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CareSource case sheds light on Ohio whistleblower laws

Robin Herzog, one of two whistleblowers in the federal lawsuit against CareSource, which is paying $26 million to settle the case. This story will focus on whether Ohio should have its own False Claims Act like the federal government and more than half of other states do. Herzog and fellow whistleblower Laura Rupert's lawsuit was filed under the federal False Claims Act.

Ty Greenlees/Ty Greenlees Robin Herzog, one of two whistleblowers in the federal lawsuit against CareSource, which is paying $26 million to settle the case. This story will focus on whether Ohio should have its own False Claims Act like the federal government and more than half of other states do. Herzog and fellow whistleblower Laura Rupert's lawsuit was filed under the federal False Claims Act.

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CareSource whistleblowers feared losing jobs, nursing licenses

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By Ben Sutherly, Staff Writer Updated 11:25 PM Saturday, February 5, 2011

DAYTON — Under Ohio law, whistleblowers have little financial incentive to report wrongdoing if they see their employer defrauding the government.

Last week, CareSource denied wrongdoing but agreed to pay $26 million in what’s thought to be the largest settlement involving an Ohio managed care organization. But the two nurses who blew the whistle on the Dayton company did so through a federal lawsuit. Ohio has no whistleblower provision to compensate workers who report fraud.

Some, like Ohio Attorney General Mike DeWine, a Republican, say a whistleblower regulation may be needed in a cash-strapped state where Medicaid accounts for nearly a quarter of all state spending.

“We were able to use the federal government this time, but you may have cases where that’s not the case,” DeWine said.

Ohio’s False Claims Act is limited in scope. It lets prosecutors go after Medicaid providers, but not pharmaceutical companies, durable medical goods suppliers or others that get Medicaid money. And it doesn’t apply to other sectors like defense.

Whistleblowers are crucial to the federal government’s anti-fraud efforts. Of the $27.2 billion the federal government has recovered in fraud cases since 1987, $18.2 billion came from cases involving whistleblowers. Under the federal False Claims Act, whistleblowers get 15 percent to 30 percent of the federal share in a settlement.

Robin Herzog of West Carrollton, one of the two nurses in the CareSource case, said she didn’t know until after she quit her job that people who reported fraud could be financially compensated; her motivation for seeking legal counsel, she said, was fear of losing her nursing license. Although they will only receive a fraction of it because of attorney fees and taxes, Herzog and Laura Rupert were awarded $3.1 million as part of the CareSource settlement.

Advocates of a tougher law say financial incentives are needed because whistleblowers often lose their jobs.

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