UC settlement raises doubts about voluntary disclosure

A recent big-money settlement is raising disturbing questions about the value of voluntarily disclosing potentially damaging information to the federal government, and exposing your facility to whistle-blowers.

In that settlement, the University of Chicago, its affiliated hospitals, and a faculty physicians’ group agreed to pay the government and the state of Illinois a total of $10.9 million to settle charges that they improperly billed Medicare and Medicaid an unspecified amount for outpatient and inpatient physician services between 1995 and 1998.

According to the settlement agreement, the university self-reported possible violations in June 1996, after an initial inquiry revealed that in some instances the physician may not have been present for each billed service. But health care attorney William Sarraille of the Washington, DC-based law firm Arent Fox says the university’s attempt to police itself may have paid meager dividends. "Looking at this, it is hard to see what they really got for their voluntary disclosure and their commitment to compliance," he asserts.

"This is a case in which the government arrives at a False Claims Act settlement where there has been a voluntary disclosure," argues Sarraille. "I would say this is another example of what appears to be a disturbing trend."

"Unfortunately, the way the False Claims Act is written, a voluntary disclosure doesn’t prevent a relator from filing a subsequent case," says Assistant U.S. Attorney Linda Wawzenski. "The only thing the statute gives someone who voluntarily discloses is a guarantee that the damages will not go any higher than double damages instead of treble damages under the statute."

According to Wawzenski, the only basis on which you can say that a whistle-blower cannot file a lawsuit against a defendant is if the relator is filing a lawsuit based on a public disclosure. "It is not as if the statute says that if you voluntarily disclose to the government, nobody can file a qui tam suit against you. I sympathize, but that is the way the statute is currently written."

Wawzenski does cite a recent case in the Seventh Circuit that may buck that trend. The decision in that case, U.S. ex. Rel, Eunice Mathews v. Bank of Farmington, suggests that under certain circumstances a voluntary disclosure may be considered a public disclosure, prohibiting a relator from filing a valid qui tam suit.

Under the terms of the settlement, the university agreed to pay the government $8,275,000 and an additional $2,625,000 to the state of Illinois. The whistle-blower in the case, Al Reppine, a former registered nurse and protocol research clinician at Weiss Hospital, which is affiliated with the University of Chicago Hospitals, will receive $1,850,000 for his role in the litigation.

Serraille also questioned the manner in which the settlement was disclosed. "This clearly is not the tact that had to be taken, and the press coverage is not going to be conducive to the institution’s reputation and standing," he argues. "There are dozens, if not hundreds, of cases that never have a press release initiated."