The Department of Justice recently announced a record breaking level of recoveries in settlements and judgments in civil cases brought under the False Claims Act (FCA) for the fiscal year 2012. The federal government alone saw recovery of $4.9 billion. This was a 300% increase over the recovery reported for 2011.
Notably, $3 billion of the funds recovered were for healthcare fraud. While two of the three top settlements this year came from pharmaceutical and medical device companies, the broader healthcare arena is still expected to see a significant increase in further activity under the FCA. It is important to note that two-thirds of the recovery under the FCA resulted from whistleblower actions. The Justice Department noted that the increased incentives for whistleblowers under the various amendments to the FCA resulted in a significant increase in the number of investigations and recoveries by whistleblower suits. The incentives have clearly created a situation where the federal government does not have to initiate an investigation or encourage activity by former or current employees in health related industries in order to trigger these actions.
All healthcare related businesses should take notice of the increase in whistleblower actions under the FCA. This will require employers to make sure that they update and evaluate their compliance programs on a regular basis and to carefully manage their employment relations issues when there are complaints raised by employees about potential misconduct or abuse in the delivery of health services. Employers in the healthcare area should carefully screen or interview departing employees regardless of whether they are being terminated or are leaving on their own accord to ensure that these employees are not going to become future whistleblower plaintiffs.
The FCA includes a “qui tam” provision that allows individuals who are not affiliated with the federal government to file an independent civil action on behalf of the government based upon charges of fraudulent conduct in violations of the FCA. The individual filing the action could receive a portion of the recovered damages (15% to 30%). The government can recover up to six times the amount of money paid out under the false claim. In addition, there is a penalty of up to $11,000.00 for each false claim. Therefore, the whistleblower could reap the benefit of these multipliers and increase their recovery. This could include claims for Medicare fraud and improper healthcare billing practices. Under the FCA, any person or entity that has evidence of misconduct, abuse, or fraud incurred against the federal government under a federal contract or program can act as a whistleblower.
Even under the Patient Protection and Affordable Care Act (aka ObamaCare), there are added incentives for whistleblower type actions to assist the federal government in rooting out fraud and abuse. The Act also provides protection to employees from retaliation for reporting misconduct. Obviously, with the new release of regulations and the uncertainty surrounding many of the provisions for reimbursements and utilization under ObamaCare, the opportunity for whistleblower type actions could dramatically increase.