August 7, 2024 • 34 mins
The DOJ’s annual report for 2023 revealed that the agency’s Health Care Fraud Unit was its busiest criminal enforcement section, responsible for convicting more than $3.8 billion in False Claims Act and whistleblower claims. There has reportedly been an uptick in whistleblower work among law firms and a record number of whistleblower cases. Still, some healthcare providers and hospital systems tend to hide their heads in their scrubs after being served.
Today we’re going to talk about how whistleblower cases come about, the benefits of rewarding whistleblowers, how things are done differently outside the U.S., what’s driving the acceleration of this area of law, and best practices when your company is served.
Drawing on his background as both public servant and private practitioner, my guest, Justin M. Lugar, counsel with WoodsRogers in Roanoke, Virginia, is going to walk through these issues and others.
Justin represents clients in all types of government investigations. He’s obviously well suited for the task. Prior to WoodsRogers he was Assistant U.S. Attorney in the Western District of Virginia, where he led the Affirmative Civil Enforcement team managing dozens of fraud investigations, many of which had parallel criminal investigations under the False Claims Act and related state statutes.
Justin served as the Department of Justice’s Civil Health Care Fraud Coordinator, Affirmative Civil Enforcement Coordinator, and Civil Rights Coordinator for the Western District of Virginia. Justin was recently recognized by the Drug Enforcement Agency for his efforts enforcing the Controlled Substances Act, leading to the largest fine assessed against a hospital system in the United States at the time.
When he was a federal prosecutor, Justin led investigations involving numerous state and federal agency partners, from the FBI to the IRS to the Department of Energy to the FDA and the Defense Department.
Justin started his career at a major global firm in London, conducting international investigations around the globe. But my favorite part of his background is – when he was a religious studies major in college – he lived at a Tibetan Buddhist Monastery in Kathmandu, Nepal. Not to brag, but I just returned from Vermont.
There is more to Justin’s background, like his LLM in international dispute resolution, which he earned at the School of Oriental and African Studies at the University of London, his J.D. from Liberty University School of Law, and his B.A. from the University of Virginia.
*******
This podcast is the audio companion to the Journal of Emerging Issues in Litigation. The Journal is a collaborative project between HB Litigation, a brand of Critical Legal Content (a custom legal content service for law firms and service providers) and the vLex Fastcase legal research family, which includes Full Court Press, Law Street Media, and Docket Alarm.
If you have comments, ideas, or wish to participate, please drop me a note at Editor@LitigationConferences.com.
Tom Hagy
Litigation Enthusiast and
Host of the Emerging Litigation Podcast
Home Page
Follow us on LinkedIn
Subscribe on your favorite platform.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Tom Hagy (00:01):
Welcome to the Emerging Litigation Podcast.
This is a group project drivenby HB Litigation, now part of
Critical Legal Content and VLEXCompanies, Fastc ase and Law
Street Media.
I'm your host, Tom Hagy,longtime litigation news editor
and publisher and currentlitigation enthusiast.
If you wish to reach me, pleasecheck the appropriate links in
(00:23):
the show notes.
This podcast is also acompanion to the Journal of
Emerging Issues and Litigation,for which I serve as
editor-in-chief, published byFastcase Full Court Press.
And now here's today's episode.
If you like what you hear,please give us a rating.
The Department of Justice'sannual report for last year
(00:44):
revealed that the agency'shealth care fraud unit was its
busiest criminal enforcementsection, responsible for
convicting more than $3.8billion in False Claims Act and
whistleblower claims.
There has reportedly been anuptick in whistleblower work
among law firms and a recordnumber of whistleblower cases.
(01:05):
Still, some health careproviders and hospital systems
tend to hide their heads intheir scrubs after being served.
Today, we're going to talkabout how the whistleblower
cases come about, the benefitsof rewarding whistleblowers, how
things are done differentlyoutside the US, what's driving
the acceleration in this area oflaw and best practices when
your company is served.
Drawing on his background asboth public servant and private
(01:29):
practitioner.
My guest, Justin M Lugar,counsel with Woods Rogers in
Roanoke, Virginia, is going towalk through these issues and
others.
Justin represents clients in alltypes of government
investigations, which he's beendoing for quite a while.
He's obviously well-suited forthis task.
Prior to Woods Rogers, he wasassistant US attorney for the
(01:52):
Western District of Virginia,where he led the affirmative
civil enforcement team inmanaging dozens of fraud
investigations, many of whichhad parallel criminal
investigations under the FalseClaims Act and various state
statutes.
Justin served as the Departmentof Justice's Civil Health Care
Fraud Coordinator, itsAffirmative Civil Enforcement
(02:12):
Coordinator and Civil RightsCoordinator, also for the
Western District of Virginia.
Justin was recently recognizedby the Drug Enforcement Agency,
the DEA, for his efforts inenforcing the Controlled
Substances Act, leading to thelargest fine assessed against a
hospital system in the UnitedStates.
At that time, when he was afederal prosecutor, justin led
(02:34):
investigations involvingnumerous state and federal
agency partners whose titlesinclude just about every letter
in the alphabet, except maybe Xand Z everybody from the FBI and
the IRS to the DOE, theDepartment of Energy, to the FDA
and the DOD, the DefenseDepartment.
He started his career at amajor global law firm in London
conducting internationalinvestigations around the globe,
(02:56):
in Europe and Asia.
My favorite part of hisbackground he was a religious
studies major in college andduring that time he lived at a
Tibetan Buddhist monastery inKathmandu, Nepal.
Where'd you go on vacation?
Also, I need to get out more.
There's more to Justin'sbackground which you can find
(03:17):
via a link in our show notes,like his LLM in International
Dispute Resolution, which heearned at the School of Oriental
and African Studies at theUniversity of London, which he
earned at the School of Orientaland African Studies at the
University of London, his JDfrom Liberty University School
of Law and his BA from theUniversity of Virginia.
And now here's my interviewwith Justin Luger of Woods
Rogers.
I hope you enjoy it.
(03:40):
.
Sowe want to talk about today and
we can start off with the DOJreleasing its annual report for
2023.
It talked about the health carefraud unit.
Justin Lugar (03:51):
Yeah, health care fraud is obviously the huge
driver of False Claims Actrecoveries in the US and it's a
huge focus of DOJ.
Tom Hagy (03:59):
What did they collect?
What $3.8 billion in FalseClaims Act and whistleblower
claims?
Are they prosecuting those?
Justin Lugar (04:06):
I mean you could call it both really so under the
False Claims Act, when you'relooking at these DOJ statistics,
these are from the civil sideof the Department of Justice and
so these are monetaryrecoveries that the government
has gone out throughinvestigation, settlements and
litigation and recoveredessentially taxpayer money back
to put back into the federalFISC.
And so this represents just thefederal portion of recoveries
(04:30):
where the government has usedthe False Claims Act to recover
funds.
And so there's a bunch ofdifferent areas that anytime
there's federal funds involved,there is potential for False
Claims Act liability forentities that engage you know,
engage in any conduct that mightbe deemed fraudulent.
So you've got it in.
Healthcare fraud is the largestsort of subcategory of False
(04:51):
Claims Act cases.
But you also have things likegovernment procurement contract
fraud, where you know somebodyhas a contract to produce a
widget for, you know, the GSA orfor the military, or GSA or for
the military, or, you know, foruse in government contracts,
and there'll be somemisrepresentation made or the
government won't get what itpaid for and believes it's
(05:12):
entitled to a discount and thatsome sort of fraud or deception
was committed in order to obtainthose funds.
And so these statistics justsort of lay out what the
Department of Justice recoveredon behalf of the taxpayer under
this particular statutory schemeknown as the False Claims Act.
Now there are criminalprosecutions under the False
(05:33):
Claims Act as well.
There is a correspondingstatute, but those are much less
common because there's a lot ofother criminal statutes that
cover the same type of conductand, frankly, it's just easier
to charge crimes under differentstatutes like wire fraud, mail
fraud, less elements, easier toprove.
Tom Hagy (05:51):
According to this, there are more and more health
care fraud claims.
Why do you think that is?
Justin Lugar (05:57):
Yeah.
So I think it's commensuratewith a couple of things, one
being it is aside from defensebudget, it's up there in the top
five.
If is aside from, you know,defense budget, it's probably
got.
It's up there in the top five,if not number two, for
government expenditures in agiven year.
Um, so you think Medicare,medicaid and I think part of
what's driving that is, frankly,that all of the boomers are are
(06:18):
, you know, we're right in themidst of those folks becoming
eligible or starting to be inthe Medicare program in some
shape or form, and so I thinkthe number of people that are in
those programs, and thus thefunding that goes into those
programs, has increased.
