Fighting Healthcare Fraud Via Whistleblowers | Jonathan Tycko, Attorney

Transcript Disclaimer: This transcript is generated using speech-to-text technology and may contain errors or inaccuracies.

Mike Koelzer, Host: [00:00:00] John, for those that haven't come across you online, introduce yourself and tell our listeners what we're talking about today.

Jon Tycko: My name is Jonathan Tyko. I go by Jon, I'm an attorney and, in my practice I represent whistleblowers in what are known as qui TAM lawsuits. And, for reasons I'm sure we'll get into, a lot of that is related to the healthcare industry, and a lot of it is related to pharmacies and pharmaceuticals.

Mike Koelzer, Host: All right. Now the obvious first question is, what the hell does qui Tam mean?

Jon Tycko: Sure. Well, it's a shortened version of a much longer Latin phrase. We like Latin phrases in the law, but what it means is a lawsuit that is brought by a private citizen, but in the name of and for the benefit of the government.

 and so the False Claims Act is the statute, the primary statute that we operate under, and that's a law that makes it illegal to commit fraud on the government or on government funded programs.

And so, as it would relate to your audience, healthcare fraud that, that impacts, government funded healthcare programs like Medicare, Medicaid,

tricare,would violate the False Claims Act. And a whistleblower, a private citizen who has information about such a fraud can initiate one of these cases.

And if the case is successful, most of the money goes to the government because it's the government's money. But the whistleblower gets a share as the financial reward or incentive for having come forward.

Mike Koelzer, Host: You focus on the government side of that? Is there such a thing as a whistleblower that's not involved with the government? Or is it always a government thing?

Jon Tycko: Well whistleblowers a much more general term. We use that term in our practice. there's a lot of different types of whistleblowers. There's government whistleblowers, there's other types of corporate whistleblowers. The technical term under the False Claims Act is actually realtor.

That's the person or company sometimes that brings the lawsuit, but we use the term whistleblower just because people understand what we're talking about when

we say 

that. 

Mike Koelzer, Host: When I think of whistle blowing, I think of, If someone does it and now their life is threatened in all the dark corners and the car chases and all this kind of stuff. I'm sure it's exciting, but I don't think it's all of that.

Jon Tycko: Well, I actually count myself very lucky because a lot of lawyers do stuff that honestly is kind of boring. But my practice is actually super fun. I mean, I've never been involved in a high speed car chase, but, but there is definitely a cloak and dagger aspect to it. We often have clients that are inside of big companies that are speaking out about things that they are, very, concerned about the ramifications of doing that, about losing their jobs, being blacklisted and so forth.

We have had clients that have been worried for their physical safety. We've had clients that have worn wires that have helped the government run sting operations. So , it's never quite as exciting as it is on TV where they have to take a three year case and boil it down to one hour.

but as a legal practice goes, it's actually a very interesting practice. and it does actually have some of those aspects to it.

Mike Koelzer, Host: when somebody whistle blows, is it common that they're staying in the corporation and they're doing this, secretly and the government wants them to keep going, or there's some people that they're looking back at a company that they left because they didn't wanna be a part of it?

Is it a mixture of all that?

Jon Tycko: Yes. It is a mixture of it, and there's nothing in the statute itself that says that the whistleblower or the relator has to. Be currently working in the company. Often that is the case. but we certainly have clients who have, by the time they reach out to us, they've already left or been fired.

sometimes cases are brought by other people in the industry, just industry experts, competitors, 

Other businesses who see one of their competitors doing something unlawful and use this statute to bring it to the government's attention. I mean, the main purpose of the statute from the government's perspective is to create a vehicle for people to come to the government, to the Department of Justice with information about unlawful conduct.

And the Department of Justice doesn't particularly care who it is that's bringing them the information. They just care about whether what they're being told is 

true and, whether there's really something illegal going on.

Mike Koelzer, Host: Is it ever a case where the whistleblower maybe has a little bit of blood on their hands, like they were part of it and they're trying to jump the gun and, bring it to light before someone else brings it to 

light and now they're part of the guilty party kind of thing?

Jon Tycko: Well, often the whistleblowers, the best whistleblowers, the people who have the best information about the [00:05:00] illegal conduct are people who were at some level involved in the illegal conduct. That is not unusual. And, what I would say about that is that, what the statute says is that as long as you are not sort of the person who planned and initiated the fraud, 

you're not the one running it.

you still can come forward to the government and claim your reward at the end. If you are somebody who has planned. The fraud or run the fraud scheme and you then turn yourself in and try to claim a financial reward for having done that. The Department of Justice will say no. 

So,there can definitely be gray areas there, but what we find is that the people that are leading and planning the fraud never, are never our clients.

They're never the ones who turn themselves in because they understand they have liability and there are criminal ramifications for this kind of conduct too. So our clients are more typically lower level folks in the company or people that are in a different function in the company who have kind of stumbled on this conduct.

