When Jeffrey Mazik, then senior practice leader for Kaiser’s national compliance office, was asked to compare two brands of auditing software, it set in motion his downfall and later his whistleblower lawsuit. Mazik discovered an alleged problem in the way Kaiser used one software, ClaimsXten, which was made by McKesson. Kaiser allegedly turned off 25 of 54 rules used to detect billing fraud, and when the other software was used to double check the data, Mazik and his colleagues found $5.3 million in overpayments, according to his False Claims Act (FCA) complaint.[1]
The findings were presented to several Kaiser executives, but “nothing was ever done,” the complaint alleged, and Mazik eventually wasn’t allowed to use software tools at all. It was not the only way he allegedly was prevented from doing the compliance job he was hired to do. For example, Mazik also alleged he was shushed on a call with the HHS Office of Inspector General (OIG) by an executive who was afraid he’d spill the beans about overpayments.
Mazik’s FCA lawsuit partially survived a motion to dismiss on Feb. 13, when the U.S. District Court for the Eastern District of California gave the go-ahead to his software deactivation and retaliation allegations.[2] But the court dismissed other allegations in his FCA lawsuit, partly because other FCA lawsuits against Kaiser beat him to the punch. In a nutshell, the FCA complaints allege Kaiser Foundation Health Plan and other members of the Kaiser “consortium,” including medical groups, submitted inaccurate diagnosis codes to increase Medicare Advantage (MA) reimbursement. For example, whistleblower James Taylor, M.D., a former employee of Colorado Permanente Medical Group, alleged in his whistleblower complaint that Kaiser’s national, regional and diagnosis-specific audits of risk adjustment claims identified categories of claims with “high rates of falsity,” but “Kaiser rarely took even minimal steps to filter its claims to prevent submission of these claims, or to audit prior submissions to find the previously submitted” false claims.
The U.S. Department of Justice (DOJ) in 2021 intervened in six FCA lawsuits and consolidated them. “Kaiser then moved to dismiss under the FCA’s first-to-file rule, which left three whistleblower cases standing,” said attorney Max Voldman, who represents Taylor. Those three cases have survived motions to dismiss and are now in discovery, Voldman said. Some of the whistleblowers are also separately pursuing cases against Kaiser based on allegations that DOJ left behind. Mazik is essentially a seventh whistleblower and not part of DOJ’s case. He’s also barred from pursuing the risk-adjustment allegations because of the first-to-file rule under the FCA, according to the court decision.
In a statement about the Feb. 13 court decision, Kaiser noted the government has declined to intervene in Mazik’s FCA lawsuit. “The court has now dismissed significant portions of the former employee’s case and we will defend vigorously the portions of the case that remain. Kaiser Permanente has robust processes and tools in place to ensure compliance with our legal obligations.”
Compliance professionals sometimes may find themselves in tenuous positions if they identify overpayments or worse and run into resistance to rectifying them. Mazik, for example, alleged he kept pushing back and was fired after nine years at Kaiser. “It’s incredibly hard for a compliance officer to put themselves in that position and know you are walking a figurative plank,” said former compliance officer Robert Trusiak, an attorney in Buffalo, New York. If compliance professionals are uncomfortable with the way situations are unfolding, they should memorialize them on a personal computer or cell phone they will have access to even if they’re suddenly fired and escorted out of the building, he said. “Memorialize, memorialize, memorialize.” And compliance professionals should consider protecting their interests with liability insurance of their own, Trusiak said.
Mazik filed his complaint in 2021 against Kaiser Foundation Health Plan, Kaiser Foundation Hospitals and the Permanente Medical Groups. According to the complaint, the more he spoke up about Kaiser’s processes for handling unsupported diagnosis codes and overpayments and tried to push Kaiser toward full compliance and disclosure, the more he was “sidelined” from data and documents. “Kaiser continued to resist, obstruct, and dismiss Relator’s efforts,” the complaint alleged.
At one point, OIG arranged a call with several Kaiser employees to discuss claims accuracy. Mazik, who was on the call, knew that some things said by an executive in Kaiser’s National Compliance, Ethics & Integrity Office were allegedly “misrepresentations” designed to prevent OIG from “inquiring into Kaiser’s claims process.” Because the executive was worried Mazik might bring up his compliance and overpayment findings to OIG, she messaged him during the call to not “say a word,” according to the complaint. “Relator understood this as a direct order not to correct or contradict anyone on the call…,” according to the complaint. “He did as instructed and stayed quiet on the call.”
