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.