Sometimes they are folks who have tried to stop the conduct internally. They've gone up the chain, Often it starts with somebody who thinks that the company is just out of compliance and doesn't realize it. And so they go up the chain and say, Hey, we're doing this thing. I think it might be unlawful.

Maybe we should stop. And then the reaction they get from the company is, oh,no, let's not talk about that. 

and then it becomes a legal problem. But, 

um, but what I would say is, yeah, don't, the False Claims Act is not a way to both engage in fraud and then make money by turning yourself in.

That won't work. 

Mike Koelzer, Host: So the victim is always a government or are there times when it's like two companies or something? 

Jon Tycko: Well, for it to be a valid case under the False Claims Act, these qui tam cases, that law is specifically designed to protect the government's money,

Mike Koelzer, Host: What about other things we hear about like whistle blowing? Is it always the government's victim or is it, could it be two companies against each 

other, 

Jon Tycko: I guess what I would say is often the conduct that violates the False Claims Act is also illegal for other purposes. So you could imagine that, I'll just throw out a hypothetical. a hospital is overbilling for procedures. It's not really conducting. All right. Let's just say something simple like that.

if it's doing that, there's probably a false Claims Act violation because the hospital is likely getting paid through Medicare and Medicaid. But that same scheme could also be committing fraud on private insurance. It could also be committing fraud on their individual patients. 

Um, it's just that the, there has to be a nexus to government money for it to be one of these key TAM cases, but it doesn't mean that the other kinds of conduct aren't bad or that they aren't 

happening. 

Mike Koelzer, Host: Now I gotta go back to the drawing board.

Jon Tycko: But often what we find is that in the healthcare business in particular, if there is sort of a big ongoing fraud scheme, it almost always ends up violating the False Claims Act because it will almost always touch government money at some point.

Mike Koelzer, Host: The typical person that comes to you, what is their demeanor? Are they pissed? Are they anxious? Are they withholding? Like they feel a little bit of guilt bringing this up. What is their demeanor usually when they're coming to you?

Jon Tycko: Well, as you might imagine, it's a mix. But Will, what I will say is that my experience representing whistleblowers over the years is that they often exhibit some personality traits that are somewhat unique, in the sense that they tend to be people that have a strong sense of right and wrong, a strong sense of justice.

often some sense of patriotism because they realize that they're sort of protecting the taxpayer's money and the government's money more broadly. But the other thing that's sort of unique about whistleblowers is that they are often doing something that very much cuts against sort of the normal social grain, 

 All of us will say, oh, sure, if we see something illegal, we would stand up and raise our hand.

But in practice, most people don't. I mean, this has actually been studied by psychologists. Most people, if they're in sort of a group setting, like at a company and a bunch of their employees and they see somebody doing something wrong, the instinct is not to immediately raise their hand and point a finger.

The instinct is to try to get along, maintain group cohesion, protect themselves, even people that are perfectly good, moral people. And so the whistleblowers, it takes a certain amount of courage. and so I will say when they, when they come to us, they're often in a little bit of psychological turmoil at that moment where they're reaching out to a lawyer, which is a big step for most

people. and they're trying to kind of figure out what to do in this situation. So there, there's a, there is a, sort of a unique psychological kind of, 

situation there.

Mike Koelzer, Host: , you see it on TV about, everybody will be on an elevator facing the back or something, when 

someone goes on and then they gradually turn around after about 45 seconds. They first look that way, then [00:10:00] they turn a shoulder, and you see it with different things , not this simple, but you know, four people say two plus two is five, and then the last person gets into that kind of thing.

Jon Tycko: Yeah.

Mike Koelzer, Host: John, when people, they're seeing something, they've gotten to the point where they want to do something and they're looking online for an attorney that does whistleblower, is it that direct of a link to you?

Jon Tycko: often that is what it is. Yeah. I mean, we. Sort of put ourselves out there as attorneys that do this. It's a fairly niche practice, really. I mean, honestly, there's probably about a few hundred of us across the whole country who really have some expertise in this area. so sometimes the clients just find us online, read something about one of our cases, and reach out to us directly.

Often what happens is they will go to some other lawyer, like a more generalist employment lawyer or something, and then that lawyer says, well, I think you have an issue here, but this is outside my expertise. And then the lawyers kind of know how to find other lawyers who have these different sort of niche

practices. And so sometimes it'll come to us that way. 

Mike Koelzer, Host: So then they come to you and I imagine then that you guys probably have to hire someone to do some private investigation or something.

Jon Tycko: Right. So a big part of our practice is just kind of doing what we call case vetting. So this is sort of the first process when a potential client reaches out to us. we have to hear their story, what do they say is happening? and then we start to ask all the same questions that the government lawyers are eventually gonna ask if they go forward, 

and a lot of that comes down to what is the evidence because the government prosecutors who handle these cases, Are gonna be somewhat skeptical of a case. If it's just somebody's story, here's my story of what happened. Okay. Are there any documents that show that's what happened? No. No.

