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A Guide To The Federal False Claims Act

The Federal False Claims Act is the U.S. Government’s primary weapon for combatting fraud. It allows whistleblowers to sue persons...

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Why the False Claims Act is Essential

August 18, 2015

The ease with which most people can commit health care fraud explains why the False Claims Act is essential.  Back when I was an Assistant U.S. Attorney, one of the jokes that would circulate in the office in response to a fact pattern where the defendant did something really stupid, virtually guaranteeing that he would be caught, was: “We don’t catch the smart ones.”  Courtrooms all over the country are filled with stories of people doing self-defeating things–not only criminal behavior, but behavior that rational actors would know would land them in prison.  Think of the bank robber who wrote his demand note on the back of his pay stub, with all his identifying information on it.  (Yes, I really did have a case like that.)

In the fraud arena, the same phenomenon exists.   We have the world’s largest Honor System in the reimbursement of Medicare and Medicaid claims, with claims being paid first and problems being chased later (the “pay and chase” system).  As readers of this whistleblower blog know, there is no limit to the ways in which fraudsters can game these systems, to line their pockets, to advance their careers, and to steal from the rest of us.

Given how easy it is to cheat Honor Systems, why do people go so far overboard, like the doctor who was convicted of a $2 million overbilling scam in which he claimed to treat 156 patients per day?  The answer has to do with human greed and ambition.  Once people realize that a small fraud is successful and mostly difficult to detect, it is very difficult not to head down the slippery slope towards a larger fraud.  For those without a functioning moral compass or under great pressure from superiors, engaging in a more and more blatant fraud becomes a means to wealth, or a means to self-aggrandizement, or even a means of survival in a company with unrealistic sales targets.

So when you’re going 65 mph in the center lane of a highway where the speed limit is 55 mph, you may wonder “What on earth is he thinking?” as some guy goes flying by in the left lane going 90 mph.  You were speeding too; it’s just that you were speeding intelligently.

The speeding analogy is a good one.  That guy going 90 is hurting the rest of us by putting us at extreme risk of physical injury, just as the fraudster is by taking our tax dollars.  And both the speedster and the fraudster have engaged in some twisted internal logic that guides them into thinking that they won’t get caught – THAT THERE AREN’T ENOUGH COPS OUT THERE TO CATCH ME.

Sadly, there is some truth to the logic, which is why the False Claims Act and its qui tam whistleblower provisions are so essential.  With whistleblowers being the government’s eyes and ears, there are so many more eyes and ears out there to aid law enforcement.  It helps balance the playing field a bit: sure there is no HHS Office of Inspector General agent looking over one’s shoulder at every minute.  But one’s employees and coworkers are around all day long, and they’re not stupid.  And they might just have a moral compass more sensitive than someone distracted by how easy it is to get rich gaming the system.

Maybe it’s true that “we don’t catch the smart ones.”  But at least with the False Claims Act, prosecutors get a fighting chance to catch fraudsters, and maybe, just maybe, incentivize people to slow down as they speed past their more honest peers.

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