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Whistleblowing in the Healthcare Industry: A Deep Dive

August 4, 2023

Most people who decide to engage in a career in the healthcare industry do so out of a sense of responsibility for the wellness of others. They brave dealing with the challenges of healthcare whether it’s exposure to patients that are ill with communicable diseases or having to tell someone bad news about their health and prognosis – tough to do but its part of the job. What shouldn’t be part of the job is when the company, the nurse, doctor, billing coordinator or many other positions is dealing with a different type of plague in the healthcare industry – billing fraud. Some practices strive to do what’s right and take all sorts of steps to stay in compliance with ethical and lawful billing – others not so much, whether it’s through indifference, outrage, or outright fraud.  

Thus, healthcare practitioners are thrust into a world in which not only do they have to combat disease, but they encounter fraud and sometimes it’s so systemic and ingrained that the worker feels helpless or else they feel their career is on the line if they complain and their license is on the line if they don’t. Feeling trapped and damned if you do and damned if you don’t, workers should know that they can at least speak with someone who has been through it before and encountered many different permutations of healthcare fraud to understand what one’s rights are as a whistleblower. It’s important to consult with an experienced whistleblower law firm and if you look at certain metrics like Lex Machina’s stats you can focus on who is the best whistleblower law firm for your needs by taking advantage of their free consultation mechanisms and also use it as a form of catharsis. 

Whistleblowing in the Healthcare Industry

Navigating the Complex Landscape of Whistleblowing

If you’re thinking about blowing the whistle on the systemic fraud you’ve seen in the healthcare space, then you should evaluate your upside versus your downside. Inherently, staying silent has its own downside which is if the fraud is uncovered without you exposing it, you may be viewed as complicit in it and depending how intimately you were involved and profited from the scheme may have some exposure economically, criminally and licensure-wise. The upside altruistically is ending the fraud, but don’t feel selfish for asking the question about what’s in it for you, because blowing the whistle may have consequences and you deserve an upside for doing the right thing. Whistleblowing in healthcare is essential for ensuring accountability and patient safety within medical institutions.

Financial Incentives and Legal Protections for Whistleblowers

One tremendous upside is that certain statutes like the Federal False Claims Act and the California Insurance Claims Fraud Prevention Act and the Illinois Insurance Claims Fraud Prevention Act permit whistleblowers to obtain a percentage as high as 50% of what the recovery is for the fraudulent practice.  Damages under all three statutes are tripled, so if an entity has defrauded California insurance companies by a million dollars, there could be up to three million in damages with the California Insurance Claims Fraud whistleblower standing to receive up to $1.5 million of that as a whistleblower reward.  The False Claims Act, which is the federal statute addressing Medicare Fraud, Medicaid Fraud and Tricare Fraud, is more modest, but still provides up to 30% of the government’s recovery, with an average intervention recovery of around $13 million that could be several million as a whistleblower award. 

So even though altruistic principles will dictate what you should blow the whistle on, economic principles may govern too and it is a consideration that the whistleblower law firm will analyze with you.  For example, if you’re aware of a concrete upcoding fraud, but the fraud has only resulted in $10,000 of Medicare fraud a year for three years,  an experienced qui tam law firm like ours would indicate the economics probably don’t warrant filing the False Claims Act, since at best there would be a $90,000 recovery which if a whistleblower award was 20% would be a $18,000 whistleblower reward, plus attorney’s fees and costs.  However, with litigation risks cuts that in half and maybe there’s just a potential $9,000 award in play before fees and costs and the whistleblower law firm and the government may have to spend hundreds of thousands of dollars of time chasing that result.   That’s not to say it should never occur. If, for example, there’s some other issue like unnecessary procedures that are putting patients at risk, then no matter how much money there is to gain it’s important to report through one channel or another and any economic fraud should be reported too, but the question is what’s the right way to report to hold the company accountable and keep you out of it if there’s limited upside, but potentially boundless aggravation.

Retaliation against whistleblowers has been known to happen. Oftentimes if you utilize the companies internal reporting mechanisms, the company will view you for some reason as complicit with the fraud if you went along with it and may take action against you which is why that’s not a good option to avail yourself of.  If the whistleblower case is properly filed under the False Claims Act then it will generally stay under seal for several years and the defendant healthcare provider will not know about it. That will give you the benefit of time to plan for what to do when it comes unsealed.  Even if you did not suffer retaliation, you may feel chilled if you’re still in the environment that you blew the whistle on. Defense attorneys sometimes comment that the company generally wants the whistleblower out and can pay for them to leave separately from the case in chief about the fraud.  So although the law stridently protects whistleblowers from retaliation, it does so to try to stop it from happening, but the law contemplates that it does occur. So have an exit strategy along with your whistleblower lawsuit, even if you don’t want to leave, consider that may be a possibility.

