Shift seen in False Claims whistle-blower suits

Time was, if a whistle-blower couldn't persuade the government to join with them as a plaintiff in a False Claims Act lawsuit, the case was likely to fizzle long before any litigation took place.

But that has changed along with the national explosion of whistle-blower lawsuits in healthcare, say the lawyers who represent both the civil plaintiffs and the government. These days, a decision by the government to pass up the chance to join a particular lawsuit doesn't necessarily have any influence on whether the plaintiffs think their claims are strong enough to continue without government help.

“The fact that the government doesn't intervene is not the death penalty in these cases,” Marlan Wilbanks, a founding partner of Atlanta whistle-blower firm Wilbanks and Bridges, said Monday during the annual Fraud and Compliance Forum. “We're going to file a case with the intent of litigating, regardless of what the government decides to do.”

Greg Demske, the recently installed chief counsel to HHS' inspector general, noted that the federal government has continued to join only about 22% of the cases filed by whistle-blowers—known as “relators”—through the False Claims Act, despite the steady rise in the number of cases filed each year.

“Relators have been continuing to litigate without government help,” Demske said during a keynote address Monday. “That is new.”

False Claims Act cases were a hot topic at the three-day annual meeting in Baltimore, held jointly by the American Health Lawyers Association and the Health Care Compliance Association.

Daniel Anderson, deputy director of the commercial litigation branch of the Justice Department's Civil Division, told a lunchtime audience the department has been “roundly criticized” for taking too long to decide whether to intervene in healthcare cases, which has lead to the recent announcement of a new policy.

“We try to wrap up any qui tam (intervention decision) within nine months. And if we can't do that, we report what we are going to do next,” Anderson said. “There is an inordinate pressure to wrap these things up.”

Anderson also reminded the healthcare lawyers in the audience that the Justice Department remains open to having early discussions directly with hospitals accused of wrong-doing by whistle-blowers, and that it has been known to resolve or even move to dismiss cases long before they are unsealed in the court record.

He noted that although the majority of big False Claims cases in past years have been filed against pharmaceutical companies, healthcare providers should expect to see an increase in cases against their organizations.

“The hospital industry has reason to be concerned right now, given what's out there,” he said. “And there is reason to think there will be an uptick in the number of qui tam cases that are filed.”

The Justice Department has previously reported that a record 638 qui tam lawsuits were filed in 2011, after hovering between 300 and 400 a year for most of the prior 10 years.

“We had a record-setting year last year, and this year we are going to blow right past that,” he said.