No. Are there any, were there any other witnesses? No. no. See, that's not a good case. And we would normally tell somebody like that. Well, sorry, but I don't think that's, I think you should not file that case. So a lot of the case vetting is about sort of exactly what you're talking about, looking at the evidence often that the clients themselves have, if they're inside the company, there are, there's usually some document trails, some set of emails or memos or, or in healthcare, just bills and medical charts and things.

Things that you have to look at to figure out what's really going on. And then we often have to do some legal research on our end because every specialty within the healthcare business has its own set of rules, its own set of regulations. And so though we do healthcare cases day in and day out, often a client will come to us with some issue that we've never dealt with before.

Now we have to figure out, well, what really are the reimbursement rules for this particular type of care or this particular type of device or drug? And, so we have to do some of that. and that's sort of a process. And that process sometimes takes a while. And then once we've sort of gathered the information done, our research, then we can go back to the client, say, yes, you have a strong case.

Here's the process if you want to go forward. 

Or sometimes we tell people, we don't think you have a very strong case. We don't think it's gonna be successful. You really shouldn't stick your neck out for this one. 

and we decide not to take the case.

Mike Koelzer, Host: I'm thinking if I worked for a big company and if I was ticked off at them, one of the first things I'm gonna do, I mean, if I was unethical, one of the first things I would do is, try to be a whistleblower on 'em. and that'd be the best way I would think to take down a big company if that was my,, desire.

So you probably get some false accusations.

Jon Tycko: Yeah. I mean, you gotta remember, most people don't go to work for a company with the goal of taking the company

down. 

Mike Koelzer, Host: But after you're wronged, after you're fired, people 

don't go in there for that. 

But they're fired and they don't think they should have been fired. And now they concoct this whistleblower thing. Is there any of that, kind of a revenge thing with no proof?

Jon Tycko: Those are the cases where we would say, no, we don't want to take that case. I mean, and that's why we go through that vetting process. we would not file a case that was just somebody's concocted story. Because we know what's gonna happen in those cases. Filing a key Tam case as an, as a pure act of revenge will not work.

it won't get you the revenge you want. 

it's not

gonna be successful

Mike Koelzer, Host: because you need so much proof to probably even open the case kind of thing.

Jon Tycko: Well, what you gotta remember is you're bringing this case on behalf of the government. It's not your case, it's the government's case, although you have a role in it. So it. 

the cases are filed in court, like a normal lawsuit, 

 They are filed under what we call a seal. They are secret filings. The defendant.

So let's say you're a. Pharmacist and you work for Walgreens, 

and this has happened. Walgreens has gotten a bunch of these and you think Walgreens is doing something illegally. You file the case against Walgreens in federal court. Walgreens does not know that you have filed the case. It's a secret.

But you then give that complaint to the US Department of [00:15:00] Justice and you have to do what is called a disclosure statement where you tell the Department of Justice Lawyers, here is all the evidence that I have in support of my case. And then the first thing that the Department of Justice does is they assign a team to your case and they call you in, they call you the whistleblower into an interview.

And you have to sit down across the table from the DOJ lawyers and investigators, and they grill you. I mean, this is off the record, it's not in

court, but still you're gonna get grilled. They're gonna ask you hard questions. They are testing you because you are asking the government to open an investigation.

They have limited resources, limited time. They have to decide. they're sort of doing their vetting like, are we gonna take this case seriously or not? 

And if you're not ready for that, and all you have is a revenge story, but you can't back it up, you're, it's not gonna 

go far. They're just gonna shut it

down. So, like I said, th this process of vetting and then if we decide it's a good case, kind of packaging that case in the right way 

so that when the Department of Justice looks at the case, they understand it, they see what the key evidence is. I mean, they're looking for a good, strong case. 

They're gonna go do their own investigation.

They never just take our client's word for it no matter what we do, 

but, but, we want to sort of trigger those government investigative resources. And to even do that, the case has to be pretty credible.

Mike Koelzer, Host: And when I picture the whistleblower cases, I'm picturing like bringing a company down, but I imagine that you have a whistleblowing that the highest it's gonna go is maybe stopping one part of the business and maybe a fine or something. It's not always like bringing down the whole company.

Jon Tycko: No. In fact, that is never the goal because the Department of Justice will not do that. 

 they as a matter of policy. I mean, except if it's criminal conduct. What we're handling is a civil case. That's about money. Sometimes our cases will lead to criminal investigations, but that's up to the government to decide whether they want to take it that way.

But if it's just a civil case about money, the Department of Justice as a matter of policy, will not force a company into bankruptcy. They will always look for a way to settle the case on terms so that the company survives. And the reason they do that is, particularly in the healthcare business, I mean, let's say you have a pharmacy and you're the main pharmacy in that town, right?

