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An Economic Model to Analyze the Impact of False Claims Act Cases on Access to Healthcare for the Elderly, Disabled, Rural and Inner-City Poor
Published online by Cambridge University Press: 24 February 2021
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In 1964 President Lyndon B. Johnson declared a “War on Poverty.” By 1965 Congress had enacted several key weapons in that war, including two massive revisions to the Social Security Act designed to provide broad access to healthcare for if. the elderly, the disabled and poor, uninsured pregnant women and infants. The current Medicare and Medicaid health insurance programs, along with the State Children's Health Insurance Program, provide health insurance and thus, access to healthcare, for 60% of people living in poverty. Medicaid alone pays for half of all nursing home care in this country. Medicare pays for hospital care for over 32.4 million elderly Americans, and for 3.7 million disabled Americans. Medicare and Medicaid have been called the “lynch pin” in the nation's strategy to assure access to healthcare for low income Americans. In short, the War on Poverty is not effective without the access to healthcare Medicare and Medicaid afford to the poor, elderly and disabled.
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References
1 Special Message to Congress Proposing a Nationwide War on the Sources of Poverty, 219 Pub. Papers 375, 376 (Mar. 16, 1964).
2 The “War” resulted in what became known as the “Great Society” legislation. The period between 1964 and 1976 was one of this nation’s most comprehensive periods of social reform, overseeing the enactment of the Civil Rights Act of 1964, Pub. L. No. 88-352, 78 Stat. 241 (1964); the Voting Rights Act of 1965, Pub. L. No. 89-110, 79 Stat. 445 (1965); and the Civil Rights Act of 1968, Pub. L. No. 90-284, 82 Stat. 73-92 (1968).
3 42 U.S.C. §§ 1395-1395ccc (1994).
4 42 U.S.C. §§ 1396-1396u (1994).
5 42 U.S.C.A. § 1397aa (West 2001). Under the State Children’s Health Insurance Program (SCHIP), states received a total of $20.3 billion over five years, through 2002, to establish and support health insurance programs for low income children. Medicaid now covers children under 19 years of age who are otherwise uninsured, and whose family incomes are less than or equal to up to 200% of the federal poverty level. See generally Health Care Fin. Admin., State Children’s Health Insurance Program, at http://www.hcfa.gov/init/children.htm (last visited Nov. 7, 2001) (providing an overview of SCHIP, as well as the most recent statistics for the program).
6 Press Release, HHS Press Office, A Comprehensive Strategy to Fight Health Care Waste, Fraud and Abuse (Mar. 9, 2000), available at http://www.hhs.gov/news7press/2000press/20000309a.html.
7 Diane Roland, Medicaid at 30: New Challenges for the Nation’s Health Safety Net, 274 JAMA 271, 271 (1995).
8 See Clark C. Havighurst et al., Health Care Law and Policy 110 (2d ed. 1998). This is not including the 237,000 end stage renal disease patients also covered by Medicare, id.
9 Hearing on Welfare and Medicare Refund Before the Senate Comm, on Finance, 104th Cong. 97 (1996) (statement of Karen Davis, President, the Commonwealth Fund).
10 Upon introducing the Medicare and Medicaid statutes to Congress, President Johnson declared, “we are going to fight for medical care for the aged as long as we have breath in our bodies.” (emphasis added). His vision, therefore, was that government would facilitate access to healthcare, by enacting legislation to finance medical treatment for the underserved. Robert D. Myiller, Problems in Health Care Law 72 (7th ed. 1996).
11 In 1989 the federal Medicare program spent $96 billion and the state and federal Medicaid program spent $71 billion. See BARRY R. FURROW ET AL., HEALTH LAW 565 (2d ed. 1991).
12 Salcido, Robert, DOJ Must Reevaluate Use of False Claims Act in Medicare Disputes, 5 Andrews Health Care Fraud Litigation Rep. 7, 15 (2000)Google Scholar.
13 See Fraud and Racketeering in Medicare and Medicaid: Hearing Before the House Select Comm, on Aging, 95th Cong. 11,11 (1978) (statement of Griffin B. Bell, U.S. Att’y Gen.).