And so I think what you'reseeing is just a natural rise in
the number of claims becausefraud occurs.
(06:39):
You know, whether you'refunding it with a billion
dollars or a trillion dollars,you're still going to find it.
So it's just more instances ofit, and I think DOJ too, in the
last decade or more, has reallysharpened its sword in terms of
healthcare fraud.
Tom Hagy (06:56):
They really know how to investigate and bring the
cases.
Are there any particular caseswe'd want to share with people?
What kind of claims are youseeing in litigation?
Justin Lugar (07:02):
Yeah, One of the big initiatives DOJ has
announced and it seems to befollowing through with is
focusing on claims underpotentially false claims under
the Medicare Advantage program.
And so Medicare Advantage, youknow, has this process called
risk adjustment.
So they assign risk scores toindividual patients and so
(07:25):
basically the government agreesto pay kind of a flat fee and
it's capitated, and it's adifferent style, I guess, of
just a claims-based paymentwhere, hey, I went to the doctor
and I had an expensive X andthe government's going to cover
80% of it and I'm going to paythe other 20% out of pocket.
Medicare Advantage is a reallyrisk-based gamble between the
healthcare provider and thegovernment.
(07:45):
And you sort of look at theperson's health and you say, all
right, if one is our baselineof what the average healthy
person at this age, with thisdemographic is, we think this
person is going to be a 0.9 or a1.3.
And if you're right as thehealthcare company and you hedge
correctly, you can make moneycare company and you hedge
correctly, you can make money.
If you're wrong you're introuble.
But it gives some certainty tothe government as to the amount
(08:10):
that it's going to have to payfor a given patient for a given
year under a given plan, and sowhat you're seeing is a focus on
whether or not the insurancecompanies that are Medicare
Advantage providers areaccurately, and in an honest and
truthful manner, diagnosing andusing the right sorts of codes
to actually capture the carethey're giving, because there
(08:33):
are ways to risk adjust thatwill cause the reimbursement to
go up, and it's the only way toreally increase the amount the
government pays you if you endup taking a bath on a particular
patient's care.
And so DOJ has really honed inon that and they settled a big
case last year I think it was$172 million case against I
think it was Cigna, if Iremember correctly and so I
(08:55):
think you're going to see a lotmore cases in that space,
because once the DOJ kind of hastheir teeth in one and has
figured out how to do it, themethods are usually pretty
similar across differentcompanies.
So I think looking at MedicareAdvantage and how that plays out
in the next few years is goingto be interesting.
You're also seeing and theseget captured, I think, in part
(09:17):
under healthcare fraud butCOVID-related claims, so, for
example, under some of the CARESAct relief that was provided
during the pandemic under HHS,so Health and Human Services
there's a sub-agency called theHealth Resources and Service
Administration or HRSA insuredfund.
(09:44):
The principle behind it, as Iunderstand it, was hey, we want
to incentivize people who even,even people who don't have
coverage, to be proactive aboutgetting tested for COVID and
treated for COVID.
Um, because early treatment is,you know, supposed to be the
best way to to prevent a badoutcome.
Right, you deal with it early.
So the idea was they didn'twant you know, the government
didn't want people being afraidto go to the ER because they
didn't have insurance if theythought they might have
(10:07):
COVID-like symptoms and theywanted to get tested.
Well, so they createdmulti-billion dollar funds to
pay hospitals so that hospitalswould willingly treat people
without insurance and, you know,realized, hey, we could
actually get reimbursed for this.
And so there's different typesof claims there.
The program was intended tocover testing claims.
So if somebody comes in andsays, hey, I think I've been
(10:28):
exposed or I got a cough, youknow, you test them, you can
submit those claims forreimbursement to the government
for testing.
And then there was COVIDtreatment claims as well.
So if you're actually diagnosedor have a primary diagnosis of
COVID, then it would cover allthe incidental care that comes
with that.
So, for instance, if I go intothe ER, I'm uninsured, I get a
COVID test, I test positive andthen they have to treat me for
(10:50):
COVID.
You know, any of the scans thatgo along with scanning my lungs
or any incident giving me an IVbecause you know I've not been
able to retain fluids, whateverit may be, hospitals were going
to be reimbursed for that.
Well, I think what you're goingto see and what we have seen is
an uptick in cases where folksare saying insiders,
whistleblowers, are saying, hey,we were submitting for
(11:11):
reimbursement claims thatweren't really COVID specific.
You know, we might have claimsthat you know, everybody knows
that when you went to the doctorduring that time period, you
always got tested for COVID,right.
And so I think there areconcerns that healthcare
providers in some instanceswould monkey with the coding or,
you know, switch a primarydiagnosis in order to make sure
(11:33):
they could get the care coveredand they might end up treating
you know, doing an ankle surgeryor something and trying to loop
it in under this COVID and say,well, covid was the primary
diagnosis, but you know, whilewe were in there we decided we
needed to help them with thisissue, and so I think you're
going to see a lot of secondguessing of how those claims
were built.
Tom Hagy (11:52):
Trying to see a connection between COVID and an
ankle surgery or something.
Yeah no, there isn't right.
I coughed so hard I twisted myankle Right.
Justin Lugar (11:59):
Yeah, and then you might see other stuff.
I think some of the publicinformation about settled cases
were things dealing withelectronic medical records in
particular, and so you've gotkind of two prongs there.
One is you know there's aanytime you have electronic
records involved, there's theability to build into the code
you know suggestions about whatdrugs to prescribe or
(12:21):
suggestions about what the nextstep of care should be, and,
while well-intentioned in manycases to make sure you deliver
the best care, we want doctorsto be independent and to make
decisions about the care basedon the patient in front of them,
not some pre-populated decisiontree that might point them in a
direction that favors a drugcompany or somebody else who
(12:43):
isn't on it.
I think you're going to seestuff like that, and then also
in the EMR, the electronicmedical record space, you're
starting to see an overlap, Ithink, in the healthcare fraud
world with the cybersecurityinitiative that DOJ is also
really gung-ho about, becauseprotecting personal health
information and PI is reallyimportant and it's a requirement
(13:05):
of any government program, butsome have more strict
requirements than others, and soI think you're going to see
more cases where you know peopleare really struggling to get up
to speed with cybersecurityrules and protect personal
information.
And every time they sign aprovider agreement or submit a
claim for reimbursement, they'recertifying to the government
that they have propercybersecurity protocol in place
(13:28):
to protect that information.
And so if you get big databreaches, you might see the
government using the FalseClaims Act to try and you know
penalize and get some of thosefunds back and say that's not
what we paid for.
We paid for a secure system andyou didn't provide one Right.
Tom Hagy (13:40):
Yeah, gotcha.
So how are healthcare providersand hospital systems responding
when they're being served inthese cases?
Justin Lugar (13:49):
You know it really depends the more sophisticated
the system, you know, the largerthe system, the more controls
they're going to have in placeto make sure subpoenas get to
the right place and that sort ofthing.
But you know, doj also has avery strong policy and you know
I just left DOJ two and a halfmonths ago, so this was sort of
drilled in for the last sixyears when I was there was
cooperation credit and when,really, where's the line between
(14:10):
, like, what your legalobligations are as someone who's
permitted to operate in a freemarket and avail yourself of the
protections of the law?
Where does that line stop?
And your duties as a goodcorporate citizen begin to
cooperate with the government?
And so I think there's atension constantly between
private sector and thegovernment, between, well,
(14:31):
government you've sent out arequest, for you know it's going
to cost us $40,000 to providethese documents to you.
Look how cooperative we'rebeing.
We're spending all this money,whereas DOJ views that as well.
That's just the cost of doingbusiness.
Like you want to operate andcontract with the largest,
essentially bank in the world,like, then you've got to follow
our rules and it's expected ofyou that you are going to
(14:52):
respond to our subpoenas andthat you're going to provide the
information you want.
But I think one thing forhealthcare providers that
haven't dealt with thesesituations is there's always
room for negotiation when youget a subpoena or when you get
served with something or you geta request from the government.
I've always found that, on thedefense side of things, the
earlier you engage with thegovernment and start negotiating
and start cooperating, tryingto figure out ways to refine
(15:16):
what they're actually focused in, then the better results you're
going to get in the end.
You're going to save money,you're going to save the
government in your own time andyou're really going to be able
to get to the heart of an issuewithout a bunch of pomp and
circumstance.
Pomp and circumstance and ifyou do that, you know I always
tell people like 95% of the workI do no one ever hears about
and that's because I'm doing agood job.
Right, they don't get indicted,they don't have a big
(15:37):
settlement number that's flashedall over the news and you try
to work these things out beforethey become public and before
they become a much bigger deal.
