The last thing Paul Michelson, M.D., wanted to be was a whistleblower.
But that's what happened in 1987 when the La Jolla, Calif., ophthalmologist filed a lawsuit accusing a colleague of overbilling Medicare and doing laser eye treatments on patients who didn't need them.
For Michelson (shown here), his whistleblower lawsuit was a last-ditch effort to stop something he couldn't ignore.
"I had to look in the mirror every morning," says Michelson, now 55.
Michelson was among the first to file a whistleblower lawsuit after Congress revamped the False Claims Act in 1986 to enlist citizens in combating fraud on the government. The Civil War-era law now carries stiffer penalties and gives bigger rewards to those who, like Michelson, expose it in lawsuits.
Well, the gambit worked. The number of whistleblower lawsuits filed has skyrocketed more than 1,500% to a total of 2,013 from 1987 to this October.
The flood of cases is translating to a lot of money for the government and the whistleblowers.
Recoveries to the government's coffers from whistleblower cases have swollen to $625 million this year from only $355,000 in 1988.
And for the whistleblower, a successful lawsuit or a settlement can mean a bounty of 15% to 30% of what the government recoups. In some cases, that's millions of dollars.
On the other hand, whistleblowers also suffer the consequences of tattling, which can include ostracism in their communities and professions.
Still, the money at stake raises questions about the motives of whistleblowers: Are they trying to do the right thing or just make a buck?
That's an easy answer for Michelson, whose lawsuit was settled in 1990. Money wasn't it.
"I never was sure there would be any money," says Michelson, who adds that he donated his $126,000 take from the lawsuit to a medical school and other national groups.
Lawyers who represent companies accused in whistleblower actions say most people's motivations aren't noble.
Attorney John Boese believes there is a dark side to qui tam, otherwise known as whistleblower, actions. Boese, who wrote a book on the False Claims Act, likens the government's use of it to asking children what political activities their parents are involved in.
"We're actually asking people to spy," says Boese, of Fried, Frank, Harris, Shriver & Jacobson in Washington. "It's dirty to me, it's ugly.
"It's the money," he says of whistleblowers' motivations. "It's got to be."
Hit 'em where it hurts. Since the 1986 change, the government has recovered a total of more than $1.8 billion through qui tam lawsuits and shared more than $244 million of it with whistleblowers.
In 1987 there were 33 qui tam actions. In 1997 the number of actions filed has risen to 530. Since the Oct. 1 start of federal fiscal 1998, 10 qui tam cases have been filed.
The percentage of whistleblower cases involving HHS, which controls Medicare and other federal healthcare programs, has exploded with the overall boom. HHS was involved in 54% of this year's cases, up from just 12% in 1987, according to recent Justice Department figures.
These days the invitation to file whistleblower lawsuits is the government's unprecedented crackdown on healthcare fraud.
With high-profile fraud investigations under way -- including one of Columbia/HCA Healthcare Corp. -- the government and whistleblowers believe there's a gold mine out there, potentially.
Lawyers know it too, and at least one firm has advertised in MODERN HEALTHCARE looking for whistleblowers.
Because of lax past enforcement, years of billing irregularities could be just waiting to be unearthed, one attorney says.
Now billing practices are bound to tighten.
Michael Hertz, director of the Justice Department's civil fraud division, says whistleblower actions are sending a strong message to providers about the dangers of submitting questionable or fraudulent bills to federal programs. In some cases, criminal penalties could result since copies of all whistleblower lawsuits are shared with criminal investigators at the Justice Department.
"It's not like it used to be," Hertz says. "You can't just take your claims and submit them and hope that they get paid, or think the worst that will happen to you is that they won't."
Adds Marc Raspanti, a Philadelphia attorney who represents whistleblowers: "You had an entire industry that felt they could not be hurt, and the only way to hurt them is in the pocketbook."
Still, Raspanti sees dangers in the wave of whistleblower suits. "I think it's a bad thing that there are so many cases because a lot of the cases are crap, to be honest with you," says Raspanti, of Miller, Alfano & Raspanti in Philadelphia.
Suffering the consequences. Being a whistleblower isn't simple, painless or glamorous.
"You pay a punishing price; whistleblowers just get chewed up," says Washington attorney John Phillips, who helped Congress draft the 1986 amendments and represented Michelson in his case.
Whistleblowers' characters often are questioned and some lose their jobs, only to find they are unable to work again in the industry, attorneys say.
Kentucky physician J. Hilton Brooks says he knows this firsthand.
Brooks, of Middlesboro, Ky., accused 150-bed Pineville (Ky.) Community Hospital and two doctors of an illegal billing scheme in 1992. He says they falsified patient medical records to bill Medicare for services that were never provided.