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The Role of Whistleblower Attorneys

As one of the most accomplished whistleblower law firms with significant False Claims Act experience, we understand the critical role whistleblowers play in combating healthcare fraud and will provide counsel of the ups and downs of filing a case.  When you avail yourself of a whistleblower consultation you should candidly express your concerns about your case and your career with your counsel so they can provide perspective and share potential routes for you to explore as well as steps to protect yourself.  

For the scores of healthcare professionals who generally consult with our whistleblower law firm each week, after listening to their circumstances we sometimes give a blunt assessment on the phone why the matter is not actionable or not a fit for what we litigate.  It’s important to ask questions to any whistleblower law firm about why they’ve declined your case which may give insight as to whether the underlying conduct you wish to report is actionable under an identifiable statute and as indicated before whether the economics make sense to proceed.  

One of the most important facets of the structure of our legal system is that you enjoy an attorney-client privilege in contemplation of representation. That is, when you share with your lawyer information about the wrongdoing from the healthcare entity, they have to keep it a secret under most state ethics laws.   This encourages a full and frank discussion of the issues so you can obtain a more accurate opinion whether to proceed.  If you lie or sugar coat your lawyer, then you may obtain inaccurate information – garbage in and garbage out is a saying, and you don’t want garbage, so don’t gloss over the bad stuff when you explain the potential case.  Bad stuff could include how you profited from the scheme, your criminal history, the fact that you know you’re going to be fired, etc. but no matter how bad you think it is a seasoned whistleblower law firm like Brown, LLC has probably encountered it before or something analogous to it and talk you through how to deal with it.  

Selecting a whistleblower counsel that you click with is important because the process is a lengthy one.  You should not even consider going about it alone. Not only is the proverb “he who represents himself has a fool for a client” applicable, but under the False Claims Act if you wish to file a Medicare Fraud whistleblower lawsuit, Medicaid Fraud and/or Tricare Fraud, the law forbids pro se litigants.

If the qui tam law firm is thinking about working with you on your case, during the initial consultation they may tell you so, or they may discuss it with their team if they have one to flush out certain particular issues that may be critical before filing your complaint.  A Qui Tam lawsuit refers to a special type of whistleblower case under the False Claims Act which allows you to bring the case on behalf of the government through your complaint, which is why the plaintiff in a case along these lines is referred to as a relator since they are relating the injury of the government (taxpayers) through their complaint.  

Common Types of Healthcare Fraud and Their Implications

Here are some of the most common types of healthcare fraud.  Healthcare fraud encompasses a range of deceptive practices aimed at unlawfully exploiting the healthcare systems billing for the profit of the practice at the expense of the taxpayers, insurance companies and sometimes at the expense of the health of the patient.  Some of the most common types of healthcare fraud include:

  • Billing Fraud: This involves intentionally overbilling or billing for services not rendered, misrepresenting the severity of a patient’s condition, exaggerating the amount of time spent per encounter or upcoding (charging for more expensive procedures than performed) to name a few.  Billing fraud seems to become systematic and wrongdoers fall into certain patterns. For example upcoding all asymptomatic COVID encounters to higher level encounters with symptoms and longer length of time to overbill Medicare for more money for a simple visit.
  • Kickbacks and Referral Schemes: Under the Anti-Kickback Statute (AKS)  if Medicare funds are implicated it is illegal to offer items of value or below fair market value to induce business.  This can unlawfully occur when healthcare providers receive payment or incentives in exchange for referring patients, services, or products to specific entities. Some of the biggest False Claims Act cases involve pharmaceutical fraud, in which prescribers are given subtle kickbacks in proportion to the amount of prescriptions.  These kickbacks could be speaker fees, vacation, sporting events, or medical directorships in title without responsibility.  
  • Unnecessary Medical Procedures: This is one of the exceptions to the dollar amount threshold for taking cases, when doctors perform unnecessary medical procedures for billing sake, not for necessity it could potentially put patients at risk.  For example, on the less dangerous side if every cold patient received a strep throat test to bill for the procedure regardless of whether their throat hurt or not, it’s a waste of resources and unnecessary. While that wouldn’t be considered risky, on the other extreme, a doctor implanting pacemakers for the sole purpose of billing for the surgery would put patients at risk and have life altering impact, so even if that’s happened just a couple times, a couple times is enough and if there are strong proofs it’s likely the government would triage to stop this.  
  • Off-Label Marketing: Another big area of pharmaceutical fraud that has resulted in some of the biggest False Claims Act settlements is promoting drugs or medical devices for uses not approved by the FDA.  In addition to billing the taxpayer for a product that hasn’t been fully vetted or approved this can lead to adverse health effects due to the lack of rigid trials for the off-label usage.  For example, there was a product that was brought to market to shrink enlarged prostates, that was prescribed off-label for hair growth, but was allegedly causing sexual side effects, so the off-label use wasn’t properly vetted versus the actual risks.  The whistleblowers in off label marketing cases tend to be sales representatives or individuals who were involved in the new drug application (NDA) and know about the potential falsification of data that led to the product’s approval. Another offshoot of pharmaceutical fraud is when the company doesn’t adhere to CGMP and takes steps to falsify compliance and/or testing that were not approved by the FDA or supported by data. 

