In this episode, we’re pleased to welcome Jonathan Tycko, Partner at Tycko & Zavareei, to discuss whistleblowing in healthcare and how to avoid lawsuits.Learn how to listen to The Hospital Finance Podcast® on your mobile device.
Highlights of this episode include:
- What is qui tam lawsuit under the False Claims Act?
- Are qui tam whistleblowers anonymous?
- Rewards to qui tam whistleblowers
- Key areas in healthcare that are the focus of qui tam lawsuits
- How healthcare companies can avoid ending up as a defendant in a qui tam lawsuit
Kelly Wisness: Hi, this is Kelly Wisness. Welcome back to the award-winning Hospital Finance Podcast. We’re pleased to welcome Jonathan Tycko, Partner at Tycko & Zavareei. In his 25 years of practice, Jonathan Tycko has represented a wide range of clients, including individuals, Fortune 500 companies, privately held businesses, and nonprofit associations. Although he continues to handle a variety of cases, his current practice is focused primarily on helping whistleblowers expose fraud and corruption through qui tam litigation under the False Claims Act and other similar whistleblower statutes. Mr. Tycko has been recognized by his peers as a leader in the field of whistleblower representation and qui tam litigation. He currently serves as a co-chair of the conference committee of the Taxpayers Against Fraud Education Fund. Prior to founding Tycko & Zavareei LLP in 2002, Mr. Tycko was with Gibson, Dunn, & Crutcher LLP, one of the nation’s top law firms. He received his law degree in 1992 from Columbia University Law School and earned a BA degree with honors in 1989 from the Johns Hopkins University. Today, we’re going to discuss whistleblowing and healthcare. Thank you for joining us for this very interesting topic, Jonathan.
Jonathan Tycko: Yeah. Thank you for having me. I look forward to this discussion.
Kelly: Great. Well, let’s get to it then. What is a qui tam lawsuit under the False Claims Act, and who can bring one?
Jonathan: So, the False Claims Act is the primary federal law that makes it unlawful to commit financial fraud on the government. And the statute covers healthcare because as all of your listeners know, a lot of healthcare is funded by the government. So, any type of healthcare fraud, and we can kind of get into some of the examples of what that might be, but any kind of fraud in the healthcare industry often will result in a violation of the False Claims Act. And the False Claims Act has a unique provision that we call a qui tam provision which is sort of a Latin phrase. But what it means is that a private citizen, usually a whistleblower, can bring a lawsuit in the name of the government under the False Claims Act to try to recover money that was defrauded from a government program. And then if the person who brings the case, the whistleblower, the technical word for that is the relator, if the relator is successful and there is actually money recovered for the government, then that person gets a financial reward which is a share of the money that is recovered for the government. So, there’s a financial incentive to blow the whistle on that type of fraud. So that’s a quick summary. It’s a statute that’s been around for a long time, and there’s a lot of details, but that’s basically what it does.
Kelly: Okay, well, thank you for that. And are qui tam whistleblowers anonymous?
Jonathan: Yeah, that’s a good question. And this is often one of the first things that people ask me when they first contact me about these situations. Because as you might imagine, blowing the whistle, particularly if you’re an employer of the company that you’re blowing the whistle on, that can often come with some serious professional risks. People get blackballed out of the industry, or they just can be alienated in their place of business. So often people ask me, “Will my employer find out that I’ve blown the whistle through one of these key tam lawsuits?” And so the answer is that whistleblowers under the False Claims Act are anonymous for a while. So, when these cases are filed, they are actual lawsuits. They’re filed in federal court, but they are filed under seal. And what that means is that they are not public. Normally, you can walk into a courthouse, and you can actually look at the records of the cases that the court is handling. But these qui tam cases under the False Claims Act are not part of the public record. They’re filed under seal, and the defendant, the company, or the person you sued, doesn’t know about the lawsuit.
Again, this is the exact opposite of a normal lawsuit, where the defendant gets served with the complaint pretty much right away, and the case launches. With these cases instead, the complaint and the evidence and support of the complaint is given to the government, the Department of Justice, and the government will investigate your allegations. And during the period of that investigation, the case remains under seal. And those investigations typically go on for several years. So, during that entire seal period, the identity of the person bringing the case is essentially secret, and the government won’t disclose that to the potential defendant. Once the government finishes its investigation and decides what to do with the case, at that point, the case can become unsealed and the identity of the person bringing the case becomes known. So, there is temporary anonymity, and that anonymity typically lasts for several years.
