Whistleblower Lawsuit Results in $5.5M Reward for Information Provided

A whistleblower who helped the federal government uncover an illegal medical fraud kickback scheme will receive $5.5 million in compensation as part of a settlement between the accused company and the federal government.

Bruce Moilan, Sr., a former systems director for the South Texas Health System, filed a whistleblower lawsuit in 2007, alerting the U.S. Department of Justice (DOJ) to an alleged kickback scheme in which his employer, consisting of several Texas hospitals, was paying physicians with fake medical directorships and leases in return for referrals.

South Texas Health System is a subsidiary of Universal Health Services, and includes three McAllen, Texas hospitals; McAllen Medical Center, McAllen Heart Hospital, Edinburg Regional Medical Center, and the South Texas Behavioral Health Center.

According to the allegations, the government was illegally billed for services referred by at least seven doctors, who made the referrals in return for kickbacks, which is illegal under the False Claims Act. The South Texas Health System has settled the charges with the DOJ and the State of Texas for $27.5 million.

As part of a whistleblower reward, Moilan will receive $5.5 million of that settlement, along with an undisclosed amount for severance, attorney fees and other costs and expenses.

Whistleblowers who report a false claim against the government may be entitled to 15% to 25% of any money that the government recovers from the offenders under the “qui tam” provision of the False Claims Act. In return, the whistleblower must be the first to bring the case to the government’s attention, and must not publicize the claim until the DOJ decides to prosecute the claim.

Compensation for whistleblowers may also be available under a variety of whistleblower protection laws if they are retaliated against by their former employers or related organizations.