Enforcement Trends

Whistleblowing Activity Continues to Grow Despite the Pandemic

Even during a pandemic, False Claims Act whistleblower litigation against labs and other health providers continues to be a highly profitable business for both whistleblowers and the federal government alike. However, while uptick in whistleblower activity is par for the course, new takedowns and fishing expedition information gathering practice by the federal government may betoken potentially disturbing new trends that drive up both compliance costs and risks.

The Thriving Whistleblower Industry

First things first. It takes enormous courage to be a whistleblower and the vast majority of individuals willing to stake their careers and reputations on suing their employers don’t do it for the money. But having said that, it’s also true that winning a qui tam whistleblower lawsuit can net a whistleblower, aka relator, a fortune, including up to 25 percent of whatever the government recovers from the action if it chooses to intervene.

While growth rates have tailed off somewhat since 2010, the federal government still recovers billions of dollars from whistleblowing activity targeting the health care sector each year—including $3.6 billion in 2019—with relators enjoying a big chunk of the profits. And those figures belie the true costs labs and other providers incur in defending claims that turn out to be baseless.

Newly received referrals, investigations and whistleblower actions

The ‘Takedown’ Effect

The pandemic has done little to blunt whistleblowing investigations and litigation. On the contrary, 2020 and 2021 are shaping up to be record years for recoveries due, in part, to the Department of Justice’s (DOJ) massive healthcare takedown initiatives. In 2019, it was Operation Double Helix targeting genetic testing fraud.

And lest anybody thought 2020 might bring a lull, in late September, the DOJ unveiled Operation Rubber Stamp, the largest healthcare takedown in the agency’s history charging more than 345 people across 51 federal districts, including 100 doctors, with submitting over $6 billion(!) in false claims to public and private insurers, mostly for telemedicine services. Numbers like that are likely to fuel even more and bigger probes in the future, experts say.

From Investigation to Fishing Expedition

The step-up in enforcement is reflected not only in the higher numbers of charges and recovery amounts but also the aggressiveness of investigators’ tactics. “Burdensome investigative demands for documents seem to be on the rise,” notes Hogan Lovells’ attorney Craig Smith quoted in a recent article from Modern Healthcare. Other attorneys cited in the excellent piece note that investigators often start with broad demands and may ask a provider for five to 10 years worth of data, requests that can cost providers tens or even hundreds of thousands of dollars to fulfill.

The investigators’ role is to gather evidence and root out wrongdoing. But investigators are, in essence, flipping the script, counting on the providers to do the extensive data analysis and prove that they did nothing wrong. And as enforcement budgets continue to tighten, lawyers expect such fishing expedition tactics to continue and grow more common.

Takeaway

Whistleblowing remains a major concern not just for labs that do ill but those that work like heck to do right. But the fishing expedition type of investigation does represent something of a novel, and hopefully, short-lived phenomenon. The good news is that attorneys say that if you cooperate and work with investigators, whether state or federal, you can often get them to agree to narrow the scope of their requests for records and data.

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