Kelly: Wow, that is so interesting. Thank you for that. How are rewards to qui tam whistleblowers determined?
Jonathan: So, the whistleblower who brings the qui tam suit gets a percentage of whatever is recovered for the government, and the statute says that that percentage ranges between 15% and 30%. And where you fall in that range depends upon a number of different factors. So, you can imagine a case that recovers, let’s say, $10 million for the government, which would actually be a relatively small case in the healthcare world, but let’s say you bring a case and ultimately the government recovers $10 million as a result. Then the whistleblower’s reward would be somewhere between one-and-a-half million and $3 million. So, these rewards are quite substantial. The government really does pay them, and literally, billions of dollars have been paid to whistleblowers over the years under the False Claims Act.
Kelly: Wow, that’s much more than I would have anticipated. What are some of the key areas in healthcare that are the focus of qui tam lawsuits?
Jonathan: So, in the healthcare sort of realm accounts for a majority of the recoveries in qui tam lawsuits every year. And again, the reason for that is, just as your listeners know, so much government money goes to pay for healthcare in our country through Medicare, Medicaid, the VA system, and so forth. And so typically somewhere around 65 to 70% of qui tam recoveries every year are in the healthcare world. But that is spread out over lots and lots of different types of cases. So, I can just kind of list some of the sort of more common types of fraud cases that we see in the healthcare realm under the false claims act. So that could include upcoding or unbundling. This is sort of basically playing games with the billing codes that are used to bill for healthcare services and products, certainly billing for unnecessary medical services. That could be lab testing often, or another example would be in the nursing home context. There have been a number of cases where nursing homes were ordering and then billing for essentially unnecessary therapies, physical therapies, that type of thing.
Violations of the anti-kickback statute are also considered false claims act violations, and so kickback cases tend to be very, very large. And some of the biggest recoveries ever in the healthcare space have been for violation of the anti-kickback statute, which just basically makes it illegal to use financial incentives in order to get somebody to use your product or your service. In the pharmaceutical area, violations of Medicaid’s best price or drug rebate requirements, there have been a number of very large cases in that area lately. Violations of electronic health records requirements, there have been cases involving fraud in the certification or the use of EHR software, and those are just sort of a few examples. But if you look at the whole panoply of healthcare cases, you’d find lots of other types of fraud. People who are trying to commit fraud find new and creative ways, and every year it seems that there are new areas of focus. I mean, right now HHS OIG is very focused on telehealth issues because of the sort of COVID-related expansion of the telehealth market and whether or not sort of all of the services that are being billed for the telehealth world are really kind of necessary services. So that’s an area of focus now, but it literally changes year to year.
Kelly: Oh, I bet. Yeah. That makes a lot of sense. And other than the False Claims Act, what other laws are out there that give rights to healthcare whistleblowers?
Jonathan: Well, the Federal False Claims Act, which I’ve been talking about, is the main one, but there are other laws out there that provide protections to whistleblowers and offer rewards for blowing the whistle on fraud, and some of the other ones that could intersect with the healthcare world are state-level False Claims Act. So, most of the states in the country have a law that is very similar to the Federal False Claims Act, but that covers money spent by the state as opposed to the federal government. And so because states fund Medicaid, those state-level FCAs are often involved in healthcare cases. There are some states, most notably California and Illinois, that have qui tam whistleblower statutes that apply to private insurance. So, fraud on private insurance carriers would be covered by those laws in California and Illinois. That could be, for example, workers comp is often a private insurer, and so fraud in the workers compensation space, providing unnecessary medical treatment or therapies and then billing that to workers’ compensation insurance, that would be covered by those state-level insurance fraud statutes.
And then there are also whistleblower reward statutes in the securities and tax areas that are run by the Securities and Exchange Commission on the security side and the IRS on the tax side. So sometimes the frauds that we see in the healthcare space also sort of incidentally violate securities laws or tax laws. And so those are other avenues that a whistleblower could take.
