A whistleblower settlement has been reached in a case involving a medical contractor and prison health care contracts.

Integrated Medical Solutions LLC and owner Jerry Heftler will pay an out-of-court whistleblower settlement of $2,475,000 million to the U.S. government because of alleged violations of the False Claims Act and Anti-Kickback Act.

Integrated Medical Solutions allegedly paid a consulting company for inside information that enabled Integrated to obtain contracts to manage health care for the federal prison system. The consulting company, The Hudson Group, was owned by Cary Hudson, who previously was employed by the Federal Bureau of Prisons.

Jerry Heftler was founder and president of Integrated Medical Solutions until the latter part of March 2017. Cary Hudson was a business administrator of the Federal Medical Center Carswell in Fort Worth, Tex., prior to starting The Hudson Group.

Integrated Medical Solutions allegedly paid The Hudson Group for confidential material that gave Integrated an advantage over its competitors when making a bid to provide medical services with the Bureau of Prisons.

“This settlement demonstrates that the Department of Justice is committed to protecting the integrity of the federal contracting process from unscrupulous contracts,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division in a written statement.

In October 2014, Hudson pleaded guilty to submitting false documents to a federal agency because he had not reported the payments from Integrated Medical Solutions which could have been seen as a potential conflict of interest. Those felony charges were separate from this whistleblower settlement case.

Whistleblower Settlements Reward Bravery

More than 55 federal laws protect or reward whistleblowers, and 44 states plus Washington D.C. provide varying degrees of legal protection.

The oldest whistleblower law is the False Claims Act that dates back to the Civil War when it was designed to protect the government from being overcharged by defense contractors. This law made the news in the 1980s after defense department purchases of $400 screw drivers and $600 toilet seats were brought to light by whistleblowers.

This act encompasses any person or entity that defrauds the government. Today, eighty percent of the cases heard involve health care.

The False Claims Act empowers whistleblowers by enabling private citizens to file suit on behalf of the government. Called qui tam, Latin for “in the name of the king,” the law allows citizens to collect a percentage of the money recovered in the lawsuit that brings the offending party to justice.

A whistleblower settlement is more likely if the Department of Justice joins the prosecuting team. Most cases take just over three years to resolve, and half settle for $2 million or less. After all is said and done, the average whistleblower reward is around $320,000.