Personal Knowledge Supports Whistleblowers' Qui Tam Suit

How much detail must a whistleblower provide to support a qui tam lawsuit under the False Claims Act?  According to a federal court in Florida, the answer depends on whether the whistleblower is an insider with direct, personal knowledge of the facts.

In a recent case, two whistleblowers alleged that their employer made false claims to Medicare and other government healthcare programs by using billing code modifiers to increase reimbursement rates, by submitting claims for 5,000mcg doses of a drug when only 1,000mcg doses were actually used, and by billing for computer aided detection software analysis of mammograms when the software was not in fact used.

The defendants moved to dismiss the complaint on the ground that it failed to plead the alleged fraud “with particularity” as required by Federal Rule of Civil Procedure 9(b).

The court denied the motion.  It ruled that company insiders can state a claim under the False Claims Act if their complaint describes “the alleged fraudulent acts, why they were fraudulent, when they occurred, and who engaged in them.”

Key to the court’s decision was the fact that the whistleblowers were company insiders who provided “a factual basis for their personal knowledge of the events at issue.”  That factual basis included descriptions of meetings they attended and discussions with the defendant regarding the practices at issue, defendant’s knowledge of the practices, and defendant’s failure to take corrective action.

The court was also impressed with the whistleblowers’ direct access to the events at issue.  One whistleblower was a Health Information Management coding professional employed by the defendant for seven years.  The other was a physician with staff privileges at one of defendant’s hospitals for 14 years.

One caveat in the case is: The government declined to intervene in this case, forcing the whistleblowers and their counsel to prosecute the action on their own.  Perhaps if the whistleblowers had provided more details backed up with documentary evidence, they could have convinced the government to intervene.

The bottom line remains:  It is always best to gather as much detail and documentary evidence as possible, even if the whistleblower is a true company insider.

John Howley
New York, New York

Source:  United States ex rel. Dittmann v. Adventist Health Sys./Sunbelt, Inc., No. 6:10-cv-1062-Orl-28GJK (M.D. Fla. July 30, 2012).

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