Whistle-Blowers Help Feds Recover Cash

According to an analysis of Department of Justice records between 1996 and 2005, whistle-blowers helped the DOJ recoup $9.3 billion from healthcare providers accused of defrauding federal and state governments over that 10-year period. And according to some experts, the figures in the study, which was published in the Annals of Internal Medicine, may be conservative, since some of the biggest fraud recoveries came after 2005. For example, the study does not include the $920 million settlement against Tenet Healthcare Corp. in 2006.

The DOJ began using insider information in its ramped-up battle against healthcare fraud in the 1990s; now, 90% of the department’s fraud lawsuits are initiated by whistle-blowers. The informants don’t do badly for themselves, either: whistle-blowers typically get from 15% to 25% of any amount that’s recovered. In the cases reviewed, the informers got more than $1 billion.

Although the DOJ pursued fewer cases during the period covered by the study, the average per-case recovery soared. From 2002 to 2005, the average recovery went from $10 million to $50 million, in part, say some observers, because of an increased focus on pharmaceutical companies. Drug makers are often sued over alleged artificial inflation of the cost of the drugs they sell to Medicaid programs, which is a violation of Medicaid’s best-price regulations.