David Caputo recently sat down with Stacy Clark at the Main Line Network to discuss The Whistleblower Protection Act and the legal rights of Whistleblowers.
Audio Transcript
Stacy Clark, Esq.:
Hi, welcome to Legal Talk. My name is Stacy Clark. And in this show, we try to bring you the newest legal developments that may affect your business, your job, or your personal life. I also try to bring you the top professionals in each area of the law and today is no exception. I have an incredible guest. So, I want you to come closer to the screen, turn up the volume, because you’re not going to want to miss a word.
Stacy Clark, Esq.:
My guest is David Caputo. David is a Founding Partner of Youman & Caputo, and he has a nationwide practice representing whistleblowers in cases involving fraud on the government. And he also handles catastrophic injuries in New Jersey and Pennsylvania. David is a graduate of Duke, Harvard Law School, a former federal prosecutor, and also a graduate of Radnor High School.
Stacy Clark, Esq.:
We’re so pleased to have him today. We’re going to be talking about the exciting world of whistleblowing, and I should add that David has filed claims by his clients, which have helped return more than $200 million to the United States government. He has also successfully helped whistleblower stop fraud, receive substantial compensation for helping the government to do so, while also helping protect his clients from the retaliation that they could suffer for doing the right thing. And we’re going to talk all about that now today. First, let me welcome David. Hi.
David Caputo, Esq.:
Hi. Thank you so much for having me.
Stacy Clark, Esq.:
Well, your area of practice is absolutely fascinating and I really want to hear about it. So, tell me, what is a whistleblower, just in the very easiest sense of the terms?
David Caputo, Esq.:
Well, in the very easiest sense of the terms, it’s someone who is reporting wrongdoing. And it can be in any number of contexts. Obviously, it’s been a term very much in the news. So, people have seen the term and some of the contexts in which it’s been used. But whistleblowing in general means someone who steps forward when they see wrong and tries to correct it.
Stacy Clark, Esq.:
Okay. And what types of wrongs are we talking about?
David Caputo, Esq.:
Well, in my case, in particular, we’re talking about fraud on the federal government. Fraud, which causes the federal government to spend money that it would otherwise not have spent if it had known the truth, essentially. So, any type of federal program, where the federal government is spending money, is a program that could be defrauded. So, my clients are whistleblowers, people who see fraud on a federal program and try to report it and correct it. And ultimately, if they are successful in doing so, there is the potential for an award at the end.
Stacy Clark, Esq.:
That’s incredible. So, you’ve really got your own citizen police force out there trying to right these wrongs with you. And that’s fantastic. And I understand that some of the cases that you handle are under a law called the US False Claims Act. Do you want to talk about the kinds of cases that are taken under there?
David Caputo, Esq.:
Sure. So the US False Claims Act goes back actually to the Civil War. There were reports of fraud on the Union government, people, unscrupulous munitions dealers, selling cannonballs filled with sawdust. So, it was the idea of Congress and president Lincoln at the time to try to help uncover those unscrupulous munitions dealer to deputize essentially private citizens. If you work for one of these companies that was selling cannonballs filled with sawdust to the United States army to the Union army, to give them a financial incentive for doing so.
David Caputo, Esq.:
So, it was passed originally in the 1860s and has been amended various times since then. But the United States False Claims Act as it exists now is a law that gives private citizens the ability to file a lawsuit. They bring a suit on their behalf, but more importantly on behalf of the United States government. And ultimately if the case is successful, if the government recovers fraud, then the whistleblower who’s filed the case has the potential to receive an award at the end.
Stacy Clark, Esq.:
Interesting. And you’re actively filing those kinds of cases right now?
David Caputo, Esq.:
Actively filing those kinds of cases right now, have filed cases all over the country. As you said, at the outset, I was a federal prosecutor here in Philadelphia. So, many of my cases are filed here. The office here is quite good at these kinds of cases. But I have cases that are filed, again, literally from coast to coast.
Stacy Clark, Esq.:
Okay. And how does a case work? How do you get the call to help a whistleblower? Tell us the natural progression of these things.
