The False Claims Act (31 U.S.C. §§ 3729–3733, also called the "Lincoln Law") is an American federal law that imposes liability on persons and companies (typically federal contractors) who defraud governmental programs. The law includes a "qui tam" provision that allows people who are not affiliated with the government to file actions on behalf of the government (informally called "whistleblowing"). Persons filing under the Act stand to receive a portion (usually about 15–25 percent) of any recovered damages. Claims under the law have typically involved health care, military, or other government spending programs. The government has recovered nearly $22 billion under the False Claims Act between 1987 (after the significant 1986 amendments) and 2008.

The FCA originally protected the Government from being overcharged or sold shoddy military goods or services, including fraudulent billing for services never performed. With the passage of Medicare in 1965, the Department of Health and Human Services was authorized by Congress to develop rules relating to the Medicare program. HHS delegated to CMS and the OIG to develop additional regulations which must be strictly followed. Today, the FCA not only prohibits over-charging or billing Medicare for shoddy or defective goods and services, but also includes cases in which there is some defect in adherence to the rules, even if the goods or services were life-saving to the patient, and reasonably priced. This is because HHS, CMS and the OIG take the position that full compliance with all federal rules and regulations is a prerequisite to entitlement to submit a claim for payment. This includes not only Stark Law and the Anti-Kickback Statute, (dealing with the rules for referrals between providers who also have some financial relationship) as well as the various laws regarding proper coding and documentation.

Federal Whistleblower cases do carry one advantage which is not present in governmental agency initiated administrative actions. One of the first motions filed in a whistleblower case seeks the dismissal of the lawsuit on the grounds that the alleged conduct is not actually illegal. A number of recent decisions indicate that the OIG’s view of the False Claims Act is too expansive. In the June 26, 2012 opinion by a California district court in Gonzalez v. Planned Parenthood, the court dismissed a qui tam complaint which alleged the defendant overcharged the government by failing to bill the government for contraceptives at “cost,” as required by the government’s published guidelines. The Gonzalez court held that it is insufficient to show the defendant did not comply with the guideline, at least in the absence of proof the defendant lied about the basis for the charge submitted. While the government’s guidelines may not have been followed, the court reasoned that a False Claim was not submitted, where the defendant never lied or alleged the claim was the actual “cost.”

There are a number of additional defenses to False Claims Act Whistleblower cases. The federal rules of civil procedure make it very difficult for a plaintiff, known as a “relator” to properly plead and prove a case. Further, because many qui tam cases are purely technical violations, e.g. the treatment was actually provided at a reasonable price, juries are very reluctant to award damages against hard-working, honest physicians.

A physician defendant must exercise great caution in selecting counsel who is knowledgeable in these defenses. Martin Merritt is recognized as one of the nation’s leading lawyers in the field of False Claims Act Defense tactics, and is a nationally recognized Stark Lawyer located in Dallas, Texas. If you would like to schedule a free consultation, please contact us.