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Whistleblowing a growing threat to companies in healthcare

The recent $10 million Medtronic settlement is an indicator that businesses in healthcare need to increasingly update their compliance strategies

As the world witnessed with the emergence of Edward Snowden and his leaks about the National Security Agency’s surveillance tactics last year, whistleblowers can have long-lasting and far-reaching effects on industries. Whistleblowers can be responsible for the permanent damaging of brands and the upending of business practices. Recently, a case in the healthcare field in the U.S. has once again drawn attention to the importance of compliance, so that companies can avoid the ramifications of potential whistleblowing on their practices. 

Medtronic Inc. — the world’s fourth-largest medical device company — has agreed to pay $10 million as a result of a whistleblower’s claim that the company offered illegal kickbacks to physicians to implant its pacemakers and defibrillators. The U.S. Department of Justice (DOJ) has been closely monitoring the healthcare industry, and the majority of recoveries in False Claims Act cases have related to healthcare. The case serves as a reminder that companies — particularly in healthcare — need to be diligent about maintaining compliance and policy-reviewing procedures. In an interview with InsideCounsel, Proskauer Special Labor & Employment Law Counsel Daniel Davis, a DC-based member of the management-side law firm’s Whistleblowing & Retaliation Group explained why the Medtronic case is one to pay attention to. 

Davis says that part of the reason why the DOJ has demonstrated a more aggressive interest in pursuing healthcare-related settlements is related to the expansion of Medicare and Medicaid:

“With the expansion of Medicare and Medicaid, there are potentially more opportunities for False Claims Act claims based upon Medicare and Medicaid. The Department of Justice has also been successful in this area, recovering over $13 billion in False Claims Act settlements or judgments in the health care industry since 2009.  The Department of Justice has a growing group of attorneys who understand that health care industry and can evaluate False Claims Act claims.  With this increased expertise comes the likelihood that they will continue to focus on whistleblower matters.”

Because the case was resolved on settlement, it does not provide much information on what companies in healthcare should do to host more acceptable practices, Davis notes. But the case does serve as a hefty reminder to continue monitoring developments, update their compliance policies and procedures accordingly, and have good reporting programs. With more whistleblower legislation instituted nearly every year by Congress, companies need to update their practices.

Davis made mention of the fact that whistleblowers are using the False Claims Act much more frequently than they used to: “In recent years, the whistleblower landscape has undergone dramatic changes while the financial and reputational risks for employers across all sectors have risen substantially. Whistleblowers are also using the False Claims Act far more often than they used to.  In 2008, there were less than 400 False Claims Act claims filed by whistleblowers.  In 2013, that number had almost doubled to 752.”

So, it would seem that — through certain regulation — those who would be whistleblowers are increasingly more inclined to use such power. If anything, such a rise in reporting company neglect for compliance should keep businesses on their toes.

 

Further reading:

 

Regulatory double jeopardy? FTC enforcement of privacy and security in healthcare

JPMorgan whistleblower receives massive $63.9 million award 

Whistleblower won’t testify before Senate in NCAA hearing

Contributing Author

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Juliana Kenny

Juliana Kenny is a contributor to InsideCounsel.com, covering a range of topics including patent litigation, conflict mineral laws, executive compensation, and antitrust regulation. Juliana earned B.A.s...

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