Whistleblower Allegedly Told Not to Call Employees
Around July 2016, when that executive was replaced by a senior manager in the special investigations unit, Mazik informed her of a possible $380,000 overpayment caused by a procedure code error. She allegedly criticized him for doing the review without her permission and put him on a performance improvement plan (PIP), according to the complaint. Mazik also alleged that in October 2016, he was refused access to software tools he needed to do his job, such as the claims data warehouse (Kaiser’s internal repository) and Kaiser’s electronic health record database. The senior manager also allegedly forbade Mazik from meeting with anyone above her level without her approval.
“These circumstances created an impossible work environment for Relator, who became fearful of speaking up or identifying further instances of overpayments stemming from unsupported diagnostic codes,” the complaint alleged.
Mazik alleged the retaliation got worse. The senior manager allegedly prohibited him from “communicating with other employees, via phone or Kaiser’s internal instant messaging system.” Instead, he was told to only use email and copy her on all emails, the complaint alleged.
After Mazik requested a meeting with human resources to complain about the “harassing environment,” the tables were turned, he alleged. He was terminated in January 2017. According to the complaint, until the senior manager put him on the PIP because of his presentation on overpayments, Mazik had received numerous performance reviews that rated him as successful and excellent.
‘You Must Do What You Can Do’
The allegations in the complaint raise the question of what compliance officers should do in “incredibly difficult situations in which you perform your compliance duties and identify overpayments and make a presentation to corporate executives and what happens? Nothing,” Trusiak said, or so Mazik alleged.
If a compliance professional is told to keep quiet on a call with the government, there are two choices: “be insubordinate and be prepared to be fired after the call if you spoke up or do nothing and your silence can be interpreted as being a co-conspirator,” he said. “That’s not a theoretical concern” especially now that DOJ requires chief compliance officers to sign certifications that their organization’s compliance program is “reasonably designed and implemented to detect and prevent violations of the law” and functioning effectively in the resolution of certain corporate criminal cases.
At a minimum, Trusiak said, compliance officers should make a copy of any emails “where they were told to stand down, maintain it in their personal files and write a memo” about what transpired. “Ideally, at some point you would hope to make an annual board report and set forth the [alleged] fraudulent activity.” Compliance officers may also want to send an email to anyone who silenced them that recaps the conversation.
“You must do what you can do,” Trusiak said. “The corollary is the fact you can’t do everything doesn’t mean you should do nothing.”
It’s unclear if Mazik took his concerns to the board of directors, Trusiak said. “Did this person report regularly to the board or ever request an executive session with the board to alert them to his findings?” It’s not mentioned in the complaint. Taking compliance concerns to the board is important for several reasons. One is “self-preservation,” Trusiak said. “If the compliance officer never took steps beyond executive notification, then will he or she be in the circle of blame given the downward nature of blame?” Another reason is fiduciary duty to the employer, which all employees owe to their employer, not the CEO or immediate superior, “although the chain of command must be respected,” he explained.
Trusiak also recommends compliance professionals secure a severance agreement as part of their compensation package. “Compliance officers generally do not seem to advocate for this at the point of hire,” he noted. “The existence of a severance agreement provides the genuine independence necessary to present overpayment matters to executive staff and, absent a compliant response, further addressing with the board or general counsel.” Compliance professionals should also have their own liability insurance in case they need to defend themselves in a government investigation or employment action, he said.
Court Ruling Is Mixed
In the court decision granting Kaiser’s motion to dismiss Mazik’s FCA lawsuit in part and denying it in part, Judge Dale A. Drozd explained other whistleblowers and DOJ had broadly alleged the same scheme involving Kaiser requesting Medicare reimbursement based on inaccurate diagnosis codes. But the software allegations are Mazik’s alone. “The court concludes that relator’s FCA claim is barred by the first-to-file rule except to the extent relator alleges that defendants deliberately tampered with compliance software to ensure that it did not identify erroneous diagnosis codes.”
The court also denied the defendants’ motion to dismiss Mazik’s retaliation claims against Kaiser Foundation Health Plan and Kaiser Foundation Hospitals but dismissed them with respect to Permanente Medical Group. Among other reasons, the court “finds that relator has adequately alleged that he was engaged in protected activity,” which refers to “investigating matters which are calculated or reasonably could lead to a viable [False Claims Act] action… The court further concludes that relator has alleged that the employer defendants knew of his engagement in protected activity.”
Contact Trusiak at robert@trusiaklaw.com and Voldman at mvoldman@constantinecannon.com.