The Department of Justice doesn't want to deprive the town of that. Medical service, they view their job as kind of recovering whatever kind of money they can, as much as they can without putting the company into bankruptcy and kind of cleaning it up, like getting the company, stopping the illegal conduct, forcing the company to start doing business legally, but keeping the services going.

So, even in the biggest cases, and some of these cases are billion dollar cases, if they're against, huge pharmaceutical companies that can absorb a billion dollars, like 

it's nothing. Right? But if it's against, I mean, and there are cases that have been brought against smaller pharmacies, small pharmacy chains, and the government's role is not to put them outta business.

The government's role is to try to clean up that business, get them playing legally, 

and then to recover as much money as they can without putting the company outta business.

Mike Koelzer, Host: Where does intent fall into this? Shenanigans versus just incompetency 

kind of thing. Does that play a part on either side of these? I'm talking about the guilty party.

Jon Tycko: Sure. Yeah. So, there is an intent element to the claim. That's what we would say in the legal term. Siento is a fancy word. So what the statute says is that in order for it to be illegal under the False Claims Act, the making of the false claims or the fraudulent conduct has to be knowing that's the word that the statute uses, and that is a defined term.

It's not as simple as you would think. In fact, just last week, the Supreme Court decided one of the biggest False Claims Act cases in the last few years, and the whole case revolved around what does knowing mean in this statute. And it happened to also be a pharmacy case. 

It's an interesting case involving us usual and customary charges in the pharmacy context. but the case revolved around the question of. Defining that, that exact term in the statute. So yet, yes, there is, it's not the same as criminal intent. So you can be liable under the False Claims Act for,what's called reckless disregard or deliberate ignorance.

In other words, you can't just put your head down and pretend not to know anything about the 

reimbursement rules. If you're asking to be reimbursed, you have to act reasonably to understand what the actual rules are, and what the actual facts of your claims are. If you're just submitting claims willy-nilly without knowing what's behind them, you're, you violate the statute.

I mean, it's not, so that may not be enough for criminal intent, but it's enough for civil

liability for the 

Mike Koelzer, Host: somebody who's, [00:20:00] got the wherewithal to know how to bill things and do this and that. Well, naturally you have to know a rule if you're requesting money from this

Jon Tycko: Right. yeah. That's basically what it comes down to. If you're in the business, you know you're a pharmacy, and if you're submitting claims to Medicare, you have to know the basic reimbursement rules, and you have to know the facts behind your claims. Like if you're claiming that you dispensed a particular drug, you better have actually dispensed it, and you better have a record 

somewhere that you did that. 

Mike Koelzer, Host: All right, John, let's go down the road of, usual and customary. 

 I know that a bigger chain had one that they won a year or so ago. 

Jon Tycko: Well, this case that just came out of the Supreme Court, I think is a really good example of that issue, and it is a complicated issue. So, as some of your listeners or if you're in this business, you probably know that the Medicaid system and Medicare Part D both typically have a requirement that when a pharmacy bills those systems that they bill the government at what is called usual and customary charges.

The purpose of that rule is just to make sure that the government isn't paying more than other customers. 

So the question is, what does usual and customary mean in these cases? That went up to the Supreme Court, the factual scenario involved sort of these,rebate or promotional pricing systems.

So one of the cases involved Safeway Pharmaceuticals and the other one involved a company called Super Value, which I take as another big pharmacy chain. And they were both doing similar things. They had these various promotional programs where they kind of had a list price, but then they had

discount prices.

And it turned out as a factual matter that they were actually charging the discounted prices. At least this is the allegation in these cases, that they were charging the discounted prices more frequently than they were charging the list prices. But when they reported the price to the Medicaid system or to the Medicare part d providers, they reported the list price, not the discounted prices.

 So the allegation in the case is no. Those were not your usual customary charges. You, and in fact you knew that, I mean, this is the siento question. Did they know that they were not their usual and customary charges? and those cases became the vehicle for taking this question of, well, what does it mean to know 

the way up to the Supreme Court?

Which the Supreme Court answered in a very broad way. , the companies had actually won these cases in the lower courts. They had argued that, even though we now know that what we did was illegal at the time we did it, it wasn't clear that it was illegal. That was their argument.

And the argument on the other side, on the government side was, Well, maybe it wasn't a hundred percent clear that it was illegal, but you knew internally that you were risking that this was illegal and there was evidence, at least this is, again, this is the allegations in the case. These cases have not gone to trial, so we don't know what the total outcome is gonna be, but the allegation is that these companies actually knew internally that the government would likely not regard their list price as the usual and customary and yet they went forward.

