A federal lawsuit in New Jersey is part of a growing trend of nontraditional whistleblowers filing False Claims Act (FCA) actions against healthcare providers, McGuireWoods partners Michael Podberesky and Brett Barnett and associate Stephen Tagert wrote in a July 31, 2024, article in Westlaw Today.
The attorneys analyzed a May 30 decision by the U.S. District Court for the District of New Jersey in United States ex rel. Allstate Ins. Co. v. Phoenix Toxicology & Lab Servs., LLC. The court ruled that Allstate could proceed with its whistleblower action against Phoenix, a clinical laboratory that allegedly submitted false claims to the federal government for medically unnecessary urine drug tests.
FCA qui tam actions often are filed by a defendant’s former or current employees, but Allstate joined the growing ranks of nontraditional, whistleblower-like insurance companies, activists, investors and special purpose entities pursuing alleged fraudsters.
“This case serves as yet another reminder to healthcare providers that fraud can be uncovered by both insiders and outsiders it interacts with and that the universe of potential whistleblowers is growing (a trend that is being accelerated by litigation-funding entities bankrolling qui tam suits),” the authors wrote.
The article was originally published on The FCA Insider, McGuireWoods’ blog covering developments in FCA litigation.