Affordable Care Act – What Does it Mean For Medicare Fraud Whistleblowers?

Love it or hate it, the Patient Protection and Affordable Care Act, H.R. 3590, was passed on March 21 by the 111th Congress and signed by President Obama yesterday to thunderous applause. The President called it “a new season for America.” Opponents quickly began a campaign in opposition, and at least thirteen states, acting primarily through conservative attorneys general, joined in a lawsuit to block the new law.

Grandstanding might aptly describe such hyperbole on both sides of the debate. But amidst all the noise about healthcare reform, few are discussing or even aware of the details of the actual bill. As far as healthcare whistleblowers are concerned, these key changes among others written into the new law warrant mentioning:

For Healthcare Whistleblowers
Under Section 1558, workers who report healthcare violations to an employer, Federal Government, or a state Attorney General are protected from retaliation, including reporting violations of the new laws prohibiting denial of coverage based upon preexisting conditions. Such whistleblowers will receive remedies similar to those found in the federal False Claims Act, including among other things: reinstatement, back pay, special damages, and attorneys’ fees.

Whistleblower Requirements for Long-Term Care Facilities
Officers, employees, managers, and contractors of long term-care facilities that receive more than $10,000 in federal funding annually are required to report reasonable suspicion of a crime to law enforcement and can be fined up to $200,000 for failure to do so. Retaliation against whistleblowers in such facilities is subject to a fine of up to $200,000 and exclusion from federal funds for up to two years.

Whistleblower Requirements for Nursing Homes
Under Section 6105, nursing homes are required to implement standardized complaint forms and each state is required to develop a complaint resolution process to track and investigate nursing home complaints and protect against whistleblower retaliation.

Whistleblowers Remain Most Powerful Tool in Fighting Medicare Fraud
While the debate rages on about the viability of healthcare reform, two things are certain: (1) Medicare and Medicaid have been and will continue to be fertile grounds for fraud; and (2) whistleblower suits are the most effective tools for ferreting out false claims and healthcare fraud.

Since 2009, nearly $6 billion has been recovered in state and federal false claims act cases (including criminal penalties). Under the federal and False Claims Act, whistleblowers may file actions on behalf of the federal government to recoup Medicare false claims. Likewise, many states have false claims act that permit whistleblower suits for Medicaid false claims.

With a few minor differences most state false claims acts operate like the federal False Claims Act, requiring that treble damages be paid for fraudulent billing and up to $11,000 per false bill be levied as a penalty. Actions brought by whistleblowers are known as qui tam lawsuits and by statute result in a whistleblower award of between 15-25% of any recovery based on credible, first-hand knowledge by the whistleblower. In cases where the whistleblower is permitted to proceed alone, he or she may receive up to 30% of the recovery based upon her efforts and involvement in the suit.

While the Affordable Care Act provides many new criminal and civil penalties and new tools for fighting healthcare fraud, it is the whistleblower protection provisions that are likely to be the most used – and most litigated. As word of enhanced whistleblower protection spreads, more and more individuals with knowledge of healthcare fraud are likely to come forward. No matter what you think about healthcare reform, that’s a good thing.