Exposing Healthcare Fraud with Jonathan Tycko | E. 68

The Healthcare Leadership Experience

High levels of government funding means that the value of healthcare fraud runs into billions of dollars annually. Attorney Jonathan Tycko discusses his role in representing whistleblowers, with Jim Cagliostro.

Episode Introduction

Jonathan explains why the value of healthcare related cases under the False Claims Act ($1.8 billion recovered in 2022) represents only a fraction of the real total, why most people are reluctant to become whistleblowers, and shares the universal mistake all health systems make. He also urges hospitals to focus on mission over money and explains why compliance isn’t the enemy of healthcare.

Show Topics

• Representing whistleblowers in qui tam lawsuits

• Understanding healthcare fraud

• Analyzing statistics in healthcare fraud

• Whistleblowers share key characteristics

• The risks of becoming a whistleblower

• Compliance should not be seen as a problem

• Hospitals must focus on mission, not money

02:46 Representing whistleblowers in qui tam lawsuits

Jonathan explained his move into the healthcare niche, and the meaning of ‘’qui tam.’’

‘’This particular practice that I'm in now where I represent whistleblowers for reasons we can get into as we go along here, tends to be very focused in the healthcare sector….about 15 years ago, I got a call from a person who was involved in one of these cases and he says, "I'm a relator in a qui tam lawsuit and I'm looking for a new lawyer to help me with an appeal." And I said, "I don't even know what those words mean." Even though I had been practicing law for about 15 years at that point I had never heard of these kinds of cases before. It is really a very niche practice, there are very few of them. But I took his case and through that really learned a little bit about the False Claims Act, which is the statute we operate under mostly. And just got really interested in it from that one case. And then slowly over time started to look for other opportunities to represent clients in that area. Did a little marketing and so forth and over time built up the practice. And now this is almost exclusively what I do as a lawyer, which is representing whistleblowers in what are called qui tam lawsuits, which is where a whistleblower is bringing a claim for some type of fraud, where the fraud is really committed on somebody else, usually the government or government programs. But it is brought by a private whistleblower that is specifically authorized by certain laws.’’

06:03 Understanding healthcare fraud

Jonathan said any type of fraud in healthcare is likely to fall within the False Claims Act due to the extent of government funding.

‘’Well, at a very high level of generality, it's just what it says. It's any type of fraud scheme that is impacting the healthcare system. What we're focused on a little bit more specifically is, like I said, there's this statute called the False Claims Act, which makes it illegal to basically commit fraud on the government or on programs that are funded with government dollars. And as you know, obviously a huge percentage of healthcare spending is funded through Medicare, Medicaid, Tricare, the VA system, and these are all programs that are covered by the False Claims Act. So any type of fraudulent conduct or unlawful conduct that is widespread and that impacts the healthcare industry is likely to cross paths with the False Claims Act because of all those government dollars that are used to fund our healthcare system. And so any sort of fraud... And I can run through a whole bunch of different categories and give you some sense of what the types of cases are, but pretty much any type of fraud that is ongoing in the healthcare industry is likely to also violate the False Claims Act. And so a whistleblower, somebody who has non-public information about that fraud, is a potential whistleblower under that statute.’’

07:45 Analyzing statistics in healthcare fraud

Jonathan said that the high levels of healthcare spend makes it difficult to provide accurate figures on fraud.

‘’It's really hard. It's an interesting question. It's really hard to talk about fraud in a statistical sense because you only know about what gets reported. And so you never really know how much fraud is occurring that you don't know about. So what I can give you some sense of is what is reported by various government agencies that have access to some statistics. So what we know is that pretty much every study that's done of any government program where they're looking at what are the rates of what folks in the government call fraud, waste, and abuse. So it's not all just intentional fraud, but it's also just wasted money. They're looking at, "If we spend a billion dollars, how much of that is going to actually go to the program and how much of it is going to just get siphoned off through fraud, waste, and abuse? And they pretty much always conclude that it's about 10%, which is a shockingly high number, but that's usually what they conclude. And so what I can tell you is I can give you some more very, very specific statistics. So if we look at just this past year, 2022. The government reports statistics under the False Claims Act every year. So in 2022, the government recovered about 1.8 billion in healthcare related False Claims Act cases. And that's somewhere around 2 billion a year. Again, that's what they recover. So the actual amount of fraud is probably some multiple of that. And that's just the federal government, right? The state governments recover more on top of that if there are Medicaid dollars, because Medicaid is jointly funded by the federal government and by state governments. So that's even a little bit of an underestimate. My sense is probably the real number is about 5 billion a year in recoveries and maybe five X or 10 X more of that that isn't recovered. So it's a lot. And it's a lot because healthcare spending is so huge.’’

12:44 Whistleblowers share key characteristics

Jonathan said most people are reluctant to take action when it comes to whistleblowing.

