One thing is certain—if there is money in an enterprise, fraud will follow. That is certainly true in the insurance industry, where increased regulation under the Affordable Care Act has tightened insurance companies’ bottom lines. And if there is fraud, there is an opportunity for whistleblowers to expose it, which comes with tremendous risk and tremendous potential reward. Choosing to expose that fraud and become a whistleblower means risking your livelihood, friendship with colleagues, and financial security.
But with risk comes reward. The following April 17, 2018 article excerpts demonstrate the potential reward of whistleblowing, so I thought it would be interesting to those considering becoming a whistleblower. The whistleblower in this health insurance case exposed $89 million dollars in unpaid federal taxes. If his case is successfully prosecuted by the U.S. government, he would be due 30 percent of that amount or $26.7 million dollars under the IRS Whistleblower Program. I have linked to the entire article at the end of this blog post and encourage you to read it.
California Insurer Faces Whistleblower Complaint Over Health Law Taxes
A federal whistleblower complaint alleges that a major California insurer failed to pay an estimated $89 million in taxes on premium revenue as required under the Affordable Care Act.
The complaint against Blue Shield of California focuses on the taxation of certain health plans that are funded by both an employer and insurer. It could spark more scrutiny by federal officials into whether all insurers are paying their fair share of taxes on premiums.
The ACA’s health insurance tax is one of several fees designed to help fund the health law. Employers’ self-funded plans are exempt from this ACA tax. But traditional plans, in which health insurers are fully responsible for paying medical claims in exchange for premiums, are subject to the tax.
At issue in this case is whether Blue Shield should have paid ACA taxes on hybrid, or “flex-funded,” plans, in which employers pay claims out of their own pocket up to a point and the insurance company covers the rest. Such plans account for a modest share of the insurance market.
The whistleblower in the Blue Shield complaint is Michael Johnson, a public policy director at the company until 2015, when he left and became an outspoken critic of the company.
“Blue Shield appears to have skipped out on $89 million in health reform taxes in 2016, and it’s poised to do the same every year going forward,” Johnson said.
In July 2016, the San Francisco-based insurer made a significant change to its annual tax filing required by the ACA, federal records show. Blue Shield amended its initial filing from three months earlier and made a 25 percent reduction in its reported premiums, or $3.1 billion less.
Johnson cited those public Internal Revenue Service filings and other information he learned as a Blue Shield employee in his Jan. 30 whistleblower complaint. He shared parts of his complaint with California Healthline.
Johnson worked at Blue Shield for 12 years before leaving in March 2015. Soon after, he launched a public campaign against Blue Shield, accusing the nonprofit of shortchanging the public by operating too much like its for-profit competitors. Blue Shield sued Johnson in 2015 for breach of contract, accusing him of disclosing confidential company information. Johnson is seeking to have the case dismissed in state court.
The IRS Whistleblower Office acknowledged receipt of Johnson’s complaint in a Feb. 22 letter and said “we will evaluate the information you provided to determine if an investigation is warranted and an award is appropriate.”
If the IRS uses the information provided by a whistleblower, it can award the person up to 30 percent of the additional taxes and penalties collected. A spokesman for the IRS declined to comment further, saying the agency can’t discuss specific cases.
What Should You Do if You are Considering a Whistleblower Claim?
Are you considering filing a whistleblower case? To attain your compensation, you will require the help of an experienced whistleblower attorney to decide whether the conduct you have observed constitutes fraud. Evidence gathering, dealing with the federal government’s attorneys, important deadlines, and filing requirements make your representation both complex and time-sensitive.
Call Barrett Law now at (800) 707-9577 if you think you may be a whistleblower.
Having expert legal advice by your side can mean the difference between receiving your share of a whistleblower judgement and losing your career and livelihood. Call us today.
Sources: https://californiahealthline.org/news/california-insurer-faces-whistleblower-complaint-over-health-law-taxes/
