DOJ did so under the Attorney General’s statutory authority to pay “awards for information or assistance leading to a civil or criminal forfeiture.” Therefore, a prerequisite to any award is that the whistleblower’s information leads to a criminal or civil forfeiture, which the Program further specifies must exceed $1 million in net proceeds. Our prior Client Alert provides an overview of the Program and explains that it takes aim at four main areas: financial institutions, foreign corruption by companies, domestic corruption by companies, and health care fraud implicating private payers.
Previously, private efforts to combat health care industry fraud were primarily limited to the False Claims Act’s ("FCA's") qui tam provision, which allows private relators to bring civil suits on behalf of the government against parties accused of submitting or causing the submission of false or fraudulent claims for payment related to federally funded health care programs such as Medicare and Medicaid. The launch of this Program, which provides incentives for whistleblowers to allege fraud in the private payer sector, is significant, as two-thirds of insured Americans have private insurance, and DOJ estimates that tens of billions of dollars are lost to private health care fraud each year.
Unlike the FCA’s qui tam provision, the Program covers both criminal and civil acts. Although the government is not required to investigate all reported conduct, the Program, in practice, expands the scope of possible health care fraud enforcement, creating additional risk for health care companies.
How it works
The Program encompasses federal health care offenses beyond those involving federal health care benefits or beneficiaries. It thus gives rise to opportunities for whistleblowers to recover significant financial rewards for reporting frauds that target private insurance plans, consumers (including patients), investors, and other non-governmental entities. Therefore, the Program encompasses a wide range of conduct that is outside the FCA’s scope; for example, hospital networks charging private insurers for treatments that were never performed.
There are three discretionary factors that DOJ will consider that may increase the forfeiture award to a whistleblower: (i) how significant the provided information was to DOJ’s prosecution, corporate criminal resolution, and any associated forfeiture action; (ii) the degree of assistance provided by the whistleblower; and (iii) the whistleblower’s participation in a company’s internal reporting channels. As for the last factor, it appears that DOJ wants to incentivize whistleblowers to first attempt to address any problematic practices through a corporation’s internal compliance processes.
Importantly, a company that voluntarily reports internal whistleblower information to DOJ within 120 days of receiving that information, and before DOJ initiates an investigation, may be eligible to have DOJ decline criminal prosecution, provided that the company fully cooperates with any ensuing investigation and remediates any identified misconduct.
Takeaways
With the advent of the Program, companies should carefully assess whether their compliance controls and audit functions are adequately designed to uncover and assess fraud with respect to private payers in addition to federal health care programs. Additionally, companies should assess whether their reporting, investigations, and escalation processes are efficient so that they may have sufficient time to consider potentially benefiting from a declination through self-reporting.
This new Program underscores that private payer compliance concerns cannot be discounted. This comes on the heels of increasing state enforcement, which also looks beyond government funded programs. The likely expansion of private health care fraud enforcement from the Program calls for measured, yet prompt action, guided by experienced counsel.
Authored by Thomas Beimers, Ron Wisor, Allison Caplis, Jesse Suh, and Toni Cross.
References
1 See 28 U.S.C. § 524(c).
