Whistleblowers Often Face Retaliation for Exposing Healthcare Fraud

The whistleblower brought this suit under the federal False Claims Act.

The False Claims Act (FCA) allows a private party (known as a “relator” or “whistleblower”) with inside information about fraud against the government to file a lawsuit on the government’s behalf and receive 15 to 30 percent of the financial recovery as an award. First passed during the Civil War to prosecute unscrupulous defense contractors selling gunpowder cut with sawdust and lame horses to the Union army, today the whistleblower provisions of the FCA are the government’s primary tool in prosecuting healthcare fraud against Medicare, Medicaid, and other publicly funded health insurance programs.

While our reporting on this topic for RACmonitor to date has focused on the various healthcare fraud schemes exposed by whistleblowers in False Claims Act lawsuits and the prosecution of these actions, today we would like to go behind the scenes of the FCA cases to examine the types of harms whistleblowers face in bringing these frauds to light – and the anti-retaliation provisions of the FCA that exist to protect them.  

It is well-known that whistleblowers often are retaliated against for bringing forward information about fraud. Rather than listening to the message the whistleblower brings, many employers instead resort to various forms of blaming the messenger, and as a consequence, whistleblowers are often fired, sidelined, or blackballed from the healthcare industry for their activities.

Empirical data confirms that whistleblowers who report fraud often do so at enormous risk to their professional and personal lives. According to a study of healthcare whistleblowers published in the New England Journal of Medicine, being a relator in a FCA suit correlates with severe marital strain and a notable increase in stress-related health problems. The risk is also often financial, as 82 percent of participants in the study reported being subjected to pressure by their employers in response to their reporting of fraud, and 31 percent of participants reported financially “devastating” consequences.

To encourage whistleblowers to come forward in the face of such obstacles, the False Claims Act has section (h), a provision to protect them against retaliation. The anti-retaliation provision generally bans companies from firing, demoting, threatening, suspending, or harassing employees that tried to stop the company from defrauding the United States. These provisions apply even in certain circumstances when no FCA suit is filed. To file a lawsuit under the anti-retaliation provision, an individual must show that he or she engaged in protected activity and was discriminated against because of protected activity.

A recent case filed in Missouri provides a concrete example of the type of allegations that can give rise to a potential claim against a healthcare employer for violations of the FCA’s anti-retaliation provisions. In that case, whistleblower Debra Conrad allegedly attempted to prevent fraud at her company, Mosaic Life Care, a provider group with over 10 locations in the area surrounding St. Joseph, Mo. According to the complaint, Ms. Conrad, who had been with the company for over 40 years, attempted to prevent the submission of claims to Medicare that were not eligible for Medicare reimbursement. As she alleges in her complaint, soon after she reported the fraud to Mosaic, she was reassigned, put on a performance-improvement-plan, accused of violating HIPAA, and later fired. Ms. Conrad has sued Mosaic under the anti-retaliation provisions of the False Claims Act, and also under Missouri state laws that ban age discrimination. The suit, which was filed in late May, is only in its initial stages, and Mosaic is expected to be filing its response to the complaint shortly. We will keep readers up to speed on developments in the case as it progresses.

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