Hospices need to understand the range of risks involved in qui tam cases and how best to navigate whistleblower concerns amid an evolving regulatory landscape.

Qui tam actions occur when a whistleblower, called a “relator” by the courts, files a False Claims Act suit on behalf of the government. The relator has the potential to receive a portion of any funds recovered by the government via the lawsuit, with amounts typically ranging from 15% to 25%.

A federal judge recently found the qui tam clause unconstitutional, ruling that the relator’s role in sparking enforcement actions effectively makes them an executive branch officer appointed without due process.

Though only one case, the outcome has the potential to introduce a new and possibly limiting precedent for whistleblowers’ ability to voice concerns, according to Jonathan Porter, partner at the law firm Husch Blackwell. Porter is also vice chair of the fraud and abuse practice group at the American Health Law Association.

“Whistleblowers play a huge role in False Claims Act cases,” Porter told Hospice News. “If whistleblowers are no longer able to bring these cases, it’s going to have a huge impact. That said, this is just one court deciding on this, while other courts have disagreed with this position. There’s a lot that needs to happen before we get to a spot where whistleblowers are cut out of the equation categorically. This is just a tiny event that may spark something, but it’s going to be a while before we get there.”

Relators play a key in helping regulatory watchdog agencies detect instances of potential malfeasance in the hospice space, Porter stated. Whistleblowers provide a window into information that regulators would not otherwise have insight into through other oversight measures, he explained.

Keys to navigating qui tam concerns

A large contingent of False Claims Act cases are initiated by whistleblowers. Qui tam actions were involved in roughly 86% of all FCA settlements reported by the U.S. Department of Justice (DOJ) in the Fiscal Year 2023, representing more than $2.3 billion. Health care-related cases made up $1.8 billion of the $2.68 billion FCA suits reported that year, according to the DOJ report.

Understanding the various outcomes of qui tam cases is crucial for hospice leaders seeking compliant and sustainable care delivery, according to Bryan Nowicki, partner at Husch Blackwell. These suits can take significant time and financial resources to address and often hinge on the ability to substantiate a relator’s claims, Nowicki explained.

“The problem is the process itself can be expensive and costly,” Nowicki told Hospice News. “Some providers could spend tens or hundreds of thousands of dollars defending themselves or settling, with both of those things happening.”

Some whistleblowers may be “opportunistic” and seek financial incentives, Nowicki added. The process of weeding out these types of complaints against legitimate concerns of ineffective, poor or negligent practices can be lengthy and resource-intensive.

Hospice leaders often have a window of opportunity to address employee concerns before they become part of a qui tam action, said David Jochnowitz, partner at the employment law firm Outten & Golden LLP.

Many whistleblower cases originate with employees’ voicing an issue internally among their supervisors, Jochnowitz. These concerns should be fielded in a timely, responsive manner. Not doing so can result in an issue escalating to legal levels and garner regulatory attention, he said.

Hospice leaders should heed whistleblower concerns, keeping open lines of communication with these employees as they perform an internal investigation and audit, Jochnowitz explained. While a claim may not uncover maleficent activity, it could help providers find potential compliance issues hidden in their process worth correcting, he added.

“If you really think you’re doing things right, explain it to them,” Jochnowitz told Hospice News. “It can be really tricky to do and not everybody is going to agree, but [it’s] respecting the fact that the person has a personal and professional risk to come forward. If you do an investigation and never tell them anything, they’re left completely in the dark. The risk that you run is that your whistleblower employee will go and find a lawyer and you’ll potentially face a false claim suit when it could have been avoided.”

A significant point in FCA cases for hospices to grasp is that self-disclosing information of practices related to alleged fraud, waste and abuse can help minimize the potential impacts, he added. When hospices disclose that they knew of a problem and took specific actions to correct it, they potentially face less severe outcomes and penalties as a result, according to Jochnowitz.

Whistleblowers face repercussions

Relators face a wide range of personal, professional and financial risks when coming forward, Jochnowitz stated.

FCA cases establish some protections against risk of retaliation by an employer, he indicated. Nevertheless, some whistleblower employees have been demoted, fired or shunned at the workplace during qui tam investigations.

“These lawsuits can cause a ripple effect in personal impacts, and there’s a mental health reality of this,” Jochnowitz told Hospice News. “These cases take forever and so one of the biggest mental health challenges for most whistleblowers, particularly in hospice, is concern about patients’ well-being. It can be really mentally draining to not know what’s going on and whether patients are going to continue to be taken advantage of. Also, being asked questions by a government investigator is really intimidating and creates interpersonal stress.”

Qui tam cases take substantial evidence to surface in the court systems, and calls have grown louder for legislators to design laws that strengthen protections for whistleblowers and allow for increased transparent oversight of organizations’ business practices, according to Nowicki.

Blowing the whistle can also affect future employment, Nowicki stated. Once filed, qui tam cases become public record, discoverable by employers and sometimes a consideration in their hiring decisions, he explained.

“There’s potential reputational harm if you’re a whistleblower,” Nowicki said. “It’s not that difficult to identify who whistleblowers are in court cases and making a hiring decision based on that. Employers might think nothing of it as a legit whistleblower of somebody doing something bad and appropriately called on it, or maybe it’s the opportunistic kind trying to figure out how to squeeze them financially.”