Seven steps to limit your qui tam exposure

One reason the overall number of qui tam suits is declining may be simply that the False Claims Act is working, suggests Stuart Gerson, a partner with Epstein Becker in Washington, DC. Nevertheless, the former assistant U.S. attorney also cautions that the size of the settlements flowing from these suits continues to grow, along with the costs of defending.

Gerson says there is a lot that is wrong with the False Claims Act, including parts that should be amended. Nevertheless, a successful litigation regime should create predictable behaviors and it’s not unlikely that that is what is happening here, he says. As compliance programs have become more prevalent, providers may simply be learning what is permissible and what is not, he says.

Gerson says several other factors are also at work. "The most competent lawyers have developed a following, and they are very selective," he says.

He also warns that the sheer size of recent settlements shows that the well is not dry. "Arguably, that is an efficiency," he asserts. "It speaks to the probable success of the regime."

Lynn Snyder, also a partner with Epstein Becker, says false claims cases are all unique. "These are not your typical lawsuits," she asserts. "I have been asked time and again, What can I do to minimize my risk if I have one of these lawsuits, and if I have one of these lawsuits how does it ever end?"

Here are the seven steps Snyder says providers can take to take to limit their qui tam exposure:

I. Don’t bury your head in the sand. Providers must assume that if they receive a government receivable, they also will receive a subpoena sometime within the next 0 years, Snyder says. The "knock on the door" may be a letter from the carrier to the billing clerk, or it may be somebody showing up at an employee’s house.

Often, providers are reluctant to train employees on how to handle these situations because simply educating employees might appear suspicious. "Those days are over," she argues. "The best thing you can do is to educate your employees about their rights if an FBI agent happens to show up at their doorstep on a Sunday night."

II. Chasing down the alumni club. The group of employees most frequently contacted by government investigators are former employees, she says. "Very often, the whistle-blower is a former employee," she adds. Anything that a provider’s human resource office can do to maintain the name, address, and phone number of those employees can be very valuable, she argues.

Often, however, she says, human resource officers only maintain this information for the one year they must retain it in order to send the W-2s for tax purposes. "The government has more latitude now to speak with former employees," she cautions. "Keep those lines of communication open."

III. Don’t forget human resources. Snyder says that one facet of health regulatory due diligence is to look through personnel files for resignation letters. She says that human resource staff, who frequently encounter disgruntled employees, often ignore claims about improper billing and simply file them away. "You must connect the dots between human resources and compliance and be proactive and reach out to those people to find out if those claims are true," she advises.

IV. Maintain a chronology of government contacts on how to bill. Many providers struggle to recreate a history from former employees at the carrier. But she points out that carriers no longer even give out last names of their employees.

Snyder says she often tracks down former employees to find out the name of an employee at the carrier who instructed them to do something a certain way. "They could save a lot of money if they would maintain this chronology," she adds.

V. Educate the government. Snyder says the government does not always take the time to track changes in billing rules. "They will come to you based on today’s rules about something that happened in 1990, and it is up to you to recreate the reimbursement history," she warns. "That means it is up to us to do the homework for them."

VI. Preparing the client. Attorneys must explain to providers how the False Claims Act works, including how a private party can come forward and how these cases are resolved, she says. Snyder often gives clients settlement documents from other cases, including the Department of Justice settlement and the relator and counsel settlements. "I give them the whole ball of wax so they can see what it looks like, because it may be five years before they ever reach that point."

VII. How to prevent whistle-blowers. "It is against public policy to tell somebody they cannot go to the government," she says. Even employees who deal with sensitive information, such as compliance officers and general counsel, cannot be prevented from becoming a whistle-blower.

"One of the things we recommend is to have a written employment agreement and at the time of employment get them to waive any financial recovery they might be entitled to," she says. "That does not mean they can’t go to the government, but you can try to remove the financial incentive." Whether this type of provision will stand up in court is yet to be determined, she notes. "We will find that out in the next few years," Snyder says.