By Lindsay Toler
By Chad Garrison
By Brett Koshkin
By RFT Staff
By Lindsay Toler
By Riverfront Times
By Danny Wicentowski
By Pete Kotz
The heightened focus on health-care fraud came at the same time the Clinton administration was putting health-care reform on the front burner. Focusing on fraud could put pressure on provider groups while sending a message that out-of-control spending was the result of something other than poor policy decisions.
Once Washington got the ball rolling, health-care fraud investigations gained a momentum of their own, for a couple of major reasons. The first was an important piece of legislation the 1996 Kassebaum-Kennedy bill which increased funding for HHS investigators and health-care prosecutions. The second factor was the increased use of the federal False Claims Act, especially when it became clear that whistle-blower cases could be used to enforce the federal government's broad anti-kickback law.
Congress passed the False Claims Act in 1863 after the government was billed for mules that were diseased, blind and lame. The Civil War-era law was dusted off and amended in 1986 in a move to strengthen the government's attack on defense-procurement fraud. The act was changed to allow private citizens with knowledge of substantial and previously undisclosed fraud to file suit on behalf of the federal government. The law provides that the government can recover three times the amount stolen, plus $5,000-$10,000 for each fraudulent claim.
As an incentive for the private citizen to blow the whistle, the law provided a reward: 15 to 30 percent of the total funds recovered.
Last year, HHS's Office of the Inspector General brought 261 criminal convictions and 927 civil settlements and barred 3,000 providers or organizations from the Medicare and Medicaid programs. It claims $38 billion in savings since 1993. Many of the government's biggest cases, including its investigations of Columbia/HCA Healthcare and Quorum Health Group, were triggered by whistle-blowers.
Malcolm Sparrow, a professor at Harvard's Kennedy School of Government and author of License to Steal, a 1996 book examining health-care fraud, says whistle-blower lawsuits have become a popular way of attacking fraud because they can yield large financial penalties for false claims without the whistle-blower's having to prove criminal intent. Today, Sparrow says, the Justice Department is getting health-care whistle-blower cases "at the rate of one per day."
James F. Blumstein, a Vanderbilt University law professor and director of the Health Policy Center at the Vanderbilt Institute for Public Policy Studies, sees the explosion of whistle-blower cases as a disturbing trend. He worries that whistle-blowers, in effect, push prosecutors to pursue cases they might otherwise drop. "The government has been, as prosecutor, rather reasonable, because it exercises discretion. Where things happen that aren't so bad, they tend to let it go," says Blumstein.
"A whistle-blower is more like a bounty hunter than a sheriff. A sheriff exercises some discretion. But the whistle-blower has a completely different set of financial incentives. What's a whistle-blower's motivation? The only thing a whistle-blower has to care about is money," Blumstein argues.
Goeggel denies he's in it for the money. "Owning your own business is like having a kid. It's not about money; you want it to do well. That's all."
In June 1996, Goeggel decided to go ahead with the lawsuit and hired Jeff Sprung, whom he had heard describe whistle-blower lawsuits at the conference earlier that year. Steve Hubbard, the ambulance owner-turned-investigator, joined the team to help build the case.
"Steve came into town and did a little more digging," Goeggel recalls. "If I was asking the questions, it would be blatantly obvious. He came in and was able, on my behalf, to ask some questions of some people and get them to say some things that were incredibly interesting and confirm an awful lot. We had some people that were really, really impressed with talking. They liked to talk."
Among the most chatty was Philip Salvati, a former Abbott vice president and chief financial officer. Goeggel had heard that Salvati left Abbott the circumstances were unclear and suggested that Hubbard approach him.
Salvati agreed to meet with Hubbard in late August 1996, and then, in the course of their conversation, described a range of practices at Abbott that not only seemed to confirm the allegations of fraud by Dougherty and other Abbott officers but also suggested that executives of the sponsoring hospitals Barnes-Jewish and SLU knew of those activities.
Goeggel speculates that Salvati spilled the beans because he thought "he was being interviewed or being considered for a very important position someplace else. It wasn't like somebody was pointing a finger at him, saying, "Here, make up as much as you can about this guy so that you can get your ass off the hook.' He didn't have a clue what was going on."
Hubbard says, "I met with (Salvati) and never told him for sure I was going to hire him. What I told him was absolutely the truth.... I told him I'd been told he was the guy who knew all about hospital-based ambulance systems and wondered if I could pick his brain and see what would develop from that. I'm sure he read into that, and it was my intention that he would read something into it.
"Frankly, I was amazed at the information he gave someone who was a total stranger to him." Later, after Goeggel's lawsuit was filed under seal, triggering a federal investigation, Hubbard met a second time with Salvati. For the second meeting, the feds supplied Hubbard with questions. They also supplied him with a wire.