AMARILLO, TX – On August 1, 2024 the Criminal Division of the Department of Justice (DOJ) rolled out a new Corporate Whistleblower Awards Pilot Program (the “Program”). According to the DOJ, the Program will reward whistleblowers who provide original, truthful information regarding certain corporate misconduct that “leads to forfeiture exceeding $1,000,000 in net proceeds.” The Program is a three-year initiative by the DOJ that aims to fill gaps in existing whistleblower programs.
The DOJ plans to examine the Program throughout the three-year term, and at the end of the term will decide whether to extend or revise the Program. Since this is an initiative of the DOJ, the scope of the Program is much broader than just healthcare arrangements. Specifically, the Program focuses on four areas, including “health care fraud schemes targeting private insurers not subject to qui tam recovery under the False Claims Act.”
The Program specifically applies to arrangements involving private insurers. This means that the Program goes beyond the scope of the federal False Claims Act, Anti-Kickback Statute and Stark Law that providers are constantly cautioned about. Whistleblowers under the Program can now potentially draw attention to providers’ arrangements with private insurers.
Arrangements that exceed the standard fee-for-service agreement with an insurer could be viewed as suspect, which potentially risks legitimate efforts by providers, like DME suppliers, wanting to take a more active role in patients’ health care. While this is potentially alarming, and the Program could have broad-sweeping impacts on the way health care providers interact with payors in the coming months and years, there is some cold comfort to be found for the majority of providers:
- The Program is monitored by the Criminal Division of the DOJ, implying that the arrangements it will investigate will generally be criminal in nature (e.g., overt fraud or intentional deceptions).
- There are exclusions from eligibility to receive an award under the Program:
a) Whistleblowers must be individuals; they cannot be entities — no risk of competitors utilizing the Program to attack each other
b) Individuals can only utilize the Program if they are not otherwise eligible for another whistleblower or similar program of the U.S. Government — no double dipping
c) he individual cannot have meaningfully participated in the activity that he/she reports (e.g., directing, planning, initiating, or knowingly profiting from the activity) — minimizing risks of individuals joining companies just to dig for information
d) The individual cannot acquire the information that he/she reports from a person who is ineligible unless the reporting individual is providing the DOJ with information about violations involving that person
- Whistleblower awards are entirely discretionary and up to the sole discretion of the DOJ, after taking into account the amount of the forfeiture, less any government expenses, payments to legitimate lienholders, and individual victims and the overall impact that the information provided had on the investigation. This process alone may deter would-be whistleblowers.
While the majority of well-meaning providers will likely not have to worry about the Program, additional scrutiny should be considered for arrangements with private payors for the foreseeable future, particularly any arrangements that fall outside of a standard fee-for-service agreement.
What is not clear from the current guidance is how the DOJ will be judging these arrangements and under what laws the DOJ will use to prosecute alleged offenders. Since the Program is so new, we will likely not obtain any meaningful information until the DOJ begins reviewing whistleblower claims and investigating arrangements. This may be challenging for DME suppliers that have been working, in conjunction with insurers, to increase their roles in the health and well-being of their patients. Arrangements that reward for outcomes or that compensate (or provide benefits for) certain metrics could fall under scrutiny in the Program, which could ultimately have a cooling effect on these efforts.
Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, PC, a law firm with a national health care practice based in Texas. He represents pharmacies, infusion companies, HME companies, manufacturers and other health care providers throughout the United States. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization and can be reached at (806) 345-6320 or [email protected].
Rossanna J. Madrigal, JD, MPH is a senior attorney in the Health Care Group at Brown & Fortunato, PC, and she is based in Houston, Texas. She represents DME/HME suppliers, pharmacies, home health agencies, and other health care providers across the United States. Madrigal can be reached at (806) 345-6308 or [email protected].