David Caputo, Esq.:
So, the cases generally come to me, they can come to me from another lawyer who refers them to me, because that lawyer knows that I handle these types of cases. It could be a client who has a particular concern in his workplace or her workplace, and does some research and finds either that I’ve handled a case like that, or just finds my website and sees that I do these kinds of cases.
David Caputo, Esq.:
Typically, the clients are people who are not even aware of something called the United States False Claims Act. Very often they work for companies that are engaged in the fraud. They may often be involved in the fraud and in some ways they’re being asked to do things that they know are wrong, or think may be wrong. And they have a concern about what they need to do. Do they have an obligation to report it? Do they have an obligation to try to stop it? Do they have an obligation to go to the authorities?
David Caputo, Esq.:
So, they do some research. They find that there are whistleblower lawyers. Sometimes they find that there’s the United States False Claims Act, and they contact me and we start to talk about what they know and what their options are.
Stacy Clark, Esq.:
What happens then?
David Caputo, Esq.:
So, we do a very thorough interview. We look at all of the documents that they have, the information that they have, and we make an assessment. We being me and my team. We make an assessment as to whether we think there is a viable False Claims Act case, not all fraud on the government is necessarily the kind of fraud that would result in the potential for an award.
David Caputo, Esq.:
But let’s just use the example of healthcare fraud. Most of the False Claims Act cases that are filed every year are in the healthcare fraud arena, Medicare or Medicaid, defrauding those two programs or other federal healthcare programs in some way. You may have someone who is a sales representative for a pharmaceutical company. And that sales representative is being asked to do things to try to get physicians to prescribe their drugs, which they know are wrong, or at least they think may be wrong, providing a benefit of some kind, which could be a kickback.
David Caputo, Esq.:
And that sales representative will contact me. I will interview that person about what they know, what they’ve seen, what proof they have, any emails or internal communications. And then if we think that there is a potential merit there, if we think there’s a potential claim, the next step will be then to contact the United States Attorney’s Office, where that claim might be filed, and start an informal conversation before we go ahead and file the case.
Stacy Clark, Esq.:
Is the person named, the potential whistleblower, at that point, when you’re having conversations with the US Attorney’s Office or no?
David Caputo, Esq.:
It’s really at the option of the whistleblower. So, many people are understandably concerned about what it means to be a whistleblower. People have a concern about, will this implicate their own job? Will it affect their ability to keep their job? Or if it becomes public that they’ve filed a whistleblower case, will they be able to get another job? So, we are extremely, extremely sensitive to that concern. We’ve always been. But of course, particularly in this economy.
David Caputo, Esq.:
So, we may not disclose the whistleblower’s name initially, in that initial conversation. The reason for having the conversation, I mean, there’s a technical legal reason, but the practical reason is you want to find out if the government is concerned about the conduct. Are they interested potentially in the case? Because the way these cases work is they get filed, but they’re filed under seal. Nobody knows the case has been filed except the whistleblower, the whistleblower’s lawyer, the government and the court.
David Caputo, Esq.:
Once that happens, you have set a process in motion that will run the course of many lawsuits. But the difference in this case being, it remains under seal for as long as it takes the government to investigate your allegations. And once the government is done investigating the allegations, it makes a decision whether or not it’s going to intervene in the case and take the case over or decline to intervene, in which case the whistleblower does have the option to proceed on their own.
David Caputo, Esq.:
Most cases are successful when the government intervenes, not all by any means. We have some very significant cases, my firm has litigated some very significant cases where the government had not intervened. But most of the time, your chances of success are best when the government intervenes. So, you want to try to get as much information as you possibly can before you make that decision, whether or not to file suit, whether you think there’s a chance the government might intervene.
Stacy Clark, Esq.:
So, someone’s life isn’t going to change the minute they call you. They’re not going to lose their job potentially right away. There’s a process that then ensues.
David Caputo, Esq.:
Correct. Correct. And of course, any communication with us is subject to the attorney-client privilege, even if-
Stacy Clark, Esq.:
Right. Confidential.
David Caputo, Esq.:
Confidential. And if you call and we talk about your information and I decide not to take the case, that’s still a confidential communication. Even if you never formally retained my firm, it’s still a confidential communication. And we take that, that of course is the most serious oath that a lawyer takes, to keep confidential those clients’ communications. So, we evaluate the information confidentially. Then, again, that discussion with the United States government informally before you file is also a confidential communication.
