Whistleblowers often have a tough time taking on their employer. Even those that take on a former employer can still face an uphill battle. It is often a true David versus Goliath fight, one in which a single employee tries to take on huge and powerful corporations.
Congress recognized this and passed the federal False Claims Act in 1863. Under the Act, whistleblowers can file lawsuits on behalf of the United States. The law can only be used, however, if there is a loss or fraud involving government funds or programs. Examples include home health care agencies that defraud Medicare, defense contractors that bilk the military and mortgage companies that engage in bad underwriting practices. (In the latter example, most residential mortgages are backed by the FHA, VA, Fannie Mae or Freddie Mac meaning tax dollars.)
To encourage whistleblowers to file suits and help stop greed and fraud, the law allows whistleblowers to receive a cash award of up to 30% of what the government collects. Million dollar awards are common.
In addition to the awards, the law also protects whistleblowers from retaliation. The court can award double damages to an aggrieved employee.
Finally, the False Claims Act provides that the whistleblowers’ legal counsel can be awarded fees and costs. This is especially important when the lawyers must prosecute the case privately or spend years prosecuting retaliation claims.
Recently the 6th Circuit Court of Appeals decided a case involving these counsel fees. For those not familiar, the 6th Circuit is the top federal appeals court covering Ohio, Kentucky, Michigan and Tennessee. Those of us who primarily represent whistleblowers don’t always consider it the friendliest court but an opinion this month certainly shows that the court still appreciates whistleblowers and the need for counsel fees.
In 2014, Community Health Systems (CHS) agreed to pay $97 million to settle claims that the company engaged in medically unnecessary emergency admissions, illegally paid kickbacks to physicians who referred patients to the company’s Laredo Medical Center and improperly billed for inpatient procedures. The case was actually the consolidation of several cases filed by whistleblowers.
Because all the alleged wrongdoing involved Medicare, the cases were brought under the federal False Claims Act. After the case settled, a dispute arose over the nearly 7,000 hours of billable time expended by the several law firms that were involved in the case.
While the details of the court ruling are important to whistleblower lawyers, the words of one of the appellate court judges are worth repeating for the public and would-be whistleblowers. In reading the opinion, please note that the term “relator” is the legal term for “whistleblower.”
We are reprinting most of that opinion verbatim:
“I write separately to address the purposes and goals of the False Claims Act, which set the perspective through which the courts (and the government) should view all FCA litigation.
“Health care fraud is rampant in the United States. Some estimate that fraud costs Medicare and Medicaid between $30 billion and $98 billion annually. In one way or another, we all pay for this fraud through higher health insurance premiums, copayments, and taxes.
“The FCA is one of the Government’s most effective tools for combatting health care fraud. ‘To date, the FCA has helped the government recover more fraudulently spent Medicare dollars than any other mechanism within the federal government.’ (Joshua A. Levy, Lessons from the Private Enforcement of Health Care Fraud). In 2014, for instance, while the Government recovered only $454 million through the Department of Health and Human Services’ fraud prevention system, it recovered $2.3 billion from health care FCA cases. In addition, evidence provided by FCA whistleblowers has resulted in dozens of criminal convictions and administrative exclusions that otherwise may not have occurred.
“Most of these recoveries would not be possible without the FCA’s qui tam provision. ‘Of the $21 billion recovered by the government between 1986 and 2008 under the Act, over 63 percent, or $13.7 billion, was recovered in cases filed under the FCA’s qui tam provisions.’ (Quoting Matthew S. Brockmeier, Pulling the Plug on Health Care Fraud. The False Claims Act after Rockwell and Allison Engine.) [I]f courts lose sight of the legislative intent behind the FCA and restrict opportunities for qui tam plaintiffs to succeed under the FCA, ‘the incidence of health care fraud against the government can only be expected to increase” and thereby increase health care costs “to a public already struggling to pay some of the highest health care prices in the industrialized world.’ (Again quoting Brockmeier.)
