Whistleblowers Reward: Inside the $95 Million Payout from Kaiser Settlement

Whistleblowing is a courageous act that defends public funds and holds powerful organizations accountable. It offers not only the chance to fulfill a moral imperative but also the potential for financial rewards for those daring enough to step forward and stop corporations from misusing public resources.

Recently, healthcare giant Kaiser Permanente agreed to pay an astounding $556 million to resolve allegations of defrauding the federal government. However, the most inspiring aspect of this story goes beyond the corporation’s penalty—it lies in the rewards earned by the brave individuals who exposed the fraud. The whistleblowers in this case will collectively receive $95 million for their vital role in uncovering the scheme.

If you possess knowledge of corporate fraud, this case serves as a powerful reminder of the profound impact you can make, along with the protection and rewards that are available to you under the law.

The Kaiser Permanente Case: A Breakdown

The settlement represents the collaboration of Kaiser Foundation Health Plan of Washington, Kaiser Foundation Health Plan, Inc., and their dedicated affiliated entities. At its heart, the case highlights the importance of integrity within the Medicare Advantage program, a vital government-funded health insurance option for our seniors.

The Allegations

The essence of the case revolves around the critical aspect of “risk adjustment” within our healthcare system. In the Medicare Advantage program, the government empowers insurance plans with a monthly allowance per beneficiary, promoting fairness and responsiveness to individual health needs—ensuring that plans receive appropriate support for patients facing greater health challenges and managing chronic conditions.

According to the Department of Justice and the settlement agreement, Kaiser was accused of:

• Pressuring physicians to create addenda to medical records after patient visits had concluded, specifically to add diagnoses that the patients did not actually have or that were not relevant to the visit.
• Submitting false claims for risk-adjustment payments based on these improper diagnoses.
• Mining medical records for potential diagnoses that could boost revenue, often without sufficient medical justification.

Essentially, the government alleged that Kaiser made its patients look sicker on paper than they actually were to collect higher payments from Medicare.

The Resolution

To settle these allegations, Kaiser agreed to pay $556 million to the United States, a significant step toward accountability. This settlement resolves civil claims arising from the company’s violations of the False Claims Act, highlighting the importance of integrity in our systems. Notably, as is customary in such agreements, Kaiser does not admit liability, and the United States does not concede the validity of its claims.

The Role of the Whistleblowers

This remarkable recovery of taxpayer dollars owes much to the courage of those within the organization. The settlement stems from lawsuits initiated by two brave whistleblowers who stood up for what is right under the qui tam provisions of the False Claims Act.

The whistleblowers in this case were:

1. Ronda Osinek, a former employee who filed her lawsuit in 2013.
2. James M. Taylor, M.D., a physician who filed his lawsuit in 2014.

Understanding the False Claims Act

The Kaiser settlement highlights the power of the False Claims Act (FCA), which is the government’s primary tool for combating fraud. The FCA incentivizes individuals (relators) to report fraud by offering them a share of the financial recovery.

What is a Qui Tam Action?

A qui tam action allows a private individual with knowledge of fraud against the government to file a lawsuit on the government’s behalf. If the lawsuit is successful, the whistleblower receives a percentage of the funds recovered.

As detailed in the Helmer Friedman LLP resources on whistleblower rewards, the FCA covers various types of fraud, including:

• Charging for goods or services not provided.
• Billing for unnecessary medical procedures or tests.
• Falsely certifying information to get paid.
• “Upcoding” or billing for more expensive services than those actually rendered.

Calculating the Reward

The reward amount in a False Claims Act case is not random. It is statutory. If the government intervenes in the case (takes over the prosecution), the whistleblower is generally entitled to receive between 15% and 25% of the recovery. If the government declines to intervene and the whistleblower pursues the case on their own, the reward can increase to between 25% and 30%.

In the Kaiser case, the roughly $95 million payout represents a significant percentage of the total settlement, acknowledging the critical role Osinek and Dr. Taylor played in the investigation.

Why You Need a Whistleblower Attorney

While the rewards can be substantial, navigating a False Claims Act case is legally complex and fraught with potential pitfalls. You cannot simply call a government hotline and expect a multi-million dollar check.

To file a qui tam lawsuit and be eligible for a reward, you must follow strict procedural rules:

1. Confidentiality: The lawsuit must be filed “under seal,” meaning it is kept secret from the public and the defendant while the government investigates. Breaking this seal prematurely can disqualify you from receiving a reward.
2. Original Information: The information you provide must be “original,” meaning it is not already publicly known or previously disclosed to the government by someone else.
3. Legal Representation: You generally cannot file a qui tam suit pro se (without a lawyer). You need an attorney to represent the government’s interests as well as your own.

Furthermore, employers often fight back. While the law prohibits retaliation against whistleblowers, having an experienced employment lawyer is essential to protect your career and rights throughout the process.

Other Whistleblower Programs

The False Claims Act isn’t the only avenue for reporting fraud. Depending on the nature of the violation, other programs may apply:

• SEC Whistleblower Program: For violations of securities laws (like insider trading, Ponzi schemes, or accounting fraud). The SEC awards 10-30% of sanctions over $1 million.
• IRS Whistleblower Program: For reporting tax evasion or underpayment. Awards generally range from 15% to 30% of the proceeds collected by the IRS.

Taking the First Step

The $95 million award to the Kaiser whistleblowers stands as a powerful reminder that choosing to do the right thing can lead to both justice and financial reward. These cases demand patience, discretion, and expert legal guidance.

If you possess credible information about corporate fraud, Medicare fraud, or other violations of federal or state law, prioritize confidentiality by avoiding discussions with colleagues or posts on social media. Your first step should be a private consultation with a qualified whistleblower attorney who can evaluate your claim and expertly navigate you through the journey of protected disclosure.

At Helmer Friedman LLP, we bring over 20 years of dedicated experience advocating for justice and empowering individuals who are ready to challenge the status quo. We recognize the significance of your actions, and we are unwavering in our commitment to securing the maximum reward you rightfully deserve.