They sort of took the risk 

and they took the risk and they turned out to be wrong. And then the question is, was that sufficient to kind of satisfy this knowing element under the False Claims Act? And the Supreme Court said, yes, if the facts that are alleged in those cases are actually proven that yes, that would violate the False Claims Act.

you can't knowingly take the risk of being wrong. That's kind of, kind of the lesson of that case. But it took, those cases have been around for many years and it took the whole process all the way up through the federal system to the Supreme Court to resolve that. That is now the law of the land, a good outcome for the government and a good outcome for like our clients who are, who bring those cases.

it, it took away a potential defense that the companies were

asserting. 

Mike Koelzer, Host: John, what are some areas that pharmacists might not even know they're doing something wrong? So, in the case about the U N C, it's kinda like we didn't know, but we're kind of bearing our head. Maybe we think there might be a problem, this or that. What are some areas where maybe a pharmacist just has no clue?

I mean, if they would've done their homework with the correct, fraud, waste and abuse stuff, they might, but what's something that they might do that it never crossed their mind that it was, the rules?

Jon Tycko: Yeah. Well, I would say the anti-kickback statute is sort of in that category so what the anti-Kickback statute says in essence is that it's illegal to provide an inducement, I think that's the word the statute uses in order to obtain a referral for a service that you're ultimately gonna bill to a government funded healthcare program like Medicare or Medicaid.

And the government has taken a very hard line on what counts as an inducement. So, Walgreens got [00:25:00] in trouble a number of years ago because they had this program where they were giving $25 gift cards, a relatively small inducement. They said, just transfer your prescription over to our pharmacy and we'll give you a 25.

And their program, their written description of the program even said, but we won't do it if you're a Medicare or Medicaid beneficiary. But in practice, what was happening is the patients were coming in and saying, I want my $25 gift card. And then the pharmacist at the store would say, oh, no, you're covered by Medicare.

We can't do that. And the patient would go,grumble. And the pharmacist would go, okay, fine. Here's your $25. 

And so as a practical matter, they were paying them to everybody 

and they got in trouble for that. And the, and so, that's something that I think. In any other business.

Let's say you're selling 

 cars. Come on into our dealership and take a test drive and we'll give you a Starbucks gift card. It would not be illegal. Nobody would think it's illegal. It's only illegal in the healthcare context. And the reason for that is, I think, is that this is really intended as a patient protection measure.

and it's not really directed at pharmacies so much as it's directed at doctors and hospitals. I think,the idea being that we want medical judgements to be made, pure, purely for the benefit of the patient's care

and not have those medical judgements sort of infected by these kinds of like, back padding things that are normal in other businesses.

And so, pharma pharmacies can definitely get, get caught up in that. I think sometimes it can be very intentional. I mean, there was a big case that settled a few years ago, against a company called Patient Care America. Where they were doing something a little more nefarious. This was a company that was, doing mostly,pain creams, 

 and

They were compounding these pain creams and they were sort of basically paying people to go out and find patients for them, and then paying them like a little, if you find us a patient, we'll give you a little bit of money for that.

And then they were, they were doing the same thing with doctors who were doing sort of telemedicine 

would write the prescriptions with very little input from the patients, or sometimes no input from the patients. That company got into trouble. they, I think they ended up paying like 20 or $30

million.

and so that's a more sort of intentional thing. But I think, just like even these little small inducements, I think a local pharmacy could get into trouble doing that if they just didn't know that was against the law. They might otherwise think they were doing something totally harmless and helpful for the patients.

failure to collect copays or copay waivers. The government takes the position that it's a kickback that the patient owes that company. And if you tell the patient, nah, don't bother, you're essentially giving that money back to the patient. And that's actually a kickback. So things that I think sometimes can be, done for not particularly nefarious reasons, 

um, can run afoul of the anti-kickback statute.

So that's one that I think everybody just needs to be conscious of and kind of co and just aware of.

Mike Koelzer, Host: There's some things that if you came into a store ownership now you probably wouldn't do. But there's some things probably that pharmacist Jones did in the 1950s and has always done this and families go on and things just happen but rules change.

Jon Tycko: Yeah. Yeah. Yeah. I mean, I think an another area, that's been sort of, a hot issue recently and again, that's very pharmacy specific, has to do with quantity and days of supply

Mike Koelzer, Host: Mm-hmm. 

Jon Tycko: And so there's been a couple of cases. One, that my firm handled a couple of partners at my firm, Renee Booker, Eva, er, who are themselves former Department of Justice prosecutors who did this on the government side.

There Are now in private practice, they had a case involving a company called PillPack, which was 

an Amazon subsidiary that was, I think, doing mostly online. fulfillment and the issue there had to do with these pens that are used to administer insulin for diabetics. And I, and you probably know more about this than I do, but they, I take it that those pens are often sold in like boxes of five 

pens or

something like that. And the pharmacy had, this online pharmacy had some system where that was intended to track how many that they had dispensed to the patient so that they could accurately report the sort of day of supply information, which I take it in for. That product needs to periodically be re reported to the insurance companies or to Medicare.