‘’….everybody, when you ask them in the abstract, "Well, if you saw your employer doing something illegal, would you turn them in?" I think most people would say, "Oh, yeah. Yeah. Of course I would." But then in practice, most people actually don't because we have these very, very strong instincts to want to get along with the people we know and work with. It turns out that most people, even most good people who would never themselves do something dishonest, won't blow the whistle when they see it happening in an employment setting. And what I've noticed is that the people who do, the people are willing to blow the whistle, tend to have some fairly unique personality types. They're people with a strong sense of self-identity. They're not necessarily people who are just going to go along to get along. They have a strong sense of right or wrong. Often they have a strong sense of patriotism because a lot of these cases have to do with injuries being done to the government and to taxpayer dollars. And so they have this sense of wanting to stick up for the country or for the community. And so they're often are motivated by some strong personality trait, and they tend to be very strong-willed people.’’

13:36 The risks of becoming a whistleblower

Jonathan said whistleblowers risk dismissal from their jobs for raising concerns with employers and play a key role in providing information.

‘’And this goes to the question of what is the role of whistleblowers within organizations? Often by the time somebody has called me, they've already tried to solve the problem internally at the company or in the office or with their employer. And what they've run into is being told to keep their mouth shut, being dismissed, being told they're crazy, maybe being fired because the company doesn't want to deal with it. And so they've tried to fix the problem and they had been met with this stonewalling or evidence that the company isn't going to deal with it. And that's usually what's happened before they call me. Then the next question is, "Well, what role does the whistleblower actually play in one of these cases?" And what are called again, qui tam cases. These are cases brought under the False Claims Act by the whistleblower. The main role in that case is for the whistleblower to actually provide the information to the government.’’

19:35 Compliance should not be seen as a problem

Jonathan said that healthcare’s focus on the bottom line is an obstacle to compliance.

‘’If they're in a rush to ramp up the company and they're trying to turn the company profitable and go public or sell it, trying to get to the next round of VC money or whatever it is, there's a strong pressure to focus very much on the bottom line. And sometimes compliance issues can at least not stop that, but can slow it down a little bit. And so often when the whistleblower raises his or her hand and says, "Well, wait a second. Isn't the way we're marketing this drug or isn't the way that we're billing for this procedure, whatever the issue is, isn't that maybe wrong?" There's often, in companies like that, a tendency to instinctively say, "We don't really want to hear about that." No. No. Because God forbid the answer be, "Yeah. It's wrong." Then we might have to change how we do things and we don't want to change how we do things. So there's that instinctual resistance to it. So again, that's a corporate culture thing. So what I would say is you can't, and particularly in healthcare where it's such a heavily regulated business, you can't just view compliance as a problem. You have to view it as just part of the business, right? That you have to deal with compliance. You can't have this negative view that compliance is just something to be minimized and dealt with. And so if a whistleblower within the company... They're not really a whistleblower at that point, they're just an employee who is raising an issue that they see in the company, right? They haven't become a whistleblower yet.’’

30:06 Hospitals must focus on mission, not money

Jonathan said the priority in healthcare has to be the service provided.

‘’But don't become obsessed with the money. It can't be about the money as the first priority, right?The first priority has to be, "Let's provide the service, provide the product, do it in a safe way, do it in an ethical way." And if you do that and you do it well, you will make your money. But if you go into the healthcare business and you think making the money is the thing, your chances of running into legal problems go way up because it is a regulated industry. It's a highly regulated industry. It's an industry that the government watches carefully. And people within the industry, a lot of them do know about these whistleblower rights. And so maybe you can make some money for a little while, but eventually you'll get caught. So just keep your eyes on the prize. And the prize should be, "Am I fulfilling whatever the mission of the company or my healthcare mission is?" Take compliance seriously. It's just part of the business. It's not something outside the business that you have to view as the enemy. You have to view compliance as just part of the business and take it seriously. So from my perspective, that's what I would say to somebody running a healthcare entity.’’

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You’ll also hear:

The niche nature of whistleblowing in healthcare: ‘’There are only about 600 of these cases that are filed nationwide every year. And just to give you some sense, that is out of about 400,000 cases that are filed every year in federal court. So this is tiny, it's one 10th of 1% of the lawsuits in the country.’’

The potential rewards for whistleblowers in successful cases: ‘’In some of these cases the recoveries are quite large. Just in fiscal year 2022, the last reported fiscal year, the federal government paid $488 million to the whistleblowers in False Claims Act cases.’’

Why not taking whistleblowers seriously is the universal mistake made by healthcare systems.

Why a feedback loop is essential in encouraging people to become whistleblowers. ‘’Sometimes the employee thinks the company is doing something illegal, but actually they're not. And so it's also important, I think, to have a feedback loop that goes back to the employee that says, "Yeah. We've heard you."

Understanding the process: Why litigation can take years. ‘’The process is slow. The government investigations often take months or years to complete. And then if you have to litigate on top of that, that's more months and years. And in some sense, the stronger cases take the longest because those are the ones that get investigated the hardest, that have the most dollars at stake.’’

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