Tom Hagy (15:44):
So ignoring it isn't a good strategy.
Justin Lugar (15:48):
I call it ostriching away, like just
putting your head in the sandand hoping it goes away.
Maybe you get lucky once in ahundred times that maybe the
AUSA or assistant US attorney orgovernment attorney somehow
gets in the bottom of theirstack and they forget about it.
But I can tell you what if asubpoena is cut at any point,
someone is tracking thatsubpoena, whether it be at the
US attorney's Office or theDepartment of Justice or the
(16:10):
agency that is the one thatwants it, the information.
So it might be in thehealthcare space HHS, oig.
They're tracking it and theirsupervisors are saying, hey,
when's that subpoena return,coming back?
Why haven't you heard from them?
So it's not going away.
If you get a paper, you got todeal with it.
Tom Hagy (16:28):
How do?
Justin Lugar (16:28):
you deal with it, one of the first things.
I mean, I think if you gotin-house legal counsel,
obviously they're going to beinvolved, but getting somebody
outside to look at it.
There's a lot.
You can tell by where asubpoena comes from.
What is requested in thesubpoena, what type of subpoena
Are we talking about?
A healthcare fraud subpoenawhich is issued by a criminal
function?
So that'll tell you whetherit's a criminal case potentially
(16:50):
versus a civil.
Is it a HIPAA subpoena?
So Health and Human Servicesand state Medicaid programs will
a lot of times use HIPAAsubpoenas, which you really
can't tell a lot about a HIPAAsubpoena?
It could just be seeking recordsthat are related to another
investigation, where you're nota subject or target of the
investigation.
Is it a civil investigativedemand?
If I get a civil investigativedemand, then I know that there's
(17:11):
a False Claims Actinvestigation and what that
tells me is that there could bea whistleblower and so there
could be information that youknow everything that is
happening on the defense sidecould be being communicated to
the government in real time.
You know there could be aninsider and so you try to figure
out.
You know what is the governmentfocused on.
If it's a grand jury subpoena,then you know it's probably a
(17:33):
much bigger problem, unlessyou're just a witness, which
usually the government will tellyou that pretty quickly.
But yeah, the key is you canfigure out a lot of information
about what's going on by wherethe subpoena comes from, who
issues it, what type of subpoenait is, what's requested, and
then outside counsel can hop onthe phone immediately and start
(17:54):
the dialogue with the governmentattorney that's identified on
the subpoena or the agent thatis identified.
And that's where you startfishing.
You start trying to get as muchinformation as you possibly can
which helps your clientnegotiate the terms of the
subpoena, figure out whatdocuments they really want, what
information they're reallylooking at.
If you've just buried your headin the sand and they're playing
the ostrich game, you'remissing out on an opportunity
(18:18):
potentially to find out.
Hey, wait a minute, we're justa witness.
They're looking at this doctorwho you know did surgery at this
hospital and we just need toprovide them the record so they
can finish their investigation.
Okay, but if you don't dealwith it, you don't know that.
Tom Hagy (18:26):
So does that get to trying to find out the origin of
the investigation?
Is that what you're talkingabout?
Justin Lugar (18:32):
Absolutely, and so it also it helps on the defense
side.
It helps you frame and isolatewhere the weakness, potential
weak areas are, where you needto look internally to figure out
what is going on In order to beable to effectively represent
yourself and defend yourcompany's interests or
individuals.
Whoever it is facing governmentinquiry is.
(18:53):
You've got to understand whatthe boundaries of the problem
are so that you can hone in onthe really key issues.
Figure out what the factsactually are so that you can
then start the process ofadvocating and trying to explain
to the government why they'rewrong about X or the fact that
you got from this person is onlyhalf of the story.
Let me give you the rest of thestory.
That is absolutely essential todefending someone effectively
(19:16):
and making sure you protecttheir interest is trying to keep
them in a witness category,trying to keep the government
from thinking that there's beenany wrongdoing on your part, and
if you ignore it or don't knowwhere to look, it's like trying
to build a puzzle in the dark.
Tom Hagy (19:29):
Right.
Justin Lugar (19:30):
Never going to get there.
Tom Hagy (19:32):
Right.
Is there a typical way thatwhistleblower complaints start?
Justin Lugar (19:37):
It depends.
I mean, if we're talking in thehealthcare false claims, you
know context, I will say, fromhaving prosecuted these cases.
And when I say prosecuted youknow a lot of times we'll have
civil and criminal inquiriesinto stuff and then you'll
figure out whether it's morecriminal or more civil or maybe
it stays both.
But prosecuting just meansgoing after potential fraud on
behalf of the government.
So one of the trends that Inoticed and I've had the fortune
(20:00):
of representing whistleblowers,I've had the fortune of
defending companies that havebeen accused of fraud in
relation to whistleblowing, andI've prosecuted government cases
where we're kind of workinghand in hand with the
whistleblower to pursue a case.
And so one of the trends thatreally popped out and I think
this would be almost a universalstatement, folks who've done
this before is there are so manyopportunities, typically
(20:23):
internally at a company, to havethe whistleblower provide the
information to the companybefore it ever gets to the point
of the government yougovernment.
It's almost like you're on thehighway and you have 15 exits
that'll take you to the sameplace and it just depends on
which one you take, as to whatpath you take, and that can make
all the difference in the world.
So one of the things I found isthat whistleblowers very
(20:45):
frequently they create a verythorough and ongoing record of
their gripes, their complaints,their concerns, and it'll be in
writing.
Usually it happens over a periodof time by the time it gets to
the government.
It's one of two things Eitherthe company has just ignored it
or they haven't adequatelyaddressed it in a way that
satisfies the whistleblower.
(21:06):
And so one of the big lessonsthat I've learned from seeing
how this plays out is if you'rea company and someone comes to
you and says I think we're doingsomething wrong, like at the
earliest outset, whether they'reright, whether they're wrong,
whether they're crazy, whetherthey're sane, whether they have
all the information or not,you've got to engage with that
person immediately.
Now you've got to alsocommunicate with them in a way
(21:29):
that lets them know hey, I don'tknow how many times I've seen
cases that were filed rightwhich eventually come out from
under seal and become part ofthe public record.
Maybe the press picks up on it,maybe not, but it's based on
half information, so theemployee whistleblower will only
have a part of the story, andthen it takes six years and by
the time it gets to thegovernment, we're able to fill
(21:51):
in the other blank and realizethere's not a case.
Or maybe there is a case and soif the company just engages
early and has processes in placeto genuinely not just, like you
know, pay lip service to ohyeah, here's a hotline you can
call.
But, actually look into each oneand say, OK, this person says
that we're submitting a falseclaim for payment.
But what they don't realize isthat six steps down the line
(22:14):
that supposed false claim forpayment is actually pulled out
of the queue.
Because we realized thediagnosis code was not properly
categorized and we looked at thechart and we said, oh, that's
not the right thing.
So we never actually submittedit to the government.
So there was no fraud, therewas no completed false claim.
But if the whistleblower on thefront end doesn't know that it
went through that process andwas pulled out, they may think
(22:37):
this is just the way the companydoes business.
And until the governmentfigures that out, which is many
hundreds of thousands of dollarsin legal fees and paying
document processing fees and allthat stuff down the road, it
could have been nipped in thebud at the very beginning.
Tom Hagy (22:50):
Can you give me a little bit of a perspective from
the whistleblower, because itjust sounds like such a risky
undertaking to become one.
There are incentives.
Talk about that and what thatexperience is like it is a big
step there.
Justin Lugar (23:05):
I mean most whistleblowers I've dealt with
and this is not universal, butmost are very conscientious,
thoughtful, analytical folks whoyou know really are concerned
about something.
I mean very few of them knowthat they can monetize their
information until far down theline.
You know, once they get alawyer they might figure out
that they can monetize it.
(23:25):
But it doesn't usually startthat way.
Usually it starts with ah, youknow there's this thing going on
at work and you know I don'tknow what it is, but it doesn't
feel right, or you know, and soyou run the risk.
So you do have whistleblowerretaliation protections under US
law.
But who wants to go to work andbe the pariah Right?
Who wants to?
Who wants to like be on aknife's edge at all time?
(23:46):
Who wants to put their careeron the line, their reputation?
What if you're wrong?
What if you think you're rightand you put your neck out there
and you've just gone to theguillotine for no good reason?
You know it's a really riskything and under the False Claims
Act your identity will be knowneventually.
There is no anonymity under theFalse Claims Act.
Under other whistleblowerschemes there can be anonymity,
(24:07):
like SEC whistleblowing andanti-money laundering.
There's some anonymity involvedthere, but it's super risky.
