Potential for Increase in Whistleblower Litigation

On April 8, 2014, The Centers for Medicare & Medicaid Services (CMS) released, with tremendous fanfare, hundreds of thousands of points of billing data regarding Medicare suppliers including some 880,000 physicians for 2012. These data are presented in an Excel format that makes searching and scanning easy. Within 48 hours, virtually every major media outlet had reviewed the data dump, trying to extract something newsworthy.

Most media outlets reported which physicians received (under their billing number) the highest Medicare payments. While there was some commentary about possible explanations for why certain types of physicians landed at certain places on the spreadsheet, the desire to find news largely overcame the requirement of detailed and thoughtful analysis. 

The worst of the stories suggested some impropriety in receiving the highest total payments, when of course the size of the payments does not mean there must have been fraud involved. One would hope that government enforcement authorities would know that and would resist any public pressure to investigate providers simply based on the size of the payments. The release of these data, however, likely will further fuel the current boom in whistleblower litigation, particularly False Claims Act litigation because individuals with complaints will be incited by the numbers – regardless of what they really mean.   

It remains to be seen what value this level of transparency will have for the market. Most likely, the vast majority of patients will have little or no interest in the numbers (beyond simple curiosity). No doubt, however, some patients who already have concerns regarding their provider will look at the data and perhaps make false assumptions about their meaning. (There are also valid concerns about the privacy of the practitioners who are named. It is not clear how many of these individuals knew that their name and place of work would be published on the Internet for everyone, including, potentially, people they do not wish to find them, to readily search.) Researchers likely will find valuable trends within the data, particularly comparing specialties among regions to determine whether there are different practice patterns in different locations. Ideally, this work could result in insight into practices that enhance quality of care at a reduced cost. There remain many concerns about the potential misinterpretation of data to be published under the Physician Payment Sunshine Act as well. Arguably, there is more useful information in those reports regarding potential conflicts of interest than in the Medicare payment database released yesterday, but there will be equal if not more concern about potential confusion of patients and their families with this latest release.

The easiest prediction to make is that this release will provide further information to whistleblowers looking to sue providers, and that they will seek to use it in litigation. Because of the False Claims Act’s public disclosure bar, whistleblowers who have no other information about a provider beyond the released data likely will be barred from using these data to assert a case that they otherwise would not be able to (though some whistleblower lawyer somewhere is surely poring over the data as we speak). However, employees and former employees of providers who have some knowledge, but lack knowledge about Medicare billing, likely will try to use the data in the release to assert that the provider they seek to sue is submitting fraudulent claims to Medicare.

Because the Supreme Court recently declined to resolve a purported circuit split on how much detail whistleblowers need to provide about claims submitted to the government to survive a motion to dismiss (in U.S. ex rel. Nathan v. Takeda Pharamceuticals, et al.), the effects may vary in different parts of the country. In Florida, Alabama, and Georgia, for example, where the Eleventh Circuit Court of Appeals typically requires specific details of specific claims such as the date a particular alleged false claim was submitted, this release may not result in whistleblowers being able to state claims in litigation that they could not state before, because full claim by claim detail is not provided in the release.

In other parts of the country, however, the data in the recent release may provide enough information as to at least some providers to cause otherwise deficient complaints to be filed, and in some cases, possibly to survive motions to dismiss. Whistleblowers also may try to use apparently outsize payments as to some providers, perhaps with the help of expert analysis, to try to convince the government to intervene in their False Claims Act suits. In addition, since Department of Justice approval procedures for issuing Civil Investigative Demands were loosened several years ago, the recent flood of CIDs may increase further as whistleblowers, competitors, or others push DOJ to issue CIDs to providers with apparently anomalous data.

Providers Should Consider Examining the Published Data

When the dust settles on these disclosures, there likely will be some valuable information to be gained in the academic and business communities. Because of the slow pace of most False Claims Act suits, however, the effect on whistleblower litigation likely will only materialize piecemeal, over a period of several years. We will be watching for these effects and look forward to exploring them in a future post. In the meantime, providers should consider examining the data published about them to make sure it is accurate, and should be prepared to respond to accusations, whether in court or in the court of public opinion, that the data means they are doing something wrong.