Naked Greed Can Help Expose Medical Fraud

As Adam Smith noted some 200 years ago, greed is a powerful force promoting economic growth and human welfare. But it can also lead to activity that hurts society. What better way to deter such activity than to appeal to the same powerful profit motive?

That, notes health-care analyst Ira Loss of NatWest Washington Analysis, is exactly what's now happening in the health-care industry, where fraud is said to run into the billions of dollars. With the federal law that offers corporate whistle-blowers as much as one-third of the civil fines that are collected by Uncle Sam for fraudulent behavior, the action is heating up.

Over the past 12 months, National Health Labs Inc. has agreed to pay the government more than $100 million to settle civil fraud charges, C.R. Bard Inc. has accepted a $61 million fine, and Unilab Corp. and MetPath, a division of Corning Inc., have agreed to pony up a total of $39.8 million. Meanwhile, at least seven other health-care companies are under federal investigation.

A common denominator in several of these cases, says Loss, is the eager participation of whistle-blowers. And no wonder. In the clinical labs cases, one cooperative person was awarded a cool $21 million for his efforts.