Justice News Flash: Featured Column : Whistleblowers – Inside and Out

Whistleblowers – Inside and Out

Whistleblowers can blow the lid off fraud because they worked for the offending company

Whistleblowers – Inside and Out

// Justice News Flash: Featured Column // Kathleen Scanlan
We think of whistleblowers as possessing the ultimate “inside” information. They can blow the lid off fraud because they worked for the offending company—they witnessed the graft or corruption first-hand, or they’ve got damning documents. The Insider, the 1999 feature film about tobacco company whistleblower Jeffrey Wigand, enforced the iconic image of the heroic employee who broke the code of loyalty in order to uncover monumental wrongdoing by his employer.

Over the decades, insiders in a variety of industries, including health care and defense, have taken action under the False Claims Act as qui tam whistleblowers. Examples include: a hospital lab technician who told of widespread billing for tests never conducted; a doctor who claimed her hospital overbilled for patient visits; a hospice care worker who said his facility falsely billed Medicare for treatment that never occurred; a CIA contractor who claimed that his company gave gifts, or kickbacks, to CIA employees in order to win favor.

Where qui tam whistleblowers are concerned, however, there is no prerequisite that you be an insider to come forward with evidence of fraud on the government. The False Claims Act's qui tam provision allows any private citizen with knowledge of fraud against the government to file a civil lawsuit, on behalf of him- or herself and the government, to recover damages and civil penalties. As an incentive, the private citizen will receive a percentage of any ill-gotten gains that are recovered.

For example, in 2011, California settled a $241 Million qui tam whistleblower case under the state's false claims act against Quest Diagnostics, the state's biggest provider of medical laboratory testing, alleging that Quest systematically offered doctors, hospitals and clinics low prices for lab tests in return for referrals to Quest of patients, including Medi-Cal patients. Quest then allegedly charged Medi-Cal a higher price to make up the difference - resulting in the loss of millions of dollars to the Medi-Cal program. The qui tam whistleblower was one of Quest's competitors who could not compete fairly in the marketplace because of Quest's scheme. A similar case against Lab Corp brought by the same whistleblower was settled for $49.5 million.

More recently, a drug manufacturer sued a competitor alleging that it used a fraudulently obtained patent to inflate the price of an anti-clotting drug and, in turn, overcharging federal government programs that bought the medicine. The qui tam whistleblower (in this case the competitor) argued that its independent research into its competitor’s patent and sales history could be the basis of its qui tam whistleblower case. The court agreed.

Whether the whistleblower is the consummate insider, or the informed outsider, they all have certain things in common. They possess independent knowledge that materially adds to the government's ability to expose and prosecute the alleged fraud. The government wants them whether they are inside or out. When there are an infinite number of ways to commit a fraud, the government needs an equally vast pool of potential whistleblowers.


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