claims Act, alleging that Universal Imaging, Inc. paid kickbacks to doctors, and essentially operated as a for-profit corporation while required to be a non-profit. A $1.56 million settlement with many of the involved physicians was also announced in the same press release.

What is especially interesting about this case is that it was initiated by whistleblowers Richard and Kim Chesbrough. Dr. Chesbrough is a radiologist, and Mrs. Chesbrough is a former employee of Universal Imaging. The government lauded the Chesbrough’s vigilance and initiative in bringing the information to light that led to the suit.

This is not the only time the Chesbroughs have ‘blown the whistle’. While the result of the above case remains to be decided, the United States Sixth Circuit Court of Appeals recently dismissed a False Claims suit brought by the Chesbroughs against the Visiting Physicians Association (“VPA”), a radiology consulting company that interprets x-rays and other images Chesbrough v. VPA, P.C., 655 F.3d 461 (6th Cir. 2011). The Chesbroughs alleged that VPA was billing Medicare for bad radiology studies, which were discovered when they contracted with VPA to interpret images taken by Dr. Chesbrough.

The Court held that, even though the Defendant’s work may have been shoddy, Medicare does not require work be up to industry standards as a precondition of payment. Additionally, the Court noted that tests performed by VPA, which had no diagnostic value, could be fraudulent if actually submitted to the government–but the Chesbroughs could not identify any actual claims submitted by VPA. The upshot of the Court’s decision for future claims seems to be that qui tam relators, like the Chesbroughs, will have to identify specific claims which were actually filed, or possibly be able to make a very strong inference based on personal knowledge, in order for these claims to proceed.

This time perhaps the Chesbroughs will be successful, alongside the U.S. Government in the new case against Universal Imaging. Win or lose, the government certainly relies on vigilant citizens like the Chesbroughs–and indeed all of us–to make it aware of potential abuses, and rewards them if the claim succeeds.

Amanda Narvaes

Amanda P. Narvaes, a Partner, joined Drew Cooper & Anding in 2011. Ms. Narvaes is a civil litigator in the areas of complex commercial litigation, lender liability, copyright litigation, and consumer protection. She graduated cum laude from Carleton College with a bachelor’s degree in history. She earned her law degree at WMU-Thomas M. Cooley Law School, graduating magna cum laude, and received Cooley’s Distinguished Student Award. Ms. Narvaes represents clients before Michigan trial courts across the state and in the Michigan Court of Appeals, and before the United States District Courts for the Western and Eastern District of Michigan. Ms. Narvaes has been a guest speaker in Ron Foster’s “Litigation for Paralegals” class. Ms. Narvaes discusses differences between Federal civil discovery rules and Michigan civil discovery rules.