Can Whistleblowers Root Out Public Expenditure Fraud? Evidence from Medicare

Abstract

This paper analyzes private antifraud enforcement under the False Claims Act, which compensates whistleblowers for litigating against health care providers who overbill the US government. I conduct several case studies of successful whistleblower lawsuits concerning Medicare fraud, pairing new legal data with large samples of Medicare claims. I estimate that deterrence from $1.9 billion in whistleblower settlements generated Medicare cost savings of nearly $19 billion, while imposing low costs on the government. These results suggest private enforcement is a cost-effective way to combat public expenditure fraud.