14 See Overview of False Claims and Fraud Legislation: Hearing on Legislation to Combat the Growth of Fraud Against the Federal Government Through the Filing of False Claims by Government Contractors Before the Senate Comm, on the Judiciary, 99th Cong. 2, 35 (1986) (statement of Richard K. Willard, Asst. U.S. Att’y Gen. Civ. Div., Dep’t Justice). See also Bucy, Pamela H., Fraud by Fright: Crime by Health Care Providers?, 67 N.C. L. Rev. 855, 937 (1989)Google Scholar.
15 See, for example, the creation in Florida of the Agency for Health Care Administration. Fla. Stat. Ann. § 20.42 (West 2001).
16 Fact Sheet, HHS Press Office, The Clinton Administration's Comprehensive Strategy To Fight Healthcare Fraud (Aug. 21, 1997), available at http://www.aoa.gov/pr/strategy.html.
17 HCFA is now the Centers for Medicare & Medicaid Services (CMS). See CTRS. for Medicare & Medicaid Servs., Introducing CMS, at http://cms.hhs.gov/about/reorg.asp (last visited Oct. 12, 2001).
18 Fact Sheet, HHS Press Office, supra note 16.
19 Press Release, HHS Press Office, President Announces Health Care Anti-Fraud Project: Operation Restore Trust (May 3, 1995), available at http://www.hhs.gov/news/press/1995pres/950503.html; see also Press Release, Office Inspector Gen. Press Office, Operation Restore Trust ailable at http://www.hhs.gov/news/press/1997pres/970520d.html (announcing the expansion of the Operation Restore Trust based on a two year demonstration project that recovered more than $187.5 million in fines, recoveries, settlements, audit disallowances and civil monetary penalties owed to the federal government).
20 See, e.g., Health Care Fin. Admin, Medicaid Bureau Fraud and Abuse Information, at http://www.hcfa.gov/medicaid/mbfraud.htm (last visited Oct. 10, 2001.) (discussing HCFA’s effort to detect and prevent fraud and abuse in the Medicaid program, based on a partnership and cooperative effort with beneficiaries, Medicaid providers, contractors and state and federal agencies).
21 See U.S. Dep’t Health and Human Servs., AAA Training Manual for S.O.R.T., available at http://www.aoa.gov/aoaortnet/sortmanual.html (last modified Dec. 1, 1998) (discussing how S.O.R.T. began with a grant awarded by DHHS Administration on Aging to recruit and train retired individuals to identify and report Medicare and Medicaid fraud and abuse). See also Health Care Fin. Admin., Who Pays? You Pay!, at http://www.hcfa.gov/medicare/fraud/hmfraudl.htm (last modified Apr. 3, 1998) (discussing the campaign initiated by the DOJ, DHHS and AARP to train volunteer Medicare beneficiaries to report fraud); Press Release, DHHS Press Office, Shalala Announces a Toll-Free Hot Line to Fight Medicare and Medicaid Fraud (June 27, 1995), available at http://www.os.dhhs.gov/news/press/1995pres/950627b.html.
22 Press Release, OFFICE INSPECTOR GEN. PUB. AFFAIRS OFFICE, Inspector General Issues Open Letter to Health Care Community: Urges Providers to Self-Disclose Improper Conduct (Mar. 9, 2000), available at http://www.os.dhhs.gov/oig/modcomp/disclosenews.htm.
23 Bucy, Pamela H., The Path From Regulator to Hunter: The Exercise of Prosecutorial Discretion in the Investigation of Physicians at Teaching Hospitals, 44 ST. LOUIS U.L.J. 3, 14 (2000)Google Scholar.
24 Id. at 16.
25 31 U.S.C. § 3729 (1994).
26 See Bucy, supra note 23, at 35 (calling the FCA “one of the most potent weapons available to the Government to combat health care fraud.”). See also Mark Langdon, Special Issue: Health Law Symposium: Transcript: Fraud and Abuse 1 U. MIAMI BUS. L. REV. 438, 440 (1999) (calling the FCA “the Government’s most powerful weapon in this fight against fraud and abuse because of the enormous penalties that can be imposed.”); Thompson, Lewis Morris & Gary W., Reflections on the Government’s Stick and Carrot Approach to Fighting Health Care Fraud, 51 Ala. L. REV. 319, 326 (1999)Google Scholar (naming the FCA as the government’s “primary weapon” against fraud).
