Preventing Medical Billing Fraud by Protecting Whistleblowers

December 17, 2020

The COVID-19 crisis has shed light on the many everyday heroes that have helped patients, neighbors, and communities survive the coronavirus. In the shadows, however, lurk opportunists taking advantage of the outbreak – including healthcare providers and medical suppliers tasked with saving lives. Just like first responders, doctors, and nurses, whistleblowers who call out fraudulent billing practices during the pandemic are heroic, too.

Misuse of COVID-19 Relief Funds

In response to the coronavirus crisis, the federal government enacted legislation providing emergency resources and financial relief. With more than $3 trillion in hand – not including the $950 million headed to state and local health departments and $300 million earmarked for vaccines and treatments –  the Secretary of Health and Human Services has been tasked with distributing the first allocation of disaster relief funding. While this money is intended to pay for lifesaving care, bad actors in the healthcare and medical supply fields may seek to profit from it, to the detriment of patients and others in need.

Opportunists may defraud healthcare payment systems, including those used for relief programs, Medicare and Medicaid payments, and Veterans Affairs services. Employees in these healthcare organizations who witness fraudulent business practices have the power to expose the wrongdoing and protect the public good by blowing the whistle on the responsible parties.

False Claims Act Combats Misappropriation of Pandemic Resources

The federal False Claims Act (FCA) protects individuals who blow the whistle on medical billing fraud and allows the government to recover some of the misappropriated funds. This legislation dates back to the Civil War, in response to dishonest contractors who swindled the government by taking funds for faulty, defective, or unusable products. Congress strengthened, updated, and expanded the Act’s protections in 1986.

The FCA prohibits improper billing practices, including:

  • Charging the government for more than was provided;
  • Fraudulently seeking a government contract;
  • Submitting a false application for a government loan;
  • Submitting a fraudulent application for a grant of government funds;
  • Demanding payment for goods or services that do not conform to contractual or regulatory requirements;
  • Requesting payment for goods or services that are defective or of lesser quality than were contracted;
  • Submitting a claim that falsely certifies that the defendant has complied with a law, contract term, or regulation; or
  • Attempting to pay the government less than is owed.

How Do Individuals Pursue Claims for Violations of the False Claims Act?

The U.S. Department of Justice (DOJ) investigates and pursues FCA violations, but individual whistleblowers (called “relators”) can also initiate claims on behalf of the government. These are frequently employees of organizations, contractors, or subcontractors that receive government funding and who witness or credibly suspect fraudulent activity regarding those funds.

As an incentive to come forward and take professional and personal risks, the FCA rewards relators with a percentage of any amount the government recovers from the lawsuit. If the DOJ proceeds with the prosecution based on the whistleblower claim, that individual can recover anywhere between 15 to 25 percent of the recovered proceeds, plus an amount for reasonable legal expenses and attorney fees. If proceeding without the government’s assistance, the whistleblower may recover 25 to 30 percent of what the government recovers. The bounty program also directs up to ten percent of the proceeds to persons other than the relator who provided information the court determines is significant to a suit’s outcome.

The DOJ has recovered more than $62 billion through litigation of False Claims Act violations since 1986 – $3 billion in 2019 alone. FCA actions brought by whistleblowers comprise a significant percentage of both the number of FCA claims and the total damages. In 2019, the share of proceeds paid to relators exceeded $272 million – a noteworthy incentive for potential whistleblowers to expose fraudulent medical and healthcare billing and other forms of fraud and abuse.

Healthcare Whistleblowers Are Protected from Retaliation

Even with such strong monetary incentives to report medical billing fraud, potential whistleblowers in the healthcare system may be reluctant to report their concerns fearing adverse treatment. The FCA prohibits retaliation against whistleblowers and establishes a federal discrimination cause of action for employees who file related actions or attempt to enforce the False Claims Act. Specifically, employers are prohibited from terminating, demoting, threatening, or otherwise discriminating against an employee in the terms and conditions of their employment for engaging in protected activity. Protected activity under the Act includes raising complaints of fraud to a supervisor, refusing to participate in fraudulent practices, opposing or making an effort to stop fraud committed by the company, or pursuing an action under the Act.

After bringing a successful retaliation claim, an employee could be reinstated and recover compensation, including double back pay, special damages, and attorney’s fees and costs. Like all whistleblower protection statutes, the FCA is complex and has numerous exclusions, exceptions, and requirements.

It is essential to understand the reporting process, the statute of limitations, and protections before initiating or pursuing a claim. Consult with an experienced attorney to protect your rights if you believe you have witnessed wrongdoing contrary to the FCA.

(*Prior results do not guarantee a similar outcome.)