How whistleblowers are helping to fight healthcare fraud

Earlier this month, the Department of Justice announced it had resolved a $237 million judgment against Toumey Healthcare System in South Carolina for violations of the Stark Law.

In this particular case, the hospital was alleged to have entered into contracts with 19 specialists that required them to refer their outpatient procedures to the hospital in exchange for compensation that far exceeded fair market value, including part of the money the hospital received from Medicare for those procedures.

The case arose from a qui tam lawsuit filed in October 2005 by an orthopedic surgeon who said he was among those physicians who was offered what prosecutors called “secret sweetheart deals” between the hospital and physicians. Rather than sign on, the surgeon filed suit.

Such whistleblower cases are fertile ground for federal prosecutors and can result in a windfall for those who file them if they win. Last year, the U.S. Department of Justice reported it obtained a record $5.69 billion in settlements and judgments from civil cases involving fraud and false claims for the fiscal year ending September 30. False claims against federal healthcare programs such as Medicare and Medicaid accounted for $2.3 billion of that. It also marked five years in a row that more than than $2 billion was recovered in cases involving false claims against federal healthcare programs such as Medicare, Medicaid and TRICARE.

Because the federal government can’t be everywhere, it relies on whistleblowers to be its eyes and ears. Under the False Claims Act, private parties can file complaints on behalf of the government, and the government can decide whether to participate or decline to join in the lawsuit. Whistleblowers, in turn, can receive a percentage of any recovery. Whistleblower rewards generally are between 15 percent and 30 percent of the total recovery from the defendant either as a result of a favorable verdict resulting from a trial or a settlement.

In the case of the South Carolina hospital, the physician who filed the lawsuit will receive approximately $18.1 million, according to the DOJ. Between January 2009 to the end of fiscal year 2014, the federal government has paid awards in excess of $2.47 billion.

While some healthcare providers are willing to accept the lucrative financial arrangements offered to them in exchange for looking the other way, others, like the orthopedic surgeon in this case, are willing to blow the whistle on their employers, even if it means risking their career. Filing a qui tam lawsuit has its risks and it’s important that you consult a qualified attorney who can provide guidance about gathering evidence and navigating through the process.

The increasing number of qui tam cases, coupled with the potential for multimillion-dollar recoveries, also should serve as a reminder to healthcare organizations that they should look to ward off potential whistleblower claims by having strong compliance programs in place to catch any wrongdoing long before anyone else has the opportunity to do so.

Healthcare providers who do find themselves the target of a whistleblower lawsuit should move quickly to mount an aggressive defense early on to mitigate further damage.

The Health Law Offices of Anthony C. Vitale is known for its representation of whistleblowers, as well as our ability to defend those who are the target of a whistleblower action. Our proactive approach in defending our clients helps to reduce the risks early on in an effort to find a successful resolution¸ even before litigation begins¸ saving our clients’ time and money.

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