But they had set up their system in a way that they were sort of, I guess underreporting the 

supply. And therefore dispensing and billing for more of these than they really should have been. And they ended up settling for about $6 million. 

Andthe realtors, our clients who were themselves pharmacists working for this company, I think got over a million dollars in rewards.

 And Walgreens a few years ago got into trouble again. It was these insulin pens and it was a similar thing where they had a software program that was supposed to track things. but they had sort of set up the program in a way that the sort of store level pharmacy pharmacies were not able to sort of break up the five

pack,

box.

[00:30:00] And so they were essentially, Selling more pens than the customers needed. and knowingly do that. and I take it that these pens are, there's a huge number of these that are sold to diabetics. And so if you add a little extra margin on each sale over time, I think Walgreens ended up paying close to $40 million in that case.

Mike Koelzer, Host: And don't get me wrong, there's people out there that know better and they're cheating people on the other side. It's tough, because again, I'm not making excuses for people that did it.

But let's say you have no intention and you're trying to do your best. There's some of those things, like, for example, the pens. you got eight different insurances telling you something different, and then , the package says it must be sold, in a pack of five because the correct government warnings are on the box, not on each pen kind of thing.

And there's so many damn rules that, I think I'm following all of 'em, but I can see where somebody may not be, just because you're getting it from every different angle.

Jon Tycko: Yeah. Yeah, absolutely. and this is where the sort of intent element does

come in.

 not every violation of that rule is going to be viewed by the government as fraud.

Uh, it has to be pretty systematic and ongoing and at a company that should know better. I mean,

I think 

That's the theme there.

I mean, I think the other area that's similar to this and that, that is a, I think, a really interesting area. Cause I think that, I think the bigger question here, maybe I'd be interested actually to know what you think about this, is sort of what is the role of the pharmacist in sort of policing prescriptions?

and this is a huge issue in the opioid litigation 

that's going on now. just about a month ago, I think it was in April of this year, maybe two months ago now. the Department of Justice intervened in a False Claims Act case, 

 Again, I think it was Rite Aid, where the allegation was that Rite Aid had violated the False Claims Act by filling prescriptions for opioids when they sort of should have seen red flags.

That from which they should have determined that these prescriptions were not medically valid, not medically necessary. There wasn't any question that the prescriptions were written and presented to the pharmacist, but the government's theory in that case is that. Rite Aid had enough information, at least about some of these prescribers and some of these patients to know that these were not being used for medically necessary purposes.

, and that was enough to make the claims for under Medicare and Medicaid, violations of the False Claims Act. So that case is ongoing. we don't know what the result in that case is gonna be, but I think, this is sort of similar to the dosage cases in the sense that they both kind of go to this question of, well, what is the role of the pharmacy in sort of making sure that what they are dispensing and billing for is truly medically necessary.

And I'd be curious to know what your thought

is about those opioid cases, cuz you're probably right on the front lines of that kind of issue all the time.

Mike Koelzer, Host: I had Ray Carlson on, he's a pharmacist and an author of a book. it just came out a few months ago, but it's, the opioid crisis and word do 

pharmacists play a part in and so on. And,He didn't hold anything back saying that, that's all squarely on the pharmacist. 

 I wanted to kind of think of excuses and so on, like, well, the doctor wrote it and all this kind of stuff.

He said, look, the pharmacists are getting paid 120, $150,000, something like that a year. And they're professionals. And if they're in a situation where they're not able to do their job being the, d u r, I forget the law, but it came out the counseling law, years ago that pharmacists had to counsel and so on. He said if they're not doing their job and they're in a place that is not alone and would do their job, they gotta stand up.

they gotta quit. They gotta talk, they gotta do something. Bearing your head in the sand, being a professional, you owe it to the

fellow American citizens to 

stand up.

He puts it solely on them, and I can't disagree with them. I don't know if I'd want to march around with a sign outside and say this to get tomatoes thrown at me. But I can't say I disagree with 'em. I think there's others to blame too, 

but pharmacists are not faultless.

Jon Tycko: Absolutely. I mean, the doctors who wrote the prescriptions are primarily to blame. But,I think that, I think the government's thinking in that case is, well, okay, yes,the doctors wrote the prescriptions, but the pharmacies were making a lot of money off this.

And at some point, a big pharmacy like Rite Aid that has access to a lot of data and can really tell, like they [00:35:00] actually had flagged some 

of these doctors as like, there's just no way that this is legit. But it's interesting. That's, I think, just gonna be a hot area in this field for a while.

We'll see how those cases play out, and it's just an interesting thing to keep an eye on.

Mike Koelzer, Host: Our legal wins, financial wins in court, from whatever the source are, those tax free, that's not like an earned income kind of thing.

Jon Tycko: No, they are taxable. 

Mike Koelzer, Host: so the government 

gets half of it.

Jon Tycko: Well not half, but the government gives you the money and then takes some of it back at the end of the year.

