Posted: March 14, 2019

Medicare and Medicaid account for roughly $1 trillion in federal spending annually. That’s a lot of money. And wherever there is a lot of money, there are those who will try to steal it.

The AARP reports that at about 10 percent of Medicare funding – or some $60 billion, roughly the budgets of the Department of Homeland Security and NASA combined – is stolen or misdirected each year, and some experts believe the total is much more, perhaps as much as 20 or 30 percent annually – or close to $200 billion -- in fraud, abuse and improper Medicare payments.

“The fact of the matter is, we don’t know how much is lost,” Malcolm Sparrow, a Harvard University professor and leading expert on health care fraud, was quoted as saying in a 2017 article. “We ought to know. We shouldn’t have to guess. But the truth would be hard to swallow.”

The bottom line is that theft of public health care funds is rampant, both in Medicare funding for the elderly or Medicaid health care payments directed to the poor. It is also fair to say that the government itself lacks the enforcement army it would take to catch all the crooks.

AARP Medicare Fraud Infographic

Enter the whistleblower.

Under the U.S. False Claims Act as amended in 1986, whistleblowers, or “relators,” are eligible for a reward or portion of any government recovery. And they are taking advantage – in a good way – of it.  Between 1987 and 2012, whistleblowers were responsible for 70 percent all federal FCA actions, with recoveries totaling $38.9. Since then, the percentage of cases derived from whistleblowers has grown; the U.S. Department of Justice reported that of $3.7 billion collected in fiscal 2017, $3.4 billion was related to lawsuits filed under the qui tam provisions of the False Claims Act.  During the same period, the government paid out $392 million in rewards to whistleblowers who helped expose the fraud.

The number of lawsuits filed under the qui tam provisions of the Act has grown significantly since 1986, with roughly a dozen qui tam suits filed each week, or more than 600 annually. Individual states also recovered funds under these actions since up to 50 percent of Medicaid, is funded by the states (with matching federal expenditures).

Medicare, which serves about 56 million people 65 and older, is scammed in a number of ways. Here are a few of the most prevalent:

  • Health care providers billing for unnecessary procedures or those that aren’t actually performed, known as “phantom billing.” Medicare is also billed for tests that are never performed or are not necessary.
  • In some cases, patients are involved in fraudulent billing, providing their Medicare numbers in exchange for kickbacks. If asked, the patient will lie and say that he or she received the medical treatment that was never administered.
  • Bills are inflating by using a billing code that falsely indicate a patient needed expensive procedures.

In many cases, but not enough, the crooks are caught. In 2017, for example, the Justice Department announced the arrest of 412 people, including some 100 doctors, in one fell swoop for fraud schemes that bilked the government of $1.3 billion, mostly from Medicare.

But most often the cases are smaller, arising from one individual’s suspicions and a call to an attorney’s office. Thus a whistleblower is born.

While it is not necessary to retain an attorney to help in a whistleblower case, it is advisable since many such cases can be complex and a lawyer experienced with government agencies and major corporations can be exceedingly helpful. Also, it is necessary to file an action as soon as possible since often the first one to blow the whistle on a certain crime will receive the reward, or the major share of the reward.

Once a lawsuit is filed, and, if the case is found to have merit, the government will often take over. If the case results in a reimbursement of the government, the whistleblower will get a reward. Those rewads range between 10 and 30 percent of the total reimbursement depending on the type of case and the size of the government reimbursement.

One example: Kline & Specter, PC, attorneys represented a whistleblower in a case that resulted in a $35 million settlement with an Arizona healthcare system over alleged Medicare fraud. The whistleblower in that case, a former employee of the healthcare system, was to receive a nearly $6 million reward.

The law firm also represented a whistleblower in a case that settled for $10.19 million against a New York pharmaceutical services company for allegedly engaging in fraudulent practices in the sale of prescription medications to Medicare and Medicaid beneficiaries. In that case, the whistleblower’s reward was $1.85 million.

In yet another case, Kline & Specter partner David Williams represented a whistleblower in litigation that brought a $16.2 million judgment against an imaging firm for submitting false claims for Medicare reimbursement. The whistleblower, once again a former employee of the company, was to receive a $2.9 million reward.

If you suspect fraud – either to a health care system or other government agency, such as the IRS or Securities and Exchange Commission – you may want to come forward with a whistleblower lawsuit. Kline & Specter, with 42 attorneys, has the experience and expertise to litigate whistleblower cases. The law firm will provide a free and confidential evaluation of your case.

*Infographic Source: