Chris Riedel | Massive Health Care Fraud and The Importance of Whistleblowing

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Joel: Hello, and welcome to the publishing for profit podcast. This is your host, Joel Mark Harris. Today we interviewed Chris Riedel, who is the founder of five healthcare companies and the author of a new book called Blood Money. It is the story of a whistleblower who went against some huge healthcare companies in the United States who were defrauding the American taxpayers.

Chris has spent over 40 years in the healthcare industry and his companies that he founded included. Hunter Heart, Hunter Laboratories, Maris Laboratories, Micro Scan, and Micro Media Systems. In 1992 merits was ranked by Business Week as the 40th best small company in America. He served as managing director for Providence capital, a boutique New York investment bank.

As the chairman of chai laboratory systems, a hospital and commercial laboratory consulting firm in the US. Who is also a member of a board of directors of Boston Heart Lab. And he is currently serving as a member of business executives for national security for the past decade or so. Chris has concentrated his efforts on fighting against fraud in the medical lab systems that have been defrauding, the American taxpayers and the medical industry as a whole, which is the subject of his book.

One of his proudest achievements was when he received the taxpayers against fraud whistleblowers award in 2011, for assisting to recover $286 million from two of the largest medical lab, companies in the United States. We have a great conversation. We talk about how he became a whistleblower about his new book, about the writing process and the whole, medical system in the United States as a whole.

So hopefully you enjoyed this conversation and this interview with Chris Riedel.

Hi Chris. Welcome to the show. How are you today?

Chris: I’m just great. Thank you for having me.

Joel: I want to talk about your new book was just released called blood money. Can you tell us a little bit about that? And what is the story about?

Chris: Blood Money is a true legal thriller. It’s the story of how a Silicon Valley entrepreneur and CEO morphed into a fraud fighter for taxpayers, and it’s a behind the scenes look at what it’s like to work with a government prosecutors trying to stop massive, totally fraud. It’s scary and thrilling in different parts.

Joel: So there, there seems to be a lot of Hollywood elements to it, you know, like kidnapping, you know, Cayman Islands, you know?

Chris: In the book are stories of attempted murder, fraudsters, foresters that are going down to the Cayman Islands to try and hide their assets. A CEO who had three government prosecutors tell me they haven’t found it yet, but they told me that they had heard that he had buried a shifted container filled with gold in his backyard.

It also has amazing stories of an assistant attorney general in the state of Georgia sabotaging performing state’s case. Costing taxpayers, new and a corrupt governor who sabotage all the attorney general is saying this that most people would never believe could happen, but everything in the book is true.

Joel: So is, is Hollywood calling yet? Is that the plan?

Chris: Not yet. The book just came out. Although it is a best seller now in three categories.

Joel: Congratulations. That’s amazing. So you’ve spent pretty much entire career in the healthcare industry. Can you tell us a little bit about your background and how you came to figure out about these fraudsters?

Chris: Sure. When I graduated from college with a degree in political science, I have no idea what I was going to do. And, my friend said, Oh, go to sales. You know, they made a lot of money and I thought, well, I’ll do that for a couple of years, go to Europe, come back and go to graduate school. I eventually accepted a job with a healthcare company, very small medical device company.

Even though I’d gotten a degree in biology, the sales manager convinced me that he thought I could do. Okay. And after three years at the age of 24, I started my first company, micro media systems, and we developed a new way to identify what type of bacteria are causing infection and a much more precise way of how I’ve treated.

My second company was founded about six years later. And if it took that product line to it, the higher level, my third company was my first medical laboratory. And the success of that was at a whole new level. We took it public in 1991 and, what’s after a secondary public offering and then coming to.

It was identified by Forbes as the 40th festival to be that I never tired for awhile. And then came back to the industry in 2003, started Hunter laboratories. It’s named after my youngest son. And shortly after we got started, we built a beautiful out of choice with the most modern equipment known to man.