Mike Koelzer, Host: I'm gonna whistle blow on them for stealing half of it. 

 But if someone makes 20 million on something, I think the government's probably getting 10 of it almost. Aren't they?

Jon Tycko: I mean, they could, yeah, sure. Between the state and the federal governments. Yeah. I mean, it's the, you know, it was their money to start with, but again, that, that would be, if you made 20 million doing something else, you would have to pay taxes on it too. 

I mean, so the government does, I mean, this is, goes into the tax law question, but as a matter of tax law, it's just considered income the same as any other income.

I mean, you pay income on a lottery winning, you pay 

in income. If you win money in Vegas, you pay income if your employer gives you a bonus and you pay income. If the government gives you a reward, it's just treated the same. 

Mike Koelzer, Host: Is that true in legal cases across the border? Whenever you sue a company for something or other, and you make so much money on 'em, are you paying taxes on all that?

Jon Tycko: Well, this is a little bit outside my expertise. I think the only real exception to that might be personal injury cases

where you're being, 

you're being reimbursed essentially, expenses that you had to incur. I think in that case, the government might not view that as income. It might, they might view that as just bringing you back to square one.

 but certainly in these cases, the government views it as income. but it's a lot of money. And for some of our clients it's literally

life changing money. I mean, 

These are people that might have been making a pharmacist salary. It's a good profession, but you don't necessarily get rich doing that.

And

so a million dollars is a lot of money 

to 

those folks. 

Mike Koelzer, Host: John, if you could make one change to the law? I. to the current setup of this, is there anything you would change that you think would be more fair to the companies or to the whistleblower, to the government? Anything you would change about the laws?

Jon Tycko: I think the substance of the law is pretty good. I mean, the False Claims Act in its current form, has basically been on the books since 1986. So it has a long history and there still are these issues that get refined through the court system and litigation over time. But the law has served, I think has served the country well and I think it mostly functions well.

I think if I could sort of wave my magic wand and change something about the system, it would have more to do with some of the process issues. it is unfortunate the cases take as long as they do. and again, the average time between when you file the case and when it's resolved might be three or four years.

And I, and as the case gets bigger and stronger, it actually takes longer, because the government throws more resources into it. And then, in a big case against a big company, they're gonna have defense lawyers on the other side who are gonna drag it out. So sometimes these cases can be four years, five years, six years.

And that's just the system. And the system grinds slowly in part because the government's. Resources are limited and they take a long time to investigate these claims. And we often have clients who come to us and they say, oh, this is the biggest fraud. It's the most outrageous fraud.

As soon as we go to the government, they're going to be in there with the fbi. The next day, the documents, two days later, the company's gonna crumble and beg to settle. 

And I'm like, never. It never happens that way. There is a process. The process takes many years. The problem with that is that, during the period of that time, often the fraud is still just ongoing.

And because these cases are under seal, they're also kind of secret. So information that would be sort of valuable for the public or valuable for the industry to

know is kind of kept secret for multiple years. Sometimes allowing these practices to go on when they could have been stopped sooner and.

 It's also putting the company at jeopardy for multiple years. they need to get the case resolved. The whistleblowers are often, their sort of lives are a little bit kind of suspended while these cases are going on. So I wish the cases would move faster. I think the only real way to do that would just be to have the government resources kind of there to move them faster or for the judges to kind of push the cases faster.

, and I think it is unfortunate that they're that slow and that long, but that is ultimately kind of a bureaucratic problem.

Mike Koelzer, Host: Do these guys ever go to jail? Do corporation people go to jail? I don't know. The whole civil versus criminal and all that.

Jon Tycko: sure. And we have had cases where our clients have come forward in, in a civil case, brought that case to the government and. Once you tell the [00:40:00] government some information, they're gonna do whatever they're gonna do with it, you don't control that. 

and we definitely have had cases where, as a result of the information we've given to the Department of Justice, they've ended up opening criminal investigations as well as the civil cases.

And where the individuals at the companies, if they are the ones who sort of really masterminded and led a clear, intentional fraud. I mean, that's what it has to 

1. It's, these are not cases where there's gray areas 

and mistakes. These are clear, intentional frauds. We've had cases where companies were forging medical records, putting doctors' signatures on documents that the doctors never saw.

kickback cases where the, it was just outright bribery 

where people were being handed bags of cash and gold coins. cases like that, the government will treat them criminally and people will go to jail. Yes.

Mike Koelzer, Host: Is that a pretty wide net? Sometimes It depends who throws whom underneath the bus, but I'm sure that sometimes the ceO maybe isn't in trouble, but it's the CFO that knew this or that, but , government probably gets 

whoever they think was in on it.

Jon Tycko: It's an unfortunate aspect of our criminal justice systems that sometimes it's the small guys who get ensnared and the big guys get off because the big guys have sort of plausible deniability, they have better lawyers. But having said that, like I said, we've had companies where high up executives at fairly large companies have had to plead guilty to crimes.