Brooks says he filed the lawsuit after trying to bring the practices to the attention of hospital officials. When he did, they wanted to revoke his privileges. He also says he reported the problems to state and federal officials who did nothing.
The government joined in the lawsuit at the last minute before it was settled at the request of Brooks, according to his attorney, Bill Copeland of Cincinnati.
The hospital previously has said it had no intent of violating federal billing rules and blamed the problem on poor documentation.
Before filing suit, Brooks moved his practice full-time to Middlesboro, about 13 miles from Pineville. The reason: He thought Pineville might get dangerous.
After the lawsuit was unsealed in 1993 in federal court in Lexington, Ky., Brooks says, he got harassing telephone calls and had to ask for police protection. He also said other doctors didn't want to refer patients to his internal medicine practice.
His lawsuit was settled for $2.5 million in 1995. About a quarter of that went to Brooks. After legal fees, Brooks estimates that will leave about $300,000, which doesn't begin to replace the income he lost while being away from his practice.
Brooks still doesn't like to venture to Pineville much.
"I'm very uncomfortable in Pineville," he says.
From the Civil War to Medicare. Those critical of the False Claims Act often complain that Abraham Lincoln wasn't thinking about healthcare fraud when he urged its passage in 1863. What Lincoln had in mind was stopping suppliers from ripping off the Union Army during the Civil War.
Critics argue that the law is too clumsy for healthcare, where the complexity of federal programs makes it hard to tell what's fraud and what's not. People running to the government aren't always the best to make that call. That's why government -- not private citizens -- should decide which cases end up in court, one attorney says.
Qui tam suits are filed under seal so Justice Department officials can investigate claims in secrecy. But if the government doesn't choose to join a case, the whistleblower is free to go it alone.
"The people who are well informed about their own regulations should make these decisions, not an individual party out there in the world who believes they have that knowledge," says Oklahoma City attorney Todd Taylor, who represents a billing company accused in a false claims suit.
Phillips doesn't agree with Taylor. No matter the criticism of whistleblowers' judgment and motives, what matters is how good a road map whistleblowers provide to a company's scam, he says. Whistleblowers are a kind of tip sheet for government regulators.
"It's going to ultimately boil down to the facts," Phillips says. "That's the case. The case is the paper trail, not the person saying, `I saw this.' "
A recent Texas ruling could make it harder for whistleblower suits to proceed. A U.S. District Court judge in Houston threw out a case against 594-bed St. Luke's Episcopal Hospital, arguing that the nurse who made allegations of fraud at the hospital hadn't suffered any individual injury and therefore had no standing to sue (Nov. 10, p. 16). Attorneys for the nurse plan to file an appeal.
While the feds don't divulge why they don't intervene in lawsuits, attorneys say reasons range from the merits of a case to limited resources.
Still, there's a significant difference in outcome when the government intervenes. According to the Justice Department:
Of the 2,013 cases filed since 1986, the government intervened in 267, declined to prosecute in 1,009 and is investigating the remainder.
Cases in which the government intervened have resulted in more than $1.8 billion in recoveries.
On their own, whistleblowers have recovered $31 million for the government in 49 cases with settlements or judgments.
Courts have dismissed more than 730 cases pursued by whistleblowers without the government as a party; only five cases pursued by the government have been dismissed.
The average award for whistleblowers is $1 million.
Boese says it's clear merit drives the government's decisionmaking. "They spend their time on cases that they can win," he says.
Leaving a legacy. The government appears to be winning one case in Oklahoma City, although it hardly matters to the whistleblower -- who died of cancer in May 1996.
Teresa Semtner, a former billing coder, accused a billing company and several emergency room staffing firms of "upcoding" Medicare bills to collect more from the government in a 1994 case.
Two companies have settled for more than $8 million since the government joined the case in 1995. Emcare Holdings of Dallas paid almost $7.8 million, and Coastal Emergency Physicians Group of Texas paid about $269,000 for a company it acquired.
A trial in the case against the remaining firms is set for summer.
Semtner was diagnosed with cancer in early 1996, long after the case was filed.
Her more than $1.5 million share of the recoveries is being paid to her husband and two children.
Taylor, who represents one company involved, Emergency Physicians Billing Services of Oklahoma City, says Semtner may have tried to form a competing company before filing the lawsuit.
But Semtner's attorney, Cheryl Vaught of Oklahoma City, says Semtner saw the lawsuit as her legacy. "She was very committed to the coding business," Vaught says. "I don't think I've ever had a client with more altruistic motives."