It was a fantastic lab, but as we got sales reps coming to me and said, Chris, these huge giant companies and labs, they’re multi-billion-dollar companies. And they’re the two, the lions in the industry are offering prices so cheap that in the west we can’t match them. These were prices to physicians so that physicians could choose that laboratory.

It was a loss leader and they made their money on the other business. They said, you know, if we don’t match these prices where I can build a rotary fast. So when I saw the prices, I thought they were well below the cost.

And I said, you aren’t going to call my regulatory counsel, find out if I should attempt to match this. If I have any legal liability. Sure enough, our lawyer said, Oh yeah, first of all, if you don’t pass those discounts on to the Medi-Cal program, you’re in a clear violation and Oh, by the way, offering these below cost discounts, kickbacks to doctors, don’t do it.

And then, you know, I remember sitting by my waterfall one day realizing we couldn’t go on. Because we couldn’t get the volume that we needed to be profitable in the face of this illegal activity, these tasks they’re skewed. So my choices were first knowingly violate federal law, second, try and do something about it.

And eventually I came to the conclusion I had to do something about it. It was just wrong for the industry that was wrong, certainly with fatal to our company. And I didn’t want to have to lay off 150 wonderful employees. And third it’s just wrong. The test pairs with police so bad. So that’s how the, my first with the lower Lawson originally

Joel: Did you know at that time, how difficult it would be to go against these huge Goliath companies or was it, were you surprised at just how difficult it would be to, I guess speak out on this issue?

Chris: I had no idea. I whistleblowers tend to be destroyed with the companies that they’re gone after realizing it is. They do everything they can to really rewind and most of them and, blackballed, unemployable, divorced, and bankrupt. I knew it was difficult to fight a billion dollar company with the best lawyers, but I had no idea of the risks for whistleblowing.

Joel: Do you regret, blowing the whistle or do you feel like you made the right choice for you and your family?

Chris: It was a tough call and it was funny story. When I told my wife who was also with Parker in the business, what I wanted to do, she was absolutely dizzy and, and, you know, finally I wore her down. And she said, okay, Chris, you can go ahead and do this. I don’t want to hear one word about it. And, if it comes back to harm her children or her reputation with you, I will never forgive you.

So he’s very hard choice. in my heart, I felt it was the right thing to do. And in retrospect it was scary. It’s a very serious time, but it was get put to death.

Joel: Hmm. And so you guys eventually won a, what is it? 240 something odd million dollar suit against these companies. Can you tell us, walk us through what happened there and how did you feel after you guys won that suit?

Chris: Sure. We were financially done. We were on the brink of having to declare personal bankruptcy and corporate bankruptcy, losing our house and pulling our kids out of school.

We were really, I was totally fucked. It was very scary. And then two weeks later, we were in a settlement conference and we came to that amazing number and, I felt fantastic. I felt vindicated for doing it the first place and greatly relieved that our family and our business we’re not going to be destroyed.

Joel: Do you think that there is enough protection for whistleblowers in general? And if not, then what should the, what sort of protection can there be for people who want to speak out, but are too afraid?

Chris: I don’t think there is enough protection. The statute clearly says there can’t be retribution against you. But in my case, the reason our company got in with so much financial distress was because when Quest and LabCorp, got wind that we were looking into their companies,  they went to Blue Shield, a very large insurance company and said,  can you cut our insurance?

It was an easy decision for Blue Shield. But from that point forward, we had a dagger in our back. And so I went to the, during the summer conference, I asked the assistant attorney general, who was running it for California, if, as a term of the settlement, he would ensure that quest and LabCorp went to blue shield and put us back in the network. He refused to do it. So even though those protections are there, that doesn’t mean that you really going to be. Able to feel the benefit from it.

Joel: And so what should there be government oversight or what is kind of like, what can we do for whistleblowers?

Chris: if, if the existing protections rigidly followed by the departments of justice, both state and federal. But, I know in the case of the, California, through the general, they said, look, there isn’t enough money with this lawsuit. I don’t need to do anything else to help you.

Well, that may be true, but what about all the other horror films? So we ended up having really there’s, there’s no recourse for those guys and I wonder how you help them unless you can. That’s the wall that says if a company landfalls you, that they should be on the phone for something that’s not the kid.

