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December 11, 2013 False Claims Act Legal News

False Perceptions About The False Claims Act

The federal False Claims Act (“FCA”) is widely-touted as one of the most successful pieces of legislation in American history. Its success is rooted in the incentivization of integrity which, right or wrong, seems to work. To date, the FCA has been pivotal in the U.S. government recouping billions of dollars from fraudulent government contractors. Most notably, the FCA has led to sizable settlements and judgments against healthcare providers found to be over-billing the government’s Medicare and Medicaid programs.

In a recent congressional policy briefing, the former chief operating officer of the DOJ David Ogden addressed a group of legal minds assembled at Washington’s George Mason University School of Law. Now in private practice, Mr. Ogden admonished the FCA and its procedures, as well as referred the audience to the solutions presented in the recent Chamber of Commerce report to Congress, which he helped co-author.

Perceived Problems With the FCA

As we reported last month, the Chamber of Commerce’s Institute for Legal Reform presented Congress with four suggestions as to how to “improve” the FCA. As a follow-up to those suggested changes, Mr. Ogden centered his speech around the apparent imbalance between record-shattering whistleblower awards and the inopportunity for corporations to correct or self-report their behavior prior to facing liability.

Throughout his speech, Mr. Ogden referred to “bounties” and excessive recoveries, stating “if [that] is your goal, and as part of that lots of bounties, and lots of attorney’s fees, it’s working great….what’s not work out is preventing fraud in the first place.”
In support of this assertion is the section in the ILR’s report which states “despite some successes, the FCA is simply ineffective at preventing fraud as it is currently structured and enforced….[t]he Government Accountability Office has estimated that the United States Treasury loses approximately $72 billion to fraud, abuse, and improper payments each year.”

Unsound Argument

In response to Mr. Ogden’s assertions, we contend that allowing any company who self-reports fraud to escape FCA liability does not necessarily deter fraud in the first place. More likely, companies considering engaging in fraudulent conduct will not feel compelled to make a different decision regardless of whether a statute exists allowing a whistleblower to receive a percentage of the government’s settlement. Conversely, they will continue its fraudulent ways, devise strategies to avoid detection and hope no one finds out.
In sum, removing the FCA’s whistleblower provisions would not steer a corporation, already set on committing fraud, in another more honest, direction. In fact, removing or weakening whistleblower rules places one less preventative measure in the way of a fraudulent company by giving it one less reason to worry. If the only concern is internal self-reporting and compliance, fraud can continue indefinitely – and taxpayers will be none the wiser.

The U.S. has recovered billions of dollars thanks to the FCA. Money which would not have surfaced but for the courageous reporting of whistleblowers, and would undoubtedly have never reached the DOJ’s desk if companies are only bound by their promise to self-report their own fraudulent acts.

Entities like the ILR and individuals like David Ogden believe the FCA and its 30 percent qui tam statute to be unfair and unduly biased against corporations. However, we believe any individual with original information of fraudulent activity against taxpayers should come forward with the help of a whistleblower attorney and hold corporations responsible for their actions. We would also remind those with a similar view to consider the fact that any whistleblower award advanced to a qui tam plaintiff is deducted from the total settlement or judgment and is not an additional payment made above and beyond the settled amount. If you are aware of fraud, contact a qui tam lawyer right away.