Public Health Law Map - Beta 5 - Medical and Public Health Law Site

(2) The Everyone-Does-It Defense
Despite the decision in Greber and clear wording of the law, medical care
attorneys and their clients continued to structure deals in violation of the laws. As
one attorney put it, “the standard set in the United States v. Greber case is clear:
If one purpose of payment is to induce future referrals, the Medicare statute has
been violated.” But, he adds, it is not followed absolutely. “You’ve got this case
law that says everybody goes to jail and you know that can’t be right.” The
question then becomes which of the transactions is more likely to stimulate the
interest of a prosecutor, he says. [Hudson T. Fraud and abuse rules: enforcement
questions persist. Hospitals. 1990;64:36.]
As late as 1993, the authors of this book wrote:
For unstated reasons, the Justice Department has not enforced the fraud
and abuse law in any meaningful way, leaving physicians and their
attorneys in an ethical quandary. If physicians follow the law and the
cases interpreting the law, they will be at a tremendous competitive
disadvantage. Under the plain language of the law, its interpretation by
the courts, and the administrative agency regulations, attorneys are
compelled to recommend against many common medical care business
practices. If attorneys do so, their clients will seek counsel who are more
realistic.
Since that was written, the DOJ and the OIG have “discovered” fraud and abuse
prosecutions and have sanctioned many medical care providers for their illegal
deals. In the latest enforcement actions, the government has started to indict the
attorneys who advised on abusive deals.
(3) False Claims Act
The FCA was passed during the Civil War to fight corruption among the
contractors who supplied the Union Army. It is a qui tam law, which allows a
private litigant to sue on behalf of the government. [This is a very old legal tool,
dating to the pre- colonial period. See e.g., Shoemaker v. Shirtliffe, 1 U.S. 127
(1785) and Purviance v. Angus, 1 U.S. 180 (1786).] The government may take
over the lawsuit, ask that it be dismissed, or allow the private litigant to prosecute
the lawsuit for a civil remedy. If the government prosecutes the lawsuit, then the
private litigant is entitled to between 15% and 25% of the recovery, [31 U.S.C. §
3730(d)(1).] and between 25% and 30% if the government does not intervene.
[31 U.S.C. § 3730(d)(2).] The attraction of these actions in medical care is the
statutory penalty—$5,000 to $10,000 per false claim submitted. [United States v.
Bornstein, 423 U.S. 303 (1976).] The court does not have the authority to reduce
this penalty. [United States v. Lorenzo, 768 F. Supp. 1127 (E.D. Pa. 1991). In this
case, a dentist presented 3,683 false claims, worth approximately $140,000. The
court found that it had no authority to reduce the penalty below the $5,000
minimum and awarded the government $18,415,000.]
114