Whistleblowers endure stress and personal hardship

by Charles Bankhead

Whistle-blowers in the healthcare industry endure substantial hardship and often pay a high personal price for cooperating with Justice Department investigations, according to a report based on detailed interviews with more than two dozen informants.

Loss of employment, financial ruin, divorce, and a host of mental and physical health problems were common consequences of individuals’ decisions to report corporate fraud.

Cases can drag on for years before reaching a resolution, often leaving whistle-blowers in the lurch with little or no support from the legal system, Aaron S. Kesselheim, MD, JD, and co-authors wrote in a report in the May 13 issue of the New England Journal of Medicine.

Whistle-blowers receive a share of financial recoveries resulting from prosecutions and settlements, which exceeded $9 billion from 1996 through 2005. However, many informants, or “relators,” felt their remuneration did not match their sacrifices.

As currently structured and followed, the process could discourage whistle-blowers from coming forward.

“Our findings suggest that changes to the False Claims Act and [investigation] process that mitigate relators’ hardships may help promote responsible whistle-blowing and enhance the effectiveness of this integral component of efforts to combat healthcare fraud,” Kesselheim, of Brigham and Women’s Hospital and Harvard, and co-authors concluded.

The federal False Claims Act prohibits submission of false claims or statements to the government, and violations carry fines of $5,500 to $11,000 per claim. Whistle-blowers, or relators, can initiate cases by filling a sealed complaint in federal court, usually with the help of a personal attorney.

Known as qui tam actions, whistle blower-initiated investigations account for 90% of healthcare fraud causes, according to Kesselheim and co-authors. Qui tam comes from a Latin phrase that means “who as well for the king as for himself sues in this matter.”

Often portrayed by government sources as a cost-effective deterrent to fraud, the qui tam process has accumulated minimal evidence to support or dispute its effectiveness. The lack of data led Kesselheim and co-authors to conduct a study to “shed light on the motivations and experiences of whistle-blowers in cases of major healthcare fraud.”

With assistance from the Justice Department, the authors identified 17 federal qui tam cases against pharmaceutical companies settled from January 2001 to March 2009. Total recoveries from the cases exceeded $6 billion.

Using unsealed records, the authors identified 42 whistle-blowers involved in the cases and subsequently interviewed 26 of the relators. The individuals consisted of 22 people working for the companies investigated and four people outside the companies.

For 16 of 22 insiders, the triggering event for their actions related to career changes, such as starting with a new company or getting a promotion with an existing employer. Changes in the business environment, such as increased competition or new management, also figured into some cases.

Eleven of 26 relators refused to participate in corporate actions that led to the cases. Company insiders said their refusal led to declining performance relative to other employees who agreed to participate in illegal marketing schemes. Additionally, 18 of 22 insiders tried to resolve the problems by expressing concern to superiors, who universally dismissed the concerns and expressed support in the legality of the schemes.

All 26 relators said financial reward had nothing to do with their actions. Kesselheim and co-authors described the predominant motivating factors as integrity, altruism or public safety, justice, and self-preservation.

Fifteen relators became active participants in the investigations. Some wore recording devices during meetings, recorded telephone calls with colleagues, and made copies of files and documents requested of them.

Some relators continued to work closely with investigators after the Justice Department began to acquire documents and other evidence by subpoena. Relators perceived the workload and pressure as intense, the authors wrote. When relators were asked to come to Justice Department offices, they often traveled at their own expense. FBI agents would come to relators’ offices with little advance notice, forcing the informants to concoct various explanations.

Conflict between relators and investigators was common. Some relators felt they were under suspicion, as well as the people involved in the wrongdoing. Some relators complained that investigators frequently provided little or no information about the status or progress of an investigation.

Many relators reported intense pressure at work, as colleagues suspected them from the beginning because of the informants’ refusal to participate in illegal activities. At least eight relators endured “devastating” financial consequences, including foreclosure, repossession of automobiles, and loss of retirement funds. According to several relators, the Justice Department offered no financial assistance.

Six relators divorced or had severe marital problems during investigations, and 13 reported stress-related health problems.

Relators’ share of financial recoveries ranged from $100,000 to $42 million, and the median share was $3 million. Although one whistle-blower likened the settlement to winning the lottery, “the prevailing sentiment was that the payoff had not been worth the personal cost,” the authors wrote.

Despite the hardships and dissatisfaction with the process and financial recovery, 22 of the 26 relators continued to believe that their actions were important “for ethical and other psychological or spiritual reasons.”

In summarizing the implications of the study, the authors suggested three areas of focus to improve the qui tam process:

1. Increased recognition of relators’ tribulations by investigators and others involved in the cases and provision of resources for relators during the investigation
2. A more sophisticated approach to determining relators’ share of financial recoveries to make the process more equitable and to promote responsible whistle-blowing
3. Increased protection for relators against retaliation

The authors listed several limitations to their study. First, it only focused on prosecutions against pharmaceutical companies that were taken up by the Justice Department and led to recoveries, “so the findings may not be generalizable to other types of qui tam litigation, and the experiences of relators in our sample may be more positive than those of whistle-blowers whose cases were not successful,” they noted. In addition, responses to some questions may have reflected a socially desirable response bias or a recall bias.

Charles Bankhead is a MedPage Today staff writer.

Originally published in MedPage Today. Visit MedPageToday.com for more health policy news.