Suing for the King - Whistleblower Lawsuits

A few weeks ago, one of our state’s largest hospitals agreed to pay $1 million to settle charges that it had defrauded Medicare, Medicaid and TriCare.  A former bill coder at the hospital alleged that the hospital used physicians’ assistants (PAs) to work as surgical assistants during coronary by-pass operations.  The government does not pay for work done by surgical assistants but it does pay for services required to be performed by licensed PAs.  As a whistleblower, the bill coder may be entitled to a share of the $1 million penalty.  Because she has accused the hospital of retaliating against her for blowing the whistle on the illegal practices, she may be pursuing additional damages as well. 

Both federal and state laws allow people who witness government fraud to file lawsuits on behalf of the government.  In certain cases, the government will join in the suit.  The whistleblower is entitled to 15%-25% of fines assessed and the defendant must also pay the whistleblower’s attorney fees.  As the fines and penalties are extreme, multi-million dollar cases often result. 

Typically, the whistleblower is a former employee.  For example, in 2011, a national pharmacy chain agreed to pay $17.5 million when one of its pharmacists sued alleging that the chain overcharged Medicaid for prescriptions.  The pharmacist received $2,595, 460 of the money in addition to attorney fees.

Today’s cellphones can make an employee’s claims of fraud stick.  In a recent Florida case against Polliwog Dental, an employee used her cell phone to videotape a dentist altering dental charts that had been subpoenaed by the Florida Department of Health. 

Frustrated employers who take disciplinary action against whistleblowing employees can also face fines.  In a Maine case, a dentist fired one hygienist and placed another one on administrative leave after they complained that the dentist did not follow required infection prevention protocols.  OSHA required the dentist to pay the whistleblowers $72,000.

Employers who discover fraud committed by employees often blow the whistle on the employees to avoid being implicated in the scheme.  The owners of Kool Smiles Dental in Abilene, Texas learned that one of their dentists had fraudulently billed the government for work he had not performed.  The dentist hoped to earn bonuses by exceeding daily target production goals set by the practice.  His employer cooperated with the government investigation of the fraud.  In February of this year, the dentist received an 18 month prison sentence and must pay $58,000 in restitution to his employer. 

In some instances, colleagues have filed whistleblower charges.  In a North Carolina case, one dentist reported to the Dental Board that her co-worker subjected several of his inmate patients to physical abuse.  She later sued her employer for retaliating against her in connection with her report. 

Laws and ethical codes require many health care professionals to report colleagues who commit fraud or negligence.  For example, the American Dental Association’s Code of Ethics requires dentists to report “instances of gross or continual faulty treatment by other dentists.”  Dentists must also report colleagues who practice while impaired.  Similarly, the American Nurses Association Code of Ethics requires nurses to report “incompetent, unethical, illegal, or impaired practice.”  In addition, state law requires nurses to report “misconduct or incapacity” of a nurse. 

Finally, patients can initiate whistleblower claims.  If the patient discovers fraudulent billing or other illegal practices, he can consult with an attorney specializing in whistleblower litigation.  Although the complaining patient’s damages may be insignificant, the patient’s report may trigger an investigation into whether the defendant treated others in the same manner as it treated the complainant.  As we’ve seen, if the defendant is a national pharmacy chain or large hospital, those penalties can surpass the million dollar mark.

A review of these cases shows that fighting for the government in court can certainly be safer and more profitable than fighting for it on the battlefield.

Fines And The Cost of Health Care

I was sure that the pharmacist had made an error when he charged me over $200 for those few pills. Perhaps he had inadvertently added a zero to the bill. But he double-checked and insisted that the price was accurate.

Wondering how the cost of medicine had gotten so high, I remembered a recent case  involving a particular pharmacy chain. The Drug Enforcement Agency alleges that this company “lost” 37,000 hydrocodone pills. The street value of the pills is $370,000.00. But the lost profits on the drugs are the least of the chain’s worries. It also faces fines of $29 million for violations of federal controlled substance laws. In addition the state Board of Pharmacy is taking action against it. This makes the $169,000 that OSHA wants from the chain for safety hazards in a separate case look like chump change.

This pharmacy chain seems to repeatedly run into problems with governmental agencies. Just last year it paid $11 million in connection with another DEA investigation. In that case, the pharmacy’s employees created fake DEA numbers on dispensing records, filled prescriptions for unlicensed doctors, and improperly labeled medications. In another case, it paid $658,000 for failing to offer patients consultations regarding their medications. The company also saw a $57,305.50 fine for price scanner inaccuracies, a $650,000 fine for dispensing the wrong medications to patients, and a $250,000 fine for selling out-of-date products and violating patient privacy.  OSHA leveled a $40,000 fine against it for lack of an emergency action plan.  One thing this chain certainly needs is an emergency action plan. 

2012 was another landmark year for this company. It paid $77.6 million for failing to monitor sales of pseudoephedrine. In another case, the federal government called two of the company’s Florida pharmacies an “imminent danger” to the public. It banned the stores from selling controlled substances.

In 2010 this company paid $13.75 million to resolve illegal hazardous waste disposal charges. 2009 brought more fines. The company paid $2.5 million in connection with throwing patient records in dumpsters and $2.8 million for making “unsubstantiated” claims regarding a product that allegedly boosted the immune system.

The above fines total almost $139 million. This does not include the costs of attorney fees, investigation expenses, and employees’ lost time. Moreover, I’m sure this is not a complete list of the fines assessed by state and local governments against this pharmacy chain over the past few years.  Also, it doesn't include the thousands of cases filed by state Pharmacy Boards.

The litany of government actions against this one pharmacy chain raises three important questions. First, isn’t the company simply passing these fines on to the consumer by raising the cost of medications? Second, are these fines having any impact on this company? And third, if the fines are not protecting the public and are increasing the cost of health care, should the government consider other options?

I guess I was lucky that the price of the pills was a mere $200.00. If these fines keep on coming, that price will probably soon double.  Like many people, I can no longer afford to get sick.