Investigation Into Calif. Medicaid Fraud Demonstrates Power of Inside Knowledge

09/27/2013 // Whistleblower Law Firm // Keller Grover, LLP // (press release)

When widespread Medicaid fraud was uncovered by the Center for Investigative Reporting and CNN in July, the news demonstrated two crucial points: Fraud remains an all-too pervasive problem in today’s society; and insiders often can help root it out.

Whistleblowers — those who have first-hand knowledge of improper behavior and speak out about it — can be a powerful weapon in the fight against fraud, and there are a host of laws and programs that can assist them in their effort, and even reward them for it.

The year-long investigation — featured on CNN’s Anderson Cooper 360 program — uncovered a so-called “Rehab Racket,” where dozens of drug rehabilitation clinics in California were defrauding the Medicaid system via a host of illegal practices. These included billing for counseling that never happened, falsifying paperwork to increase billing amounts, providing false diagnoses to individuals who, in fact, suffered no addiction problems, and even billing for ‘ghost clients,’ who were dead, in jail, or otherwise never present for treatment. The report claimed that, in all, $94 million in public funding had been paid out to 56 Southern California clinics suspected of dubious billing. As a result of the reporting, California’s Department of Health Care ordered 16 clinics closed pending a government probe.

In their own investigation, the reporters had relied, in part, on their own observations — positioning themselves outside the clinics and witnessing traffic that didn’t mesh with the far higher number of patients for which the centers were billing. But the reporters also relied on former clinic employees and clients, who had witnessed, first-hand, the improper practices.

All of these individuals were potential whistleblowers, able to reveal the Medicaid fraud and help authorities take action to stop it. “Insiders are really our first — and often our best — line of defense against fraud,” says Jeffrey F. Keller, a founding partner at Keller Grover, a nationally recognized whistleblower law firm, and a veteran labor and employment lawyer. “They know what happened, and when they come forward and tell their story, it is often a powerful narrative, full of details that help the courts and law enforcement take the appropriate steps to shut the wrongdoing down.”

When whistleblowers use the federal False Claims Act to help, they can be well rewarded — not just with the knowledge that they helped stop wrongdoing, but financially, as well. This powerful law has spurred the recovery of some $34 billion since it was significantly modified in the mid-1980s. The statute provides whistleblowers with a share in any ultimate recovery the government receives from those who defraud it. Indeed, the law has been so effective that many states have enacted their own statutes and programs based on the False Claims Act. Likewise, Congress has used the law as a model to create whistleblower programs at the Internal Revenue Service, the Securities and Exchange Commission and the Commodities Futures Trading Commission.– All of these initiatives are intended to spur and assist whistleblowers in coming forward with vital information about improper behavior.

“Fraud against government programs like Medicaid really hits home because it reduces funding available for legitimate needs,” says Keller, whose firm has offices in Los Angeles and San Francisco. “Whistleblowers don’t just help us beat back fraud, but recover funds that can then be redirected to the programs — and the people — who need it.”

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