The typical whistleblower is often an aggrieved employee who brings to light his employer’s fraudulent conduct. These individuals, often called internal whistleblowers, are important in combatting healthcare fraud.
There remains, however, a different kind of whistleblower. Some whistleblowers are individuals or entities that are not employed by the company who committed the wrongdoing. These individuals, often called external whistleblowers, are a critical part of the False Claims Act (FCA) and vital to exposing healthcare fraud.
First, it is important to note the pervasiveness of healthcare fraud. The U.S. Department of Justice has described the FCA as “the government’s primary tool to recover funds to the Treasury and to the Medicare Trust Fund due to health care fraud.”[i] Between 1988 and 1998, the percentage of FCA cases involving the U.S. Department of Health and Human Services grew from 5 to 53 percent.[ii] In fiscal year 2000, it had risen to 70 percent.[iii]As of 2010, roughly 80 percent of all recoveries under the FCA were in the health care context.[iv] In fiscal year 2017, $2.6 billion was recovered under the Health Care Fraud and Abuse Control Program.[v]
The FCA permits claims by whistleblowers with no personal connection to the alleged fraud. Any person or entity can file an action pursuant to the FCA, absent a few exceptions.[vi] But there are no categorical limitations on who can sue and there is not even a suggestion that eligible whistleblowers should be limited to insiders.[vii]
The text and legislative history of the FCA encourages outsider whistleblowers. Congress, in attempting to combat the “growing pervasiveness of fraud,” consistently amended the FCA to encourage more whistleblowers to bring FCA actions and more claims to proceed.[viii] Congress never limited the class of potential whistleblowers to insiders; rather, Congress amended the FCA over the years to “encourage any individual knowing of government fraud to bring that information forward.”[ix]
In recent years, the DOJ has resolved a number of high profile cases brought by outside whistleblowers concerning healthcare fraud. In 2009, an external whistleblower filed a FCA claim after uncovering, through his own independent investigation, the defendant was supplying faulty lab tests to the government.[x] The case settled for $302 million. In 2015, a data miner and cardiac nurse identified a scheme to install medically unnecessary, implantable defibrillators.[xi] One of the hospitals involved in the settlement is located in our area of southwest Virginia, specifically Lewis-Gale Medical Center.[xii] The case settled for more than $250 million.[xiii]
Similarly, consumer whistleblowers—including individual healthcare beneficiaries and sophisticated private payors—have brought external whistleblower lawsuits when they determined providers were engaged in fraud.[xiv] For example, insurers offer private, employer-sponsored and Medicare Advantage plans that may be defrauded from the same healthcare schemes that are defrauding the government. Whistleblower actions permit these outsiders to seek justice not only at the individual level but for society as a whole.
Courts and federal agencies are increasingly aware of the vital role external whistleblowers play in combatting healthcare fraud. This important area of the law will likely continue to grow in importance in the coming years—to the benefit of individuals and collective society.
[i] Press Release, U.S. Dep’t of Justice, DOJ to Hold Briefing on the Use of False Claims Act in Health Care Fraud Cases (Apr. 23, 1998), available at https://www.justice.gov/archive/opa/pr/1998/April/194.htm.html.
[ii] U.S. Dep’t of Justice Fraud Statistics, available at https://www.justice.gov/opa/press-release/file/1233201/download (statistics showing the Department of Health and Human Services was the client agency in 53 percent of the qui tam filing in fiscal year 1998, compared to 5 percent in fiscal year 1998).
[iii] Nearly $1.2 billion in civil fraud recoveries related to FCA cases in fiscal year 2000. Press Release, U.S. Dep’t of Justice, Justice Recovers Record $1.5 Billion in Fraud Payments; Highest Ever for One Year Period. (Nov. 2, 2000), available at https://www.justice.gov/archive/opa/pr/2000/November/641civ.htm.
[iv] Press Release, U.S. Dep’t of Justice, Department of Justice Recover $3 Billion in False Claims Cases in Fiscal Year 2010 (Nov. 22, 2010), available at https://www.justice.gov/opa/pr/department-justice-recovers-3-billion-false-claims-cases-fiscal-year-2010.
[v] Civil Div., U.S. Dep’t of Justice, Fraud Statistics—Overview: October 1, 1986–September 30, 2017, available at https://www.justice.gov/opa/press-release/file/1020126/download (Dec. 19, 2017).
[vi] 31 U.S.C. § 3730(b).
[vii] Arbitman, Zac, et al., Outside Whistleblowers Are Critical to Exposing Fraud, Law360 (Oct. 14, 2020), available at https://www.law360.com/articles/1318424/outside-whistleblowers-are-critical-to-exposing-fraud.
[viii] See e.g., S. Rep. No. 99-345 (recognizing that “only a coordinated effort of both the government and the citizenry” could prevent rampant fraud on the government).
[x] Phillips & Cohen, Businessman Exposed Problems With Quest Subsidiary’s Blood Test Kits; Led to $302 Million Settlement (Apr. 15, 2009), available at https://www.phillipsandcohen.com/businessman-exposed-problems-quest-subsidiarys-blood-test-kits-led-302-million-settlement/.
[xi] Press Release, U.S. Dep’t of Justice, Nearly 500 Hospitals Pay United States More Than $250 Million to Resolve False Claims Act Allegations Related to Implantation of Cardiac Devices (Oct. 30, 2015), available at https://www.justice.gov/opa/pr/nearly-500-hospitals-pay-united-states-more-250-million-resolve-false-claims-act-allegations.
[xiii] Note 11.
[xiv] Note 7.