Highlights
The DOJ’s new Corporate Whistleblower Pilot Program encourages individuals with tips regarding criminal activity in areas including private healthcare fraud to come forward in exchange for a monetary award
The program is intended to close the gaps in healthcare fraud enforcement not otherwise covered by the federal False Claims Act
In anticipation of an uptick in whistleblower activity in response to the new pilot program, providers should consider reviewing their internal reporting policies and procedures
On Aug. 1, 2024, the U.S. Department of Justice (DOJ) introduced its highly anticipated Corporate Whistleblower Pilot Program, meant to fill gaps in current federal agency whistleblower programs. One such gap relates to the healthcare industry and private insurance payers, as the False Claims Act (FCA) – the federal government’s primary civil enforcement tool for redressing fraud against the United States government – imposes liability only for fraud perpetrated against federal payers such as Medicare and Medicaid.
Under the Whistleblower Pilot Program, the DOJ aims to incentivize whistleblowers that have original information relating to federal healthcare offenses and crimes not covered by the FCA and involving private healthcare benefit programs.
Pilot Program: What’s It All About?
Under the three-year Whistleblower Pilot Program, individuals with original, independent knowledge of corporate violations related to certain specified priority areas – including federal healthcare crimes involving private payers, fraud against patients, investors, and other non-governmental healthcare industry entities, and any other federal violations involving conduct related to healthcare not covered by the FCA – may submit information to the DOJ themselves or through an attorney. If the tip leads to a criminal or civil forfeiture exceeding $1 million in connection with a successful prosecution, corporate criminal resolution, or civil forfeiture action related to corporate criminal conduct, the whistleblower is eligible for a discretionary award of a percentage of the forfeiture amount. The award could be up to 30 percent of forfeitures of up to $100 million, and up to 5 percent of forfeitures between $100 million and $500 million.
Whistleblowers can either 1) report to the DOJ directly without using internal compliance or legal channels or 2) report internally first and then to the DOJ within 120 days. Internal compliance systems participation can increase the share of any subsequent award. Importantly, the Whistleblower Pilot Program also allows corporate entities who self-report misconduct to the DOJ within 120 days of receiving an internal complaint to remain eligible for a presumption of declination under its Corporate Enforcement Policy. This is true even if the whistleblower reports first, so long as the company appropriately self-discloses prior to the DOJ initiating contact with the whistleblower.
To be eligible for an award under the Whistleblower Pilot Program, the whistleblower must not have meaningfully participated in the criminal activity they report. In addition, the whistleblower’s disclosure must be voluntary, and it cannot be made in response to any request by the DOJ or in connection with any preexisting obligation or agreement to report the disclosed information to federal law enforcement (for instance, in connection with an existing criminal prosecution or civil enforcement action). The whistleblower must agree to cooperate in any resulting DOJ investigation and subsequent civil and criminal actions stemming from their disclosure.
How Does the Pilot Program Differ From the False Claims Act?
The DOJ has made clear that the Whistleblower Pilot Program is not meant to cover healthcare-related misconduct reportable under the FCA’s qui tam whistleblower provisions. The FCA allows whistleblowers – referred to as qui tam relators – to bring civil actions on behalf of the federal government to recover treble damages for fraudulent claims made by healthcare providers or other entities for federal healthcare program dollars.
FCA relators may receive anywhere from 15 percent to 30 percent of the damages recovered by the government. Unlike the FCA’s qui tam whistleblower program (which is also managed by the DOJ), the Whistleblower Pilot Program seeks information regarding criminal healthcare fraud perpetrated against private payers or other healthcare-related entities, investors, or patients. Exactly how and to what extent the Whistleblower Pilot Program will expand liability of healthcare companies is unclear, but it certainly further incentivizes would-be whistleblowers to look beyond the FCA to uncover fraud on a larger scale.
Below is a summary comparing the key terms of the FCA’s qui tam whistleblower provisions with those of the DOJ’s Whistleblower Pilot Program.
To download the chart, click here.
