Source: https://falseclaimslaw.doodlekit.com/home/an_overview_of_the_false_claims_act
Timestamp: 2019-04-23 04:44:42+00:00

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These provisions gained renewed public attention following the 1986 False Claims Act Amendments. The 1986 Amendments made it easier for qui tam relators to file claims and increased the rewards for doing so.5 Initially, the FCA was used to fight defense contractor fraud, but it was soon applied to other areas of government spending, including Medicare and Medicaid.
This paper examines the qui tam lawsuit from plaintiff and defendant perspectives. First, I briefly review the history and current scope of the False Claims Act. Second, I examine the elements of a qui tam action. Third, I suggest some strategies for those institutions and individuals who are actual or potential defendants in a qui tam action. In conclusion, I explore the reaction of the health care industry to this powerful law and possible future outcomes.
Congressional changes barred use of information in the public record and lowered the reward to between 10 and 25 percent of any recovery.13 As a result, until Congress changed the law in 1986, few qui tam cases were filed.
During the 1980s defense buildup, reports of $400 dollar hammers and $800 dollar toilet seats led Congress to revise the statute.14 The 1986 FCA amendments raised the reward for qui tam plaintiffs to between 15 and 30 percent of the recovery, eased restrictions on the use of public information, and inserted provisions to allow the plaintiff to recover damages stemming from workplace retaliation.15 As a result, qui tam lawsuits dramatically increased.
Since the focus of this paper is on medical fraud, I will explore that category in greater detail.
13. use of substandard equipment.
7. Knowingly making, using, or causing to be made or used a false record to avoid, or decrease an obligation to pay or transmit property to the Government.
7. Employment protection for whistleblowers including reinstatement with seniority status, special damages, and double back pay.
Under 31 U.S.C. § 3730(a), the U.S. Attorney General is empowered to institute a civil action against persons that submit claims in violation of 31 U.S.C. § 3729. Section 3730(b) contains the qui tam provision which provides for “a person” to bring a civil action on the government’s behalf for violations of § 3729.
To have standing under Article III of the Constitution the relator must show actual or threatened injury.64 In several cases, defendants have unsuccessfully attempted to challenge the relator’s standing.65 United States ex rel. Truong v. Northrop Corp was the clearest opinion rejecting such challenges.66 In that case, the court found that the relator’s standing stemmed from the injury to the Federal Government in whose name the suit was brought.67 The relator’s standing is not an issue when the U.S. government intervenes or when the relator has suffered actual damages due to actions taken by his or her employer.
The scienter or knowledge requirement under the FCA is less than the elements of common law fraud.77 As noted above, the plaintiff must prove either 1) actual knowledge of the falsity of the information submitted to the government; 2) deliberate ignorance of the truth or falsity of the information; or 3) a reckless disregard of the truth or falsity of the information.78 Thus, only the defendant’s negligence or innocent mistake will go unpunished.
transaction as the ciminal proceeding.” Thus, the civil trial is carried out only to determine damages.85 As can be seen in the above listing of damages and penalties, the qui tam penalties can be great.
The settlement agreement in U.S. ex rel. Wagner v. Allied Clinical Laboratories provides an example of a fairly typical settlement agreement. In that case Allied falsely submitted claims to Medicare to induce improper payment for tests and improperly collected Medicare payments.
Ultimately, if medical providers have their way with Congress, the power of the FCA and its qui tam provisions may be fleeting. The AMA and the AHA are jointly spending millions on Capitol Hill lobbying efforts and in court battles to diminish the FCA’s power. Their efforts may stifle a dawning awareness of the FCA’s utility in fraud fighting efforts in many other sectors of our society.
powerful tool to hold public officials, corporations, and individuals entrusted with the expenditure of trillions of taxpayer dollars to their word.
False Claims Act, 6-WTR Kan. J.L. & Pub. Pol’y 89. 6Paul Reidinger, Fraud Doctors: How a Law that Shot Down Defense Scams is Now Zeroing in on Bogus Health-care Costs, ABA Journal, May 1996, at 52.. 7Id. 8Anna Mae Walsh Burke, Qui Tam: Blowing the Whistle for Uncle Sam, 21 Nova L. Rev. 869, at 871. 9808 F.Supp. 580. 10See note 8, at 872. 11The 1986 False Claims Act Amendments: Tenth Anniversary Report, Taxpayers Against Fraud, at 5. 12The case that spurred the changes is the Supreme Court’s decision in Marcus ex rel. v. Hess, 317 U.S. 537 (1943), in which the Relator relying solely on information already in the government’s possession was successful in collecting his share of the damages. 13See note 11, at 6. 14Sanford Teplitzky and Harry Silver, False Claims Act Does Not Encompass Kickbacks or Violations of Stark, BNA Health Care Fraud Report, 5-7-97, at. 303. 1531 U.S.C. §§ 3729-33 (1996). 16Id § 3729(7). This is the so-called reverse false claim provision. In the medical context, where a corporation has discovered fraud through an internal compliance program, it is then required to repay Medicare or Medicaid. Were it to fail to do so, it may be held liable. See e.g. 885 F.Supp. 1055. 17Franklin Hoke, Novel Application of Federal Law to Scientific Fraud Worries Universities and Reinvigorates Whistleblowers: With Major Penalties the False Claims Act is Being Used to Hold Schools Accountable for Faculty Member’s Misconduct, The Scientist, 9, 17, Sept. 4, 1995. 18U.S. v. Incorporated Village of Island Park 791 F.Supp. 354 (E.D.N.Y. 1992) 19Lisa Hovelson, Speak Out: Support Your Local Whistleblower, GW Magazine, May 1995 at 33 20U.S. v. Incorporated Village of Island Fark, 888 F.Supp 419 (E.D.N.Y. 1995). 21Wang v. FMC Corp., 975 F.2d 1412 (9th Cir. 1992). 22United States ex rel. Sequia Oragnge Co. v. Sunland Packing House Co., 912 F.Supp. 1325 (E.D. Cal. 1995) 23See U.S. ex rel. Fallon v. Accudyne Corp., 888 F.Supp 636. 24Whistle Blower’s Website, visited 3-1-98. (www.whistleblowers.com) 25Medicare Fraud and the Lincoln Law, Advance, November 1994 at 29. 26Id. also see note 24 and Michael Mustokoff et al. The Government’s Use of the Civil False Claims Act to Enforce Standards of Quality of Care: Ingenuity or the Heavy Hand of the 800-Pound Gorilla, 6 Annals Health Law 137. 27Fraud and Abuse: Organized Crime has Penetrated Health Industry, FBI Director Says, 3 HCP 13 d7. 28Fraud and Abuse: Health Care Fraud is High Priority for Justice Department, Reno Claims, 4 HCP 25d8. 29Annual Report of the Departments of Health and Human Services and Justice: Health Care Fraud and Abuse Control Program 1997 at 1. 30Id at 3.
