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The Ubiquitous False Claims Act: The Incongruous Relationship between a Civil War Era Fraud Statute and the Modern Administrative State

1 St Louis University Journal of Health Law & Policy 131 (2007)

44 Pages Posted: 14 Feb 2014  

Malcolm J. Harkins

St. Louis University

Date Written: March 1, 2007

Abstract

From the mid-nineteenth century through the early twentieth century, federal regulation, to the extent that it existed at all, related primarily to the terms on which third parties could sell or buy goods. In contrast, today, the federal government itself is a dominant consumer of goods and services produced by the private sector. In that role, the federal government regulates government contractors' production processes and often dictates the methods that contractors must use to produce goods or services purchased by the governnment as well as the prices at which the government will purchase such goods.

Government regulation of the production process and of the ordinary incidents of the purchase and sale transactions between the govenment and private parties raises difficult issues unforeseen at the time that the False Claims Act was adopted.The predominant role of the government as a purchaser of goods and services likewise was not anticipated at the time of the FCA's adoption, futher exacerbating the difficulties inherent in applying a nineteenth century fraud statute to twenty-first century transactions. Recent decisions of federal appellate and trial courts evidence the difficulties experienced and foreshadow even greater problems if the tension between the Civil War era FCA and the modern administrative state is not addressed and resolved.

The problems are particuarly acute in programs such as those created by the Medicare and Medicaid Acts. The statutes and regulations implementing those Acts detail performance standards, but also contemplate a degree of non-compliance with such standards and provide the agency with discretion to continue payment for services even when there has been an egregious breech of the performance standards. Moreover, the Medicare and Medicaid programs allow the government discretion to continue to contract with, and to pay, non-compliant suppliers when doing so is is determined to be in the best interests of the program's beneficiaries. Further, in some programs, the Medicare and Medicaid stautes provide that compliance with program standards is to be determined using a specified protocol and by specially trained persons with expertise in the field. Those protocols bear no relationship to the judicial process. In addition, the Medicare Act provides that jurisdiction to determine compliance with program standards ordinarily resides in the Secretary of Health and Human Services, not in the courts.The conflict between the fact-finding and enforcement process peculiar to the Medicare and Medicaid programs and the judicial process used to adjudicate claims under the FCA gives rise to a series of difficult questions that courts must resolve in order to adjudicate FCA claims implicating Medicare and Medicaid performance standards.

Keywords: Flase Claims Act, FCA, Medicare, Medicaid, fraud, regulation, certification, payment, survey, enforcement, discretion

JEL Classification: K41, K42, K23, K20, K19, K10, I18,H80, H57, H51

Suggested Citation

Harkins, Malcolm J., The Ubiquitous False Claims Act: The Incongruous Relationship between a Civil War Era Fraud Statute and the Modern Administrative State (March 1, 2007). 1 St Louis University Journal of Health Law & Policy 131 (2007). Available at SSRN: https://ssrn.com/abstract=2394778

Malcolm Harkins (Contact Author)

St. Louis University ( email )

School of Law
100 N. Tucker Blvd.
St. Louis, MO 63101-1930
United States
314 977 3998 (Phone)
314 977 3332 (Fax)

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