And so people who sort ofdiscount whistleblowers and say,
oh, they're all just greedymoney, hungry, you know,
snitches or whatever, you knowwhatever derogatory term you
want to use for them.
That's very rarely the case.
Tom Hagy (24:26):
I've very rarely seen opportunistic folks for it and
put all the time and energy andrisk and frankly, like lawyers,
don't want to represent folkslike that because they know it's
not going to be a return on theinvestment.
Some of them don't even knowthey can monetize or there will
be.
Justin Lugar (24:43):
And even if you do I mean if you what is it?
I think the statistic I don'tknow what the current one is,
but you know the government hasa choice.
When you file a false claims atcase, you can proceed without
the government if they choosenot to take over your case.
So you always want thegovernment to take over your
case if you're a whistleblower,but the government only takes
like 10%, 12% of cases and ofthose, not all of them end up in
(25:04):
a result, a verdict or asettlement, and then very rarely
do whistleblowers go forwardwithout the government.
I do think you're going to seemore of that as more cases are
filed and the government hasjust fewer and fewer resources
to tackle the problems.
But I'd contrast it with someof the stuff that I've been
looking into and watching in theUK, right, yeah, so you've said
that things are different inthe UK, that they don't monetize
(25:26):
whistleblowing.
Tom Hagy (25:28):
Why do you think that is?
Justin Lugar (25:29):
It's a cultural thing and I'd studied abroad
there and sort of you know,dabbled a little bit in
understanding the cultural normsaround this.
But you know they haveombudsmen, they have lots of
different ways to reportmisconduct or perceived problems
, but there's very littleprotection for whistleblowers.
And even the definition ofwhistleblower under their
(25:50):
current legislation it requiresyou to be an employee, right?
You can't be a third, like what?
If you're a contractor ofanother company that sees the
fraud, you can't be protected.
Then I mean it doesn't makesense.
But what's really interestingis the serious fraud office, the
SFO, in London, which is kindof the equivalent to like it's
kind of a mixture of the DOJ'sfraud division mixed with the
SEC for securities regulationhere in the United States.
What typically has been thesort of MO there or the ethos of
(26:14):
whistleblowing is, you knowwe're going to look into claims
come whistleblow, but that's it.
I mean you just should do itbecause you're brave and want to
do the right thing right, andthen we'll ferret it out.
And the prior directors of theSFO had no interest in, you know
, advocating for monetizinginformation.
The newest SFO director, who wasappointed in, I think, fall or
(26:36):
early winter of 2023, zach FGrave.
He's actually a law enforcementofficer.
He's not a lawyer, he's not,you know.
He comes at it from a differentperspective, I think, in that
he investigates, he's alwaysinvestigated crime and he's the
you know the one out there inthe trenches on the ground
seeing how this stuff happens.
And he, I think he has a realappreciation for insider
(26:58):
information and how valuable itcan be.
That can be what makes a case.
I mean um, and so he came out inhis first public speech, I
think in February of this year.
He flat out, he said it.
I mean and I don't have itright in front of me, but the
quote is something like weshould pay whistleblowers.
I mean we should change our lawand pay whistleblowers because
the um, the cultural, you knowimplications of like
(27:21):
incentivizing people to tell onothers.
You know it's far outweighed bythe benefit.
And if you look at, if you lookat the United States, right,
and since the just under thefalse claims act, it was revised
in 1986 and really gave itteeth, starting in 1986, senator
Chuck, chuck Grassley reallyput it and he still to this day
focuses heavily on it the UnitedStates has recovered like $73.5
(27:43):
billion for the taxpayer andthey've only paid out like nine.
That's like a 737% return oninvestment, I think any of us.
If we invested a dollar and got737 back, we'd all be pretty
happy about that, right?
Where can I do that?
Yeah, exactly what other placecan you do that?
So I think that, and so the UK.
(28:03):
There is a real momentum.
There's a bill pending inparliament right now.
It doesn't monetize, it doesn'tprovide for monetary incentives
for whistleblowers or forcompensation, but it does make
it a little bit easier forwhistleblowers there to get
protection under the law.
I'm reading a book and Irecommend it by Dr Peter Duffy.
He was a consultant urologicalsurgeon in the UK who has
(28:24):
written two books.
Now I'm on his first book, buthe talks about whistleblowing
and the problems he found.
It's called Whistle in the Wind.
It's about his struggle to outsort of problems with the
national health system in the UKand how certain private
interests were being prioritizedbecause it led to more money
for the NHS Trust, how it led todirect patient harm problems
(28:46):
and then he lost his career.
I haven't gotten that far inthe book yet, but he's about to
lose his career.
Then the amount of retaliationhe faces, both from his peers,
from management, just theculture of the NHS is this is an
institution far bigger than you, and he had to incur tens of
thousands of pounds to go beforean employment tribunal to try
and clear his name, and it putthe onus on the whistleblower to
(29:09):
go clear their name, and reallywe should be saying like thanks
for pointing out these problems, let's figure out how to fix
them right.
It's a very differentexperience and to me it captures
the risk of not protectingwhistleblowers and not
incentivizing them to comeforward, because I mean, it's
just so.
Brandeis said this, chiefJustice, that you know sunshine
(29:29):
is the best disinfectant.
Air it out, let everybody seeit.
That's the best way to dealwith it, and so I'd highly
recommend it.
I think the UK is on the cuspof really seriously
reconsidering it, and one of thethings that SFO director F
Graves said in his speech too aswell, in addition to we should
pay whistleblowers is you know,there is at least 700 UK based
(29:52):
whistleblowers who went to theUS to blow the whistle because
there was no mechanism for themto do it and to hedge their
career risk, their family's riskfor coming out with information
, and so they found someone whowas able to help direct them to
the US system, and so you've gotpeople queuing up here in the
US to tell about fraud thattouches in the US too.
(30:15):
But imagine what would happen ifyou actually had the largest
financial systems in the world,whether it be in Asia or Europe,
the UK, france, wherever beingable to go to their regulator
and say hey, my company is doingthis and it's affecting the
bottom line this way and it'sdefrauding investors all over
the world.
I mean, everything's connectednow, and so it seems to me to be
(30:37):
kind of commonsensical to toincentivize this.
Tom Hagy (30:41):
Right, yeah, you wonder why let's just say
corruption.
You wonder why it works becauseso few people.
I mean there's so much risk ofcalling it out.
Justin Lugar (30:50):
And I mean even the United States recognizes
that with there was a anti moneylaundering whistleblower
provisions passed in the lasttwo or three years, and I think
it was Chuck Grassley and acouple others.
They wrote a letter to FinCEN,which is the financial center,
the enforcement arm of the IRS,saying hey, where are the
regulations?
Congress passed a bill two anda half years ago saying that we
(31:13):
want to create a whistleblowerprogram for anti-money
laundering to help us monitorwhen funds are being moved to
get around sanctions.
Whether it be North Korea, iran, russia, oligarchs are
laundering money in this countryand elsewhere.
The only way we're going to beable to break through the
barriers to develop sources.
Well, one of the ways you candevelop a source and inside
sources to incentivize them withmoney FBI and other groups can
(31:34):
pay confidential informants, butnot in the same way that you
can pay them if they get a shareof the recovery of the fraud
that they out.
There's a real push to, I think,to figure out all right why has
FinCEN not put in regulations?
How far along are they in theprocess of notice and comment
rulemaking?
What kind of fraud are wemissing?
Because we've passed the lawsbut not implemented them, and so
(31:56):
you're even seeing that tensionhere in the United States, and
I think the anti-moneylaundering, whistleblowing
protections are going to go along way, and I think Europe's
going to see that too, becausethere's so much money that is
laundered across Europe Westernand Eastern Europe and in the
United States, and so I'mhopeful that folks will look to
the US and our experience hereand hopefully they'll let us
help share our experiences sothat they can create as good, if
(32:19):
not better, systems.
Tom Hagy (32:21):
So is it fair to say so you're doing defense work,
yeah?
Justin Lugar (32:24):
I do mostly defense work, a little bit of
both.
Tom Hagy (32:26):
You're obviously a fan of whistleblower programs.
Justin Lugar (32:35):
Yeah, I think they're great for everybody,
including the companies who areon the receiving end.
Sometimes it can be a very good.
You know, you go to the doctorsometimes and get a physical and
you don't get great news.
But that's an opportunity aswell to better yourself, right.
While these things can be,investigations can be painful
and expensive, right, and hurtthe bottom line, no doubt about
it.
If you've got the rightmentality or maybe you can tweak
your mentality, if you're in acompliance group or a C-suite,
(33:02):
say, hey, wait a minute.
Like these regulations they maybe, you know, sometimes a
little bit technical andsometimes a little overbearing,
but hey, we do operate in thisspace.
