An economic model to analyze the impact of False Claims Act cases on access to healthcare for the elderly, disabled, rural and inner-city poor.

I. INTRODUCTION In 1964 President Lyndon B. Johnson declared a "War on Poverty.", By 1965 Congress had enacted several key weapons in that war,2 including two massive revisions to the Social Security Act designed to provide broad access to healthcare for the elderly, the disabled and poor, uninsured pregnant women and infants. The current Medicare3 and Medicaid4 health insurance programs, along with the State Children's Health Insurance Programs provide health insurance and thus, access to healthcare, for 60% of people living in poverty.6 Medicaid alone pays for half of all nursing home care in this country.7 Medicare pays for hospital care for over 32.4 million elderly Americans, and for 3.7 million disabled Americans.8 Medicare and Medicaid have been called the "lynch pin" in the nation's strategy to assure access to healthcare for low income Americans.9 In short, the War on Poverty is not effective without the access to healthcare Medicare and Medicaid afford to the poor, elderly and disabled.10 Soon after their enactments, the cost of administering Medicare and Medicaid programs increased11 so dramatically that a new war gradually emerged. In the words of one commentator, "One of the U.S. Department of Justice's . . . highest priorities for the past several years has been to conduct a 'war on health care fraud."'12 Unfortunately, the methods used in this new war on healthcare fraud contradict and compromise the healthcare access goals central to the original War on Poverty. Cost containment, not universal access, is the objective of the war on healthcare fraud. A key strategy in this fight is to eliminate the amount of money the government spends on Medicare and Medicaid fraud. As early as 1978 the Department of Justice (DOJ) announced that the prosecution of Medicare and Medicaid fraud was one of its top priorities.13 This offensive was reaffirmed by the Reagan administration in 1986,14 but the war against Medicare and Medicaid fraud began in earnest during the early 1990s. First, state Medicare and Medicaid fraud control units initiated legislation to combat fraud, naming this objective a "top priority."15 Then the Clinton Administration announced its strategy of "focusing . . . unprecedented attention on the fight against fraud, abuse, and waste in the Medicare and Medicaid programs."16 In 1993 the Department of Health and Human Services (DHHS), the Inspector General (OIG), the Health Care Financing Administration (HCFA),17 the FBI and the DOJ all combined efforts to "focus on fraud and abuse."18 "Operation Restore Trust," a partnership of federal and state agencies, was launched by the Clinton Administration in May 1995; this program was designed to guarantee funding for fraud and abuse enforcement efforts within DHHS and local fraud control units.19 HCFA enlisted the help of Medicare and Medicaid beneficiaries, providers and contractors in the effort to combat fraud in addition to federal and state government efforts.20 The government began to use citizen-based programs such as "Seniors Organized to Restore Trust"21 to encourage patients to report fraud. The offensive also included programs aimed at encouraging Medicare and Medicaid providers to report fraud voluntarily in exchange for the possibility of reduced penalties.22 Congress' contribution to the anti-fraud war effort has been substantial. Between 1990 and 2000 Congress almost annually passed stricter laws to combat healthcare fraud.23 Currently over thirty federal statutes address healthcare fraud.24 However, the Civil False Claims Act (FCA)25 is by far the most potent and frequently used weapon in the government's arsenal to combat fraud.26 Under the FCA, a government contractor may not knowingly submit, or cause to be submitted, a false or fraudulent claim for payment to the U.S. Government.27 If an FCA violation is proven, not only may the government recover penalties and damages from the defendant, but the qui tam28 provision of the FCA creates a private cause of action so that a private plaintiff may also earn a substantial share of those funds. …