A hospital CEO and attorneys were divided during testimony before a congressional committee Thursday on whether healthcare providers should be given greater protections against frivolous fraud lawsuits.
Dennis Burke, CEO of Good Shepherd Health Care System in Hermiston, Ore., said whistle-blowers should be required to bring their allegations directly to providers before filing False Claims Act lawsuits. The chairman of the subcommittee that held the hearing, Rep. Trent Franks, (R-Ariz.), also said that companies should be incentivized to self-report false claims.
Others, however, including another committee member and an attorney who supports whistle-blowers, said such proposals would only serve to weaken an already successful law.
The hearing Thursday, held by a House judiciary subcommittee, focused on oversight of the False Claims Act. Under that law, whistle-blowers may bring suits against providers and others on behalf of the government alleging fraudulent billing to government programs. Providers found liable for such fraud face penalties of up to $11,000 per false claim submitted plus triple damages, leading most cases to settle.
In 2015, two-thirds of federal whistle-blower lawsuits targeted healthcare entities. Whistle-blowers in successful False Claims Act lawsuits are entitled to a portion of whatever money the government recovers.
Last year, the government recovered more than $3.5 billion from False Claims Act cases, including $1.9 billion from healthcare fraud cases. Such cases often involve allegations of paying kickbacks to providers, providing unnecessary care, or overcharging for goods or services.
Franks began the hearing by saying that he believes it simply makes sense to offer incentives to companies that self-disclose violations of the law.
“False Claims Act violators who self-report generally receive the same penalties and face the same damages as those who are caught,” Franks said. “I think this makes very little sense.”
Burke also testified that providers need better protections against meritless False Claims Act lawsuits. He said his hospital was the target of such a lawsuit, filed by a disgruntled former employee, in 2003.
“What happened to us is what I would call an over-reaction that cost us dearly, both in terms of reputation and dollars and cents,” Burke said.
He said the whistle-blower in his case alleged a wide variety of fraud to see what would stick. At one point, the government offered to settle the case with the hospital for $750,000, Burke said. It was a tempting offer for his board, he said, but the hospital decided to take a stand and fight, knowing it hadn't committed fraud. Ultimately, the government determined no fraud was committed and dropped its investigation. Burke said the case cost the hospital more than $1 million in attorney and consultant fees.
But not all providers are in a position to turn down that kind of a settlement offer, even if they know they're innocent, Burke said.
He said the law should be amended to require whistle-blowers to bring their concerns to the organizations they're targeting before taking them to the government.
Others, however, said Congress shouldn't take any steps that would weaken the law.
“Pleas by industry lobbyists to weaken or eliminate private rights of action are misguided,” said Neil Getnick, a managing partner with Getnick & Getnick and board chairman of Taxpayers Against Fraud, a not-for-profit that supports whistle-blower incentive programs.
He said the False Claims Act already includes more protections to prevent frivolous lawsuits than almost any other statute in civil code, including allowing corporations to reduce their liability by one-third if they self-report fraud within 30 days of becoming aware of it.
Getnick said another proposal that would limit companies' liabilities if they adopt certain “gold-standard” compliance programs would lead to companies gaming the system in new ways.
Committee member Rep. Steve Cohen (D-Tenn.) said he agreed that Congress shouldn't take any steps that might make the law easier on providers and organizations accused of fraud, adding that he's not sure asking companies to self-report fraud would really work.
“You catch the crooks, that's what you do,” Cohen said.