Stacy Clark, Esq.:
Okay. That’s great to know. What would be some of the job titles of people who might see fraud in their jobs? Or other kinds of folks too, because we’ll get to that later. But tell me about people in their jobs. What might be some of their job titles for people who are watching this, who are thinking, “Something fishy is going on back at my company.”
David Caputo, Esq.:
So, we’ve used example of healthcare fraud, and about two-thirds of the cases that are filed each year are healthcare fraud cases, two-thirds of the False Claims Act cases.
Stacy Clark, Esq.:
Two-thirds, wow, that’s huge.
David Caputo, Esq.:
It can vary from year to year, but it’s generally certainly more than 50% tend to be healthcare fraud cases. And there are lots of different parts of the healthcare economy where the federal government plays an active part. But any Medicare or Medicaid beneficiary, who has care that’s paid for by the federal government has the False Claims Act implicated. So, the jobs would be sales representatives, pharmaceutical companies, or sales managers. Any sort of healthcare provider, physician, nurses, physician’s assistants, nurse practitioners, also folks who work in administration and management, compliance, executives.
David Caputo, Esq.:
Anyone who has information about the kinds of services that that organization is providing and the conduct that they are engaged in, in providing for those services, and then in how the services are being built for is a potential whistleblower.
Stacy Clark, Esq.:
I was going to ask you that, can it be someone in the billing or accounts receivable department as well?
David Caputo, Esq.:
Sure, Absolutely. Right. Because in fact, coders, healthcare coders, those are people who look at a medical record and decide how is this going to be built? What code should be used? And very often that code is extremely important in terms of the actual dollars that the employer gets back. So, really anyone, there is no limit on who can be a whistleblower. But I have had, if you look at my cases over the years, they tend to be healthcare professionals, people in billing or coding or compliance folks.
Stacy Clark, Esq.:
You had a recent case that was very interesting involving a physician’s assistant. Can you tell us about that case?
David Caputo, Esq.:
Sure. So, and I can talk about it because it’s public, the case is out from under seal and it was successful. My client received an award. She worked for a company where many times patients were seen by physician’s assistant. And a physician’s assistant, for people who may not know, it’s like a nurse practitioner. It’s someone who can provide a level of care, often in a primary care setting, but they aren’t doctors.
David Caputo, Esq.:
There is a difference in the billing rate between when you see a physician’s assistant and when you see a doctor. Her employer would allow patients just to be seen by a physician’s assistant, but they were billing for those patient visits as if the patient had seen a doctor.
Stacy Clark, Esq.:
Really? They were billing as if they’d seen a doctor?
David Caputo, Esq.:
Correct.
Stacy Clark, Esq.:
Okay. Wow.
David Caputo, Esq.:
And they knew what they were doing, and they knew why they were doing it. And our client, who had a background, as it turned out, in law enforcement, who had a particularly well-developed sense of right and wrong. She did what most of my clients do in the first place, which is she tried to get it fixed internally. She spoke to her supervisor, she spoke to the folks that she thought would be in a position to correct this practice in the hope that it would stop. She simply wanted to continue to see patients and go about her patients.
Stacy Clark, Esq.:
So, she said something.
David Caputo, Esq.:
So, she said something. When she said something, the problem was not corrected. They continued billing as they had. And they made it pretty clear to her that they didn’t want her really, they were not interested in her view on the subject. So, she became frustrated and she was also concerned. She’s a physician’s assistant. And she worried if this came to light through some other means, “What my license be in jeopardy? Would I face legal trouble myself?”
David Caputo, Esq.:
So, she called me and I did what I always do, which is I met with her. I sat down with her. We went over all the documents that she had. And I determined that she had a case that had merit, that I thought the government would likely be interested in. So, we took that next step we described. I called one of my former colleagues in the United States Attorney’s Office in Philadelphia.
Stacy Clark, Esq.:
Because I know them.
David Caputo, Esq.:
Because I know them.
Stacy Clark, Esq.:
Yeah.
