The Improved False Claims Act Reaches Modern-Day Healthcare Fraud Schemes

For decades, the United States Supreme Court has stressed that the federal False Claims Act is “intended to reach all types of fraud, without qualification, that might result in loss to the Government.” United States v. Neifert-White Co., 390 U.S. 228 (1968). This admonition from the Court is worth repeating, particularly as healthcare fraud schemes have become increasingly complex and defense attorneys have tried to rein in the reach of the False Claims Act.

Fortunately, in 2009, Congress restored and modernized the FCA, echoing once again that the False Claims Act should be used to protect all types of fraud on the government dollar, without qualification.

The resulting FCA has become an even stronger weapon against healthcare fraud. Moreover, not only are the courts largely respecting the congressional intent behind the improved Act, but the Department of Justice seems more willing and able to use the Act against all types of healthcare fraud schemes.

With that being said, even the most complex healthcare fraud schemes are, at their root, instances of defendants overcharging the government or wrongfully retaining government money, property, or benefits. All of these bedrock FCA allegations echo back to very founding of the False Claims Act, when President Lincoln raised concerns that contractors were defrauding the Union Army.

The government recently resolved a False Claims Act qui tam action against St. Jude Medical Inc., in which the company inflated the cost of pacemakers and defibrillators it sold the government.  According to the qui tam complaint, St. Jude actively marketed its pacemakers and defibrillators by touting the generous credits available should a device need to be replaced while covered under warranty. At the same time, St. Jude knew that it failed to give appropriate credits to device buyers in a number of cases where a product was replaced while still under warranty. In short, the company allegedly overcharged the government.

This successful qui tam action is a great reminder that present-day healthcare fraud schemes may include new bells and whistles. However, at the end of the day, they all sound the same old tune of dishonesty and deceit—and the False Claims Act is available to silence the fraud.

For more information about qui tam law and healthcare fraud, contact Nolan & Auerbach, P.A.

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