27 See 31 U.S.C. § 3729 (1994).
28 Qui Tam is an abbreviation of the Latin phrase qui tam pro domino rege quam se ipso in hac parte sequitur (causes of action brought in the king’s name as well as the plaintiffs name). Black’s Law Dictionary 1262 (7th ed. 1999).
29 (b) Actions By Private Persons.
(1) A person may bring a civil action for a violation of section 3729 for the person and for the United States Government. The action shall be brought in the name of the Government. The action may be dismissed only if the court and the Attorney General give written consent to the dismissal and their reasons for consenting.
(d) Award to Qui Tam Plaintiff
(1) If the Government proceeds with an action brought by a person under subsection (b), such person shall…receive at least 15 percent but not more than 25 percent of the proceeds of the action or settlement of the claim… .
(2) If the Government does not proceed with an action under this section, the person bringing the action or settling the claim shall receive an amount which the court decides is reasonable for collecting the civil penalty and damages. The amount shall be not less than 25 percent and not more than 30 percent of the proceeds of the action or settlement and shall be paid out of such proceeds.
31 U.S.C. § 3730 (b)
30 The FCA provides in pertinent part as follows:
(a) Liability for certain acts. Any person who: ‘
(1) knowinglypresents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval;
(2) knowinglymakes, uses, or causes to be made or used a false record or statement to get a false or fraudulent claim paid or approved by the Government;
(3) conspires to defraud the Government by getting a false or fraudulent claim allowed or paid
(7)knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government, is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the Government sustains because of the act of that person ….
31 U.S.C. § 3729 (1994). Note, however, that the civil penalties under this section have been increased to not less than $5,500 and not more than $11,000 by regulation under § 31001 (s)(l) of the Omnibus Consolidated Rescissions and Appropriations Act of 1996, Pub. L. 104-134, 110 Stat. 1321(1996). See Civil Monetary Penalties Inflation Adjustment, 64 Fed. Reg. 47,099, 47104 (Aug. 30, 1999).
31 Some courts and commentators have also called this category of cases “tainted claims” because the underlying violation “taints” the defendant’s otherwise truthful claim for payment. However, in this article I use the more general term “false certification claims” to include “tainted claims,” which may or may not be based upon an express or implied certification of compliance. Some courts have found “tainted” claims actionable merely by virtue of the existence of an underlying violation, not based upon any representation by the defendant that there was no such violation. See, e.g., United States ex. rel. Roy v. Anthony, 914 F. Supp. 1504, 1506 (S.D. Ohio 1994). See also Dayna B. Matthew, Tainted Prosecution of Tainted Claims: The Law, Economics, and Ethics of Fighting Medical Fraud Under the Civil False Claims Act, 76 IND. L.J. 525 (2001). However, the reasoning from those courts demonstrates that their analysis relies upon a finding that the defendant either represented there was no “taint” or violation, or affirmatively hid the fact that one existed. In either case the gravamen of the FCA action is the defendant’s alleged misrepresentation, which is better expressed by the title “false certification claims.”
32 Recent estimates suggest that 14% of the $68 billion paid by DHHS to Medicare providers were improper or fraudulent. See CONSUMER'S UNION, Coalition in Opposition to HR 3523: An Open Letter to Congress (Mar. 31, 1998), available at http://www.consumersunion.org/health/0331fraud.htm. According to the General Accounting Office (GAO), as much as 10% of total healthcare costs are lost to fraudulent or abusive practices by unscrupulous healthcare providers. See H.R. Rep. No. 104-496, at 69 (1996), reprinted in 1996 U.S.C.C.A.N. 1865, 1869.
33 See Bucy, supra note 23, at 12-35.
34 Health Insurance Portability and Accountability Act, Pub. L. No. 104-191, 110 Stat. 1936 (1996). ‘
35 18 U.S.C. § 287 (1994).
36 18 U.S.C. §§ 1341, 1343 (1994).
37 18 U.S.C. §§ 1956-1957 (1994).
38 18 U.S.C. §§ 1961-1964 (1994).
