Elizabeth Hogue, Esq. Provides Insight on “Whistleblower” Lawsuits

Private citizens may initiate so-called “whistleblower” or qui tam lawsuits to enforce prohibitions against fraud and abuse in the Medicare, Medicaid, and Medicaid Waiver Programs and other state and federal health care programs, such as Tri-Care.  One of the federal statutes that allows for whistleblower actions is the False Claims Act.  This Act generally prohibits providers from “knowingly” presenting or causing to be presented false or fraudulent claims for payment by the government.  Whistleblowers continue to be a major source of information for government enforcers.

In order to bring a qui tam action under the False Claims Act, private parties must have direct and independent knowledge of fraud by providers against whom suits are filed.  Thus, current or former employees who are familiar with providers’ practices may often initiate whistleblower actions under the False Claims Act.

Specifically, private individuals must be able to show that the information forming the basis for the complaint has never been publicly disclosed by the media, in litigation or through voluntary disclosure.  If the information has been previously disclosed, individuals who file such lawsuits must be able to show that they are the original source of the information.

Individuals who start qui tam actions are known as “relators.”  Relators must first file a written complaint on behalf of the United States government and serve a copy of their complaint on the United States Department of Justice.  Relators must also provide the Justice Department with copies of documentation that substantiates the allegations contained in their complaints.

Following review, government representatives must make a decision about who will continue to pursue the allegations made in the complaint.  The government may elect to proceed with the action without the relator.  If the government assumes responsibility for pursuing the complaint, the relator may continue as a party in the suit, but the government may settle the case against facilities without the agreement of relators.

If the government recovers money as a result of a whistleblower lawsuit, relators receive a percentage of these monies.  The percentage given to whistleblowers varies, but a number of whistle blowers are now multi-millionaires as a result.  Generally, relators receive less money when the government elects to proceed with the lawsuit than if the government declines to become involved and relators proceed by themselves.

When a qui tam action has been initiated by filing a complaint, only the government can intervene as described above.  No other private individuals can become parties to the existing suit or initiate another complaint based upon the same information.

Perhaps one of the most sobering developments related to whistleblower actions involves the formation of private corporations that have as their sole purpose the initiation of whistleblower actions against health care providers.  These organizations have substantial incentives to identify healthcare fraud as described above.  They may specifically target current and former employees and seek their assistance.

Current and former employees of agencies that have Medicare/Medicaid Fraud and Abuse Corporate Compliance Plans must be clear, however, about employees’ obligations under such Plans.  That is, staff members have an obligation under such Plans to make reports of potential or actual instances of fraud and abuse to their supervisors or Compliance Officers first, as opposed to going outside the facility to enforcers or to initiate whistleblower suits.

Staff members who fail to make reports internally may seriously impair their credibility in whistleblower suits.  They should, therefore, be meticulous about compliance with the facility’s Plan before they consider outside action.  Agencies that have Compliance Plans surely deserve an opportunity to address any compliance issues first.

This material is provided to the Home Care Association of Florida by Elizabeth E. Hogue, Esq.

Contact by phone at (877) 871-4062, fax at (877) 871-9739 or email at elizabethhogue@elizabethhogue.net.

© 2010 Elizabeth E. Hogue, Esq.  All rights reserved. No portion of these materials may be reproduced in any form without the advance written permission of the author.