| Federal False Claims Act (31 U.S.C. § 3729 et seq.) |
DOJ Whistleblower Pilot Program (Government Guidance/Policy) |
|
| Covered Conduct | Civil liability for any person who knowingly presents or causes to be presented a false or fraudulent claim for payment or approval, or who knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim, to the U.S. government. |
Criminal liability for violations related to a) federal healthcare offenses and related crimes involving private or other non-public healthcare benefit programs, b) fraud against patients, investors, and other non-governmental entities in the healthcare industry, and c) any other federal violations involving conduct related to healthcare not covered by the federal False Claims Act. |
| Legal Authority for Awards |
Qui tam relators have a statutory right to award under 31 U.S.C. § 3730(d). The amount of damages and civil penalties resulting from an FCA action are appealable. |
Awards are purely discretionary under DOJ policy (authority to give awards for information leading to a civil or criminal forfeiture under 28 U.S.C. § 524(c)). Awards are neither appealable nor subject to judicial review. |
| Whistleblower Award |
15-30 percent of the proceeds of the action or settlement of the claim. The court can reduce the award if the whistleblower engaged in improper activities. |
Up to 30 percent of the first $100 million in net proceeds forfeited, and up to 5 percent of any net proceeds forfeited between $100 million and $500 million (no award on net proceeds forfeited exceeding $500 million). |
| Eligibility |
Qui tam relators can be an individual, or a business or partnership. |
Whistleblowers must be individuals. Businesses or other types of entities are not eligible. Whistleblowers must not be (or have been at the time they acquired the original information), a DOJ employee, official, or contractor, or member of the same household as a DOJ employee, official or contractor. Whistleblowers must also not be an elected or appointed foreign government official. |
| Reporting Mechanism |
Qui tam relators must file a civil complaint under seal in federal district court, and confidentially serve a copy to the U.S. Attorney General and U.S. Attorney for the district where the complaint was filed. |
Whistleblowers may report information directly to the DOJ through its pilot program intake form. In addition, whistleblowers who first report through an entity’s whistleblower, legal, or compliance procedures may then report to the DOJ within 120 days of reporting internally. Whistleblowers who report internally first or simultaneously with their report to the DOJ may be eligible for an increased award amount. |
| First-to-File Bar | Under 31 U.S.C. § 3730(b)(5), a qui tam relator must be the “first to file,” meaning they cannot bring an action under the FCA based on the same conduct that is subject to an already-filed suit. |
The Whistleblower Pilot Program does not have a “first to file” bar, and in fact, more than one person can receive an award for providing information about the same scheme so long as the information provided materially adds to the DOJ’s investigation and significantly contributes to the successful forfeiture. Where more than one whistleblower qualifies for an award, the total amount paid cannot exceed the percentages outlined in the pilot program. |
| Public Disclosure Bar |
Under 31 U.S.C. § 3730(e)(4)(A) (the public disclosure bar), a qui tam action cannot be based on information that has been disclosed to the public through any of several means, such as criminal, civil, or administrative hearings in which the government is a party, government audits, reports, or investigations, or through the news media, unless the qui tam relator is an original source of the information. |
Information provided must be original, or derived from the whistleblower’s independent knowledge or independent analysis. It must not be derived from publicly available sources (such as government actions, hearings, judicial proceedings, or the news media) unless the whistleblower was a source of the information. |
| Rights of Whistleblower | Qui tam relators can sue in the government’s name, and maintain the action even if the government chooses not to intervene (although the government may dismiss the action over relator’s objection). |
Whistleblowers must cooperate with the DOJ in its investigation of related conduct and criminal or civil actions, including but not limited to providing truthful and complete testimony and evidence, producing documents or records, and working with law enforcement officers and agents. |
| Retaliation Protections | Qui tam relators are protected from retaliation under 31 U.S.C. § 3730(h), which authorizes relators to bring a separate civil action against an employer if they are discharged, demoted, suspended, threatened, harassed or discriminated against for bringing an FCA action. The qui tam relator may sue for reinstatement, two times the amount of backpay with interest, and any special damages, including litigation costs and reasonable attorneys’ fees. |
Protections for retaliation are discretionary. Whistleblowers who experience retaliation as a result of their report are instructed to provide that information in their report or a follow-up report, and the DOJ will consider any retaliation in assessing whether a company or individual cooperated with or obstructed the DOJ’s investigation and may, in its sole discretion, decline to award the company any cooperation credit in connection with any corporate resolution and/or institute appropriate enforcement action in response to any retaliation. |
| Corporate Self-Disclosure |
Healthcare providers and other entities who self-disclose potential FCA violations to the DOJ may receive credit and leniency during the resolution of an FCA case, including reduced damages and civil monetary penalties. |
Corporations who voluntarily self-report within 120 days of receiving an internal whistleblower report – and before the DOJ contacts the corporation – may be eligible for a presumption of declination under the DOJ’s Corporate Enforcement and Voluntary Self-Disclosure Policy. |
Key Takeaways
Healthcare companies should be aware that while it is still unclear how the Whistleblower Pilot Program will affect criminal healthcare fraud enforcement, it is likely there will be an uptick in whistleblower activity in this area, whether a report is made internally first or not. Providers should review their internal reporting and investigative policies and procedures to ensure they are in the best position possible to prevent, detect, and address fraud and misconduct, promptly address and escalate whistleblower reports, and make informed decisions about whether to self-report to the DOJ.
For more information, please contact the Barnes & Thornburg attorney with whom you work or Jacquelyn Papish at 202-831-6732 or jpapish@btlaw.com, Erin Steele at 202-408-6932 or esteele@btlaw.com or John Kelly at 202-831-6731 or jkelly@btlaw.com.
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This Barnes & Thornburg LLP publication should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer on any specific legal questions you may have concerning your situation.
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