An interesting wrinkle in the development of False Claims Act cases has been the increase in whistleblowers who come from a position of trust. A recent example was an August 19, 2013 $26 million settlement with the Department of Justice by Shands Healthcare, a network of health care providers in Florida for which the complaint was recently unsealed.

In 2006 Shands hired a healthcare consulting firm, YPRO Corporation, to conduct an on-site review of its Medicare and commercial insurance billing for observation services and one-day inpatient stays at six hospital. As part of its review, YPRO auditors found significant error rates and compliance issues. YPRO informed the Shands Interim Chief Compliance Officer, upper management, and department heads of its finding in an exit conference, and advised them to self-disclose its errors to the Office of the Inspector General. Shands did not self-disclose. Another audit in 2007 by YPRO produced similar results and response from Shands, which then indicated that they would not be hiring YPRO again for 2008. In April 2008 YPRO’s president filed the qui tam (whistleblower) action.

So what are the options for avoiding such a situation? Obviously the ideal situation involves the health care provider responding accordingly to the discovery of overpayments and potential fraud within its business. Including a provision in a consulting agreement forbidding that company from reporting suspected violations to the government would likely be unenforceable as against public policy, but one option might be to arrange an initial perspective conference with the consultant before documentation begins in order to retain control of the situation.

In any case, this will be a fascinating trend to follow.

Unsealed Complaint can be found here:

Click to access shandscomplaint.pdf

Written by: Stephen Angelette