A Whistleblowers Journey John W Schilling EthicSolutions LLC
Health Care Fraud Medicare spending in FY 2008 exceeded $450 billion According to Taxpayers Against Fraud (TAF), the U.S. Government estimates 9% of all Medicare spending is paid in error. Simply stated, healthcare is where the money is! The magnitude of this expenditure will create fraudulent activities.
False Claims Act (FCA) The False Claims Act is the number one tool the U.S. Government has to fight fraud. Since 1986, the FCA has returned $22 Billion to the U.S. Government, the majority of which comes from health care
False Claims Act History Qui Tam Latin Phrase Meaning He Who proceeds For the King as Well as For Himself Also known as Whistleblower Law or Lincoln s Law Enacted in 1863 Civil War Union Army Allows Private Citizens (Relators) to Sue on Governments Behalf
False Claims Act Currently, the Act provides that successful Relators shall receive between 15% -30% of the Government's recovery. Defendants found to have defrauded the Government are liable for Treble Damages and a $5,000 - $10,000 Penalty for each False Claim. The lawsuit is filed Under Seal The Act provides Whistleblower Protections from retaliation for those coming forward with evidence of fraud.
Qui Tam Actions A qui tam complaint is filed under seal in Federal Court Copies are provided to the Department of Justice, and the assigned Federal District Court Judge May have Parallel Proceedings Civil Criminal Remain under seal for a period of 60 days
Qui Tam Actions After 60 days the Government must file a motion requesting an extension The Government will conduct an investigation to include subpoenas for documents, witness interviews, and consultations ti with experts.
Qui Tam Actions At the conclusion of the investigation, the Government must choose between one of three options under the FCA. 1. Intervene in one or more counts of the qui tam complaint 2. Decline to intervene 3. Move to dismiss the complaint
Qui Tam Actions If the Government intervenes they serve as the Plaintiff and prosecute the case If the Government declines to intervene, the relator may prosecute on behalf of the Government The Government may also attempt to settle the pending action prior to or simultaneous to intervention
Qui Tam Actions The relator may receive 15-25% of the recovery or judgment if the Government intervenes. The average is 17% If the relator pursues the case without Government intervention, ti he/she h can receive 25-30% of any recovery
Whistleblower Protection Strong anti-retaliation provisions against whistleblowers were made part of the 1986 Amendments to the FCA A private cause of action was created for employees who are victims of retaliation
Whistleblower Protection Any employee who is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against, shall be entitled to relief Such relief shall include reinstatement with the same seniority status, 2 times the amount of back pay, interest on the back pay, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys fees.
FCA Stats Average of 400 FCA cases filed each year 80% are Declined (320) Of the Declined only 20% move forward Average case takes 39 months An Average of 100 cases are settled each year 50 will settle for less than 2 million 50 will settle for more than 2 million Of those 4 to 7 will settle for more than 50 million In 2008, 7 cases settled for more than 50 million with 3 of them settling for more than 100 million
WHAT IS A COST REPORT A report of operating costs for a specific time period Year end reconciliation of interim payments to actual costs A Summary Claim against the Government Sets the Part A provider payment rate (some providers)
Medicare Settlement Medicare Costs (Less) Medicare Payments (Equals) Under or Overpayment
Treatment of Genuinely Disputed Areas Mandatory Procedures Cost Reports filed under protest Provider disclosure of protest
Pre - Test How would you defraud Medicare and Medicaid through the cost report? That s Right Overstate the Cost
FRAUDULENT PRACTICES Costs Not Related to Patient Care Costs Not Allowable Improper Cost Shifting Pass Through Costs Overstating Bad Debts Overstating Disproportionate p Share (DSH) Overstating IME/GME Overstating Organ Acquisiton
Cost Report Fraud Historically Inadequate Enforcement Providers Maintain Aggressive reporting strategies Financial i Reporting Requirements Contingencies Reserve Cost Reports
Reserve Cost Report A reserve cost report is a second Medicare cost report that is more conservative than the as filed Medicare report Utilized by providers as a financial tool to determine potential ti Medicare liabilities
A WHISTLEBLOWER S JOURNEY
A SERIOUS ISSUE? New Job with Great Earning Potential & Career Growth Auditor Phone Call The Meeting Gut Instincts
Are Reserves A Problem? Overwhelming Evidence Reserve Cost Reports New Management Voiced Concerns No Action Taken No Compliance Officer
DILEMMA: WHAT WOULD YOU DO? Be Silent Continue To Voice Concern Notify Intermediary/Government Contact Attorney For Advice
Things to Consider Implications of Career Safety Altering Friendships Do you Have Enough Evidence? Are you Prepared to Testify?
WHAT I DID! Contacted Law Firm Do I have Exposure? Are These Reserves Criminal? Is This a False Claims Case? Copied Some Documents Found New Job (August 1995)
MY DECISION Prominent Whistleblower Law Firm - Informed of Jim Alderson Educate My Attorneys of the Fraud Travel to D.C. With Evidence
WHAT HAPPENED NEXT Complaint Filed in June of 1996 3 Months Later DOJ Civil Meeting Meet with FBI & Criminal AUSA Grand Jury Testimony Seal Extensions Numerous Follow up Meetings with Government
UNDERCOVER
CRIMINAL INVESTIGATION HEATS UP! Confidential Informant Undercover Operative Meetings Observations Tape Recordings Search Warrants (July 1997) Indictments
ESCAPE TO WISCONSIN Civil Case Slows Down Concerns of Retaliation Publicity of Criminal Trial New Job
CRIMINAL TRIAL NEARS Various Delays In Criminal Trial Trial Is Moved From Ft Myers To Tampa Judge Sets Trial For May 1999 Civil Case At A Standstill Awaiting Outcome of Criminal Case
New Years Celebration 1998 12/30/98 Government Intervenes 12/31/98 Media Reports Unsealing Government Requests Me To Remain Silent To Media
MAY 1999 TRIAL BEGINS Witness Preparation FBI AUSA Attorney
GAME DAY Full Courtroom Defendants Are Present Jury Watches/Listens Intently 3 1/2 Days On The Stand KPMG Case Is Unsealed Defense Attorneys Cross Examination / Personal Attacks
CONVICTIONS Convictions (July 1999) My Civil Cases Can Move Forward More Criminal Trials Likely
Civil Update 2000-2001 May, 2000 Partial Columbia/HCA Settlement of 745 Million & 95 Million in Criminal penalties (does not include cost reports). Company Pleads Guilty October, 2001 KPMG Case Settles for 9 Million Settlement Negotiations continue on cost reports but stall
Criminal Update 2000-2002 Criminal investigations continue Further assistance is provided d to law enforcement No New Indictments Convictions are overturned Government ends criminal investigation
HOW IT ENDED 2002-2003 Depositions begin after criminal investigation is over December, 2002 HCA Agrees To Pay A 898.5 Million Settlement Alderson and Schilling are Awarded The Largest Relator s Share (Reward) in US History No Rose Garden Ceremony
MAKING A DIFFERNCE Formed EthicSolutions, LLC Author Undercover How I Went From Company Man to FBI Spy and Exposed the Worst Healthcare Fraud in US History
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