Healthcare providers could face emboldened whistle-blowers siccing the government on alleged schemes to defraud Medicare and Medicaid if U.S. Sen. Chuck Grassley is successful in retooling the False Claims Act.
Grassley, an Iowa Republican, says recent court decisions have weakened the law that 20 years ago he helped make into powerful means for the government to root out and punish people and organizations bilking taxpayers money. So last week he introduced the awkwardly named False Claims Act Correction Act of 2007. The effort has bipartisan support from Illinois Sen. Dick Durbin, the Democrats assistant majority leader, as well as Arlen Specter (R-Pa.) and Patrick Leahy (D-Vt.)
Healthcare providers are common targets of whistle-blower complaints based on claims submitted to Medicare and Medicaid, and they would find the lawsuits harder to get rid of and more expensive to settle as a result of the proposed amendments, said Beth McClain, special counsel at Fried, Frank, Harris, Shriver and Jacobson in Washington.
The American Hospital Association and Federation of American Hospitals declined to comment on the bill, saying their staffs were still reviewing it.
One of the bills targets is an opinion the U.S. Supreme Court delivered in March (April 2, p. 8), which effectively made it easier for defendants to cut a whistle-blower out of recovering any part of a judgment or settlement if the claim was based on information gathered from the public realm. These decisions threaten to undermine both the spirit and intent of the 1986 amendments to the FCA, Grassley said on the Senate floor Sept. 11, according to a transcript.
Some observers, however, welcomed that decision, saying it could deter what are considered parasitic lawsuitsones seeking an easy payday by blowing the whistle on schemes already uncovered or under investigation by the government, the media or the organization itself.
But James Moorman, president and chief executive officer of Taxpayers Against Fraud, said the result of the opinion was to allow legitimate whistle-blowers to be cut out of a settlement or judgment even if the government couldnt have mounted the case without the help. It shows you how weird courts can be, said Moorman, whose Washington-based advocacy group promotes the use of the False Claims Act.
The proposed legislation would define public disclosure as information made on the public record or disseminated broadly to the general public.
The bill also would extend the statute of limitations on claims from six to 10 years and allow the government to join and add to a whistle-blowers claims using the date when the original lawsuit was filed under seal.