Criminal cases always come down to intent and the question is, how strong is the evidence that this person knew that what they were doing was wrong? 

That's what the government is really looking at. And if there is not strong evidence of that, or if there's a fight about that, 

the government,they wield that criminal hammer pretty carefully 

cuz they don't want to start criminal cases and lose, that's hugely embarrassing from the Department of Justice.

they only wanna bring cases that they're gonna win and they do win like 90 plus percent of the cases that they bring. So they're pretty careful about who they go after.

Mike Koelzer, Host: , since the beginning of time the thieves always stay one step ahead of the good guys. What direction do you see corruption going? Do you think that it's gonna get easier to be corrupt? And I'm talking about, technology and, AI and blockchain things that might help the good guys, 

Is it just the same pattern we always see where the bad guys are one step ahead of everybody else?

Do you see the, do you see the balance ever changing?

Jon Tycko: I mean, that's a very high level question. I guess what I would say is We have laws to set rules, but no matter how clear the rules are, people will always violate them. The example I give is, Hey, it's been against the law to murder people since biblical times, 

and yet every year people go to jail for murder.

So, like, you'll never, you can never ring all of the unlawful conduct. Out of the system. But what you wanna try to do is ring as much of it out of the system as you can and to use the laws in a way to kind of set examples to try to deter people from doing it again. 

things like that.

What I will say is in the healthcare fraud space, because it is so big and so complicated and because there's always new things happening, the government is always starting some new way of paying for things. before there was Medicare Part D, well there was no Medicare Part D fraud. Well 

Now we have Medicare Part D.

So now there's a new way to commit fraud on the government, and so, every time the government devotes money to something they know going in, anytime there's some government program where the government is gonna find some big activity, some percentage of that is gonna go to fraud.

It just is, cuz there will always be people looking to game the system. And so the government is always looking like where, what is the next thing we need to be looking at? I think right now, Coming out of the pandemic in the healthcare world, one of the issues that they're very focused on is sort of telemedicine or remote monitoring, remote medicine type issues.

I think the government sees that as kind of an area they need to keep a very close eye on, because it obviously has huge benefits in terms of accessibility and efficiency. But there is, it also honestly does open things up a little bit to some shady practices that have already come to light in the telemedicine world.

So I think, and I don't know if there's much of that in pharmacies, but it's just something to be careful about. I think if a pharmacy is. Getting a lot of prescriptions from a telemedicine operation. It kind of flows into this question that we were talking about, like what is the role of the pharmacist in policing the prescriptions that are coming out of that system?

And maybe if you're getting a lot of prescriptions that are coming out of a telemedicine system, you just gotta have your thinking hat on a little bit harder. 

but that's definitely an area where the government is very focused on right now. They're also very focused on data security and data privacy issues.[00:45:00] 

so in the healthcare industry that's, electronic medical records and just making sure your systems are really locked down and secure. and so yeah, I think technology often has both a liberating effect and efficiency effect. It can open up new markets, and can make things easier for people, but again, There will always be somebody who's looking to game the system.

And, every year there is some case where, you know, that we see, where we're like, wow, we didn't even know you could commit fraud that way. That was really creative. That was like some good, that was some really 

good fraud you did right there.

Mike Koelzer, Host: right. Exactly.

Jon Tycko: and sometimes you get some really creative, interesting, smart fraudsters and, they're 

Mike Koelzer, Host: right. 

Jon Tycko: what they do.

It's a, it's, 

It's always something new.

Mike Koelzer, Host: Yeah, years ago, fraud might be, Mrs. Smith, she made it to three appointments this month and not four, so are gonna bill for another appointment. but now, you got 8 billion people on their computers, that are trying to do this from 

other side

of the world.

So it's a 

big nut

to crack, I'm sure.

Jon Tycko: yeah. Yeah. But hey, I mean, from my perspective, I. It keeps me in business and it ke and it keeps it interesting cuz 

In every case, every new case, I have to learn a whole new thing. and like I said, sometimes I'm quite impressed 

by what went into

Mike Koelzer, Host: Yeah. They need an award show for that kind of thing.

Jon Tycko: Right. Best fraud of the year. Exactly.

Mike Koelzer, Host: Well, John golly, thanks for joining us. , it's interesting, but I'm glad I'm not going down that route, but, that's really interesting stuff. it sheds a real different light on things from a larger perspective. That's cool.

Jon Tycko: Well, thanks for having me on. I love talking about what I do. I hope it is interesting to your listeners and it was a pleasure talking to you.

Mike Koelzer, Host: All right, John. Very good. keep up the fight , and we'll look forward to seeing you on the upper fold of the internet for some big case that we cracked.

Jon Tycko: I hope so. Thanks a

a lot. 

Mike Koelzer, Host: right, John. Thank you.