For laboratories concerned about exposure to internal whistle-blowers, there is positive news. The whistle-blower law, which allows employees of a company to bring the company’s failure to comply with national rules and regulations to the attention of the authorities for personal financial benefit, was recently dealt a blow by the Supreme Court. In a 6-to-2 court ruling, the Court tightened a component of the False Claims Act that requires the individual whistle-blower to prove that he or she was the “original source” for a claim of fraud against the government.

For a hospital or laboratory employee, this means that the whistle-blower would likely have to file a false-claims lawsuit on behalf of the federal government before the whistle-blower saw a CMS (Centers for Medicare and Medicaid Services) investigator on the premises of the healthcare institution. It may still be possible to file the lawsuit and collect after a federal investigation has begun, but it will be much harder for the employee to prove he or she was the original source. The ruling “appropriately set limits and reduces the potential for abuse of the powerful financial incentives (dictated) under the statute,” according to attorney Daniel Westman, a partner of Morrison & Foerster in McLean, VA.

In 2006, the US government recovered $3.1 billion in settlements and judgments in cases involving allegations of fraud (Nearly 72%, or $2.2 billion, of those recoveries were in healthcare.). $1.3 billion of that $3.1 billion was paid out to individuals using the qui tam act to file lawsuits on behalf of the US government. With the new changes to the False Claims act, the US Government can expect to surrender a smaller percentage of its recovered funds from fraud allegations lawsuits in 2007. The hope of the Supreme Court in its ruling is to deter fraudulent whistle-blowers from coming forward. Critics, however, fear that the law will keep whistle-blowers with genuine claims of fraud and abuse from coming forward.

The staggering amount of claims in healthcare cases last year made on behalf of the U.S. by employees is a reminder to all laboratories and pathology group practices that potential whistle-blowers are carefully watching for compliance violations by their employers. When you Google “Whistleblower Law” , it is immediately apparent that the government provides whistle-blowers significant employment protections and hundreds of lawyers are lined up to take their cases.

The same employees that you trust to carry out procedures, rules, and regulations properly are also watching both the laboratory as a whole and their co-workers for examples of abuse and rule-breaking. The government’s whistle-blower statutes provide these individuals with a significant incentive, not only to do this for the betterment of their industry and profession, but with the added benefit of a significant personal payoff if a federal court rules that their whistleblower claims are have merit and finds that the provider has defrauded government healthcare programs, including Medicare and Medicaid.

Finally, laboratories with active compliance programs have the best protection of all from internal whistle-blowers. After all, if the law is being followed, and management is documenting its compliance, then whistle-blowers have no case to pursue.

Related Articles:

Supreme Court: More Scrutiny Required in Whistleblower Claims

Whistle-Blower Law Tightened (Modern Healthcare subscription required)