Corporate Whistleblowers

The Department of Justice announced last week that Encompass Health Corporation, formerly known as HealthSouth Corporation, has agreed to pay $48 million to resolve allegations that it was enrolling patients in its program and charging Medicare whether they would benefit from rehab or not. The DOJ called the company nation’s largest operator of inpatient rehabilitation facilities.

The qui tam cases were brought by a former company physician in Florida, the head of therapy at a Texas facility and the medical director at a Virginia hospital.

From the DOJ press release:

The government alleged that beginning in 2007, in order to ensure compliance with Medicare’s rules regarding classification as an (inpatient rehabilitation facility) IRF, and to increase Medicare reimbursement, some Encompass IRFs falsely diagnosed patients with what they referred to as “disuse myopathy” when there was no clinical evidence for this diagnosis. Additionally, Encompass IRFs allegedly admitted patients who were not eligible for admission to an IRF because they were too sick or disabled to participate in or benefit from intensive inpatient therapy.


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Medicine is a profession with high ethical standards. At the same time, there is much money to be made. Bad players find ways to siphon some of the nearly $600 billion we spend on Medicare each year. So, both the health care industry and its regulators constantly struggle with how to cope with the kickbacks, conflicts of interest and billing for unnecessary care.

Illustration by Nora Valdez

Last year, $2.5 billion of the $2.8 billion in Department of Justice False Claim Act recoveries involved the health care industry. In 2019, whistleblowers working with the DOJ included hospital administrators, sales representatives, home health care workers, physicians and patients.

Now, they may have more muscle. Maria Durant, a partner with the firm Hogan and Lovells, told a group of lawyers gathered in Boston last week there has been a a major shift in the way courts interpret the validity of medical opinion. She spoke at a conference on health care law held Thursday by the Boston Bar Association. 
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For a hospital that had once labored to break even, Wheeling Hospital displayed abnormally deep pockets when recruiting doctors.

To lure Dr. Adam Tune, an anesthesiologist from nearby Pittsburgh who specialized in pain management, the Catholic hospital built a clinic for him to run on its campus in Wheeling, W.Va. It paid Tune as much as $1.2 million a year — well above the salaries of 90% of pain management physicians across the nation, the federal government charged in a lawsuit filed this spring.

In addition, Wheeling paid an obstetrician-gynecologist a salary as high as $1.3 million a year, so much that her department bled money, according to a related lawsuit by a whistleblowing executive. The hospital paid a cardiothoracic surgeon $770,000 and let him take 12 weeks off each year even though his cardiac team also routinely ran in the red, that lawsuit said.

Despite the losses from these stratospheric salaries and perks, the recruitment efforts had a golden lining for Wheeling, the government asserts. Specialists in fields like labor and delivery, pain management and cardiology reliably referred patients for tests, procedures and other services Wheeling offered, earning the hospital millions of dollars, the lawsuit said.
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Whistleblower protection has changed dramatically in the past 15 years, says Stephen M. Kohn, chair of the National Whistleblower Center. Writing in the international publication “Ethical Boardroom,” Kohn spells out the changes and what they mean to those on governing boards and in the C-suite.

This is all radically different than the whistleblowing depicted in popular culture. It has nothing to do with employee grievances or the stealing of national security secrets. Done correctly, an employer never learns the identity of the whistleblower and thus, traditional employment relations cases become relics of a time when whistleblowers lacked safe, confidential and effective reporting mechanisms.

These changes need to be embraced, not opposed. The issue is no longer the whistleblower, but whether a company will tolerate criminal activity in order to profit. Turning a blind eye to corruption can have disastrous consequences…Trying to silence whistleblowers is the biggest mistake any corporate executive can make.
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Nader in 2008

Scientific whistleblowers include drug reviewers, medical researchers, quality control monitors, and engineers. The recent emergence of Boeing whistleblowers demonstrates that we need more of the latter, says Ralph Nader. The legendary consumer advocate and founder of the consumer protection group Public Citizen writes in Scientific American that engineers are “often the first to notice waste, fraud and safety issues”

Compared to the technologically stagnant dark days in the auto industry of cruel suppression of technical dissent over safety and toxic emissions … today’s engineers are working in an improved environment for taking their conscience to work. Yet much more remains to be done to safeguard the ability of engineers to speak truth to the powers-that-be.


