Call it the new lottery. Craig Patrick dropped a dime on his employer, Kyphon Inc., and today is splitting $15 million with Chuck Bates, another former Kyphon exec.
In his call to the authorities, Mr. Patrick questioned some of Kyphon’s sales practices. A “whistleblower” lawsuit ensued in federal court and Kyphon was accused of inflating the cost of spinal procedures in Buffalo, New York, and throughout the nation. Kyphon’s new owner, Medtronic, settled the case for $75 million.
In his call to the authorities, Mr. Patrick questioned some of Kyphon’s sales practices. A “whistleblower” lawsuit ensued in federal court and Kyphon was accused of inflating the cost of spinal procedures in Buffalo, New York, and throughout the nation. Kyphon’s new owner, Medtronic, settled the case for $75 million.
A different whistleblower in a case against National Air Cargo received $3.3 million. Approximately 25% of all whistleblower cases result in payouts to the whistleblower.
This is a relatively new phenomenon, but it is increasingly causing more and more examples of employees “dropping the dime” on their employer. For all concerned—the company, the whistleblower, and the reimbursing agencies—these are highly expensive and potentially career ending activities.
These cases take three to four uncomfortable years. As Patrick related to a reporter in Buffalo earlier this year; “It’s a very stressful process, from beginning to end. While the lawsuit is pending, you’re not supposed to tell anyone about it. You’re wondering if your work friends will ever speak to you again, and some won’t.” Patrick now lives in Hudson, Wisconsin.
The case that resulted in the Kyphon whistleblower suit came from cases where Kyphon sales people persuaded doctors and hospitals to keep patients overnight in order to receive an additional $10,000 in Medicare payments—despite the fact that the procedure can be performed on an outpatient basis.
Kyphon and, subsequently, Medtronic officials did not admit to defrauding the government.
One in four. Those are the odds currently of winning the whistleblower lottery. More than 130 surgeons are being sued in a recently unsealed whistleblower lawsuit. The Department of Justice has announced that it is targeting surgeons who request payment for services that are suspiciously tied to purchases of products.
If any surgeon or company thinks these aren’t serious times, they are whistling past the graveyard.
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