RICHMOND, Va. (Legal Newsline) – The Virginia Supreme Court on Aug. 9 affirmed a lower court decision that ruled that in a Medicaid qui tam case, the whistleblower, or relator, is eligible for 28 percent of the gross proceeds of the settlement.
The Commonwealth of Virginia and the relators couldn't agree if the 28 percent the relators were entitled to should apply to the gross proceeds of the settlement or the commonwealth's share after deducting the portion it has to pay to the federal government.
The relators filed suit against several laboratories, including Hunter Laboratories LLC. Beginning in 1997 through 2014, it was alleged that the defendant laboratories defrauded the Virginia Medicaid program by $1.25 million by over-charging payments for laboratory services.
The defendants agreed to the settlement and the relators made claim to 28 percent of that total, or $350,000.
The Commonwealth of Virginia claimed that the relators were only eligible for the portion of Medicaid fraud attributable to the Commonwealth’s share. Medicaid is a program that is jointly funded by the federal and individual states.
The share that the relators were offered by the Commonwealth after the federal portion was removed was $138,925, resulting in the relators' claim against the Commonwealth.
Virginia argued that the inherent interpretation of the Virginia statue allowing the 28 percent pay to any person or agency reporting fraud was clearly meant to be only the net or Commonwealth’s portion of the total, not the actual combined amount.
The court agreed with the plaintiffs who successfully argued that there was no wording in the statute that substantiated the Commonwealth’s claim.
“The proceeds of the award of settlement” should be interpreted as the “proceeds of the award of settlement after the deduction of the United States' share of the settlement," the Commonwealth claimed, according to the ruling, but the court ruled there is no such language present in Virginia law.
It did note that on 54 occasions the General Assembly used the limiting word “net” in conjunction with proceeds but that the assembly did not specify “proceeds” as “net proceeds” in Virginia law.
"The fact that the General Assembly knows how to specify a limitation on the intended measure of proceeds in a statute by employing the phrase 'net proceeds,' but did not employ that phrase in Code § 8.01-216.7(B), is 'an unambiguous manifestation of a contrary intention,' indicating that the term 'proceeds' was not intended to be limited in any way, i.e., that gross proceeds is the intended meaning," the court wrote.