39 42 U.S.C. § 1320a-7b(a)(l) (1994).
40 See Bucy, supra note 14, at 883.
41 United States ex rel. Pogue v. American Healthcorp, Inc., 914 F. Supp. 1507, 1509 (M.D. Tenn. 1996).
42 42 U.S.C. § 1320a-7b (1994). Throughout this article “the Medicare and Medicaid AntiFraud Laws” refer collectively to the criminal and civil provisions of the Social Security Act; the antifraud provisions of HIPAA (codified as amended in scattered sections of 42 U.S.C.); and the civil provisions of Stark I and Stark II (42 U.S.C. § 1395nn). Hereinafter, the criminal sections of the antifraud laws will be referred to as the “Anti-Kickback Act.” The civil section of the Medicare and Medicaid anti-fraud laws will be referred to as either the “Civil Monetary Penalties Law” or the “CMPL.” Stark I and Stark II will be collectively referred to as “the Stark Laws.”
43 See, e.g., United States v. First Nat’l Bank of Cicero, 957 F.2d 1362, 1374 (7th Cir. 1992); United States v. Entin, 750 F. Supp. 512, 519 (S.D. Fla. 1990). But see, e.g., United States v. Hibbs, 568 F.2d 347, 351 (3d Cir. 1997); United States ex rel. Hopper v. Anton, 91 F.3d 1261, 1266 (4th Cir. 1996); United States ex rel. Schwedt v. Planning Research Corp., 59 F.3d 196, 200 (D.C. Cir. 1995); United States v. Miller 645 F.2d 473, 475-76 (5th Cir. 1981).
44 See, e.g., United States ex rel. Schumer v. Hughes Aircraft Co., 63 F.3d 1512, 1521 (9th Cir. 1995); United States v. Ridglea State Bank, 357 F.2d 495, 497 (5th Cir. 1966); Toepleman v. United States, 263 F.2d 697, 699 (4th Cir. 1959); but cf. United States ex rel Berge v. Bd. of Trs. of the Univ. of Ala., 104 F.3d 1453, 1459 (4th Cir. 1997) (requiring false statements to be material in order to be actionable under the FCA); Young-Montenay, Inc. v. United States, 15 F.3d 1040, 1043 (Fed. Cir. 1994) (requiring injury to make out an FCA case).
45 See, e.g.. United States v. Kats, 871 F.2d 105, 108 (9th Cir. 1989); United States v. Bay State Ambulance & Hosp. Rental Serv., Inc., 874 F.2d 20, 29-30 (1st Cir. 1989). But see Hanlester Network v. Shalala, 51 F.3d 1390, 1400 (9th Cir. 1995) (requiring a specific intent to defraud); United States v. Jain, 93 F.3d 436, 440-41 (8th Cir. 1996) (holding that “the government must meet a heightened mens rea burden”).
46 See, e.g., Peterson v. Weinberger, 508 F.2d 45 (5th Cir. 1975).
47 See Hoffman, David R., The Role of the Federal Government in Insuring Quality of Care in Long-Term Care Facilities, 6 Annals Health L. 485 (1997)Google Scholar; Peterson, Kathleen A., First Nursing Homes, Next Managed Care?: Limiting Liability of Quality of Care Cases Under the False Claims Act, 26 Am. J.L. & Med. 69 (2000)Google ScholarPubMed.
48 See, e.g., Gen. Accounting Office, GAO-HEHS-98-195, Medicare: Application of the false Claims Act to Hospital Billing Practices (July 1998).
49 See, e.g., United States ex rel. Gublo v. Novacare, 62 F. Supp. 2d 347 (D. Mass. 1999).
50 The statute calculates treble damages by tripling the amount of each individual claim for payment filed in violation of the FCA. This is in addition to a penalty ranging from $5,500 to $11,000 for each individual claim for payment held in violation of the statute. See 31 U.S.C. § 3729 (1994). In 1999 the United States won or negotiated more than $524 million in judgments, settlements and administrative fines in healthcare fraud cases. Dep’t Health and Human Servs. & Dep’t Justice, 1999 Health Care Fraud and Abuse Control Program Ann. Rep. 3 (2000).