31Id at 4. 32Id. 33Id at 29. 34Id at 23. 35 See note 3 at 24 36See note 29 at 1. 37Id. 38Id at 2. 39Id at 40. 40Id. 41See note 11 at 10. 4231 U.S.C. § 3730(a) 4331 U.S.C. § 3730(b)(1) 4431 U.S.C. § 3730(b)(2) 45Telephone interview with Jim Bickett, Assistant U.S. Attorney for the Northern District of Ohio, Thursday, February 27, 1998. 46Georgia’s Biggest Whistleblower Case: Federal Suits Under ‘86 Multiply, Shift to Health Care Abuses, Daily Report, American Lawyer Media, 108, 26 Febraury 7, 1997 at 1. 4731 U.S.C. § 3730(b)(2) 4831 U.S.C. § 3730(b)(3) 49Interview with Assistant U.S. Attorney Alex Rokakis March 18, 1998. 50Id.. 51Id. In Ohio, “high enough” seems to be at least $100,000 in fraudulent claims made with a potential $500,000 recovery. 5231 U.S.C. § 3730(d)(1). 5331 U.S.C. § 3730(d)(4). 54See note 49. 5531 U.S.C. § 3730(c)(2)(B). 5631 U.S.C. § 3730(b)(5). 57U.S. ex rel. Pedicone v. Mazak Corp., 807 F.Supp 1350. 58U.S. ex rel. Stinson v. Provident Life and Accident Insurance Co., 811 F. Supp 346 (E.D. Tenn. 1992). 5931 U.S.C. § 3730(d)(2) and (4). 6031 U.S.C. § 3732(a). 6131 U.S.C. § 3732(b). 62See e.g. O.R.C. § 4113.52. 63United States v. General Electric, 808 F.Supp. 580 (S.D. Ohio 1992). 64Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, 99-100 (1979). 65United States ex rel. Stillwell v. Hughes Helicopters, Inc. 714 F.Supp. 1084 (C.D. Cal. 1989). 66728 F.Supp 615 (C.D. Cal. 1989). 67Id. 6831 U.S.C. § 3730(e)(4)(B) 69Id. 70Id. 71United States ex rel. Springfield Terminal Ry. Co. v. Quinn, 14 F.3d 345 (1994). 72United States ex rel. Doe v. John Doe corp., 960 F.2d 318 (1992). 73U.S. ex rel. Doe v. John Doe Corp., 960 F.2d 318 (1992) 74977 F.Supp. 1329, 1337. 75Id at 1339. 76Id. 77See note 21 at 1420. 78U.S.C. § 3729 (b). 79Coffey v. Foamex L.P., 2 F.3d 157, 161-162 (6th Cir. 1993). 80Michaels Building Co. v. Ameritrust Co., N.A., 848 F.2d 674, 679 (6th Cir.1988).
81Pogue v. American Healthcorp., Inc., 977 F.Supp. 1329, 1333 (M.D. Tenn. 1997). 82149 F.R.D. 142 at 145 (N.D. Ill. 1993) 83See note 80 at 679. 84See note 49. 8531 U.S.C. § 3731(d). 86Hudson v. United States, 118 S. Ct. 488 (1987). 87490 U.S. 435 (1989). 88Id. 89Id. 90Id at 450-451 91See note 86 at 494 92Id at 488 93Id at 496 94United States ex rel. Wagner v. Allied Clinical Laboratories, 1995 WL 254405 (S.D.Ohio), at 8. 95Id at 9. 96Id. 97Id. 98Id at 11. 99Id at 8. 100Id at 12. 101Id. 102Id. 103Id at 13. 104Id. 105Id. 106Id at 14. 107Id. 108Id. 109Id at 15. 110Id at 17. 111Id. 112Id at 18. 113Id. 114Francis Serbaroli, False Claims Act Settlement Negotiations, N97WCCB ABA-LGLED H-1 at 2. 115Id at 3. 116Id. 117Id at 3 118David Bradford, Qui Tam Litigation: An In House Perspective, N97WCCB ABA-LGLED I-19, at 3. 119In Re Carmark International Inc. Derivative Litigation, Del, Ct of Chancery 1996, 1996 WL 549894. 120Adam Snyder, The Fa1se Claims Act Applied to health Care Institutions: Gearing up for Corporate Compliance, 1 DePaul J. Health Care L. 1 at 40. 121Fraud and Abuse: AHA Calls False Claims Act, BBA Transfer Provisions Unfair, 6 HCP 262. 122See note 6 at 54. 123Fraud and Abuse: Reno Willing to Work with Hospitals to Ensure Proper Use of False Claims Act, 6 HCP 261.

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