KATIE GILCHRIST and DAVID DONNELL

Qui tam cases — those lawsuits brought by private individuals against recipients of Medicare and Medicaid funds for submitting false claims — are on the rise. The government supports this increase by offering relators, the private citizens bringing the claims, up to 30 percent of the government's recovery. This creates a strong incentive for those who may ordinarily be loyal to their employer to report suspected violations to the Department of Justice rather than their compliance officer. We recently reported on the new federal laws which will surely increase qui tam actions. These laws now require many healthcare facilities to educate their employees about various provisions of the False Claims Act (FCA) and the protections given to those who point out FCA violations within their company.

Healthcare facilities are not completely vulnerable to the increased call for whistleblowers. Simple steps can be taken to keep these providers ahead of most potential qui tam actions.

First, it is imperative that providers start with a strong compliance plan. A good plan will allow the healthcare provider to uncover most potential violations and allow for controlled investigations and resolutions (which may include repayments or self-reporting). Assuming most healthcare facilities have a standard compliance plan as a backstop, incorporating a few more proactive measures will drastically improve the odds of avoiding qui tam litigation.

Next, obtaining information known (or suspected) by employees is critical. While most compliance plans and policies call for disclosure of questionable actions, make sure there are defined steps that make it easy and safe for an employee to report a problem. Include as part of the employee's job duties the responsibility to report suspected violations according to the established channels. Instituting (soft-handed) disciplinary measures for failing to disclose suspected issues makes clear the provider's intention to take these matters seriously.

During an employee's annual review (or any other periodic consultation with the employee), employers should require all employees to certify in writing that they either know of no facts indicating noncompliance or have appropriately reported all facts known. Forcing both supervisor and employee to consider fraud and abuse issues annually increases the likelihood of finding problems before the problems find you.

When employees raise concerns, take them seriously. It is best to have two people attend the interview with the employee suspecting a violation. Be careful to illicit as much information as possible, ensuring that you have a full report. Document the conversation and have the employee sign off on it. If there are any documents that support the employee's concerns, make sure they are secured and not available for reproduction or removal without appropriate permission. Finally, follow up with the employee, keeping his reasonably informed of the investigation and any actions or resolutions taken. An employee who feels his concerns were not taken seriously or followed through may have added incentive to report potential misdeeds outside the company's compliance channels.

Do not retaliate against employees who report issues. State and federal laws protect whistleblowers from most disciplinary measures. Consult your employment counsel if independent or special circumstances require discipline or reassignment of anyone who has reported an issue of noncompliance.

Finally, everyone's employment terminates in one form or another. Exit interviews give the healthcare facility its last chance to obtain information from the employee. If possible, always conduct an exit interview. Have the employee execute a final certification with regard to knowledge of compliance issues and include an attestation that all documents belonging to the employer have not been removed or reproduced. Require the return of any documents or things that are in the employee's possession. While the certifications may not absolve liability, they may mitigate damages or destroy any argument supporting an "intent" to defraud.

Also, consider adding a release of liability to the termination documents. Although some consideration may be required for a release, this may be the most effective warranty against liability to a relator (not the government). Be advised that a release may not protect you against all qui tam actions.

Different courts have taken different positions on the effectiveness of a release of qui tam liability. However, a controlling court in our jurisdiction has not yet decided the issue. So consult your facility's counsel about whether adding a release would be worthwhile in your setting.

Be aware that consultants and agents are equally empowered to act as whistleblowers. Therefore, it is wise to include the requirements outlined above in all contracts with these "outsiders." As the provider, you will likely have more leverage with these individuals, so take advantage of that strength and ensure that you provide the most restrictive provisions on the use and handling of your information.

Remember, by law you are not allowed to prohibit whistleblowers from providing the government with valid information. However, you can prevent employees from seeking out the government if you manage your information properly.


June 2007