Defend yourself against whistleblowers

By Elizabeth E. Hogue, JD

Health Care Attorney

Elizabeth Hogue, Chartered

Burtonsville, MD

Home care providers are rapidly becoming accustomed to enhanced enforcement of prohibitions on fraud and abuse in the Medicare and Medicaid programs. More providers are now aware that the Office of the Inspector General (OIG) of the U.S. Department of Health and Human Services (HHS) and the Department of Justice mainly through the FBI are primary enforcers of such prohibitions.

Few providers may be aware, however, that legal actions to enforce such prohibitions may also be initiated by private citizens. Suits by private citizens to correct violations of fraud and abuse statutes are often referred to as qui tam, or "whistleblower" actions.

One of the federal statutes that allows for whistle blower 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.

In order to bring a qui tam action under the False Claims Act, private parties must have direct and independent knowledge of fraud by the provider against whom the suit is directed. Thus, as a practical matter, most whistleblower actions under the False Claims Act are initiated by current or former employees who are familiar with providers' practices.

Specifically, the private individual 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 perhaps by the provider through voluntary disclosure. If the information has been previously disclosed, the individual must be able to show that he or she is the original source of the information.

Relators must provide documentation

Individuals who state qui tam actions are known as "relators." The first step for relators is to file a written complaint on behalf of the U.S. government and serve a copy of their complaint on the U.S. Department of Justice. Relators must also provide the Justice Department with copies of documentation that substantiate the allegations contained in their complaint.

It is important to note that a copy of the complaint is not served upon the provider who is described in the complaint as involved in fraudulent conduct. Instead, the complaint and accompanying documentation are filed "in camera." That is, the complaint and information remain sealed for a minimum of 60 days. During this period of time, representatives of the U.S. government review all of the material.

Relator receives % of amount recovered

Following review, government representatives must make a fundamental decision about who will continue to pursue the allegations made in the complaint. Specifically, 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 the provider without the agreement of the relator. If money is recovered by the government when it has taken responsibility for the case, the relator receives somewhere between 15% and 25% of the amount recovered.

But the government may decide to allow relators to continue to pursue their claims without assistance from it. In this event, relators are free to continue to pursue their cases. When relators successfully obtain monies for the government on their own, they are entitled to between 25% and 30% of the amount received in addition to reasonable attorneys' fees, expenses, and costs.

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.

Corporations formed to blow the whistle

Perhaps one of the most sobering developments related to qui tam actions involves the formation of private corporations that have as a sole purpose the initiation of whistleblower actions against health care providers. The staff of such organizations has substantial incentive to identify health care fraud and to see substantial recoveries.

Providers must be concerned about what they can do to prevent such suits. The following action is warranted:

* Take action to prevent fraud and abuse within the agency in the first place so that potential relators have nothing on which to base whistleblower lawsuits. Appropriate action includes the following:

-- Develop an agency corporate compliance plan to prevent and/or identify instances of potential fraud and abuse within the agency. (See "Compliance Programs Protect Your Agency," Hospital Home Health, May 1996, p. 57.)

-- Educate all staff periodically about what constitutes fraud and abuse and what to do when they believe that they have encountered such instances.

-- Take any concerns of employees related to fraud and abuse very seriously. There are, of course, instances in which workers misunderstand what constitutes fraud and abuse and express concerns that don't have merit. But a careful hearing and investigation by management will go a long way toward satisfying employees who may not have the "straight scoop" about the activities of management.

Agencies should strive to communicate aggressive efforts to ferret out any fraud and abuse, so that potential relators have the impression that what might be reported has already been identified and rectified by management.

Be extremely cautious about the treatment of both current and former employees. Relators are often disgruntled employees who have an ax to grind with agency management. Staff should be especially careful when terminating employees. To the extent possible, employees should be allowed to "save face" so they do not elect to become relators to get even with agency personnel.

The home care industry has only seen the tip of the iceberg in the area of fraud and abuse. Now is the time for providers to take stock of compliance activities to discourage whistleblowers. *