Whistle While You Work: How the False Claims Act Amendments Protect Internal Whistleblowers

Abstract

Fraud on the federal Medicare and Medicaid programs is pervasive. Due to the complexity of federal billing protocols in the healthcare context, evidence of fraud is frequently hidden within an organization, “buried in mountains of paper or digital documents.” Because law enforcement officials will always be outsiders to organizations in which fraud is occurring, insiders who are willing to blow the whistle provide the most effective way for outsiders to learn that wrongdoing has occurred.  For instance, without the cooperation of inside whistleblowers, how could government investigators discover that an orthopedic center regularly claims reimbursements for the most expensive form of pre-operation visit, when in reality, the visits at issue took only five minutes or less? Likewise, how could investigators learn that a hospital fraudulently billed for hospitalization services for heart transplant patients who had no objective medical need for such treatments? These types of healthcare fraud require inside knowledge not only of the relevant paper trail, but also of the true medical condition of the patients or the actual services rendered that only an inside witness could have.

Given these challenges, the civil False Claims Act (hereafter referred to as “the False Claims Act,” “the Act,” or “the FCA”) is structured to prevent and detect fraud on federal healthcare programs and on the federal government generally. The False Claims Act forbids any person from knowingly making false or fraudulent claims on the public fisc. Actions under the sections forbidding fraud are often referred to as “FCA fraud claims.” Unlike other anti-fraud statutes, the FCA contains unique procedural devices that actively enlist private citizens with inside information in the fight against fraud. Under the current version of the Act, both private citizens, also known as “qui tam relators,” and the Attorney General of the United States may file civil actions on behalf of the federal government. If any case originally filed by a qui tam relator succeeds, the relator and the government split any recovery, which can include treble damages and civil penalties for each false claim.

But even with the monetary incentive of a contingent share of any recovery, potential whistleblowers often face a difficult choice between reporting their concerns to federal attorneys or keeping quiet. Most whistleblowers with inside information are also employees of the defendant, such that they often risk termination whenever they expose their employer to FCA fraud liability or otherwise undermine their employer’s efforts to defraud the government. To counteract these obstacles to whistleblowing, Congress added a retaliation provision when it revised the FCA in 1986. This provision holds defendant employers liable for any retaliation against a plaintiff employee “because of lawful acts done by the employee on behalf of the employee or others in furtherance of an action under” the FCA fraud provisions, including “investigation for, initiation of, testimony for, or assistance in an action filed or to be filed.” Courts frequently refer to the statutory prohibition of such forms of retaliation and actions thereunder as “the FCA retaliation provision” and “FCA retaliation claims,” respectively. This Note focuses on recent amendments to the retaliation provision.