David Caputo, Esq.:
I was in the Criminal Division and these cases are handled in the Civil Division, which means I put people in jail and the Civil Division sues people for money. But in the healthcare sector, where I worked, often, there are cases where you work together. So, I know these folks well. So, I was able to call them up and say, “Here’s my client. Here’s what she knows. Here’s the information that she has.” And they said, “Yes, this is a matter that we would be interested in.”
David Caputo, Esq.:
And ultimately, of course, the government can’t tell you whether to file or not. You’re not looking to them for a recommendation. You can just have a conversation. But based on the many conversations I’ve had with folks over the years, I know how to read the tea leaves, if you will. So, we proceeded with the case, ultimately she did lose her job. It was well before they knew she had filed a lawsuit.
David Caputo, Esq.:
But they were tired of her, frankly, being a squeaky wheel, they were tired of her complaints about the subject. So, she actually got fired. So, at the end of the case, the case was ultimately successful. The government recovered money, she got both a percentage of the recovery, which is how the Act works. And also she was able to get compensation for back pay, because she was out of work for a time in retaliation for the fact that she’d simply try to report fraud and do the right thing.
Stacy Clark, Esq.:
So, let me just understand that. She, in addition to getting compensation for reporting the fraud to the government and them successfully prosecuting that there was a problem, she also got back pay?
David Caputo, Esq.:
Correct.
Stacy Clark, Esq.:
Even though she was terminated.
David Caputo, Esq.:
Correct.
Stacy Clark, Esq.:
Wow.
David Caputo, Esq.:
There is a specific provision of the act, which is intended to protect against retaliation. So, I understand that most people would rather have a good job than a good lawsuit. But if in fact you lose your good job, because you’ve tried to do the right thing, and do the right thing by the taxpayer, there is a protection built into the statute to try to get you compensation for having suffered that. So, in her case, it worked, the system worked like it should.
Stacy Clark, Esq.:
So, it’s so interesting because the people that bring these lawsuits, as you mentioned, seem to have a tremendous sense of right and wrong. And they also know that it’s a fraud on the government, that it is taxpayer money that’s being spent improperly. So, that’s interesting that they have both of those characteristics. They sound like really good people who want to do the right thing.
David Caputo, Esq.:
Like I said, almost always, they’ve tried to reach out for help before even knowing that the United States False Claims Act is a law that might benefit them personally.
Stacy Clark, Esq.:
What is the average amount, under the False Claims Act, that a whistleblower is likely to get as an award if the case is successful?
David Caputo, Esq.:
So, the amount is a function ultimately of how much the government gets. So, we talked about how the government may intervene in the case, and then take the case to its conclusion?
Stacy Clark, Esq.:
Yeah.
David Caputo, Esq.:
In those events, the relator, the whistleblower is entitled to, by statute, between 15% and 25% of what the government recovers. So, if a case results in a recovery of $10 million to the United States government, by statute, the whistleblower’s recovery will be between $1.5 million and $2.5 million. If it’s a larger amount, obviously it just depends. With cases in this arena, I mean, typically the United States government recovers between $4 billion and $6 billion a year.
Stacy Clark, Esq.:
$6 billion a year? Wow, in fraud?
David Caputo, Esq.:
That may seem like a lot, but actually the estimates are that there are as many as $100 billion dollars lost each year, just to healthcare fraud alone.
Stacy Clark, Esq.:
Just to healthcare fraud?
David Caputo, Esq.:
Yes. So, while billions might be recovered in a given year, it’s still a small percentage of the overall fraud that’s out there. There is a lot of fraud that is still going undetected.
Stacy Clark, Esq.:
Wow. I’m going to take a moment and just appeal to our audience. You are seeing fraud. I want you to call him.
David Caputo, Esq.:
That’s the idea. That’s what president Lincoln had in mind.
Stacy Clark, Esq.:
That’s right. And it’s by statute that you’d get compensated. So, this is the law. So, that is tremendously in your favor.
David Caputo, Esq.:
And just one other point-
Stacy Clark, Esq.:
Yeah, go ahead.
David Caputo, Esq.:
… just to finish out that thought, if you take the case as a declined case and hundreds of millions of dollars have been recovered in “declined cases,” cases where the government doesn’t intervene, but your lawyer decides to proceed with the case on the government’s behalf. Your percentage is no less than 25%.
Stacy Clark, Esq.:
25%?