51 See Matthew, supra note 31; see also Lisa M. Phelps, Note, Calling off the Bounty Hunters: Discrediting the Use of Alleged Anti-Kickback Violations to Support Civil False Claims Actions, 51 Vand. L. Rev. 1003, 1005 (1998) (contending that it is unfair for courts to make determinations as to whether private parties may bring anti-kickback claims under the FCA).
52 Dorfman, Michael R., Note, Qui Tam: Fighting the Uphill Battle Against Health Care Fraud, 77 U. Det. Mercy L. Rev. 927, 927 (2000)Google Scholar.
53 See, e.g., Merlin, John, The Middle Class on Medicaid?, Investors Bus. Daily, Oct. 11, 1995Google Scholar, available at 1995 WL 9245138 (discussing “Medicaid estate planners,” an industry of advisors who show senior citizens how to shelter assets so as to qualify for Medicaid benefits).
54 See 42 U.S.C. § 1320a-7a(a) (1994).
55 Bucy, supra note 14, at 875.
56 Because the plaintiff in a qui tam action “relates” facts on behalf of the government, the plaintiff is also called a “relator.” Black’s Law DIctionary 1262 (7th ed. 1999).
57 Charles Miller, U.S. Dep’t Justice, False Claims Act Qui Tam Statistics, Oct. 1, 1986 Through Sept. 30, 2000 (on file with author).
58 Id.
60 See, e.g., United States ex rel. Piacentile v. Wolk, No. 93-5773, 1995 U.S. Dist. LEXIS 580, at *1 (E.D. Pa. Jan. 13, 1995).
61 These are cases in which the provider egregiously billed for more lucrative services than actually rendered or deceptively double billed the government for a single service. See, e.g., Davies, Timothy S. Jost & Sharon L., The Empire Strikes Back: A Critique of the Backlash Against Fraud and Abuse Enforcement, 51 Ala. L. Rev. 239, 271 (1999)Google Scholar.
62 See Gen. Accounting Office, GAO/HEHS-99-170, Medicare Fraud and Abuse: DOJ’s Implementation of False Claims Act-Guidance IN National initiatives Varies, 2 n.l (1999) [hereinafter GAO Rep.] (defining “initiatives” as investigations based on DOJ’s analysis of claims data patterns in past cases to predict possible patterns of improper billing by providers).
63 Id. Examples of DOJ initiatives targeting different potentially fraudulent billing practices include Laboratory Unbundling, 72 Hour-Window (billing single service under both inpatient and outpatient codes), Prospective Payment System Transfer and Pneumonia Upcoding and PATH (the initiative targeting fraudulent billing by teaching hospitals). Any impropriety in the government’s use of this last initiative is particularly troublesome since these large, tertiary care hospitals are often the provider of last resort for the urban and rural poor because they do not turn indigent patients away.
64 See Peter Aronson, Claims by DOJ Lacked Proof—GAO Says There Was Scant Evidence in 145 Health Fraud Cases, Nat’l L.J., Aug. 23, 1999, at A4 (discussing a GAO report finding insufficient evidence to support allegations of laboratory unbundling made against numerous hospitals).
65 GAO Rep., supra note 62, at 6. See also Salcido, supra note 12.
66 Gerson, Stuart M., Will New Federal Guidelines Arrest Overzealous Use of False Claims Act?, 13 White Collar Crime Rep. 3, 3-4 (1999)Google Scholar (summarizing legislation introduced by Rep. Bill McCollum and Rep. William Delahunt that eventually died after the DOJ introduced guidelines promising to curb abuses).
67 See GAO Rep., supra note 62, at 2.
68 Omnibus Consolidated and Emergency Supplemental Appropriations Act of 1999, Pub. L.
69 See GAO Rep., supra note 62, at 4-5 (concluding that implementation of the DOJ Guidance was variable, the process for assessing U.S. Attorneys’ compliance with the guidelines was superficial, and some offices restricted access to the GAO, preventing independent review of all programs).
70 This approach presents the additional risk of inconsistent application of the underlying statutes. Despite the prerequisite finding that the underlying statute has been violated, the standards applied to these judgments are unlikely to be consistent with findings by criminal and administrative law judges deciding cases under these provisions directly.