Kelly: Wow. That’s a lot of great information. Thank you for that. On the management side, how can a healthcare company best avoid ending up as a defendant in a qui tam lawsuit?
Jonathan: I get asked this all the time. I think in some sense because I don’t represent the management side, I’m normally representing the whistleblower. I think sometimes I actually have a better perspective on this than some of the lawyers who represent the companies because I actually see what the whistleblowers are going through and can kind of see how they got to that point. By the time a whistleblower has contacted me, the company’s already in trouble. They have an employee or a former employee who thinks the company has basically violated the law, and they’re willing to go outside the company to deal with it. In my experience, that is never the first thing that the employee thinks to do. Employees of companies are instinctually loyal to the company and generally think, particularly in the healthcare world, that what the company is doing is something that has use. You’re providing healthcare. You’re providing care. You’re developing new drugs to cure diseases. These are companies that have positive missions.
And so often the employees, when they believe that the company is doing something wrong and even violating the law, their first instinct is not to blow the whistle outside the company. It’s to try to fix the problem internally. And usually, by the time they’ve come to me, they’ve tried to do that and have been rebuffed by the company. So, what I often see is that the reaction of the company to the whistleblower is very negative. Instead of listening to the whistleblower and taking their concerns seriously, the person is kind of branded as a misfit, as a troublemaker, and the problem is brushed under the rug, or the company comes up with some justification for what they’re doing and some reason to sort of sideline the whistleblower, sometimes even fire them. So, the companies that have the best internal compliance systems are really the ones that are best positioned to avoid getting into this problem in the first place.
So, my advice would be you need to take compliance seriously. It’s not something to just be dealt with, but not in a serious way. And if you have somebody internal to the company who is telling you that the company is doing something illegal, take that person really seriously and listen to what the person is saying very, very carefully. Don’t go into a defensive crouch. Don’t just dismiss the person as a troublemaker. Don’t view it as a personal attack. Just listen to what the person is saying. Because if they’re coming to you, to the management of the company with that problem, they are trying to help you, not hurt you. And if you sideline them or ignore them or retaliate against them, you’re just going to ask for trouble because then that person will look to the outside, will find somebody like me, and at that point, you’re on the receiving end of a lawsuit.
Kelly: That’s some really good advice, Jonathan. I mean, I can’t even imagine what those employees must go through when they are trying to bring something to the forefront and then be rebuffed. I’m sure you’ve seen it all in your many years of doing this.
Jonathan: Yeah. And I guess I would just add one thing to that, which is that the False Claims Act and all these other laws that I’ve mentioned, they also have what are called anti-retaliation provisions, which means that not only is it illegal to commit fraud on Medicare, for example, but it’s also illegal to retaliate against an employee for blowing the whistle on that fraud. So, if the company fires the employee or demotes them or takes other retaliatory action against them, they’re actually exposing themselves to even more liability, and the employee may have other claims against the company on their own behalf for that retaliation.
Kelly: Sure. Wow. Yeah. Like I said, I’m sure you’ve seen and heard it all and really appreciate all this great information that you shared with us today and for sharing your knowledge on whistleblowing and healthcare.
Jonathan: Well, thanks for letting me talk about it. I think I’m one of the lucky lawyers who gets to do something really interesting and really fun.
Kelly: And you sound very passionate about it too. So that’s always a good thing.
Jonathan: Yeah. I love this area of the law, and I hope that what we do with our whistleblower clients, ultimately, makes the industry better and stronger and more law-abiding.
Kelly: Yes. Definitely. And if listeners want to get in touch with you, how best can they do that?
Jonathan: Well, there’s a number of different places you can find me. I mean, if you just Google my name, Jonathan Tycko, you’ll find me.
I’m all over the web, but our law firm has a website that is just devoted specifically to this area of the law. The web address is fraudfighters.net. So that’s a great source of information for whistleblowers or about these areas of the law that we’ve just talked about. And my biography and ways to contact me are on that website. You can also find me through my LinkedIn profile or on Twitter. So, lots of different ways. I’m easy to find.
Kelly: Great. Well, thank you for that, and thanks again for joining us. And we appreciate you all joining us for this episode of the Hospital Finance Podcast. Until next time.
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