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Employment Law: How a Qui Tam Whistleblower Case Works

If you work for a company that submits bills to government programs such as Medicare or Medicaid (for example blood testing labs, nursing homes, ambulance companies, hospitals, and others) and find yourself the victim of discrimination, harassment, or joblessness after reporting suspected billing fraud to your boss, take heart. A little-known statute provides job protection plus a substantial monetary reward if you follow the proper legal procedures.

Fraud against the government is rampant. For example, according to government audits, as much as 10% of Medicare charges are fraudulent. Some examples of fraud are:

  • Billing more than once for the same service

  • Charging for services not performed

  • Offering free items or services in exchange for a Medicare or Medicaid number

  • Billing for expensive equipment and only providing cheaper equipment

  • Waiving copayments routinely

  • Someone other than the physician completing the Certificate of Medical Necessity

Health care fraud affects everyone by raising the cost of health care and diminishing its quality. A little-known statute enacted during the civil war "deputizes" private citizens in the war on all types of fraud against the government - not just health care fraud - and rewards them if the government recovers money as a result of information they supplied.

The Civil False Claims Act, also known as Lincoln's Law, the Informer's Act, or the Qui Tam Statute, 31 U.S.C. Section 3729 et seq., allows a private person to sue a person or company who is knowingly submitting false bills to the federal government. The Act also protects qui tam plaintiffs who are "demoted, suspended, threatened, harassed or in any other manner discriminated against in the terms and conditions of employment" for acts done in furtherance of filing a claim under the Act. This provision allows reinstatement, double back pay, interest on the back pay, plus special damages including litigation costs and reasonable attorneys' fees.

More than 2,400 qui tam suits have been filed since 1986, when the statute was strengthened to make it easier and more rewarding for private citizens to sue. The government has recovered over $2 billion as a result of the suits, of which almost $340 million has been paid to relators/whistleblowers.

If the qui tam suit alleging false billings is successful, the whistleblower (known as a "relator") will also be entitled to 15-30% of the government's total recovery, which includes damages for the false bills, tripled, plus civil penalties of from $5,000 to $10,000 per false claim. To recover this bounty, the relator must have complied with the complex and unusual statutory requirements, however. Merely providing information to a hotline will not entitle the relator to a recovery under the False Claims Act.

To state a cause of action under the False Claims Act, a qui tam plaintiff may allege that defendant either:

  1. knowingly present[ed] or caus[ed] to be presented, to an officer or employee of the United States government . . . a false or fraudulent claim for payment or approval;
  2. knowingly, ma[de], use[d], or cause[d] to be made or used, a false record or statement to get a false or fraudulent claim paid by the government;
  3. conspir[ed] to defraud the government by getting a false or fraudulent claim allowed or paid.

31 U.S.C. § 3729(a)(1) - (3). 31 U.S.C. §§ 3729(a)(4) - (7) set forth several other theories that may be applicable in specific circumstances.

Unlike most other lawsuits, a complaint under the False Claims Act must be served on the government but must NOT be served on the defendant until ordered by the court, must be filed under seal, and must be buttressed by a comprehensive memorandum, not filed in court, but served on the government, detailing the factual underpinnings of the complaint, together with copies of all relevant documents. It is not permissible for the attorney or the plaintiff/relator to discuss the case or to disclose its existence to anyone, including the defendant and the media, as to do so could impair the government's ability to investigate the allegations in secret. Failure to follow these unique statutory requirements can result in dismissal of the action. After the complaint is filed under seal, and the memo and documents are served on the government, it has 60 days to intervene or decline to intervene, move for an extension of time to determine whether to intervene, seek dismissal of the action, or settle the case. §3730(b)(4). Usually, the government will request numerous extensions of the 60-day initial investigatory period, however, as 60 days typically seems to be an unrealistically short period of time for the government to complete an investigation.

Upon completion of its investigation, the government has the option to take over the case ("intervene"). Regardless of whether the government intervenes, though, the whistleblower, (if he or she followed the proper procedures, and is not otherwise barred from recovery), is still entitled to a share of the recovery, and may pursue the case him or herself on behalf of the government.

Recently-available Department of Justice statistics show that the average recovery by the government in all qui tam cases where there has been a recovery is $8.6 million, with $1.167 million as the average relator's award. Relators' awards in cases where the government participated total $319 million (an average of 16% of recovery). In cases where the government did not participate, relators' awards total $17.2 million (an average of 29%).

While the statute is an effective tool against fraud, it is limited in scope. For example, the following are not actionable under the False Claims Act:

  • Certain actions against armed forces members, members of Congress, members of the judiciary, or senior executive branch officials.

  • Claims, records or statements made under the Internal Revenue Code of 1986.

  • Suits based upon allegations or transactions that are already the subject of a civil suit or administrative money penalty proceeding to which the government is already a party.

  • Cases based upon allegations or transactions that have been publicly disclosed unless the relator has direct and independent knowledge of those allegations or transactions, and has provided the information to the government prior to filing suit.

  • Mismanagement by government contractors that does not rise to the level of knowingly-made false statements to the government for purposes of getting a claim paid.

  • The government's own ineptitude or waste. Only those who have made false claims to the government are proper defendants under the statute.

If you are seeking redress for wrongful termination or employment discrimination, or are suspicious about unusual billing practices, ask your lawyer about the powerful remedies offered by the False Claims Act.

About the Author: Robin Page West is a Baltimore, Maryland attorney who represents relators in qui tam cases around the country. She lectures nationally on representing whistleblowers. Ms. West has appeared on National Public Radio's Morning Edition, in the Washington Times, the ABA Journal and BNA's Health Care Fraud Report regarding qui tam litigation, and has authored numerous articles on qui tam.