Constantine Cannon Settles Whistleblower Case with Sharp Healthcare Center for Research
A whistleblower represented by Constantine Cannon, who exposed an alleged cycle of deceit at Sharp HealthCare, a regional hospital system in San Diego, has settled a False Claims Act lawsuit against the Sharp Healthcare Center for Research, Sharp’s clinical-trial research arm.
The whistleblower suit alleged that Sharp fraudulently billed government payers, like Medicare and Medicaid (known as Medi-Cal in California), in violation of rules that prohibit billing the government when other payers will pay for a patient’s care. The suit also alleged that Sharp provided illegal kickbacks to prospective trial sponsors—primarily pharmaceutical companies and medical-device manufacturers—by undervaluing the actual costs Sharp incurred in managing clinical trials. Sharp allegedly schemed to host an ever-greater number of clinical trials by illegally reducing trial sponsors’ expenses, doing so, according to the whistleblower’s complaint, to pump up its profits and prestige.
Constantine Cannon’s whistleblower client began working at Sharp Healthcare in March 2016. The whistleblower was tasked with reviewing clinical-trial contracts and tracking Sharp’s compliance with their requirements. As one of the largest not-for-profit integrated hospital systems in the region, Sharp administered hundreds of clinical trials within its four acute-care hospitals, three specialty hospitals, and two affiliated medical groups.
As the lawsuit alleged, the whistleblower quickly discovered that Sharp was improperly billing primary insurers, including Medicare and Medicaid, when patients were injured during clinical trials, rather than the trial sponsors legally obligated to cover injury-related expenses. The whistleblower also allegedly discovered that Sharp cultivated an illegal kickback scheme to entice prospective trial sponsors to host clinical trials at Sharp by regularly undervaluing Sharp’s costs involved in managing the trials. By offering below-market value incentives and billing government and commercial insurers for injuries, the lawsuit alleged that Sharp sought to increase its attractiveness to trial sponsors. Sharp’s alleged purpose was to burnish the organization’s reputation and offer a lucrative stream of income for Sharp-affiliated physicians involved in clinical trials.
“Like many whistleblowers, our client alleged she discovered fraudulent behavior at work, and immediately told the company,” said Ari Yampolsky of Constantine Cannon. “In this case, what first appeared to be negligent oversight was, our client contends, a calculated scheme to stay in the good graces of big pharma.”
Eric Havian of Constantine Cannon said: “Whistleblowers are the brave face of transparency and government oversight. Without them, and the laws in place to protect them, unscrupulous behavior in the healthcare industry would run amok at the taxpayers’ expense.”
The False Claims Act is one of the government’s most effective weapons in combating fraud and waste of government funds by private companies that contract with the government. The law allows whistleblowers to sue companies that are defrauding the government and receive as an award a percentage of any recovery. There is a corollary California state law that allows whistleblowers to report fraud against private insurers and receive rewards. Healthcare fraud alone costs the U.S. billions of dollars; since fraud can be difficult to discern without access to inside information, well-placed whistleblowers are necessary to provide information the government might otherwise lack to help stop these practices.
Sharp denies the lawsuit’s allegations and denies that it violated the False Claims Act.