By 2015, Christopher Grottenthaler had helped build many successful companies, started his own company True Health Diagnostics, created thousands of jobs, generated and billions for his investors.
Then everything changed.
Soon after his company bought the assets of Health Diagnostic Laboratory for $37.1 million, things took a dramatic turn.
Grottenthaler had hoped to leverage his new company’s assets to build a comprehensive diagnostic testing business with more than 1.5 million patients. The purchase of HDL’s assets was a free and clear acquisition approved by the DOJ and helped catapult True Health to the forefront of the industry. Grottenthaler took the unprecedented step of adopting HDL’s corporate integrity agreement and invested over $16M into True Health’s compliance program, giving True Health one of the most robust corporate oversight programs in the industry.
The purchase triggered a lawsuit by someone using federal whistleblower protections intended to help well-intentioned citizens identify fraud against taxpayers.
But the man who filed the lawsuit against Grottenthaler was a professional whistleblower who had made a lucrative career filing lawsuits that alleged corporate fraud.
In all, the whistleblower was behind lawsuits against several healthcare firms that resulted in settlements worth more than $550 million, which produced a personal gain of about $100 million, according to court filings.
In the decade after he was sued, Grottenthaler nearly lost everything. He was forced to spend millions of dollars, saw his reputation tarnished – and nearly died.
The case of Grottenthaler is a cautionary tale of how the legal system can be weaponized by professional whistleblowers who game well-intentioned legal protections to make a personal profit.
Some say the False Claims Act has morphed into a business model for professional whistleblowers to profit instead of its original purpose of serving the public.
The October 2015 lawsuit against Grottenthaler alleged that there was fraud at Health Diagnostic Laboratory, the company Grottenthaler had purchased just a few months earlier.
Because the lawsuit was filed under seal, Grottenthaler was prohibited from commenting on it or publicly defending himself or the company.
Meantime, the whistleblower published a book in which he publicly made damaging allegations against Grottenthaler like calling him a “fraudster.” The book violated the judge’s seal, yet the whistleblower was not sanctioned.
The book included incriminating details of his communications with the Justice Department, including allegations that the Federal Bureau of Investigation had concluded that Grottenthaler and his company had likely committed fraud.
Perhaps most troubling for Grottenhaler, the book predicted that Grottenhaler would be indicted. It was “expected that the DOJ will go after the CEO,” according to the book.
Grottenhaler felt smeared. He accused the whistleblower-turned-author of weaponizing the lawsuit to boost book sales, tarnish his reputation and advance his lawsuit.
The details of the lawsuit are complicated, but it generally accused Grottenhaler’s True Health Diagnostics of committing fraud in the way they used programs intended to help rural hospitals stay financially viable.
In September 2022, the government indicted Grottenthaler.
Grottenthaler argued that he didn’t know anything about the fraud, said it had been hidden from him and his compliance teams
Grottenthaler also said he took steps to ensure integrity at his company in part by hiring several prominent law firms, DLA Piper, Perkins Coie, and Sidley Austin, to review its business relationships.
The company also invested an estimated $16 million in a best-in-class compliance program, which included an independent monitor and periodic reports to the government.
Regardless, as the owner of the company, he faced years in prison.
As the case dragged on, it took a mental and physical toll on Grottenthaler. The worry caused a bleeding ulcer. Grottenthaler lost 60 percent of his blood. He was hospitalized and nearly died.
In October 2024, Grottenthaler agreed to a settlement to end the litigation. Grottenthaler said he was the “captain of the ship,” accepted responsibility and pled guilty.
But at the sentencing hearing in December, the judge issued a ruling that many thought was a rebuke of the government’s aggressive stance.
While prosecutors demanded 18 months jail time, the court found that Grottenthaler’s culpability was “fairly low”.
The court cited several mitigating factors, including the fact that Grottenthaler has paid more than $4 million to settle False Claims Act liability and had an “unblemished” record.
The judge rejected prison time and sentenced Grottenthaler to five years of probation.
Still, the case shows how unscrupulous actors can use federal whistleblower statutes to turn a profit and harm lives.
President Donald Trump and Republicans in Congress have talked about the need to block plaintiffs and the trial bar from using the legal system to punish business executives.
The case of Grottenthaler shows there is a long way to go.
Members of the editorial and news staff of the Daily Caller were not involved in the creation of this content.