Joel: Did you ever feel like those dark days, you know, you’re went up some from like what went up against some really powerful people. Attorney generals, governors who didn’t want you to succeed. Did, were you ever feel you should just back down or is it something that you always felt that in your heart, you had to see a through for better or for worse?

Chris: We didn’t have these issues with the attorney general and the governor until we were like four or five years into the case. And by that point we crossed the Rubicon and I knew in my heart, again, it was the right thing to do. These companies were stealing hundreds of millions of dollars from these particular States.

And it’s just the basic thing the governor could be so corrupt and that an assistant attorney general could sabotage your own case made no sense.

Joel: Yeah, it really does feel like a Hollywood movie for sure.

Chris: So it was rough to live through. You put all this time and effort and no you’re right. And in the case of a Florida where the attorney general, I’m sorry, where the governor destroyed his own attorney general case. the assistant attorney general, we were working with two weeks before, the governor did this set of all men’s using the law and all these whistleblower cases.

This was the closest thing to a slam dunk he had ever seen. And the governor stepped in.

Joel: Moving on a bit in 2011, you won an award. I think it’s, correct me if I’m wrong here, but it’s, Fraud Against Taxpayers, for being a whistleblower. How did it feel to win that ward? And, and what did it mean to you personally?

Chris: It’s the tech bears. It gives fraud whistleblower these years at the time. I didn’t really understand the significance of it, but as years went by and I met some of the other winners of that award and Pat time has been with them as well as hearing the stories of people who were utterly decimated. I’ve come to realize it was a major, I guess, all of us.

Joel: And so, you know, we’re, we’re almost a decade later. what made you write that book? Now?

Chris: I wanted to tell the story of a couple of days. What is the massive fraud in healthcare? the FBI estimated in 2011, $234 billion a year were stolen by unscrupulous healthcare operators. That’s a quarter of the healthcare budget in this country, our quarter, and last year, the department of justice put out a press release, probably announcing that collected 2.6 billion for the year.

That’s 1.3% of the FBI’s estimates. I wanted to show what it was like to work with the department of justice. And I have a chapter in the back of the book on what DOJ can do to dramatically improve success. These are simple suggestions. I really liked to see the department of justice. Take a good look at those and implement some of them.

I think that would have a dramatic effect on fosters and the amount of fraud in this country. And lastly, I wanted whistleblowers potentially whistleblowers know the odds that they face in a huge risk they’re about to take their lives will never be the same. And I have a chapter on rule for whistleblowers, which issue follow those rules.

You have some protection. Quite a bit of protection, but if you just jumped into it, blindly, you’re likely to be crushed.

Joel: Can you walk us through some of those rules for people who are thinking about, you know, speaking out, but are afraid to

Chris: yes. The first thing is to ask yourself, the question is whatever the fraud is, easy enough to understand by clogging the world.

If the answer to that is no, if it’s a complicated fraud, more than likely the department of justice is not going to want to have much to do with it. If the answer to that is yes. Ask yourself what evidence do you have email? You have text messages, you know, what do you have to show to somebody that proves the fraud?

And if you feel you have that. I think that the next step there is a cottage industry that has sprung up in the last five years of litigation funders. These are companies who will essentially give you money in exchange for a piece of whatever you may get in a settlement called on some litigation funders. If they don’t think the lawsuit is going to stand up, which is fine, take that to heart, but if they do think it’s going to stand up and they’re willing to give you anywhere from one to $5 million, you protected your downside. So the company, even if they blackballed, you have a nice amount of money to protect yourself as pushing yourself, maybe for life. And at least until you can find some other profession to do.

Joel: Can you tell us going back to the book, what was it like? What was the experience like writing the book and kind of reliving some of these events? Was it really difficult or was it really easy to

Chris: write? It was very cathartic to write it. I loved writing it.

