The Tucson woman who earned nearly $6 million as the whistleblower who uncovered overbilling at the Carondelet Health Network is launching her own effort to prevent health-care fraud.

“Providers are turning their heads, not wanting to hear about fraud, waste and abuse,” Jacqueline Nash Bloink said in an interview last week.

But if more people cared, she said, the nation could “plug this gaping hole” and stop money from gushing out of the federal Medicare and the state Medicaid systems.

The whistleblower lawsuit Bloink filed under the federal False Claims Act accused Carondelet of knowingly engaging in fraudulent billing and concealing its obligation to pay money back.

The U.S. Attorney’s Office, which investigated the case, announced the settlement in August and said the alleged fraud occurred for nearly seven years between 2004 and 2011.

Carondelet settled the case for $35 million — the largest payout under the federal False Claims Act in Arizona history.

The settlement was not an admission of liability by Carondelet and hospital officials blamed the problem on a failure to meet “technical Medicare/Medicaid billing requirements.” They say they addressed the issue as soon as they became aware of it.

When the settlement was announced, the local Catholic not-for-profit health network, which includes three Southern Arizona hospitals, said there were never any allegations that patients were harmed or had their care compromised due to the problems identified.

Bloink, a 53-year-old certified medical reimbursement specialist, worked for Tucson-based Carondelet as a corporate responsibility coordinator for one year, between 2010 and 2011.

During that time, court documents show she found billing discrepancies involving patients enrolled in Medicare, Medicaid and the Federal Employees Health Benefit Program.

“Many ‘whistleblowers’ go underground after their ordeal is over,” Bloink wrote in a recent open letter to the community titled “Healthcare fraud in our backyard.”

“I intend to use my newly obtained silver hair to try and help our healthcare system by being open about fraud and discussing ways to prevent it.”

Bloink’s legal action, filed under seal in 2011, cited insufficient documentation to support billings for inpatient rehabilitation services at Carondelet St. Joseph’s and St. Mary’s hospitals in Tucson between April 2004 and December 2011.

“Inpatient rehabilitation services are very costly to taxpayers, and it is critical that these federal dollars be reserved only for those qualified patients who need the intense rehabilitation therapy services provided in an inpatient setting,” U.S. Attorney for Arizona John S. Leonardo said at the time of the settlement.

Carondelet said that in 2011, the network put new protocols and processes in place to correct the documentation issues, and that prior to the settlement, it voluntarily repaid about $24 million to Medicare and Medicaid in 2012.

Billing for services that aren’t provided is a common and lucrative form of billing abuse known as “upcoding” that Patrick Burns, co-director of the Washington, D.C.-based Taxpayers Against Fraud Education Fund, compares to “providing chicken and billing for steak.”

Burns’ organization says the federal False Claims Act is the most effective tool U.S. taxpayers have to recover the billions of dollars stolen through fraud every year. Five hundred false claims suits were filed by private citizens last year concerning the U.S. Department of Health and Human Services, according to the U.S. Department of Justice. Fewer than 150 suits were settled, Burns said.

“Whistleblowers are force multipliers for the government in catching fraud,” he said. “They understand the company, how the billing schemes work. They can see things the public can’t see.

“The system itself is so complicated that you really can’t understand it unless you have whistleblowers. They are guides to secret knowledge.”

He believes there’s lots more health-care-spending abuse than what the case data reflects. Whistleblower cases are difficult to win and usually are successful only when the money involved is more than $10 million, he said. Also, many people are too afraid to blow the whistle on their employer.

“People take enormous risks coming forward. For your professional career in the future, you are committing to a path in which, in almost every case, you are identified,” Bloink’s Philadelphia-based attorney David Caputo said.

Whistleblower gets 15-25%

The whistleblower provisions in the federal law, often referred to as qui tam, allow private citizens to bring civil actions on behalf of the U.S. and share in any recovery obtained. Qui tam settlements, considered recouped federal dollars, brought in $2.6 billion in settlements and judgments in 2013, the U.S. Justice Department says.

Including those qui tam cases, the government recovered a total of $4.3 billion in health-care fraud cases and proceedings last year, federal numbers show.

The amount payable to a qui tam whistleblower under the False Claims Act is determined by statute and depends on whether the U.S. intervenes in the case. For intervened cases like Bloink’s, the whistleblower is entitled to 15 to 25 percent of any recovery.

Those provisions are designed to encourage whistleblowers to come forward and report fraud against government programs, said Cosme Lopez, a spokesman for the U.S. Attorney’s Office in Arizona. Whistleblowers may come forward either formally through a lawyer, or informally through hotlines provided by federal agencies.

“Whistleblowers — who at times have valuable, inside information — are an important part of the government’s efforts to detect and remedy fraud and abuse, and our office welcomes and appreciates their efforts,” he said.

Bloink has been training in the highly specialized field of compliance since the 1990s. She has launched her own campaign to educate people in the health industry about how to be watchdogs for billing fraud. In January she’ll speak to a local group from the Association of Certified Fraud Examiners, and in February she’ll speak to a group from the same organization in Los Angeles.

The divorced mother of two believes most providers don’t set out to commit fraud, waste or abuse. Many times they are unaware that what they are doing falls into that category, she said. For example, a provider may bill all patients as “new patients,” which means a higher reimbursement rate.

But the bottom line is that if the provider’s name is on the insurance claim form, the provider is the one held accountable, she said. “Instead of being reactive, perhaps Tucson should show the country that they are proactive and educate the medical community about fraud, waste and abuse, … starting with our medical students and members of our medical society,” she said.

She’s contacted the local medical society, medical and law schools and politicians but so far has found little interest, she says. Burns says that’s not unusual.

“Whistleblowers are good people and they are doing the right thing. But there’s always this little bit of naiveté,” Burns said. “They believe that companies are interested in doing the right thing.”

Hall of Shame in the works

Some companies are repeat offenders. Burns’ group is making a Hall of Shame and top on its list in the health arena is Tenet Healthcare Corp., a Dallas-based company that is in talks to become a majority owner of the Carondelet Health Network.

In July Tenet and California-based Dignity Health signed a letter of intent to own and operate the local network. Current Carondelet Health Network owners from Missouri-based Ascension would retain a minority interest in the chain.

Burns notes that in 1994, under the name National Medical Enterprises, Tenet made national headlines when it agreed to pay $379 million in criminal fines, civil damages, and penalties to settle a False Claims Act case in which the company was allegedly paying kickbacks and engaging in fraud at psychiatric and substance abuse hospitals in more than 30 states.

Following payment of that record health-care fraud settlement, National Medical Enterprises changed its name to Tenet.

In July 2006, Tenet agreed to pay the federal government $900 million for billing violations that included kickbacks, upcoding and bill padding.

Contact reporter Stephanie Innes at sinnes@tucson.com or 573-4134.