The Federal District Court for the District of Columbia recently ruled that a former director of Medicaid audits in Washington D.C. can proceed with retaliation claims alleging he was fired for trying to stop his former bosses from covering up $100 million in improper payments to medical providers.

Paul Hicks was hired by District of Columbia’s Office of the Inspector General (“OIG”) as an auditor in October 2007.  In October 2013, while working on a “Medicaid State Plan/Program Integrity” audit, Hicks reported $100 million in Medicaid payments that he claimed  should not have been paid to medical providers in light of allegations of fraud by those providers.  Instead, the payments should have been suspended under program rules.  Hicks explained to his supervisor and others that the “suspended payments” finding ought to be included in the audit report.  Hicks claims that his supervisor tried to suppress the “suspended payments” finding because he believed that Hicks’s recommendation would have negative implications for OIG’s Medicaid Fraud Unit.  Hicks’s supervisor eventually cancelled the audit reports completely and subsequently terminated Hicks’s employment.

Hicks sued under both the federal and Washington, D.C., False Claims Acts after he was fired from the OIG, alleging that the District had submitted reverse-false claims by knowingly retaining overpayments of $100 million.   Hicks also invoked the statutes’ retaliation provisions, which prohibit retaliation against a person who blows the whistle on this type of fraud.

Ordinarily, under the False Claims Act, the government, or a party suing on its behalf, may recover for false claims to be made by the defendant to secure a payment by the government.  The court explained: “However, in a reverse false claim action . . . the defendant’s action does not result in improper payment by the government to the defendant, but instead results in no payment to the government when a payment is obligated.  Specifically, the Federal False Claims Act establishes liability for any person who “knowingly makes, use, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.”

The District filed a motion to dismiss, arguing that Hicks didn’t allege that a fraudulent claim for payment was submitted to the Federal Government or to the District.  The court disagreed, concluding that the District had an “apparently incorrect understanding of Plaintiff’s claims,” which are “based solely on the possibility of a reverse false claim violation.”  The court ruled that Hicks had properly alleged that he was punished for trying to uncover actions taken to avoid payment of the obligations owed to the Government.  The case now proceeds to discovery.

The case is: Hicks v. District of Columbia, D.D.C., No. 1:15-cv-01828