A separate type of whistleblowing in the healthcare arena involves OSHA and could overlap with the False Claims Act.  For example, if the healthcare company reuses devices that are supposed to be sterile or has hazardous conditions for its employees, by purchasing inferior masks for protection.  If the work environment is so intolerable that as a practitioner you feel your health is in danger, a whistleblower report may be appropriate and if the conditions are so prevalent and egregious the government may view constructively that the services provided are worthless and the issue may implicate the False Claims Act as well.  A horrific example where OSHA could have assisted is there was a PRP procedure for something called vampire facials in which the company was reusing needles and multiple people who went to the practice contracted HIV.  Whistleblowers are critical to stopping these practices early before they begin as lives are at stake sometimes.  

How Whistleblowers Can Help Combat Healthcare Fraud

Whistleblowers are individuals who generally have inside knowledge of fraudulent activities within the healthcare industry and have the courage to come forward and report such misconduct the right way with the right plan in place. As shown by some of the examples above, the role of the whistleblower is pivotal in uncovering fraud that may otherwise go undetected and in some cases in all likelihood will go undetected unless someone steps forward.  

Legal Protections for Healthcare Industry Whistleblowers

Recognizing the importance of whistleblowers in uncovering fraud, various laws provide protections to shield whistleblowers from retaliation. Some key legal protections for healthcare industry whistleblowers include, but are not limited to:

  1. False Claims Act: The False Claims Act safeguards whistleblowers from employer retaliation, such as termination, demotion, or harassment, for reporting fraud. The “H” provision of the False Claims Act is generally invoked in conjunction with filing an underlying qui tam for the defrauding of the government under Medicare or Medicaid.  
  2. Whistleblower Protection Act (WPA): This WPA protects federal employees who disclose information about fraud, waste, or abuse within government agencies.  The operative concept is that the individual has to be a government employee, as the WPA has a broad sounding name, but does not protect individuals in the private sector.  
  3. Sarbanes-Oxley Act: While primarily designed for corporate whistleblowers, it offers protection to employees of publicly traded healthcare companies who properly report practices that implicate securities violations.  Theoretically, if the company is engaging in widespread defrauding of the federal government, it may have breached its fiduciary duty to its shareholders and an SEC whistleblower suit may be appropriate as well.  

The Future of Whistleblowing in the Healthcare Industry

The future of whistleblowing in the healthcare industry appears promising in many different streams as awareness of its significance grows since tens of billions of dollars each year are squandered through fraud, waste and abuse.  In the past the False Claims Act exclusively rewarded insiders with information about systemic practices that defrauded the federal government, but now industrious individuals who can harvest and interpret data can become whistleblowers as well. Increased collaboration between whistleblowers, legal firms, and government agencies can bolster efforts to combat healthcare fraud, so it’s important to select a firm that seamlessly interfaces with the federal government, especially law firms with former Department of Justice or FBI Special Agents who know from the inside how the government litigates these matters.  But no matter what the advancements are in technology, the system depends on courageous individuals stepping forward and becoming whistleblowers to protect the patient and taxpayers.  

If you have a question about whistleblowing as a healthcare provider, practitioner, or someone in the healthcare space that we haven’t answered, we’d love to hear from you. In addition to the free, confidential consultations whistleblower law firms like Brown, LLC offer, if there’s a blog topic or a video idea you’d like us to address please let us know as well.