False Claims Act Update

Legal Compliance Resource
September 20, 2012 — 982 views  

The False Claims Act (FCA), 31 U.S.C. 3729-3733, was first enacted in 1863 and signed into law by Abraham Lincoln. The original intent of the FCA was to stop Civil War contractors from defrauding the U.S. government, but since that time, the scope of the act has been extended to include whistleblowers of all types, including civilians acting on behalf of the government. The qui tam provision of the FCA allows civilians to file a lawsuit on the government’s behalf and to be paid a percentage of any money recovered.

According to the U.S. Department of Justice (DOJ), the False Claims Act was responsible for the recovery of $21.6 billion from 1987 to 2008, and in recent years, enforcement of the FCA has only increased. Since 2009, whistleblower incidents filed with the DOJ have increased by nearly 50 percent. Amendments made to the FCA in 1986 and 2009 prompted Acting Assistant Attorney General Stuart F. Delery to proclaim that it is the “government’s most potent civil weapon in addressing fraud.”

Several important updates to the FCA have been made from 2010 to 2012, and they are released on a biannual basis. These updates come from federal and state legislative action, legal settlements, case law and judicial trends. Many of the recent updates concern the healthcare sector, but whistleblowers in all industries have been afforded increased protection. Among the changes are the following:

• Whistleblower protection now extends to contractors and agents instead of only to employees.
• Healthcare providers that knowingly retain government overpayments, including those caused by mistakes, are now subject to liabilities, penalties and damages under the FCA.
• New tools are now available to the DOJ that make it easier to investigate fraud and potential violations of the FCA.

In addition to these changes, Delery announced the following midyear 2012 updates:

• FCA activity is expected to increase because the demand for government-funded healthcare is growing. State expenditures for healthcare totaled $1.69 trillion in 2011.
• The recent recession has prompted public outrage over government spending that will lead to an increased emphasis on identifying, investigating and prosecuting perpetrators of fraud and abusers of government funding. Any institution receiving government funds will be held accountable for how the funds are acquired and how the money is spent.
• Fraud investigation and prosecution is now a cabinet-level priority, and multiple task forces will be created to leverage the assets of government agencies. In addition, U.S. attorneys working for the DOJ now have the authority to issue a powerful investigative tool known as civil investigative demands (CIDs). In 2011, 888 CIDs were issued, which was 10 times the number issued in 2009 and 2010.

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