71 42 U.S.C. § 1320a-7b(b) (1994).
72 42 U.S.C. § 1395nn (1994).
73 See, e.g., United States ex rel. Joslin v. Community Home Health of Md., Inc., 984 F. Supp. 374 (Md. 1997); United States ex rel. Lacourte v. Smith Kline Beecham Clinical Lab., Inc., 1999 WL 639683 (E.D. La. Aug. 19, 1999); United States ex rel. Gublo v. Novacare, Inc., 62 F. Supp. 2d 347 (D. Mass. 1999); United States ex rel. Showell v. Philadelphia AFL, CIO Hosp. Ass’n, 2000 WL 424274 (E.D. Pa. Apr. 18, 2000).
74 914 F. Supp. 1507, 1508 (M.D. Tenn. 1996).
75 Id. at 1511.
76 Id. at 1512.
77 125 F.3d 899, 900-01 (5th Cir. 1997).
78 Id. at 901.
79 Id. at 902.
80 Id. at 903.
81 Id. at 904.
82 984 F. Supp. 374, 377 (D. Md. 1997).
83 Id.
84 Id.
85 Id.
86 Id. at 379. The court concluded that under the Fourteenth Amendment, Maryland’s repeal of the CON exemption did not disturb its vested property right in a license to provide home health services in which the defendant had a vested property interest. Id.
88 Id. at 384.
89 HCFA-1450 is the form by which the defendant Medicare provider submitted its request for reimbursement to the U.S. Government. Id. at 384. The plaintiff argued unsuccessfully that two other forms were also false certifications. The plaintiff alleged the Form HCFA-1728, the defendant’s annual cost reports, provided sufficient basis for FCA liability. The Form HCFA-1728 included the following certification: “I hereby certify that… I am familiar with the laws and regulations regarding provision of health care services, and that the services identified in this cost report were provided in compliance with such laws and regulations.” The relator also argued that a letter by a principal of the defendants certifying compliance of the law of Maryland constituted a further false statement actionable under the FCA. Neither argument prevailed. Id. at 385-86.
90 Id. at 384.
91 Id.
92 132 F. Supp. 2d 913, 925 (D. Colo. 2000).
93 Id. at 917.
94 Id.
95 Id.
96 Id. at 925.
97 Shaw v. AAA Eng’g & Drafting, Inc., 213 F.3d 519, 531 (10th Cir. 2000).
98 Wright, 132 F. Supp. 2d at 926.
99 Id. at 926.
100 Id.
101 945 F. Supp. 1485 (W.D. Okla. 1996).
102 Id. at 1487.
103 Id.
104 Id. at 1488.
105 Id.
106 Id.
107 Id.
108 Id. at 1489. It is important to note, however, that the Aranda court specifically refused to considerthis argument because the defendant failed to answer the government’s position that FCA liability was not preempted. Thus, the Aranda court’s dicta on the preemption issue must not be read as the court’s rejection of the preemption argument.
109 United States ex rel. Mikes v. Strauss, 84 F. Supp. 2d 427 (S.D.N.Y. 1999).
110 Id. at 433. A spirometer is an instrument used to measure a patient’s ability to exhale. Id.
111 Id.
112 Id.
113 Id. at 435.
114 Id.
115 183 F.3d 730, 731 (7th Cir. 1999).
116 Id.
117 Id.
118 Id. at 732-33.
120 Id. at *2.
121 Id.
122 Id.
123 115 F. Supp. 2d 1149 (W.D. Mo. 2000).
124 Id. at 1153. Although the government cited this statute to establish the level of care that the government expected, it was careful in pleading this case not to base its FCA claim on any alleged breach of a false express or implied certification that the defendants would meet this standard of care. Rather, the government simply argued that the defendant was liable under the FCA because it could not possibly have rendered the care for which it had billed under the Medicare and Medicaid programs. In short, the government alleged the care was never provided. According to the NHC Healthcare court, this distinction importantly preserved the government’s action under the FCA from dismissal. Id. at 1153-54.
125 Id. at 1155.
126 Id. at 1154.
127 Id.
128 115 F. Supp. 2d 35, 38 (D. Mass. 2000). A panel is a group of tests for which a blood sample is required. For each panel of tests, a single blood sample must be taken by syringe. Id.
