A couple of years ago, CBS’ 60 Minutes conducted an investigation into Medicare and Medicaid fraud in Florida. The story included some shocking findings: fraud is rampant, hard to detect and costs taxpayers to the tune of at least $60 billion every year.

One person profiled in the story was former Federal Judge Ed Davis. Davis told 60 Minutes that his Medicare statement showed that the government had been billed to purchase him two artificial arms. Yet, Davis did not need artificial arms; the ones he was born with were still working just fine.
Someone, it seems, used Davis’ personal information to falsely bill Medicare and then pocketed the reimbursement. This scheme, and others like it, is costing taxpayers billions of dollars each year.

Thankfully – the Department of Justice and a number of state legislatures are taking the issue much more seriously than they were a few years ago. Attorney General Eric Holder has increased resources in this area and filed charges against dozens of people in connection with false billing schemes.

In fact, earlier this year, the Justice Department exposed what may be the largest healthcare fraud case of all time. Dr. Jacques Roy of Texas is accused of masterminding a scam that charged Medicare nearly $375 million for home healthcare services that were never requested or delivered.

Medicare is only one part of the equation, however. State Medicaid programs, which are designed to provide low-income and disabled people access to medical care, are also plagued by fraud. The scope of the problem is not fully understood. One official estimate suggested that nearly 8.5 percent of Medicaid claims could be fraudulent.

Washington State has not had the best track record on this issue – largely because the state has not devoted sufficient resources to the problem. Just last June, the state’s Medicaid Fraud Unit was nearly cut from the budget when the legislature failed to pass a new Medicaid fraud bill at the end of the legislative session. This is very disturbing given that the federal government pays for 75 percent of its funding on the condition that the state pays for the remaining 25 percent.

In my view, funding for Medicaid fraud programs should not be a partisan issue. Implemented correctly, these programs recover more money for the state than they cost to run. Given that so much Medicaid fraud goes undetected, the state could be recovering millions more.

One easy way that states have increased their detection and prosecution of Medicaid fraud is through the passage of whistleblower laws that provide rewards for those who come forward with information about fraud. These laws, known as false claims acts because they mirror a federal law of the same name, provide additional tools to state governments to combat fraud, including participation in multistate cases and qui tam provisions which reward whistleblowers.

Washington recently became the 29th state to pass such a law. The bill was passed on a bipartisan basis, 40-9 in the Senate and 56-42 in the House. Governor Gregoire has signed the bill into law, and it will go into effect this June.

The qui tam, or whistleblower provisions, in the law are especially important. Whistleblowers will now be able to file a lawsuit on the state’s behalf. If the state intervenes and takes over the litigation, the whistleblower can receive up to 25 percent of any funds recovered. If the state does not intervene, the whistleblower can continue to prosecute the fraud on their own and qualify for even greater rewards.

The law also provides new protections for whistleblowers, shielding them from retaliation by their employer. This will help encourage more whistleblowers to come forward and tell investigators what they know. Perhaps most importantly, the law trebles, or triples, damages, which should help to deter Medicaid fraud moving forward.

I strongly support this legislation. Over the years, I have worked on a number of cases on behalf of states, municipalities and consumers who have been overcharged or otherwise defrauded by Big Pharma and other healthcare companies.

I have also worked with a number of whistleblowers in the healthcare industry. My law firm prosecuted a whistleblower case against an ambulance company that resulted in the second-largest recovery in that industry’s history. We also worked with a whistleblower who exposed Medicare outlier fraud and helped the government to recover millions of dollars.

We recently settled a lawsuit on behalf of two whistleblowers here in Washington who alleged that Center for Diagnostic Imaging (CDI), a radiology and diagnostic imaging company with locations in seven states, improperly billed the federal government for services without a written order from a physician. A judge also approved the maximum reward for the whistleblowers, 30 percent of the recovery.

My experience in these cases has taught me that whistleblowers should be extremely careful and hire an ethical and effective attorney to prosecute the case. This is a complex area of the law, and whistleblowers need legal counsel that has the resources and expertise needed to take on large defendants who will fight the allegations and likely retaliate against the whistleblower.

Highly skilled legal counsel is especially important for whistleblowers that come forward under the new state law. As I’ve already noted, Washington has not devoted sufficient resources in the past to catching Medicaid fraud. Thus, the state will simply not have the resources to prosecute each and every whistleblower case that comes through its door.

Instead, the state will take the cases that offer the greatest opportunity for a large recovery. Attorneys with a solid understanding of whistleblower law and the healthcare industry will help whistleblowers develop their case and present it to the government.

I strongly suggest that any prospective whistleblowers consult an experienced attorney before taking any action. You can learn more about our whistleblower practice at www.hb-whistleblower.com