From worker to whistle-blower
Informers weigh odds of success with career loss, chance of no settlement
As Bruce Moilan took his life on an irreversible new course, he didn’t tell his wife of more than 30 years or their three grown children. Nor did he, or could he, tell his colleagues at South Texas Health System, the target of his whistle-blower lawsuit that triggered a secret, multiyear federal investigation and ultimately made him a millionaire.
Moilan has what would seem to be a success story to tell. The U.S. Justice Department reported last October that Moilan was in line to get $5.5 million of the $27.5 million his employer agreed to pay the government to settle the case (while adamantly denying any wrongdoing). But even though he’s unwaver- ing in portraying his decision as the right one, he has a more conflicted view of the experience as an informant and how it ended.
“It’s a lonely situation for a long period of time that’s filled with fear,” Moilan says. “I’ve got two master’s degrees and two professional licenses, and I’m unemployed because I chose to do the right thing.”
The settlement did not make him as wealthy as he suspects some might think, with his reward pared by his lawyers’ due and federal taxes, and the possibility of forced retirement from a well-paying career at age 59.
The government, to a large extent, relies on whistle-blowers such as Moilan. They are perhaps the best tool for protecting the money Medicare and Medicaid pay for healthcare each year (approaching $900 billion combined). They’re also a potential drain on the time and resources of every healthcare organization of any size, regardless of whether the concerns are well-founded.
The Justice Department starts about 250 new False Claims Act cases each year involving alleged misappropriation of HHS money. The overwhelming majority are triggered by whistle-blowers, known in the legal parlance as “relators,” who file lawsuits under seal to recover funds on the government’s behalf. In 2009, whistle-blower lawsuits generated 85% of the $1.6 billion in healthcare dollars the government recovered from settlements and judgments (a big number that’s still a tiny fraction of what’s lost to fraud) and the relators collected nearly $164 million for their trouble.
And it is trouble, says Moilan and others who have been similarly successful, and they’re quick to point out that the odds of success should be weighed against the strong possibility of losing a job or even a career while winning nothing in return. The government is about four times as likely to decline to formally intervene in a case, and those who proceed without the government’s help are far less likely to lead to a settlement or judgment. Even when a case is successful, it’s typical that more than half the whistleblower’s gross share covers legal fees and federal income tax.
No quick money
“It’s no fun,” says Craig Patrick, one of two relators who jointly filed a lawsuit against Kyphon that yielded a $75 million settlement with Medtronic, which during the investigation acquired the maker of spine-surgery kits for $3.9 billion. “If you do it because you think you’re going to get money quickly, you’re wrong,” Patrick says
Nevertheless, the 45-year-old was sharing his account the day after he quit his postKyphon job with Boston Scientific Corp. to dedicate himself to running the Austin (Minn.) Bruins, a North American Hockey League expansion team he bought. “The money we’ve gotten is awesome,” Patrick says. “You couldn’t do it otherwise.”
Patrick teamed with another Kyphon employee in the lawsuit and split $15 million after it was settled, and they may continue to get paid as hospitals settle related allegations— nine have done so already. The other plaintiff, Chuck Bates, just returned from a mission trip to South Africa with a Christian organization, something the reward has given him the time and money to do. He took a similar trip to China and has another planned to Honduras. Like Patrick, he’s done with healthcare, instead playing a detached role in an investment business he started with a friend.
The biggest cases really do bring rock-star money. John Kopchinski, a former Pfizer sales representative, was awarded $51.5 million in a 2009 settlement as part of a record $2.3 billion agreement resolving a range of criminal allegations and False Claims Act lawsuits primarily