Beginning on August 1, 2024, the Department of Justice (“DOJ”) launched a three-year Corporate Whistleblower Awards Pilot Program (the “Program”). This initiative expands the opportunity for health care whistleblowers, adding private health insurance claims to their quiver. It does so by allowing whistleblowers to report corporate misconduct to the DOJ’s Criminal Division through their website. If DOJ prosecution leads to asset forfeiture, whistleblowers may receive a share of the forfeited assets.
Background
The False Claims Act (“FCA”), codified at 31 U.S.C. §§ 3729-3733, empowers private individuals (relators) to bring qui tam lawsuits on behalf of the U.S. government for false or fraudulent claims submitted for federal reimbursement. These qui tam suits are generally investigated by the DOJ’s Civil Division. Historically, FCA compliance efforts have centered on government regulations and programs, often focusing on public sector standards and oversight, because the qui tam program does not cover private or other non-public health care benefit programs.
The Criminal Division Pilot Program
Now, in addition to the Civil Division’s qui tam policy, the Program creates another avenue through which whistleblowers can identify fraud in the health care space—this time on private or other non-public benefit programs. Currently, the Program’s application is limited to four specific areas, intended to address DOJ’s perceived gaps in fraud prevention: (1) foreign corruption not already covered by the SEC’s whistleblower program or other existing programs; (2) crimes involving financial institutions; (3) corruption in the U.S.; and (4) health care fraud involving private insurers. Most importantly for Hall Render clients, the Program effectively expands the FCA’s whistleblower program to private health care benefit programs, which are not covered under the Civil Division’s qui tam program. However, the new Program awards reporting only; it does not allow whistleblowers to litigate their claims on behalf of the government.
The potential award payout for a DOJ whistleblower is significant: if the DOJ finalizes a successful forfeiture, the whistleblower(s) may be eligible for up to 30% of the first $100 million in net proceeds forfeited, and up to 5% of any net proceeds forfeited between $100 million and $500 million. Importantly, individuals eligible for an award through another U.S. government, statutory whistleblower, qui tam or similar program are not eligible for an additional award from DOJ under this Program.
This Program also introduces a “temporary amendment” to the Criminal Division’s Corporate Enforcement and Voluntary Self-Disclosure Policy (“Policy”), a nationwide policy that offers companies and individuals potential benefits when they self-report corporate misconduct and remediate the harm. Previously, the DOJ did not specify a time limit for health care entities to self-disclose after a whistleblower’s report. Under the temporary amendment, however, the Criminal Division may extend the Policy benefits to companies or individuals if they self-report within 120 days after receiving the whistleblower’s internal report and otherwise meet all voluntary self‑disclosure requirements within the Policy.
This Program shifts the regulatory landscape, as it has introduced incentives for whistleblowers to report misconduct not just within government programs, but also in the private insurance sector and among health care providers. This is significant, as two-thirds of people in the U.S. have private health insurance, effectively tripling the number of claims that could be raised as fraudulent by whistleblowers. This evolving environment necessitates a reevaluation of compliance programs, presently focused primarily on government payors, as private insurance claims now face increased scrutiny and potential legal action arising from whistleblower reports. To mitigate risks and address these emerging challenges, health care providers must enhance their compliance strategies, ensuring robust internal controls and reporting mechanisms that address both public and private sector concerns. This proactive approach will help organizations navigate the complexities of the modern regulatory framework as well as their various contracts with, and rules of, private insurers, to uphold ethical standards and reduce risk across all facets of their operations.
Practical Takeaways
- The Program extends the FCA to private health care benefit programs in an effort by the DOJ to address gaps in traditional whistleblower incentives.
- Health care providers should always maintain robust compliance measures to reduce the risk of being targeted by whistleblowers and to minimize the risk of legal and financial repercussions.
- Health care providers and insurance companies should consider updates to and expansion of their compliance programs and internal reporting structure, in order to accommodate the increased opportunity for whistleblower involvement.
- Hall Render will continue to provide updates and suggested considerations as the Program’s impacts are better understood.
If you have questions or would like more information about this topic, please contact:
- David Honig at (317) 977-1447 or dhonig@hallrender.com;
- Kennedy Bunch at (317) 977-1420 or kbunch@hallrender.com;
- Liza Sawyer at (202) 742-9669 or lsawyer@hallrender.com; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot give legal advice outside of an attorney-client relationship.