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Two weeks after a whistleblower filed an updated federal complaint accusing the network of promoting terrorism, Facebook continues to deal with pressure about questionable content. The details of the complaint to the Securities and Exchange Commission were outlined in an Associated Press story.

https://www.facebook.com/pages/%D9%87%D9%8A%D8%A6%D8%A9-%D8%AA%D8%AD%D8%B1%D9%8A%D8%B1-%D8%A7%D9%84%D8%B4%D8%A7%D9%85/237269353391307?timeline_context_item_type=intro_caAt issue in the complaint: the network’s failure to limit content designed

It’s Time for Facebook to be Sanctioned for Misleading Shareholders and the Public About Terror and Hate Speech on its Website 

The Securities and Exchange Commission (SEC) now has all the information it needs to sanction Facebook for its dishonesty about terror and hate content on its website, thanks to a petition filed by a whistleblower working with the National Whistleblower Center (NWC).  Today, the Associated Press published an explosive story describing and confirming the key findings in the petition. 
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Two whistleblower cases unsealed this week reveal how aggressive pharmaceutical marketing programs can cross the line into Medicare fraud and kickbacks. Trips to the Kentucky Derby for doctors and huge bonuses for sales reps can lead to bribes, conflicts of interest and poor-quality care.

Illustration: Tinker ReadyIn one case, a drug maker was competing with a far less expensive, easier-to-administer alternative. Sales reps reportedly told doctors they could shorten a two-to-three week treatment with the Questcor’s expensive anti-seizure drug to one week. However, the Food and Drug Administration had not vetterd the efficacy of the one-week course, according to the case.

US WorldMeds

In the settlement case, the company is charged with secretly covering co-pays for all Medicare patients –not just those in need — thus insulating them from a steep price hike. Good for the patients, whose co-pays could have reached $5,000, DOJ noted; bad for the rest of us, who have to pay the balance. That’s why the approach is considered a kickback.


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A selection of this week’s whistleblower news, including a harrowing tale of a group of war crimes whistleblowers.
NAVY

Some of details of the case against Navy SEAL Edward Gallagher, as reported in The New York Times Tuesday, may sound familiar to many whistleblowers.  Here’s what reportedly occurred when Navy SEAL commandos reported their platoon chief had committed atrocities in Iraq.

(I)nstead of launching an investigation that day, the troop commander … warned the seven platoon members that speaking out could cost them and others their careers, according to the report.

 The Times story is based on a confidential Navy criminal investigation report obtained by the paper.

According to the investigation report, the troop commander, Lt. Cmdr. Robert Breisch, said in the meeting that while the SEALs were free to report the killings, the Navy might not look kindly on rank-and-file team members making allegations against a chief. Their careers could be sidetracked, he said, and their elite status revoked; referring to the eagle-and-trident badges worn by SEALs, he said the Navy “will pull your birds.”


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Retaliation against whistleblowers takes many forms.  A little person working at the White House recently reported a supervisor moved files to a high shelf out of her reach. Others report being followed, shunned, smeared, fired and worse. Whistleblowers often find themselves in a hostile work environment.

Julie Myers Wood, a corporate compliance consultant, thinks that works against both whistleblowers and their employers. In-house reporting programs with whistleblower protections built in are the way to go, writes Wood, who has a resume filled with high level federal government positions.

Institutions must shift their mindsets to view the reporting of regulatory problems as an opportunity to shine by addressing the problem, improving the institution and preventing large settlements. 

In a column posted on the Forbes website Monday, she suggests companies work with whistleblowers to both protect the company and strengthen compliance.

Companies need to get to a place where they embrace the potential whistleblower by creating a transparent culture, instilling the shared value of compliance at all levels.

Her advice is not aimed at whistleblowers, some of whom have had bad experiences with in-house hotlines. Advocates suggest employees approach internal reporting systems carefully – they are there to protect the company and can be used against whistleblowers.

Wood encourages the development of internal reporting programs with the message – let’s try to keep this in house. For companies, that is a good thing. But whistleblowers have found that internal reporting isn’t always effective or to their advantage. They have other options. Working with law enforcement or government agencies, they can remain anonymous in many cases and often qualify for a reward.  
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