Consumer Fraud

Whistleblower Doctor Who Led U.S. to $84.5 Million Settlement ‘Risked Everything’

A neuroscientist whistleblower who witnessed corruption within the Detroit-area hospital system where he worked and took legal action despite the serious risks to his career has helped the U.S. government recover nearly $85 million for the Medicare, Medicaid and TRICARE programs.

Dr. David Felten filed a False Claims Act lawsuit against William Beaumont Hospitals in 2010 alleging the regional hospital system engaged in improper financial relationships with eight referring physicians, resulting in the submission of false claims to federal health care programs as well as violations of the Anti-Kickback Statute and Stark Law.

Dr. Felten, a leading figure in the medical research community for his leading role in the study of psychoneuroimmunology, filed the whistleblower complaint even after he was warned that he would be “destroyed” if he took action.

According to the Daily Report, one of the lawyers who represented him said “Dr. Felten had everything to lose, but he just could not stand the corruption he was seeing.”

His whistleblower complaint, filed in an Eastern Michigan federal court, alleged that one of the hospital’s clinical chiefs warned him to “just go along with the physicians, help them to do what they want, and not create waves or try to be a crusader. If you keep creating waves, you will be destroyed.”

The U.S. Department of Justice, which intervened in Dr. Felten’s lawsuit and litigated it, said William Beaumont Hospitals provided excessive compensation to certain physicians in the form of free or below-fair-market value office space and employees. These “perks” were provided to physicians who secured their referrals of patients in violation of the Anti-Kickback Statute and the Stark Law, and then submitted claims for services provided to the illegally referred patients in violation of the False Claims Act.

Dr. Felten was not the only employee of the William Beaumont Hospital system to step forward with whistleblower accusations, but he was the first of four whistleblowers to file a False Claims Act lawsuit against the hospital.

The $84.5 million settlement resolves all four of the whistleblower lawsuits, the Justice Department said.

In addition to the financial settlement, the hospital system also agreed to enter into a five-year corporate integrity agreement with the Health and Human Services Department’s Office of Inspector General. The agreement requires the company to take a number of specific measures to improve its oversight and ensure its compliance with federal regulations.

Dr. Felten has also filed a civil lawsuit against his former employer seeking damages related to whistleblower retaliation. Federal law prohibits employers from wrongfully terminating an employee who stands up against fraud and corruption that harms government agencies and programs.

“Health care providers that offer or accept financial incentives in exchange for patient referrals undermine both the financial integrity of federal health care programs and the public’s trust in medical institutions,” said HHS-OIG Special Agent in Charge Lamont Pugh. “Our agency will continue to protect both patients and taxpayers by holding those who engage in fraudulent kickback schemes accountable.”