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At first blush, filing a whistleblower suit seems a lot like playing the lottery, with the potential for winning big in the end. But according to an Atlanta lawyer and his client, a former healthcare executive, blowing the whistle can exact a huge personal cost. For Donald S. McLendon, it meant losing a career, a home and putting his family’s well-being in jeopardy. For his lawyer, Marlan B. Wilbanks, it meant foregoing hundreds of thousands of dollars in billable hours and shifting other cases to his law partners in hopes of a payoff that might never come. Both men spent three years immersed in what appears to be the biggest health care fraud case pursued by the federal government. And success — and millions of dollars — for both appears to be at hand. Last year, McLendon collected $9.8 million out of a $41 million civil fine paid by his former employer, Olsten Corp., after McLendon informed federal officials of alleged Medicare fraud. Now, he stands to collect substantially more — an as-yet-undetermined sum out of an astronomically bigger pot: $745 million. That’s the amount the other target of his accusations, Tennessee-based hospital giant Columbia/HCA Healthcare Corp., agreed, in principle, to pay last week to settle civil claims that the company committed Medicare fraud. Columbia officials announced May 18 they reached the “understanding” to settle certain civil claims relating to diagnostic, coding and home health care issues. The deal is subject to certain conditions being met on deadlines, namely the settlement of criminal investigations and court approval. Jeff R. Prescott, a Columbia spokesman, says the company won’t respond to specific allegations since negotiations are ongoing. In October 1997, the company created a department devoted to ethics, compliance and corporate responsibility, through which employees and others could lodge complaints or report allegations of misconduct. Department of Justice officials released a brief statement May 18, saying only that a tentative agreement had been reached, which would resolve, in part, Columbia’s civil liability. INFORMATION CALLED KEY McLendon’s information, says his lawyer, was key to the government’s recovery in three of the five issues covered by the tentative settlement, issues that resulted in “hundreds of millions” of the recovery. If the settlement is finalized, the government will determine what portion of that $745 million civil recovery is directly attributable to the former Olsten executive’s assistance. He’ll then receive 15 percent to 25 percent of the amount set by the government. Wilbanks and his firm, Atlanta’s Harmon, Smith, Bridges & Wilbanks, will get between 33 and 40 percent of McLendon’s recovery, having taken his case on contingency. The former healthcare executive says he’ll now have the luxury to decide what he’ll do for the rest of his life. Wilbanks, who previously handled commercial healthcare litigation and some high-end personal injury cases, now has a new type of practice: He spends 75 percent to 80 percent of his time handling whistleblower cases. But if all that seems dizzying good fortune, it comes in the wake of a roller-coaster ride of frustrations, fear, secrecy, uncertainty and a lot of hard work. RISKS AND REWARDS McLendon, who now lives in the Orlando, Fla., area, says whistleblower suits shouldn’t be regarded as a “get-rich-quick scheme” by any means. “You’re running a tremendous risk,” he says, and facing tremendous personal costs. Wilbanks agrees. Whistleblower suits, which are filed under the federal False Claims Act and known in legal circles as qui tam cases, might be more aptly dubbed “get-stressed-quick” propositions than “get-rich-quick” ones, the lawyer says. While qui tam litigation is a hot, new area of practice around the country, Wilbanks says it’s “not the merry-go-round the press would lead you to believe. You just don’t go tell on somebody and get rich.” From Wilbanks’ perspective, taking on McLendon’s case meant a major commitment for his small firm of Harmon Smith, which has five partners. Specifically, it meant doing without anywhere from $300,000 to $400,000 a year in billable hours that Wilbanks would typically generate. For McLendon, pursuing what he perceived to be rampant unethical practices on the part of two healthcare companies meant giving up a lucrative executive position, a nice home in Atlanta, a country club membership and two Cadillacs. It meant selling his Atlanta home and cashing out his life insurance policies for cash to live on, and moving into a rented home in Central Florida with his wife and four young children, one of whom has Down’s syndrome. It meant an end to health insurance and the luxuries of his former life. And, finally, it meant long hours of unpaid work helping the government decipher massive amounts of financial information. McLendon says there were times when he wondered if the chance he had taken was worth it. There was the constant concern over the lack of health insurance for his