“Without a doubt, relators and their attorneys play a vital role in rooting out health care fraud and obtaining recovery of the public monies that were intended to be spent for providing health care to veterans and poor, elderly, and disabled citizens. Fostering such recoveries under the FCA must include recognition that theseactions are not without economic risks and other dangers to relators and their counsel. A relator takes very real risks in coming forward to report fraud—an action that often includes obtaining and providing evidence against his/her employer that involves substantial sums of money and potential criminal liability. And providing that evidence is just the beginning. Attorneys then must undertake the substantial investigative work and expense of putting together a case for their relators then present it to government officials to determine if the government is willing to proceed with the litigation. Counsel routinely undertake this work without knowing whether other qui tam complaints have been filed under seal elsewhere. If the government decides that the information provided would be useful to it in vindicating society’s interests, it may share information about other qui tam cases and create a group of counsel to do the work that is necessary to prosecute the case. This work often takes years during which the government runs the sealed case, including assigning tasks to various counsel and approaching the defendant about the claims and monetary settlement. To consummate any settlement it negotiates, the government intervenes in and unseals the qui tam complaints filed by relators on its behalf. Though the government’s bargain sets the basic terms of the settlement agreement, the timetable, and resolves payment to the relators; counsel are often left to negotiate the terms governing payment of attorney fees—even for the considerable work accomplished by counsel at the government’s behest. Much is at stake because these negotiations may determine whether a defendant—which took public money through health care fraud—must pay a relator’s counsel for their work in forcing the return of that money. There are practical reasons for this framework but it also entails practical problems: negotiations are often rushed, counsel for the various relators may have differing opportunity to draft agreement terms, and they do not have the leverage that the government has.
“The goal of the FCA to use qui tam complaints to increase the recovery of public monies will be impacted if relators’ counsel are assigned work and not paid for doing it. As scholarly literature argues and legislative amendments confirm, the courts and government should approach FCA cases in ways that support and do not stifle the Act’s goals and purposes. To achieve those, it seems to me that the government’s litigation activity should encourage citizens to come forward and report fraud and attorneys to take their claims and put in the time and money it takes to make the case against those who defraud the public. If both parties are not fairly compensated, there is no incentive for relators to run the risks of blowing the whistle or for attorneys to put in the significant time and make the large expenditures necessary to prove a case. This is especially true (and particularly complicated) in the massive fraud cases that frequently include a number of relators and their separate counsel. But that is the nature of finding and proving frauds that operate on a large or national scale, a goal of the FCA. Those are the cases that should be nurtured because they are the type of suits that have returned billions of dollars to the public coffers and have served to deter future fraud.”
The case is United States ex rel. Doghramji, (6th Cir. Nov. 22, 2016).
It is refreshing to see that courts truly appreciate the value that whistleblowers and their lawyers contribute to society and particularly the hardships that whistleblowers must endure when taking on a powerful company.
We are honored to represent whistleblowers and frequently humbled by the sacrifices they make to put a stop to greed, fraud and corruption. If you have inside information about such wrongdoing, you too may be entitled to an award.
False Claims Act Awards for Whistleblowers
As noted above, the Act pays whistleblowers up to 30% of whatever the government or the whistleblower’s own lawyer collects from the wrongdoer. To qualify for an award, your information must relate to a government program or loss of tax dollars. The information you possess must also be “inside” or “original source.” Finally, you generally must be the first to file. (This case was unique because the whistleblowers each had knowledge of different frauds all going on within the company. That is not unusual when dealing with big banks, hospital chains, pharmaceutical companies or large defense contractors.)
To determine whether you may have a claim, give us a call. All inquiries are confidential and without obligation. Even if you never hire us, what you tell us is protected by the attorney – client privilege. Our experienced whistleblower lawyers’ can help evaluate your case, investigate and file your claim and protect you against illegal whistleblower retaliation claims. In the last five years, we have helped our clients collect over $100 million in awards.
For more information, visit our False Claims Act whistleblower page information page or contact attorney Brian Mahany at *protected email* or by phone at (414) 704-6731 (direct).
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