{"id":6909,"date":"2022-11-07T18:03:17","date_gmt":"2022-11-07T23:03:17","guid":{"rendered":"https:\/\/www.appliedpolicy.com\/staging\/7403\/?p=6909"},"modified":"2025-01-22T11:27:45","modified_gmt":"2025-01-22T16:27:45","slug":"the-false-claims-act","status":"publish","type":"post","link":"https:\/\/www.appliedpolicy.com\/staging\/7403\/the-false-claims-act\/","title":{"rendered":"The False Claims Act"},"content":{"rendered":"

[vc_row full_width=”stretch_row” gap=”35″][vc_column][vc_column_text]Fraud, waste, and abuse continue to challenge federal and federally funded healthcare programs. While it is difficult to quantify the extent of the cost of healthcare fraud, the U.S. Government Accountability Office\u00a0estimates<\/a>\u00a0that the Centers for Medicare & Medicaid Services (CMS) annually makes $50 billion in improper payments through Medicare alone.<\/p>\n

As the federal government employs increasingly\u00a0high-tech means<\/a>\u00a0of combating healthcare fraud, one of its most effective tools for recovery and deterrence remains the civil\u00a0False Claims Act<\/a>. A law with roots in medieval England, the FCA\u2019s greatest strength is not found in technology or the power of the state, but rather in the willingness of private citizens to bring fraudulent activity to light\u2014whether they be motivated by conscience, a sense of justice, or the significant cash sums which can be realized through successful prosecution of FCA cases.<\/p>\n

Earlier this year, Acting Assistant Attorney General Brian M. Boynton of the Civil Division of Department of Justice (DOJ)\u00a0observed that<\/a>, \u201cThe False Claims Act is one of the most important tools available to the department both to deter and to hold accountable those who seek to misuse public funds.\u201d<\/p>\n

Background<\/strong><\/p>\n

The current iteration of the FCA can be traced to the\u00a0Act of March 2, 1863<\/a>, which was passed as Congress sought to address widespread profiteering and fraud in defense procurement during the Civil War.<\/p>\n

In prohibiting the presentation of false claims, false vouchers, and other fraud against the Union Army, the Act provided for penalties double the damages incurred by the U.S. Government, as well as a fine of $2,000 for each offense\u2014a significant amount at the time. Importantly, the Act also specified that private parties\u2014known as relators\u2014could initiate claims on behalf of the government and were entitled to half of any damages recovered.<\/p>\n

The Act\u2019s sponsor, Senator Jacob Howard of Michigan, characterized this as a way to \u201creward to the informer who comes into court and betrays his coconspirator.\u201d[1]<\/strong><\/a><\/em>\u00a0It was also an example of \u201cqui tam,\u201d a legal concept dating to seventh century England and frequently represented by the Latin phrase \u201cqui tam pro domino rege, &c, quam pro seipso in hac parte sequitur,\u201d or \u201che who brings an action for the king as well as for himself.\u201d<\/p>\n

Qui tam laws incentivize private citizens to bring legal actions on behalf of the state by apportioning them a percentage of any funds recovered. This deputization of a populace can be an effective means of expanding the enforcement of laws when governments do not have sufficient resources to identify, investigate, or prosecute wrongdoing themselves. But the qui tam model has also been criticized by some as \u201clegalized blackmail<\/a>\u00a0\u201d and largely fell out of favor in the middle of the twentieth century.<\/p>\n

Restricted by court decisions after the Civil War and deliberately weakened by Congress in 1943, the FCA was rarely employed in subsequent decades.<\/p>\n

It wasn\u2019t until the 1980\u2019s that the potential of the FCA in combatting fraud was recognized again. As the federal government confronted instances of overbilling by\u00a0military contractors<\/a>\u00a0and\u00a0kickbacks to physicians<\/a>\u00a0billing Medicare, the public and Congress joined in calls for redress.<\/p>\n

In a decade some said was\u00a0defined<\/a>\u00a0by greed and excess, Senator Chuck Grassley (R-IA) and Representative Howard Berman (D-CA) led a bipartisan effort that resurrected \u00a0the 19th century “Lincoln Law” as a means of fighting “cost overruns, fraud, and mis-expenditures of money<\/a>.\u201d<\/p>\n

Today’s FCA<\/strong><\/p>\n

Under its current iteration, the FCA provides that:<\/p>\n

Any person who (1) knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval; (2) knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government; (3) conspires to defraud the Government by getting a false or fraudulent claim paid or approved by the Government;. . . or (7) knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government\u2026is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the Government sustains because of the act of that person.<\/a>[2]<\/strong><\/a><\/em><\/p>\n

Penalties<\/strong><\/p>\n

The FCA can impose both civil and criminal penalties for violations. These penalties can be significant, and may even result in imprisonment for individuals found criminally liable.<\/a>[3]<\/a> Civil FCA claims do not need to meet the higher standards of criminal prosecution requiring proof of a defendant\u2019s guilt beyond a reasonable doubt. Conversely, successful prosecution of a civil FCA claim only requires proof of a defendant\u2019s guilt by a preponderance of the evidence, i.e., that the defendant\u2019s guilt is more likely than not.<\/p>\n

