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False healthcare claims could be worth $4 billion in damages

When we think of fraud we often think of fraud and enforcement, we often think of federal laws and agencies. However, a new health care fraud whistleblower case that is making headlines in New York City is being pursued under state law. What does the case entail and how is state law working in this case?

The details of the case

GHI, the health insurance company that covers most of New York City's municipal workers, is accused of collecting more than $3 billion in premiums from customers while providing inadequate coverage in return including not providing proper coverage for expenses occurred at in-network hospitals, according to WNYC. If the plaintiffs are successful in their claim, GHI could owe $4 billion to 600,000 New York City employees, retirees and family members.

How it is being pursued

Prosecutors are pursuing the case under the New York False Claims Act. This law is similar to the federal law of the same name and allows for the investigation and prosecution of fraud using state resources.

While many claims associated with fraud use federal agencies like the Federal Trade Commission, the Securities and Exchange Commission or the Federal Bureau of Investigation, that level of scrutiny is not always necessary or appropriate. Because this case involves municipal employees in one state, the case is pursued under state law.

Valuable to whistleblowers

The law is applicable in qui tam cases in that private individuals who assist in prosecution may be entitled to receive part of the penalty the convicted party pays. Qui tam cases incentivize those with information about the case to come forward with potentially lucrative payouts.

In this case, the people paying for coverage from the insurance company could receive compensation if GHI is found guilty of violating the New York False Claims Act. The result of the case is to be determined by the courts, but it once again demonstrates the potential impact of a whistleblower's action at the state level.

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