David Caputo, Esq.:
Correct.
Stacy Clark, Esq.:
Oh my gosh. Okay. Well, I know that whistleblower clients face challenges, because some of the paperwork they see is also protected by law. Can you talk about how you help clients who might have some sort of confidential writings, recordings that they want to share with you and the government and how that happens?
David Caputo, Esq.:
Sure. So, that’s one of the most important issues that you end up confronting, initially, in these cases, you are called by a client, a client who barely knows you, because they’re just picking up the phone and calling you. And they’re being faced with these incredibly difficult decisions that they have to make sometimes in very short amounts of time.
David Caputo, Esq.:
So, this client, for example, we already spoke about, the physician’s assistant, she may have access to patient records that demonstrate, “I saw this patient on this day and nobody else did.” And the way you would prove the fraud is by showing the government that patient record and then compare it with how it was built.
David Caputo, Esq.:
But she doesn’t know… Everyone knows, most people know about HIPAA, personal protective, your personal health information is protected by federal statute. So, there happens to be an exception within HIPAA, that allows people, if your sole purpose is to report fraud, to disclose what would otherwise be HIPAA protected information.
Stacy Clark, Esq.:
I had no idea.
David Caputo, Esq.:
Yeah. So, I was able to, in those situations, I say to my client, “It’s perfectly fine for you to give me the record, for me to look at the record, for you explain the record to me, even if it has the patient’s name on it if your only reason to doing so is so I can understand the fraud and help report it to the government.”
David Caputo, Esq.:
The other situation that people commonly face, especially in this day and age, is recordings. People will record conversations that they have, telephone conversations or in-person conversations, in order both to document the fraud, but very often to protect themselves. They want to be able to demonstrate that they have done what they could to try to stop it. And if they were participating in some way, it was because they essentially had no choice. They really are going to keep their job and keep putting food on their family’s table or not.
David Caputo, Esq.:
But, whether that recording be used and even disclose to the government is a function often of state law. Whether you are in what’s called a one-party consent state, or a two-party consent state, which means how many people need to consent, how many people know that the conversation is being recorded before that’s a lawful recording. So, Pennsylvania is a two-party consent state.
Stacy Clark, Esq.:
So, both parties need to know that they’re being recorded.
David Caputo, Esq.:
Correct.
Stacy Clark, Esq.:
Okay. What about New Jersey?
David Caputo, Esq.:
If I were talking to you in New Jersey and I had my phone on and I was recording it and you didn’t know it, that would be a lawful recording.
Stacy Clark, Esq.:
Lawful?
David Caputo, Esq.:
Lawful.
Stacy Clark, Esq.:
Okay. Remember that, in New Jersey, it’s lawful.
David Caputo, Esq.:
The same conversation across the bridge, in Pennsylvania, would not be. And every state has its own rules. So, and there are lots of different other types of situations. People who have, the sales rep who has confidential business information. There might be confidential internal memos that might disclose the fraud. And they’ve got an agreement, which requires them to keep confidential certain things. Are they allowed to provide those documents to me, even though it might be in violation of their agreement? So, those types of questions are among the challenges that you face in almost every case.
Stacy Clark, Esq.:
Okay. So, I believe in our conversations earlier, you’ve explained to me how COVID and some of the laws that were passed because of COVID have come into your area of practice as well. Do you want to talk about some of the frauds that the government may be looking for at this point?
David Caputo, Esq.:
Sure. I mean, we have had, in the last several months, $2.6 trillion worth of federal money injected into the United States economy, or at least appropriate, maybe not all of that’s been spent. But you have, in addition to just checks to tax payers, you’ve got the Payment Protection Program, where employers are given loans at very low interest rates, which can then be forgiven if they use them for certain purposes. You have the CARES Act, which was loans to various industries. You’ve got other programs.
David Caputo, Esq.:
So, the federal government is extremely concerned in making sure that these dollars are spent as they should be, because not only was this an unprecedented amount of money that was pumped into the economy, it was done in record time. I mean, incredibly fast, as everyone, I’m sure, will remember. These acts, laws were passed very quickly, and agencies had to ramp up immediately to start getting this money out to people who need it.
