March 28, 2007, 1:28AM

Persistence pays off for whistle-blower at Hospital District
Employee to share $2.8 million prize for reporting bad billing practices


By BILL MURPHY
Copyright 2007 Houston Chronicle

A patient accounts representative earning $32,000 a year will get a reward of nearly $2.8 million for blowing the whistle on improper billing practices at the Harris County Hospital District.

Bob McCaslin said he reported the problem to as many as a dozen Hospital District managers, including the corporate compliance officer. Each time he was told that the district, the county's health care system for the needy, was following federal regulations.

"I went to my boss, and he said that's how we do it here. I took it to the next level, and that person said that's how it's done," McCaslin said in an interview Tuesday. "At every level, they told me that I was flat out wrong."

The U.S. Department of Health and Human Services' inspector general didn't agree with the district. After an investigation triggered by McCaslin's information, the inspector general concluded that the district improperly billed Medicare and Medicaid from 2000 to 2005.

The improper billings included treatment of patients injured in car wrecks, whose claims should have gone to private insurance companies, and treatment of hospitalized jail inmates.

McCaslin spoke about district billing practices after a federal judge in Houston unsealed records in the case he brought against the district. The judge said the matter already was public since the Houston Chronicle reported that the district has agreed to pay the Department of Health and Human Services $15 million to settle the case.

That settlement, which includes $10 million in reimbursement and a $5 million fine, will be finalized next month.

McCaslin will receive about 18 percent of the $15.45 million. His attorneys, including Mitch Kreindler, will get 40 percent of his share, McCaslin said.


Statute of limitations
McCaslin said he thinks district managers dismissed his criticisms of the billing practices because they knew that the district had been engaged in such billings since 1997 and would have to repay the federal government millions.

Kreindler said the recovery only goes back to 2000 because of a six-year statute of limitations on such lawsuits.

In McCaslin's whistle-blower lawsuit, he alleged that he spoke with an employee of the district's corporate compliance office about a particular bill paid by Medicare. The employee told him that the billing was proper, the lawsuit alleged.

McCaslin said Tuesday that Walter Freitag, head of corporate compliance, also informed him that the district's billing practices were proper. Freitag, through a district spokesman, declined to comment.

District Chief Executive Officer David Lopez said Freitag and corporate compliance investigated McCaslin's complaints. The office concluded some allegations were unfounded and two were true, Lopez said. That internal probe was under way, Lopez said, when the inspector general's office began auditing the district.

Freitag and corporate compliance cooperated with the federal audit, Lopez said.


McCaslin to keep job
McCaslin said he is out on a short medical leave, but plans to return to his Hospital District job.

No one retaliated against him at the district, and consultants who advised the district on improving its billing system sought out his advice, he said.

McCaslin, 51, who is married with four children, said he needs to keep working despite the windfall, which will be reduced by taxes as well as legal fees.

A former Presbyterian minister and deputy sheriff in Oklahoma, McCaslin said he didn't consider himself heroic for challenging superiors on the billing issue.

He said he wasn't motivated by the potential reward, and wasn't even aware of that possibility at first.

"I just didn't feel right letting this go by," he said. "It was just wrong."


REWARDING THE MESSENGER

Under the federal False Claims Act, the government can pay a portion of money it recovers to whistle-blowers who disclose fraud in federal programs.
• How it works : An employee with knowledge of false claims for Medicaid or other government money files a sealed lawsuit on behalf of the employee and the government, triggering an investigation.

• The incentive : Whistle-blowers whose information leads to recovery of money can get as much as 25 percent of the amount recovered.

• Protection : The act forbids employers from retaliating against employees who disclose fraud against the government.

• History : The law dates to the Civil War, when it was enacted to detect fraud by Army contractors. Lawsuits surged after 1986 when Congress raised the potential reward to 25 percent of the recovery.

Source: Chronicle files and research