KABOOM! The Explosion of Qui Tam False Claims Under the Health Reform Law
By Beverly Cohen.
Since its inception in 1863, the federal False Claims Act (the “Act”) has included provisions whereby citizens can assist in the detection and enforcement of frauds against the government. To increase fraud recoveries, the Act authorizes private citizens (“relators”) to sue on behalf of the government (“qui tam” lawsuits) when they detect a fraud that is not already the subject of a federal enforcement action.
Periodically, Congress has adjusted the Act’s qui tam provisions in order to balance its dual goals of creating, on the one hand, sufficient incentives for private parties to detect and pursue frauds, but to discourage, on the other hand, qui tam actions where the federal government already has the ability to discover and prosecute the fraud on its own. Over the years, Congress aimed to attain the “golden mean”—an equitable balance between encouraging private fraud detection that increases federal fraud recoveries but discouraging “parasitic” qui tam actions where the relator merely asserts fraud claims that have already been made public.
The most recent adjustments to the qui tam provisions of the Act occurred with the enactment of health reform, the Patient Protection and Affordable Care Act. Amidst a national recession that ballooned the ranks of the uninsured and reports of rampant health care frauds that were robbing millions of dollars from federal health care programs, Congress sought to expand incentives for private citizens to detect and report health care frauds.
However, by eliminating the two predominant statutory limitations to qui tam jurisdiction, the PPACA has enormously broadened the ability of relators to commence qui tam lawsuits under the Act. First, the PPACA revised the Act’s “public disclosure” provisions to dramatically increase the sources of public information that relators may utilize as bases for their qui tam actions. And second, the PPACA revised the Act’s “original source” rule to eliminate the “direct knowledge” requirement, formerly the most stringent requirement that relators needed to satisfy to maintain their suits. Thus, the PPACA’s reforms signal a new age of extremely broad qui tam authority.
This Article will examine these recent amendments to the qui tam provisions of the False Claims Act, focusing on the enormous expansion of relators’ ability to commence qui tam actions, and changes to the qui tam bar that are likely to result.