family, he says, adding, “When you’re down to one car with four kids, dealing with a leaky roof, it became irritating.” Still, the stakes were high. Once an executive vice president at the Atlanta offices of Olsten Health Management, a subsidiary of the New York-based Olsten Corp., McLendon claims the home healthcare provider was involved, along with the healthcare giant Columbia/HCA, in a massive scheme to defraud Medicare. Olsten was under contract to Columbia to manage the home care end of the business. Columbia had gone from not having a home care component in its business mix to being tops in the country in slightly more than two years, McLendon says. This was at a time when buying a home care agency was next to impossible given the lucrative nature of the business, he says. But Columbia managed to rise to the top of that business, the whistleblower says. The company did so, McLendon says, by structuring the deals so as to write off large portions of the purchase price as management fees, which are reimbursable under Medicare. He also says Columbia and Olsten improperly obtained reimbursements for sales and marketing costs by reporting them to the government as being for community education and home health care coordination. McLendon, through his job at Olsten, directly supervised Columbia’s community educator employees. WHEN ALL ELSE FAILED McLendon is a rarity among whistleblowers, a top executive with access to the boardrooms of both Olsten and Columbia. He says he tried to change both companies’ practices from within but got nowhere. “They were making too much money,” he says, to change. The response he got, he says, was ” ‘If they catch us, we’ll pay it back.’ “ Olsten spokeswoman Nancy A. Macenko told the Futlon County Daily Report last year that while Olsten may have made mistakes in billing Medicare, the company had always kept patient care at the forefront of its business. Faced with intransigent management, McLendon says he concluded he had three options: to go along, keeping his eyes closed and fingers crossed; to resign, an option that still left him vulnerable to possible future prosecution; or to blow the whistle. The latter choice seemed preferable, although McLendon says it wasn’t a clear-cut decision. Instead, he says, he agonized over it for months. “I don’t know that you could ever say clear-cut when you’re putting your family at risk,” he says. He was in his mid-40s, at the peak of his earning years, in an industry where he had risen through the ranks. Blowing that, he says, is “the last thing you want to do.” And, he adds, “When I pulled that trigger” and made the decision to blow the whistle, he knew his career in healthcare was over. He says he made an anonymous call to the FBI, giving no specifics, but seeking advice. He was told, he says, to go to a big law firm that handled qui tam cases. Most of those were in New York, Washington or San Francisco. But big firms weren’t what he had in mind. “Honestly, I didn’t like the feel of that,” he says. What followed was a period of discrete telephone calls and what McLendon calls a bit of luck in reaching Harmon Smith. Wilbanks says the firm is small but stable. Its name principals have remained with the firm their entire careers. While each partner has an area of expertise, the firm has resisted becoming too specialized, he says. Since he is the firm’s main litigator, Wilbanks says he does the firm’s witness evaluation. That’s why he was called in when McLendon first approached the firm in January 1997. LAWYER WON OVER After just 10 minutes of listening to McLendon’s story, Wilbanks says he knew the executive was telling the truth. “He looked me in the eye all the time,” the lawyer says, adding that, “Even if he was wrong, it was not because he didn’t have conviction.” Still, the allegations sounded almost unbelievable at times, Wilbanks says. “It sounded too greedy. It sounded over the top.” But McLendon had the evidence to back his claims — several bankers’ boxes worth of documents, Wilbanks says. “He convinced us and then he came up with the documents.” McLendon says his counsel was a good fit. Wilbanks “had a lot to lose,” McLendon says. “He was at risk as much as I was at risk.” For whistleblowers, convincing the government to intervene and take the case as its own is critical. While an individual can pursue his case alone, the government, with its vast resources and subpoena powers, is in a much better position to do battle with a massive corporation. With his lawyer, McLendon sat down for a marathon session with federal authorities in the Harmon Smith offices in early 1997. Present, Wilbanks says, were prosecutors from U.S. Attorney’s Offices in Atlanta and Florida, FBI agents and officials from Health and Human Services’ Office of the Inspector General. For five to six hours, Wilbanks says, the officials listened to McLendon’s story as he would tell it many times during the next three years. Wilbanks says he could sense McLendon’s story was getting his listeners’ rapt attention. What he didn’t know, however, was