Notably, the FCA does not require a showing that a defendant acted with specific intent to commit fraud. Instead, it is sufficient to show that a defendant was aware of information, acted \u201cin deliberate ignorance of the truth or falsity of the information; or act(ed) in reckless disregard of the truth or falsity of the information.\u201d<\/a>[4]<\/a>\u00a0Further, claims submitted for payment pursuant to a violation under the Anti-Kickback Statute may also give rise to liability under the FCA.<\/a>[5]<\/a><\/p>\n

Whistleblower protections<\/strong><\/p>\n

The FCA has always specified what rewards a relator stands to gain through successful prosecution of a claim. However, until 2009, it was less direct in addressing what a relator stood to lose.<\/p>\n

Whistleblowers commonly endure\u00a0retaliation<\/a>, which may include the loss of employment, demotion, defamation, and isolation. And the possibility of monetary gain has not always been enough to offset these threats.<\/p>\n

As amended by the Fraud Enforcement and Recovery Act of 2009, the FCA now provides protections for relators who are \u201cdischarged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment\u201d as a result of voicing concerns over fraud either internally or externally.<\/p>\n

Employers found liable for retaliation can be ordered to pay double lost earnings and a relator\u2019s expenses, attorneys\u2019 fees, and costs. In addition, they may be held responsible for \u201ccompensation for special damages sustained as a consequence\u201d of the retaliation. These damages can be significant.<\/p>\n

Recent recoveries under the FCA<\/strong><\/p>\n

In the fiscal year ending Sept. 30, 2021, the U.S. Department of Justice (DOJ)\u00a0recovered<\/a>\u00a0more than $5.6 billion in settlements and judgments from civil cases involving fraud and false claims.\u00a0 A startling ninety percent of these were associated with the healthcare sector, ranging from marketing contributing to the\u00a0opioid epidemic<\/a> to alleged kickback violations in\u00a0home health<\/a><\/a>[6]<\/a>\u00a0to fraudulent billing for\u00a0durable medical equipment<\/a>.<\/p>\n

In addition, a New York Times\u00a0investigation<\/a>\u00a0into Medicare Advantage programs published earlier this year found that four of the five largest companies participating in the program had been accused of fraud by whistleblowers. And earlier this month, Modernizing Medicine Inc. (ModMed), an electronic health record (EHR) technology vendor agreed to pay $45 million to settle allegations that it accepted and paid illegal kickbacks and caused false claims.<\/p>\n

In\u00a0announcing<\/a>\u00a0the ModMed settlement, the DOJ referred to the FCA as \u201cone of the most powerful tools\u201d in its efforts to combat healthcare fraud. A key reason for its was acknowledged elsewhere in the DOJ statement. The whistleblower in the case\u2014the company\u2019s former vice president of product management\u2014will receive approximately $9 million for initiating the case.<\/p>\n

<\/a>[1]<\/a>\u00a0CONG. GLOBE, 37TH CONG., 3D SESS. 955\u201356 (1863)<\/p>\n

<\/a>[2]<\/a>\u00a031 U.S.C. \u00a7 3729<\/p>\n

<\/a>[3]<\/a>\u00a0<\/a>18 U.S.C. \u00a7 287<\/p>\n

[4]<\/a>\u00a031 U.S.C. \u00a7 3729(b).<\/p>\n

<\/a>[5]<\/a>\u00a042 U.S.C. \u00a7 1320a-7b(g)<\/p>\n

[6]<\/a>\u00a0There has been no determination of liability and claims resolved by the settlement are allegations only.<\/p>\n

[\/vc_column_text][\/vc_column][\/vc_row]<\/p>\n","protected":false},"excerpt":{"rendered":"

[vc_row full_width=”stretch_row” gap=”35″][vc_column][vc_column_text]Fraud, waste, and abuse continue to challenge federal and federally funded healthcare programs. While it is difficult to quantify the extent of the cost of healthcare fraud, the U.S. Government Accountability Office\u00a0estimates\u00a0that the Centers for Medicare & Medicaid Services (CMS) annually makes $50 billion in improper payments through Medicare alone. As the federal […]<\/p>\n","protected":false},"author":19,"featured_media":6911,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","ap4_related_services":"","footnotes":""},"categories":[1],"tags":[],"class_list":["post-6909","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"yoast_head":"\nThe False Claims Act - Applied Policy<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.appliedpolicy.com\/the-false-claims-act\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The False Claims Act - Applied Policy\" \/>\n<meta property=\"og:description\" content=\"[vc_row full_width=”stretch_row” gap=”35″][vc_column][vc_column_text]Fraud, waste, and abuse continue to challenge federal and federally funded healthcare programs. 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