Like, this is a chance for usto like get a little bit fitter
when it comes to our processesand controls and let's treat
this as an opportunity to growand become a better, more
compliant organization, becausethat's going to earn our
shareholders, whether if you'rea public company or if you're a
nonprofit.
It's going to give us a chanceto survive and be better, and I
(33:24):
think that's good for everybody.
Tom Hagy (33:26):
Justin Luger, thank you very much for talking with
me today.
Justin Lugar (33:28):
I appreciate the opportunity and hope it helps
your listeners.
Tom Hagy (33:33):
That concludes this episode of the Emerging
Litigation Podcast, aco-production of HB Litigation,
critical Legal Content, vlexFast Case and our friends at
Lostry Media.
I'm Tom Hagee, your host, whichwould explain why I'm talking.
Please feel free to reach outto me if you have ideas for a
future episode and don'thesitate to share this with
(33:54):
clients, colleagues, friends,animals you may have left at
home, teenagers youirresponsibly left unsupervised,
and certain classifications offruits and vegetables.
And if you feel so moved,please give us a rating.
Those always help.
Thank you for listening.
Welcome to the Emerging Litigation Podcast.
This is a group project drivenby HB Litigation, now part of
Critical Legal Content and VLEXCompanies, Fastc ase and Law
Street Media.
I'm your host, Tom Hagy,longtime litigation news editor
and publisher and currentlitigation enthusiast.
If you wish to reach me, pleasecheck the appropriate links in
(00:23):
the show notes.
This podcast is also acompanion to the Journal of
Emerging Issues and Litigation,for which I serve as
editor-in-chief, published byFastcase Full Court Press.
And now here's today's episode.
If you like what you hear,please give us a rating.
The Department of Justice'sannual report for last year
(00:44):
revealed that the agency'shealth care fraud unit was its
busiest criminal enforcementsection, responsible for
convicting more than $3.8billion in False Claims Act and
whistleblower claims.
There has reportedly been anuptick in whistleblower work
among law firms and a recordnumber of whistleblower cases.
(01:05):
Still, some health careproviders and hospital systems
tend to hide their heads intheir scrubs after being served.
Today, we're going to talkabout how the whistleblower
cases come about, the benefitsof rewarding whistleblowers, how
things are done differentlyoutside the US, what's driving
the acceleration in this area oflaw and best practices when
your company is served.
Drawing on his background asboth public servant and private
(01:29):
practitioner.
My guest, Justin M Lugar,counsel with Woods Rogers in
Roanoke, Virginia, is going towalk through these issues and
others.
Justin represents clients in alltypes of government
investigations, which he's beendoing for quite a while.
He's obviously well-suited forthis task.
Prior to Woods Rogers, he wasassistant US attorney for the
(01:52):
Western District of Virginia,where he led the affirmative
civil enforcement team inmanaging dozens of fraud
investigations, many of whichhad parallel criminal
investigations under the FalseClaims Act and various state
statutes.
Justin served as the Departmentof Justice's Civil Health Care
Fraud Coordinator, itsAffirmative Civil Enforcement
(02:12):
Coordinator and Civil RightsCoordinator, also for the
Western District of Virginia.
Justin was recently recognizedby the Drug Enforcement Agency,
the DEA, for his efforts inenforcing the Controlled
Substances Act, leading to thelargest fine assessed against a
hospital system in the UnitedStates.
At that time, when he was afederal prosecutor, justin led
(02:34):
investigations involvingnumerous state and federal
agency partners whose titlesinclude just about every letter
in the alphabet, except maybe Xand Z everybody from the FBI and
the IRS to the DOE, theDepartment of Energy, to the FDA
and the DOD, the DefenseDepartment.
He started his career at amajor global law firm in London
conducting internationalinvestigations around the globe,
(02:56):
in Europe and Asia.
My favorite part of hisbackground he was a religious
studies major in college andduring that time he lived at a
Tibetan Buddhist monastery inKathmandu, Nepal.
Where'd you go on vacation?
Also, I need to get out more.
There's more to Justin'sbackground which you can find
(03:17):
via a link in our show notes,like his LLM in International
Dispute Resolution, which heearned at the School of Oriental
and African Studies at theUniversity of London, which he
earned at the School of Orientaland African Studies at the
University of London, his JDfrom Liberty University School
of Law and his BA from theUniversity of Virginia.
And now here's my interviewwith Justin Luger of Woods
Rogers.
I hope you enjoy it.
(03:40):
.
Sowe want to talk about today and
we can start off with the DOJreleasing its annual report for
2023.
It talked about the health carefraud unit.
Justin Lugar (03:51):
Yeah, health care fraud is obviously the huge
driver of False Claims Actrecoveries in the US and it's a
huge focus of DOJ.
Tom Hagy (03:59):
What did they collect?
What $3.8 billion in FalseClaims Act and whistleblower
claims?
Are they prosecuting those?
Justin Lugar (04:06):
I mean you could call it both really so under the
False Claims Act, when you'relooking at these DOJ statistics,
these are from the civil sideof the Department of Justice and
so these are monetaryrecoveries that the government
has gone out throughinvestigation, settlements and
litigation and recoveredessentially taxpayer money back
to put back into the federalFISC.
And so this represents just thefederal portion of recoveries
(04:30):
where the government has usedthe False Claims Act to recover
funds.
And so there's a bunch ofdifferent areas that anytime
there's federal funds involved,there is potential for False
Claims Act liability forentities that engage you know,
engage in any conduct that mightbe deemed fraudulent.
So you've got it in.
Healthcare fraud is the largestsort of subcategory of False
(04:51):
Claims Act cases.
But you also have things likegovernment procurement contract
fraud, where you know somebodyhas a contract to produce a
widget for, you know, the GSA orfor the military, or GSA or for
the military, or, you know, foruse in government contracts,
and there'll be somemisrepresentation made or the
government won't get what itpaid for and believes it's
(05:12):
entitled to a discount and thatsome sort of fraud or deception
was committed in order to obtainthose funds.
And so these statistics justsort of lay out what the
Department of Justice recoveredon behalf of the taxpayer under
this particular statutory schemeknown as the False Claims Act.
Now there are criminalprosecutions under the False
(05:33):
Claims Act as well.
There is a correspondingstatute, but those are much less
common because there's a lot ofother criminal statutes that
cover the same type of conductand, frankly, it's just easier
to charge crimes under differentstatutes like wire fraud, mail
fraud, less elements, easier toprove.
Tom Hagy (05:51):
According to this, there are more and more health
care fraud claims.
Why do you think that is?
Justin Lugar (05:57):
Yeah.
So I think it's commensuratewith a couple of things, one
being it is aside from defensebudget, it's up there in the top
five.
If is aside from, you know,defense budget, it's probably
got.
It's up there in the top five,if not number two, for
government expenditures in agiven year.
Um, so you think Medicare,medicaid and I think part of
what's driving that is, frankly,that all of the boomers are are
(06:18):
, you know, we're right in themidst of those folks becoming
eligible or starting to be inthe Medicare program in some
shape or form, and so I thinkthe number of people that are in
those programs, and thus thefunding that goes into those
programs, has increased.
And so I think what you'reseeing is just a natural rise in
the number of claims becausefraud occurs.
(06:39):
You know, whether you'refunding it with a billion
dollars or a trillion dollars,you're still going to find it.
So it's just more instances ofit, and I think DOJ too, in the
last decade or more, has reallysharpened its sword in terms of
healthcare fraud.
Tom Hagy (06:56):
They really know how to investigate and bring the
cases.
Are there any particular caseswe'd want to share with people?
What kind of claims are youseeing in litigation?
Justin Lugar (07:02):
Yeah, One of the big initiatives DOJ has
announced and it seems to befollowing through with is
focusing on claims underpotentially false claims under
the Medicare Advantage program.
And so Medicare Advantage, youknow, has this process called
risk adjustment.
So they assign risk scores toindividual patients and so
(07:25):
basically the government agreesto pay kind of a flat fee and
it's capitated, and it's adifferent style, I guess, of
just a claims-based paymentwhere, hey, I went to the doctor
and I had an expensive X andthe government's going to cover
80% of it and I'm going to paythe other 20% out of pocket.
Medicare Advantage is a reallyrisk-based gamble between the
healthcare provider and thegovernment.
(07:45):
And you sort of look at theperson's health and you say, all
right, if one is our baselineof what the average healthy
person at this age, with thisdemographic is, we think this
person is going to be a 0.9 or a1.3.
And if you're right as thehealthcare company and you hedge
correctly, you can make moneycare company and you hedge
correctly, you can make money.
If you're wrong you're introuble.