I mean, writing a first draft pushy draft was really fun and I totally enjoyed it. And after by year I was done and we sent it out to, viewers and they said, Oh, this is an excellent investigative journalism report, but it’s not a thrill. So I had to rewrite. Then I got the help of a ghostwriter and together we wrote rewrote the entire book to trip into a thriller and.

When that was done, I had to have our attorneys review it, to make sure that we weren’t going to be sued for something. And as a consequence of that, I had to rewrite time.

Joel: So how long did it take you all together?

Chris: It took three years together. And then, of course, the stories are true. Finding an agent.

Is that impossible? I mean to think that John Grisham was turned down 30 times for his first book, which became an international bestseller. That was the only thing that gave me pieces. I was turned down time after time after time. So finally I went to acorn publishing and eliminated the agent. I just went directly to a self-publisher.

Joel: You strike me as somebody who doesn’t give up easily. Is that an innate trait for you? Or is that something that you learned along the way?

Chris: I think I’ve always been that way. I know when my body was Unilever, I used to play a lot of basketball and tennis and, you know, there was nothing more fun for me in a one-on-one situation.

Even the defender. I just loved that. And I guess it’s, it’s just who I am. And so in business, you know, I had to work 80, 90 hours a week. I wanted to do everything I possibly could to make sure the company could be good.

Joel: And so what, have, do you suspect that there will be any changes with the way the medical system is run? and if, you know, I guess maybe just, yeah, if, if you think that your book will have any change, if the lawsuit had any change, sort of what the future you think will hold for the medical industry.

Chris: Not just the quest lab core lawsuit that we filed several federal losses on the heels of that, which were very successful. In one, we actually went to trial and won a $114 million verdict. And interestingly, the department of justice had admitted the lawyers in that case after trial 17, as they had at the end.

and as a consequence of all the work that we’ve done, there will be far fewer kickbacks in a healthcare industry and far fewer other technical violations that we brought to light and exposed and a company can no longer say, Oh, we didn’t know.

Joel: And so what’s next for your book

Chris: for this book? hopefully I’ll be doing a lot of podcasts like this and speaking engagements.

And, I’m also continuing to go after fraudsters, which, I enjoy the intellectual challenge of finding the frog, finding evidence and, biting the motions and going through the legal process. Maybe I’m nuts. Very few people would probably be intellectually stimulated by that, but I am, and I spent a lot of time.

Joel: Is your wife ready to kill you yet?

Chris: No. Now she’s happy. She’s happy. And for the ass until, until the settlement conference request, which was five years later. She, she used to talk about it at all at night at dinner, at the office, it was off the table.

Joel: So, Chris, I want to wrap it up with, one last question and this is something I ask all my guests. And what is a book that has perhaps inspired you or one that you liked to read or a one that you like to gift a lot?

Chris: I love to read. And there are so many talented offers that are out there, but one of the books I loved was a perfect predator is a true story about a husband and wife, a doctor.

They went to Egypt and the husband went into this temple. It’s not typical, but that period. Lesser-known pyramid that just been discovered. And, the wife didn’t want to go in because she had to get down and crawl in and dust everywhere. And within days he got very sick. And so it was the hospitals in Egypt that couldn’t treat him.

So they flew to Germany hospital there for the treat them. he had some type of infection, so they flew into San Diego and they treated him at the hospital where they were both employed. And he died. And, and this woman who was, not a MD, she is a PhD. I think she took it upon herself to research and found a revolutionary new method of treating this infectious disease that no one had ever thought it saved his life.

It was just, it’s just one of these stories that just grabs your heart. And at the same time, it’s really going through it. See what she did and the obstacle she faced to save her puppy.

Joel: Gotcha. So Chris, for people who want to reach out to you, where is the best place to find you?

Chris:  chrisriedelauthor.com the website, and I’d love for people to reach out to me.

Joel: And a book is, available on Amazon and all the usual places?

Chris: Yes.

Joel: Thank you so much for being on the show. It was a pleasure. and I appreciate your time and enjoy the rest of your day,

Chris: Thank you so much for having me pleasure with you. Enjoy the rest of your day too.

Joel: Thank you so much.