whether federal authorities had heard it before. He says he thought they probably had not, given the amount of detailed questions they asked. Being the original source of information is one of the key components to be able to recover as a whistleblower. But, given the rules of secrecy governing such cases, neither McLendon nor Wilbanks would know for sure if they were the first to raise these allegations of fraud until two and a half years later. In the meantime, McLendon filed his qui tam case in April 1997 — under seal, as such cases must be filed, gambling that the case was important enough and that the money at issue was large enough for federal authorities to decide to intervene. There was more to the gamble, however. If McLendon wasn’t the first to file or wasn’t the original source of the information, or if another government agency already was investigating the claims, McLendon would merely be another witness, with no stake in any recovery. In qui tam cases, a whistleblower can receive anywhere from 15 percent to 25 percent of the government’s recovery, provided he or she is the first to file, has direct knowledge and is the original source of information. But once the case is filed, the whistleblower, or relator as they are called, has no control over whether the government decides to intervene. That lack of control is frustrating and frightening, McLendon says. “Marlan is an attorney. He’s used to control. I’m in management and used to control. Just to walk away and have the ball in their court, that’s hard,” he says. But both praise federal officials who worked on the case, including First Assistant U.S. Attorney Nina L. Hunt and Assistant U.S. Attorney Amy B. Kaminshine, both of Atlanta, and Dan Anderson, a trial attorney with the Department of Justice in Washington. MCLENDON WEARS WIRE As the investigation unfolded, McLendon was outfitted with recording equipment. He recorded conversations and meetings with Olsten and Columbia executives, both in person and over the telephone. In late summer of 1997, FBI agents raided Olsten’s offices. That day, Wilbanks had a letter delivered to Olsten, revealing McLendon’s role as a whistleblower. At work, McLendon says he was ostracized and given a small office near the copier with no computer access. He had a telephone but no directory, and was given the job of reviewing a manual he had once helped write. “It was fairly horrific,” he says. “They did everything but shoot me.” He resigned in what he calls a forced exit and later settled with Olsten for about $300,000 over what he says was retaliation for his cooperation with the government. That began a long period of work as an unpaid government witness, which included weeks at a time poring over documents at the Richard B. Russell federal building in Atlanta, and an equally long period of scrimping on savings to keep his family going. It was difficult, he says, because he couldn’t tell friends about his unpaid job helping the government. SAVINGS DEPLETED By mid-1999, McLendon’s short-term savings were nearly gone and he was making plans to look for work when the call came: Not only was the government intervening in the cases against Olsten and Columbia, but it had already settled the claims against Olsten. McLendon, the government determined, should recover nearly the maximum amount for his work-24 percent, or $9,820,000 of the $40,820,000 in civil restitution paid by Olsten. After two and a half years of “nothing but giving,” Wilbanks says, the government’s announcement was a huge relief, despite the fact that the Columbia claims were pending. So was the payment that followed. Wilbanks says he had no direct role in the government’s recent negotiations with Columbia but played a behind-the-scenes role with McLendon, answering questions from government lawyers. Should the settlement be finalized, Wilbanks says it will be next year before his client receives any payment for his work. Now, Wilbanks has more qui tam cases that he can handle, scattered across the United States. “For every one I take, I turn down dozens,” he says. To be successful at this kind of case, he says, an attorney needs a strong client with firsthand proof of substantial wrongdoing, claims that have big dollars attached and a U.S. Attorney who believes in the case. And, he says, the whistleblower must be “ready and willing to deliver.” Despite the risks, the work “has a good feel to it,” he says. “You are actually pulling these dollars back for taxpayers.” McLendon also has advice for any would-be whistleblowers: understand the risks and costs and be prepared for the long haul. “If they tell you two years, think five,” he says. McLendon believes his case might have some “minimal impact” on stopping certain fraudulent practices in the healthcare industry, an industry that he describes as having become “very bottom-line oriented.” But he has no illusions that what he’s done will bring a halt to all such conduct, adding, “I wish that wasn’t the case, but I’m afraid it is.”

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