10 Traps to Avoid When Investigating Potential Whistleblower Complaints

If one of your employees comes forward to report a billing, coding, reimbursement or other potential violation, the liability of your lab will turn on two critical questions:

  1. Is the employee right?
  1. Did you respond appropriately to the allegation?

Issue 1 is "sexier." But in the real world, it’s Issue 2 that makes or breaks most qui tam whistleblower claims. An immediate, thorough and effective investigation is crucial to not only defending against qui tam claims but preventing employees from even bringing them in the first place. Unfortunately, investigations can be tricky and mistakes are easy to mistake. Here are 10 of the most common mistakes and what your lab should do to avoid them.


Establishing procedures for fielding and responding to internal complaints is a central element of a laboratory compliance program. According to the OIG Model Compliance Plan for Clinical Laboratories, when labs learn about "potential violations or misconduct [involving their participation in federally funded health care programs], they must investigate the matter promptly.

The investigation is no mere formality. It is crucial for labs to determine if a violation has actually occurred so that they can take necessary steps to address the problem. The investigation also has to be accurate. False positives can expose your lab to needless penalties, not to mention bad publicity, for violations it did not actually commit; false negatives, on the other hand, can result in missed reporting and repayment deadlines, whistleblower lawsuits and higher penalties than your lab would have had to pay if it had self-disclosed.

Avoiding 10 Common Pitfalls
Although every situation is different, there are 10 common pitfalls that cause investigations to go wrong.

1. Rushing to Judgment
The Trap: Decades ago, the tendency was to downplay employee complaints and sweep them under the rug. But the rise of qui tam whistleblower lawsuits has changed attitudes in a big way. "We have gone from complacency to panic," according to one attorney who asked not to be named. "Labs are still rushing to judgment but now, instead of presuming that claims are baseless, the presumption is that they must be true." In addition to unnecessary self-reporting, premature self-condemnation sows chaos and costs innocent employees their jobs.

How To Protect Yourself: Overreacting to whistleblower claims is just as serious as underreacting to them. So do not rush to judgment one way or the other. Allow the investigation to run its course before deciding whether the allegation has merit and requires corrective action.

2. Failure to Screen Complaints before Investigating
The Trap: Whether out of spite or innocent mistake, employees are apt to use your lab’s hotline to report transgressions that, even if true, are not violations, triggering costly, time-consuming and highly disruptive investigations that should have never been brought.

Example: A lab holds annual summer picnics for its client physicians where free hot dogs and burgers are offered. A lab employee complains that the arrangement is an illegal kickback. The lab reflexively launches an investigation and overlooks a crucial fact: gifts of nominal value like hamburgers and hot dogs do not violate anti-kickback laws. The investigation lasts a full week before sense is restored and it is called off.

How To Protect Yourself: First, you need to educate your employees about the compliance rules so they do not submit false reports. You also need a mechanism to filter frivolous complaints so that you do not automatically start an investigation every time the hotline rings.

One of the most common investigation mistakes is failing to consider all of the potential evidence.

3. Waiting Too Long to Start
The Trap: As a general principle, delaying an investigation complicates its work and undermines its reliability. Over time, memories fade, witnesses leave and physical evidence disappears. And in the health care fraud context, acting fast is imperative so that if the investigation does reveal wrongdoing you can comply with the deadlines to report it and make any necessary repayments to the government.

How To Protect Yourself: Although you need to move fast, you cannot trade speed for fairness and thoroughness. Rushing an investigation is just as harmful as foot dragging.

4. Using a Biased Investigator
The Trap: One frequent mistake is allowing somebody with a personal interest in the case handle the investigation. The rule of thumb: The investigator’s only agenda should be to determine the facts, not prove or disprove the charge.

How To Protect Yourself: Make sure the investigator is trustworthy, impartial and not related to or in any other special relationship with the accuser, accused or operation being investigated. Do not let supervisors investigate subordinates and vice-versa. Make sure the investigator doesn’t have a personal or professional stake in the outcome, e.g., having your billing director investigate reports of improper billing and coding. If you can’t find somebody objective and impartial within your organization, bring in an outsider to investigate.

5. Not Considering All of the Evidence
The Trap: One of the most common investigation mistakes is failing to consider all of the potential evidence.

How To Protect Yourself: There are two key sets of evidence your investigation must cover:

Witness accounts: Be s ure to interview (or a t least g et written statements from) third parties that you have reason to believe can shed light on what happened. Third party testimony is especially crucial in he said/she said cases.

Documentary evidence: O ther c rucial e vidence t o c onsider i n l ab r eimbursement investigations include documents like lab test requisition forms, physician correspondence, submitted claims and test reports.

6. Not Letting the Accused Confront the Accusations
The Trap: In cases where one employee accuses another of wrongdoing, it’s not enough just to interview the accuser. You must also give the accused a chance to tell his/her side of the story. You also have to let them know exactly what they’re accused of so they get a fair chance to respond.

How To Protect Yourself: Let the accused know exactly what they’ve been accused of doing and allow them to respond. However, it might be okay to withhold the accuser’s identity in some cases, e.g., where the accuser is a subordinate of the accused. It might also be not just appropriate but necessary to suspend or put the accused on temporary leave if his/her presence might intimidate witnesses or otherwise compromise the integrity of the investigation.

Doing an appropriate internal investigation isn’t enough; you must also able to prove that your investigation was through, fair and impartial.

7. Asking ‘Leading’ Questions
The Trap: Interviews are a breeding ground for mistakes, including leading of witnesses—that is, phrasing questions in a way that cues the witness to respond in a certain way.

How To Protect Yourself: The investigator should draw up a list of questions before the interview and, if possible, submit it to counsel or somebody else knowledgeable about investigatory interviewing to verify that the questions are simple, properly phrased and free of cues that may inadvertently (or advertently) lead the witness.

  • Wrong: "Did the employee accused of paying kickbacks ever say anything to you about offering free software to ordering physicians?"
  • Right: "Did the accused ever say anything about marketing to physicians that you considered objectionable or inappropriate?"

8. Interviewing Witnesses in Front of Each Other
The Trap: Requiring accusers and other witnesses to tell their story in the presence of the accused (or other persons involved in the case) can be intimidating and damage the reliability of their testimony.

How To Protect Yourself: Be aware of and make efforts to control risks of witness collaboration and intimidation. At a minimum, make sure each witness is interviewed separately and not in the presence of other witnesses.

9. Not Following Your Own Investigation Procedures
The Trap: A surefire way to taint your investigation is to deviate from your lab’s investigation procedures without explanation or justification.

How To Protect Yourself: Don’t confuse the need for consistency and adherence to procedure for lack of flexibility and remember that there may be occasions where departing from standard routine is not only justifiable but necessary to ensure fairness.

10. Not Documenting Investigation
The Trap: Doing an appropriate internal investigation isn’t enough; you must also able to prove that your investigation was through, fair and impartial.

How To Avoid It: Create an investigation report form that requires the investigator to list the steps taken, witnesses interviewed, etc.

Takeaway: Your first line of defense against fraud violations and misconduct is a great lab compliance policy. But policies can only do so much. Sooner or later, you’re probably to face an allegation from one of your employees. At that moment, it’s critical that you, as lab director, ensure that everyone stays calm and refrains from panicking into judgment until a fair and thorough investigation is carried out. Avoiding the 10 mistakes above will go a long way toward accomplishing that mission.


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