But it gives some certainty tothe government as to the amount
(08:10):
that it's going to have to payfor a given patient for a given
year under a given plan, and sowhat you're seeing is a focus on
whether or not the insurancecompanies that are Medicare
Advantage providers areaccurately, and in an honest and
truthful manner, diagnosing andusing the right sorts of codes
to actually capture the carethey're giving, because there
(08:33):
are ways to risk adjust thatwill cause the reimbursement to
go up, and it's the only way toreally increase the amount the
government pays you if you endup taking a bath on a particular
patient's care.
And so DOJ has really honed inon that and they settled a big
case last year I think it was$172 million case against I
think it was Cigna, if Iremember correctly and so I
(08:55):
think you're going to see a lotmore cases in that space,
because once the DOJ kind of hastheir teeth in one and has
figured out how to do it, themethods are usually pretty
similar across differentcompanies.
So I think looking at MedicareAdvantage and how that plays out
in the next few years is goingto be interesting.
You're also seeing and theseget captured, I think, in part
(09:17):
under healthcare fraud butCOVID-related claims, so, for
example, under some of the CARESAct relief that was provided
during the pandemic under HHS,so Health and Human Services
there's a sub-agency called theHealth Resources and Service
Administration or HRSA insuredfund.
(09:44):
The principle behind it, as Iunderstand it, was hey, we want
to incentivize people who even,even people who don't have
coverage, to be proactive aboutgetting tested for COVID and
treated for COVID.
Um, because early treatment is,you know, supposed to be the
best way to to prevent a badoutcome.
Right, you deal with it early.
So the idea was they didn'twant you know, the government
didn't want people being afraidto go to the ER because they
didn't have insurance if theythought they might have
(10:07):
COVID-like symptoms and theywanted to get tested.
Well, so they createdmulti-billion dollar funds to
pay hospitals so that hospitalswould willingly treat people
without insurance and, you know,realized, hey, we could
actually get reimbursed for this.
And so there's different typesof claims there.
The program was intended tocover testing claims.
So if somebody comes in andsays, hey, I think I've been
(10:28):
exposed or I got a cough, youknow, you test them, you can
submit those claims forreimbursement to the government
for testing.
And then there was COVIDtreatment claims as well.
So if you're actually diagnosedor have a primary diagnosis of
COVID, then it would cover allthe incidental care that comes
with that.
So, for instance, if I go intothe ER, I'm uninsured, I get a
COVID test, I test positive andthen they have to treat me for
(10:50):
COVID.
You know, any of the scans thatgo along with scanning my lungs
or any incident giving me an IVbecause you know I've not been
able to retain fluids, whateverit may be, hospitals were going
to be reimbursed for that.
Well, I think what you're goingto see and what we have seen is
an uptick in cases where folksare saying insiders,
whistleblowers, are saying, hey,we were submitting for
(11:11):
reimbursement claims thatweren't really COVID specific.
You know, we might have claimsthat you know, everybody knows
that when you went to the doctorduring that time period, you
always got tested for COVID,right.
And so I think there areconcerns that healthcare
providers in some instanceswould monkey with the coding or,
you know, switch a primarydiagnosis in order to make sure
(11:33):
they could get the care coveredand they might end up treating
you know, doing an ankle surgeryor something and trying to loop
it in under this COVID and say,well, covid was the primary
diagnosis, but you know, whilewe were in there we decided we
needed to help them with thisissue, and so I think you're
going to see a lot of secondguessing of how those claims
were built.
Tom Hagy (11:52):
Trying to see a connection between COVID and an
ankle surgery or something.
Yeah no, there isn't right.
I coughed so hard I twisted myankle Right.
Justin Lugar (11:59):
Yeah, and then you might see other stuff.
I think some of the publicinformation about settled cases
were things dealing withelectronic medical records in
particular, and so you've gotkind of two prongs there.
One is you know there's aanytime you have electronic
records involved, there's theability to build into the code
you know suggestions about whatdrugs to prescribe or
(12:21):
suggestions about what the nextstep of care should be, and,
while well-intentioned in manycases to make sure you deliver
the best care, we want doctorsto be independent and to make
decisions about the care basedon the patient in front of them,
not some pre-populated decisiontree that might point them in a
direction that favors a drugcompany or somebody else who
(12:43):
isn't on it.
I think you're going to seestuff like that, and then also
in the EMR, the electronicmedical record space, you're
starting to see an overlap, Ithink, in the healthcare fraud
world with the cybersecurityinitiative that DOJ is also
really gung-ho about, becauseprotecting personal health
information and PI is reallyimportant and it's a requirement
(13:05):
of any government program, butsome have more strict
requirements than others, and soI think you're going to see
more cases where you know peopleare really struggling to get up
to speed with cybersecurityrules and protect personal
information.
And every time they sign aprovider agreement or submit a
claim for reimbursement, they'recertifying to the government
that they have propercybersecurity protocol in place
(13:28):
to protect that information.
And so if you get big databreaches, you might see the
government using the FalseClaims Act to try and you know
penalize and get some of thosefunds back and say that's not
what we paid for.
We paid for a secure system andyou didn't provide one Right.
Tom Hagy (13:40):
Yeah, gotcha.
So how are healthcare providersand hospital systems responding
when they're being served inthese cases?
Justin Lugar (13:49):
You know it really depends the more sophisticated
the system, you know, the largerthe system, the more controls
they're going to have in placeto make sure subpoenas get to
the right place and that sort ofthing.
But you know, doj also has avery strong policy and you know
I just left DOJ two and a halfmonths ago, so this was sort of
drilled in for the last sixyears when I was there was
cooperation credit and when,really, where's the line between
(14:10):
, like, what your legalobligations are as someone who's
permitted to operate in a freemarket and avail yourself of the
protections of the law?
Where does that line stop?
And your duties as a goodcorporate citizen begin to
cooperate with the government?
And so I think there's atension constantly between
private sector and thegovernment, between, well,
(14:31):
government you've sent out arequest, for you know it's going
to cost us $40,000 to providethese documents to you.
Look how cooperative we'rebeing.
We're spending all this money,whereas DOJ views that as well.
That's just the cost of doingbusiness.
Like you want to operate andcontract with the largest,
essentially bank in the world,like, then you've got to follow
our rules and it's expected ofyou that you are going to
(14:52):
respond to our subpoenas andthat you're going to provide the
information you want.
But I think one thing forhealthcare providers that
haven't dealt with thesesituations is there's always
room for negotiation when youget a subpoena or when you get
served with something or you geta request from the government.
I've always found that, on thedefense side of things, the
earlier you engage with thegovernment and start negotiating
and start cooperating, tryingto figure out ways to refine
(15:16):
what they're actually focused in, then the better results you're
going to get in the end.
You're going to save money,you're going to save the
government in your own time andyou're really going to be able
to get to the heart of an issuewithout a bunch of pomp and
circumstance.
Pomp and circumstance and ifyou do that, you know I always
tell people like 95% of the workI do no one ever hears about
and that's because I'm doing agood job.
Right, they don't get indicted,they don't have a big
(15:37):
settlement number that's flashedall over the news and you try
to work these things out beforethey become public and before
they become a much bigger deal.
Tom Hagy (15:44):
So ignoring it isn't a good strategy.
Justin Lugar (15:48):
I call it ostriching away, like just
putting your head in the sandand hoping it goes away.
Maybe you get lucky once in ahundred times that maybe the
AUSA or assistant US attorney orgovernment attorney somehow
gets in the bottom of theirstack and they forget about it.
But I can tell you what if asubpoena is cut at any point,
someone is tracking thatsubpoena, whether it be at the
US attorney's Office or theDepartment of Justice or the
(16:10):
agency that is the one thatwants it, the information.
So it might be in thehealthcare space HHS, oig.
They're tracking it and theirsupervisors are saying, hey,
when's that subpoena return,coming back?
Why haven't you heard from them?
So it's not going away.
If you get a paper, you got todeal with it.
Tom Hagy (16:28):
How do?
Justin Lugar (16:28):
you deal with it, one of the first things.
I mean, I think if you gotin-house legal counsel,
obviously they're going to beinvolved, but getting somebody
outside to look at it.
There's a lot.
You can tell by where asubpoena comes from.
What is requested in thesubpoena, what type of subpoena
Are we talking about?
A healthcare fraud subpoenawhich is issued by a criminal
function?
So that'll tell you whetherit's a criminal case potentially
(16:50):
versus a civil.
Is it a HIPAA subpoena?
So Health and Human Servicesand state Medicaid programs will
a lot of times use HIPAAsubpoenas, which you really
can't tell a lot about a HIPAAsubpoena?
It could just be seeking recordsthat are related to another
investigation, where you're nota subject or target of the
investigation.
