Culture of Compliance Preempts Whistleblower Suits

All of the pieces are in place for a dramatic crackdown on fraud within the healthcare sector.

The problem is real. Waste and fraud in healthcare are getting a lot of scrutiny because any number of studies and estimates in recent months have shown that fraud and waste are adding billions of dollars to the nation's healthcare tab.

Recovery audit contractors are on the prowl at hospitals, looking for Medicare overbillings. The Justice Department is conducting high-profile arrests of Medicare/Medicaid con men accused of multimillion-dollar fraud schemes. The Obama Administration—desperate to find savings wherever it can to bring down the price tag of healthcare reform—is committed to an aggressive program to root out healthcare fraud.

"They believe there is a great deal of waste, and clearly fraud comes under their definition of waste," says Brian Roark, a partner in the litigation group at Bass, Berry & Sims, a Nashville law firm "There is every indication that the administration is going to increase the amount of resources the government devotes to finding and prosecuting fraud cases."

"The more that healthcare fraud waste is in the spotlight, it is going to lead to an increase in employees who see this and decide to bring a whistleblower lawsuit and it's going to urge the plaintiff"s bar to be more active as well," Roark says.

Who can blame them? There is plenty of money to be made in successful whistleblower lawsuits. A plaintiff who brings a lawsuit under the Federal False Claims Act can be awarded up to 30% of the settlement account. Do the math. "When you see these settlement amounts in the millions of dollars, the whistleblowers and their lawyers stand to recover significant amounts," Roark says.