David Caputo, Esq.:
So, there are lots of different ways to defraud the government under these programs, you could be an employer that was not entitled to get one of these loans under the Payment Protection Program in the first place. And you made a fraudulent application. You may be an employer that was entitled to get one of these loans in the first place, but now you’re not using it as the program requires. You may be a company that is using the loan, it was allowed to get it, it’s using it as required, but seeks forgiveness, seeks the ability not to have to repay it in lies on that application.
David Caputo, Esq.:
And that’s just one example of one of the programs. So, there is, I think, going to be a lot of activity, I have already received calls-
Stacy Clark, Esq.:
Interesting.
David Caputo, Esq.:
… from people who work for companies saying, “I am very concerned that my employer lied on its application to get one of these loans or is not using the money as it is intended. What am I supposed to do?” And I expect to get a lot more of those calls over the next few months. I’m sure.
Stacy Clark, Esq.:
That’s so interesting. You mentioned also that there are other agencies within the government that are looking for fraud and looking to be reported to. The IRS is one, the SEC is one. Did you want to take just a moment to talk about those kinds of frauds?
David Caputo, Esq.:
Sure. So, the Federal False Claims act does not include tax fraud, income tax fraud, if you are aware of income tax fraud, you cannot file a claim under the Federal False Claims Act to try to report it. But there is something called the IRS Whistleblower Program. It’s a very different kind of program. You submit an administrative claim, informally. In other words, it’s not a document that gets filed with the court. It’s a form that gets mailed to a office in Utah. And then, the IRS investigates the case. And if the case ultimately is successful and the IRS recovers money, they find that the fraud that you’ve reported was in fact incurring and they recover at least $2 million. Then you are, by statute, entitled to receive an award of between 15% and 30%.
David Caputo, Esq.:
The SEC, the Securities and Exchange Commission, is another agency that has its own administrative whistleblower program. Where, in those cases, it’s actually not a violation that causes the federal government to lose money. It’s a violation of the Securities Laws, which means investors were-
Stacy Clark, Esq.:
Defrauded.
David Caputo, Esq.:
… defrauded in some way. So, if that administrative claim, again, it’s not a lawsuit that’s filed, it’s a form that’s submitted, which can be submitted, by the way, anonymously. Then, if that is successful and recovers in an enforcement action that results in at least $1 million worth of recovery to the United States, then they’re entitled to an award there as well.
Stacy Clark, Esq.:
Okay. So, from what I understand, you don’t have to be a member of the company to report the fraud. Is that correct? So, people who are not employees can also call you. You mentioned competitors who might’ve seen the fraud in action.
David Caputo, Esq.:
Yes. I have, in fact, a case that I handled in Arizona, a number of years ago, I had a client who was the CFO of a healthcare system, who is an extremely smart guy, who had lots of knowledge about a particular type of a federal program. He could see, based on information available to him, and some of the data that he was seeing just from other providers in Arizona, that there was one provider that was gaming the system.
David Caputo, Esq.:
So, even though he didn’t work there, even though he hadn’t been in the meetings and couldn’t… He just knew there was no way that this data, this recovery that they were… The amount of money they were getting under this program, which was a publicly available fact, there was no way to know, there’s no way that was happening but for fraud. So, he ended up walking away with about a $1.5 million reward in that case, I think.
Stacy Clark, Esq.:
Great, well, we’re running out of time. So, I just want to say to my audience, here’s the key, see something that doesn’t sound right, you need to talk to an attorney like David to figure out if there is a claim to which you may be entitled to compensation for reporting if the claim is successful.
Stacy Clark, Esq.:
So, again, if you think something’s fishy in the company that you work at, or if you’ve seen a company doing what I’m calling fishy things, then you do need to get in contact with David. And his contact information, I believe, we’re showing on the screen right now. Again, he’s a member of the firm Youman & Caputo, and they’re local here, even though the cases that they handle are nationwide.
Stacy Clark, Esq.:
I’m so glad you were able to join us. I learned a lot. And next time, we’re going to be looking into other topics, including how can you protect some of the inventions or the books that you wrote during COVID, while we were all hunkering down. There are ways to protect them so that once we come out of COVID, you’re able to enjoy your properties, as we call, intellectual properties. So, until then, thank you so much for watching. I’m Stacy Clark, until next time.