Is it a civil investigativedemand?
If I get a civil investigativedemand, then I know that there's
(17:11):
a False Claims Actinvestigation and what that
tells me is that there could bea whistleblower and so there
could be information that youknow everything that is
happening on the defense sidecould be being communicated to
the government in real time.
You know there could be aninsider and so you try to figure
out.
You know what is the governmentfocused on.
If it's a grand jury subpoena,then you know it's probably a
(17:33):
much bigger problem, unlessyou're just a witness, which
usually the government will tellyou that pretty quickly.
But yeah, the key is you canfigure out a lot of information
about what's going on by wherethe subpoena comes from, who
issues it, what type of subpoenait is, what's requested, and
then outside counsel can hop onthe phone immediately and start
(17:54):
the dialogue with the governmentattorney that's identified on
the subpoena or the agent thatis identified.
And that's where you startfishing.
You start trying to get as muchinformation as you possibly can
which helps your clientnegotiate the terms of the
subpoena, figure out whatdocuments they really want, what
information they're reallylooking at.
If you've just buried your headin the sand and they're playing
the ostrich game, you'remissing out on an opportunity
(18:18):
potentially to find out.
Hey, wait a minute, we're justa witness.
They're looking at this doctorwho you know did surgery at this
hospital and we just need toprovide them the record so they
can finish their investigation.
Okay, but if you don't dealwith it, you don't know that.
Tom Hagy (18:26):
So does that get to trying to find out the origin of
the investigation?
Is that what you're talkingabout?
Justin Lugar (18:32):
Absolutely, and so it also it helps on the defense
side.
It helps you frame and isolatewhere the weakness, potential
weak areas are, where you needto look internally to figure out
what is going on In order to beable to effectively represent
yourself and defend yourcompany's interests or
individuals.
Whoever it is facing governmentinquiry is.
(18:53):
You've got to understand whatthe boundaries of the problem
are so that you can hone in onthe really key issues.
Figure out what the factsactually are so that you can
then start the process ofadvocating and trying to explain
to the government why they'rewrong about X or the fact that
you got from this person is onlyhalf of the story.
Let me give you the rest of thestory.
That is absolutely essential todefending someone effectively
(19:16):
and making sure you protecttheir interest is trying to keep
them in a witness category,trying to keep the government
from thinking that there's beenany wrongdoing on your part, and
if you ignore it or don't knowwhere to look, it's like trying
to build a puzzle in the dark.
Tom Hagy (19:29):
Right.
Justin Lugar (19:30):
Never going to get there.
Tom Hagy (19:32):
Right.
Is there a typical way thatwhistleblower complaints start?
Justin Lugar (19:37):
It depends.
I mean, if we're talking in thehealthcare false claims, you
know context, I will say, fromhaving prosecuted these cases.
And when I say prosecuted youknow a lot of times we'll have
civil and criminal inquiriesinto stuff and then you'll
figure out whether it's morecriminal or more civil or maybe
it stays both.
But prosecuting just meansgoing after potential fraud on
behalf of the government.
So one of the trends that Inoticed and I've had the fortune
(20:00):
of representing whistleblowers,I've had the fortune of
defending companies that havebeen accused of fraud in
relation to whistleblowing, andI've prosecuted government cases
where we're kind of workinghand in hand with the
whistleblower to pursue a case.
And so one of the trends thatreally popped out and I think
this would be almost a universalstatement, folks who've done
this before is there are so manyopportunities, typically
(20:23):
internally at a company, to havethe whistleblower provide the
information to the companybefore it ever gets to the point
of the government yougovernment.
It's almost like you're on thehighway and you have 15 exits
that'll take you to the sameplace and it just depends on
which one you take, as to whatpath you take, and that can make
all the difference in the world.
So one of the things I found isthat whistleblowers very
(20:45):
frequently they create a verythorough and ongoing record of
their gripes, their complaints,their concerns, and it'll be in
writing.
Usually it happens over a periodof time by the time it gets to
the government.
It's one of two things Eitherthe company has just ignored it
or they haven't adequatelyaddressed it in a way that
satisfies the whistleblower.
(21:06):
And so one of the big lessonsthat I've learned from seeing
how this plays out is if you'rea company and someone comes to
you and says I think we're doingsomething wrong, like at the
earliest outset, whether they'reright, whether they're wrong,
whether they're crazy, whetherthey're sane, whether they have
all the information or not,you've got to engage with that
person immediately.
Now you've got to alsocommunicate with them in a way
(21:29):
that lets them know hey, I don'tknow how many times I've seen
cases that were filed rightwhich eventually come out from
under seal and become part ofthe public record.
Maybe the press picks up on it,maybe not, but it's based on
half information, so theemployee whistleblower will only
have a part of the story, andthen it takes six years and by
the time it gets to thegovernment, we're able to fill
(21:51):
in the other blank and realizethere's not a case.
Or maybe there is a case and soif the company just engages
early and has processes in placeto genuinely not just, like you
know, pay lip service to ohyeah, here's a hotline you can
call.
But, actually look into each oneand say, OK, this person says
that we're submitting a falseclaim for payment.
But what they don't realize isthat six steps down the line
(22:14):
that supposed false claim forpayment is actually pulled out
of the queue.
Because we realized thediagnosis code was not properly
categorized and we looked at thechart and we said, oh, that's
not the right thing.
So we never actually submittedit to the government.
So there was no fraud, therewas no completed false claim.
But if the whistleblower on thefront end doesn't know that it
went through that process andwas pulled out, they may think
(22:37):
this is just the way the companydoes business.
And until the governmentfigures that out, which is many
hundreds of thousands of dollarsin legal fees and paying
document processing fees and allthat stuff down the road, it
could have been nipped in thebud at the very beginning.
Tom Hagy (22:50):
Can you give me a little bit of a perspective from
the whistleblower, because itjust sounds like such a risky
undertaking to become one.
There are incentives.
Talk about that and what thatexperience is like it is a big
step there.
Justin Lugar (23:05):
I mean most whistleblowers I've dealt with
and this is not universal, butmost are very conscientious,
thoughtful, analytical folks whoyou know really are concerned
about something.
I mean very few of them knowthat they can monetize their
information until far down theline.
You know, once they get alawyer they might figure out
that they can monetize it.
(23:25):
But it doesn't usually startthat way.
Usually it starts with ah, youknow there's this thing going on
at work and you know I don'tknow what it is, but it doesn't
feel right, or you know, and soyou run the risk.
So you do have whistleblowerretaliation protections under US
law.
But who wants to go to work andbe the pariah Right?
Who wants to?
Who wants to like be on aknife's edge at all time?
(23:46):
Who wants to put their careeron the line, their reputation?
What if you're wrong?
What if you think you're rightand you put your neck out there
and you've just gone to theguillotine for no good reason?
You know it's a really riskything and under the False Claims
Act your identity will be knowneventually.
There is no anonymity under theFalse Claims Act.
Under other whistleblowerschemes there can be anonymity,
(24:07):
like SEC whistleblowing andanti-money laundering.
There's some anonymity involvedthere, but it's super risky.
And so people who sort ofdiscount whistleblowers and say,
oh, they're all just greedymoney, hungry, you know,
snitches or whatever, you knowwhatever derogatory term you
want to use for them.
That's very rarely the case.
Tom Hagy (24:26):
I've very rarely seen opportunistic folks for it and
put all the time and energy andrisk and frankly, like lawyers,
don't want to represent folkslike that because they know it's
not going to be a return on theinvestment.
Some of them don't even knowthey can monetize or there will
be.
Justin Lugar (24:43):
And even if you do I mean if you what is it?
I think the statistic I don'tknow what the current one is,
but you know the government hasa choice.
When you file a false claims atcase, you can proceed without
the government if they choosenot to take over your case.
So you always want thegovernment to take over your
case if you're a whistleblower,but the government only takes
like 10%, 12% of cases and ofthose, not all of them end up in
(25:04):
a result, a verdict or asettlement, and then very rarely
do whistleblowers go forwardwithout the government.
I do think you're going to seemore of that as more cases are
filed and the government hasjust fewer and fewer resources
to tackle the problems.
But I'd contrast it with someof the stuff that I've been
looking into and watching in theUK, right, yeah, so you've said
that things are different inthe UK, that they don't monetize
(25:26):
whistleblowing.
Tom Hagy (25:28):
Why do you think that is?
Justin Lugar (25:29):
It's a cultural thing and I'd studied abroad
there and sort of you know,dabbled a little bit in
understanding the cultural normsaround this.
But you know they haveombudsmen, they have lots of
different ways to reportmisconduct or perceived problems
, but there's very littleprotection for whistleblowers.
