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Whistleblowers, The False Claims Act, and the Behavior of Healthcare Providers


  • Jetson Leder-Luis


This paper studies the effects of litigation by whistleblowers against healthcare providers for misreporting claims for payment to the Medicare program. Under the U.S. False Claims Act, whistleblowers bring lawsuits on behalf of the government in exchange for a share of recovered payments. I combine a new dataset on whistleblower cases from the Department of Justice with the universe of Medicare Fee- for-Service claims from 1999-2016. First, I measure the deterrence effects of successful whistleblowing lawsuits using a synthetic control design. I find that whistleblower settlements totaling to $1.9 billion in recovery generated future cost savings of more than $18 billion over 5 years. Next, I examine how whistleblowing impacts care decisions by providers. Using a case study of spine procedures for osteoporotic patients, I find that after a whistleblower settlement, care shifted from inpatient to less-expensive outpatient treatment and towards patients with the greatest expected benefit.

Suggested Citation

  • Jetson Leder-Luis, 2019. "Whistleblowers, The False Claims Act, and the Behavior of Healthcare Providers," 2019 Papers ple1069, Job Market Papers.
  • Handle: RePEc:jmp:jm2019:ple1069

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    References listed on IDEAS

    1. Gary S. Becker & George J. Stigler, 1974. "Law Enforcement, Malfeasance, and Compensation of Enforcers," The Journal of Legal Studies, University of Chicago Press, vol. 3(1), pages 1-18, January.
    2. Leemore S. Dafny, 2005. "How Do Hospitals Respond to Price Changes?," American Economic Review, American Economic Association, vol. 95(5), pages 1525-1547, December.
    3. Alexander Dyck & Adair Morse & Luigi Zingales, 2010. "Who Blows the Whistle on Corporate Fraud?," Journal of Finance, American Finance Association, vol. 65(6), pages 2213-2253, December.
    4. Silverman, Elaine & Skinner, Jonathan, 2004. "Medicare upcoding and hospital ownership," Journal of Health Economics, Elsevier, vol. 23(2), pages 369-389, March.
    5. Abadie, Alberto & Diamond, Alexis & Hainmueller, Jens, 2010. "Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program," Journal of the American Statistical Association, American Statistical Association, vol. 105(490), pages 493-505.
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    Cited by:

    1. Howard, David H. & McCarthy, Ian, 2021. "Deterrence effects of antifraud and abuse enforcement in health care," Journal of Health Economics, Elsevier, vol. 75(C).

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    More about this item

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • K15 - Law and Economics - - Basic Areas of Law - - - Civil Law; Common Law
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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