And even the definition ofwhistleblower under their
(25:50):
current legislation it requiresyou to be an employee, right?
You can't be a third, like what?
If you're a contractor ofanother company that sees the
fraud, you can't be protected.
Then I mean it doesn't makesense.
But what's really interestingis the serious fraud office, the
SFO, in London, which is kindof the equivalent to like it's
kind of a mixture of the DOJ'sfraud division mixed with the
SEC for securities regulationhere in the United States.
What typically has been thesort of MO there or the ethos of
(26:14):
whistleblowing is, you knowwe're going to look into claims
come whistleblow, but that's it.
I mean you just should do itbecause you're brave and want to
do the right thing right, andthen we'll ferret it out.
And the prior directors of theSFO had no interest in, you know
, advocating for monetizinginformation.
The newest SFO director, who wasappointed in, I think, fall or
(26:36):
early winter of 2023, zach FGrave.
He's actually a law enforcementofficer.
He's not a lawyer, he's not,you know.
He comes at it from a differentperspective, I think, in that
he investigates, he's alwaysinvestigated crime and he's the
you know the one out there inthe trenches on the ground
seeing how this stuff happens.
And he, I think he has a realappreciation for insider
(26:58):
information and how valuable itcan be.
That can be what makes a case.
I mean um, and so he came out inhis first public speech, I
think in February of this year.
He flat out, he said it.
I mean and I don't have itright in front of me, but the
quote is something like weshould pay whistleblowers.
I mean we should change our lawand pay whistleblowers because
the um, the cultural, you knowimplications of like
(27:21):
incentivizing people to tell onothers.
You know it's far outweighed bythe benefit.
And if you look at, if you lookat the United States, right,
and since the just under thefalse claims act, it was revised
in 1986 and really gave itteeth, starting in 1986, senator
Chuck, chuck Grassley reallyput it and he still to this day
focuses heavily on it the UnitedStates has recovered like $73.5
(27:43):
billion for the taxpayer andthey've only paid out like nine.
That's like a 737% return oninvestment, I think any of us.
If we invested a dollar and got737 back, we'd all be pretty
happy about that, right?
Where can I do that?
Yeah, exactly what other placecan you do that?
So I think that, and so the UK.
(28:03):
There is a real momentum.
There's a bill pending inparliament right now.
It doesn't monetize, it doesn'tprovide for monetary incentives
for whistleblowers or forcompensation, but it does make
it a little bit easier forwhistleblowers there to get
protection under the law.
I'm reading a book and Irecommend it by Dr Peter Duffy.
He was a consultant urologicalsurgeon in the UK who has
(28:24):
written two books.
Now I'm on his first book, buthe talks about whistleblowing
and the problems he found.
It's called Whistle in the Wind.
It's about his struggle to outsort of problems with the
national health system in the UKand how certain private
interests were being prioritizedbecause it led to more money
for the NHS Trust, how it led todirect patient harm problems
(28:46):
and then he lost his career.
I haven't gotten that far inthe book yet, but he's about to
lose his career.
Then the amount of retaliationhe faces, both from his peers,
from management, just theculture of the NHS is this is an
institution far bigger than you, and he had to incur tens of
thousands of pounds to go beforean employment tribunal to try
and clear his name, and it putthe onus on the whistleblower to
(29:09):
go clear their name, and reallywe should be saying like thanks
for pointing out these problems, let's figure out how to fix
them right.
It's a very differentexperience and to me it captures
the risk of not protectingwhistleblowers and not
incentivizing them to comeforward, because I mean, it's
just so.
Brandeis said this, chiefJustice, that you know sunshine
(29:29):
is the best disinfectant.
Air it out, let everybody seeit.
That's the best way to dealwith it, and so I'd highly
recommend it.
I think the UK is on the cuspof really seriously
reconsidering it, and one of thethings that SFO director F
Graves said in his speech too aswell, in addition to we should
pay whistleblowers is you know,there is at least 700 UK based
(29:52):
whistleblowers who went to theUS to blow the whistle because
there was no mechanism for themto do it and to hedge their
career risk, their family's riskfor coming out with information
, and so they found someone whowas able to help direct them to
the US system, and so you've gotpeople queuing up here in the
US to tell about fraud thattouches in the US too.
(30:15):
But imagine what would happen ifyou actually had the largest
financial systems in the world,whether it be in Asia or Europe,
the UK, france, wherever beingable to go to their regulator
and say hey, my company is doingthis and it's affecting the
bottom line this way and it'sdefrauding investors all over
the world.
I mean, everything's connectednow, and so it seems to me to be
(30:37):
kind of commonsensical to toincentivize this.
Tom Hagy (30:41):
Right, yeah, you wonder why let's just say
corruption.
You wonder why it works becauseso few people.
I mean there's so much risk ofcalling it out.
Justin Lugar (30:50):
And I mean even the United States recognizes
that with there was a anti moneylaundering whistleblower
provisions passed in the lasttwo or three years, and I think
it was Chuck Grassley and acouple others.
They wrote a letter to FinCEN,which is the financial center,
the enforcement arm of the IRS,saying hey, where are the
regulations?
Congress passed a bill two anda half years ago saying that we
(31:13):
want to create a whistleblowerprogram for anti-money
laundering to help us monitorwhen funds are being moved to
get around sanctions.
Whether it be North Korea, iran, russia, oligarchs are
laundering money in this countryand elsewhere.
The only way we're going to beable to break through the
barriers to develop sources.
Well, one of the ways you candevelop a source and inside
sources to incentivize them withmoney FBI and other groups can
(31:34):
pay confidential informants, butnot in the same way that you
can pay them if they get a shareof the recovery of the fraud
that they out.
There's a real push to, I think,to figure out all right why has
FinCEN not put in regulations?
How far along are they in theprocess of notice and comment
rulemaking?
What kind of fraud are wemissing?
Because we've passed the lawsbut not implemented them, and so
(31:56):
you're even seeing that tensionhere in the United States, and
I think the anti-moneylaundering, whistleblowing
protections are going to go along way, and I think Europe's
going to see that too, becausethere's so much money that is
laundered across Europe Westernand Eastern Europe and in the
United States, and so I'mhopeful that folks will look to
the US and our experience hereand hopefully they'll let us
help share our experiences sothat they can create as good, if
(32:19):
not better, systems.
Tom Hagy (32:21):
So is it fair to say so you're doing defense work,
yeah?
Justin Lugar (32:24):
I do mostly defense work, a little bit of
both.
Tom Hagy (32:26):
You're obviously a fan of whistleblower programs.
Justin Lugar (32:35):
Yeah, I think they're great for everybody,
including the companies who areon the receiving end.
Sometimes it can be a very good.
You know, you go to the doctorsometimes and get a physical and
you don't get great news.
But that's an opportunity aswell to better yourself, right.
While these things can be,investigations can be painful
and expensive, right, and hurtthe bottom line, no doubt about
it.
If you've got the rightmentality or maybe you can tweak
your mentality, if you're in acompliance group or a C-suite,
(33:02):
say, hey, wait a minute.
Like these regulations they maybe, you know, sometimes a
little bit technical andsometimes a little overbearing,
but hey, we do operate in thisspace.
Like, this is a chance for usto like get a little bit fitter
when it comes to our processesand controls and let's treat
this as an opportunity to growand become a better, more
compliant organization, becausethat's going to earn our
shareholders, whether if you'rea public company or if you're a
nonprofit.
It's going to give us a chanceto survive and be better, and I
(33:24):
think that's good for everybody.
Tom Hagy (33:26):
Justin Luger, thank you very much for talking with
me today.
Justin Lugar (33:28):
I appreciate the opportunity and hope it helps
your listeners.
Tom Hagy (33:33):
That concludes this episode of the Emerging
Litigation Podcast, aco-production of HB Litigation,
critical Legal Content, vlexFast Case and our friends at
Lostry Media.
I'm Tom Hagee, your host, whichwould explain why I'm talking.
Please feel free to reach outto me if you have ideas for a
future episode and don'thesitate to share this with
(33:54):
clients, colleagues, friends,animals you may have left at
home, teenagers youirresponsibly left unsupervised,
and certain classifications offruits and vegetables.
And if you feel so moved,please give us a rating.
Those always help.
Thank you for listening.
Popular Podcasts
Fudd Around And Find Out
UConn basketball star Azzi Fudd brings her championship swag to iHeart Women’s Sports with Fudd Around and Find Out, a weekly podcast that takes fans along for the ride as Azzi spends her final year of college trying to reclaim the National Championship and prepare to be a first round WNBA draft pick. Ever wonder what it’s like to be a world-class athlete in the public spotlight while still managing schoolwork, friendships and family time? It’s time to Fudd Around and Find Out!
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.