129 Id.
130 Id. at 41-43.
131 Id.
132 Id.
133 Id. at 43.
134 98 F. Supp. 2d. 822 (W.D. Mich. 2000).
135 Id. at 826.
136 Id. at 830-31.
137 Id.
138 Id.
139 Id. at 832.
140 United States ex rel. Aranda v. Cmty. Psychiatric Ctrs. 945 F. Supp. 1485 (W.D. Okla. 1996).
141 See, e.g., Cedars-Sinai Med. Ctr. v. Shalala, 125 F.3d 765 (9th Cir. 1997); United States ex rel. Wagner v. Allied Clinical Labs., 1995 WL 254405 (S.D. Ohio Mar. 20, 1995).
142 The Joslin and Wright cases are exempted from this discussion because FCA liability was premised upon underlying violations of state licensing laws. Similarly, the NHC Healthcare statutory false certification case is based on a breach of the Nursing Home Reform Act. This section discusses exclusively preemption of cases brought under the FCA alleging violations of the anti-fraud laws. The NHC Healthcare case may also raise preemption issues depending upon the scope of the Nursing Home Reform Act. That case, along with Joslin and Wright, most likely raise similar federalism problems such as those discussed in the next section of this article.
143 In 1996 the Aranda court declined to reach the issue because only the government’s position had been argued in the record before it. United States ex rel. Aranda v. Cmty. Psychiatric Ctrs. of Okla., Inc., 945 F. Supp. 1485, 1488 (W.D. Okla. 1996).
144 See Brown v. General Servs. Admin., 425 U.S. 820, 834 (1976).
145 See United States v. General Dynamics, 19 F.3d 770, 774-77 (2d Cir. 1994).
146 Sunstein, Cass R., Section 1984 and the Private Enforcement of Federal Law, 49 U. Chi. L. REV. 394 (1982)CrossRefGoogle Scholar.
147 See, e.g., Climan, Richard E., Civil Liability Under the Credit-Regulation Provisions of the Securities Exchange Act of 1934, 63 CORNELL L. REV. 206 (1978)Google Scholar; Posner, William M. Landes & Richard A., The Private Enforcement of Law, 4 J. LEGAL STUDIES 1 (1975)Google Scholar; Stewart, Richard B., The Reformation of American Administrative Law, 88 HARV. L. REV. 1667 (1975)CrossRefGoogle Scholar.
148 Sunstein offers a model for “determining when, in the absence of a clear statement from Congress, the creation of a statutory enforcement mechanism preempts the usual operation of Section 1983.” Sunstein, supra note 146, at 396. In the case of medical fraud, the question is whether the creation of a statutory enforcement mechanism preempts the usual operation of the Anti-Kickback statutes, the Stark laws, the CMPL and HIPAA.
149 Id.
150 Bucy, supra note 23, at 14.
151 See Matthew, supra note 31, at 528.
152 441 U.S. 677, 731 (1979) (Powell, J., dissenting).
153 451 U.S. 287, 297-98 (1981).
154 Sunstein, supra note 146, at 413-14.
155 42 U.S.C. § 1320a-7b(b) (1994).
156 42 U.S.C. § 1320a-7b(a) (1994).
157 42 U.S.C. § 1320a-7a(7) (1994).
158 42 U.S.C. § 1320a-7a(a) (1994).
159 438 U.S. 265 (1978).
160 Id. at 382-83.
161 Id. at 385-86.
162 Id.
163 304 U.S. 64, 78 (1938).
164 Id.
165 See generally Paul Lund, The Decline of Federal Common Law, 76 B.U. L. Rev. 895 (1996) (summarizing articles debating the scope and contours of federal common law).
166 Erie, 304 U.S. at 70.
167 Lund, supra note 165, at 905.
168 Id. at 906.
169 Professor Thomas Merrill has argued that federal courts should be free to create judge-made federal law in four categories of cases. See Thomas W. Merrill, The Common Law Powers of Federal Courts, 52 U. CHI. L. REV. 1, 12 (1985). Professor Louise Weinberg argues more broadly that cases involving the “national interest” permit the federal courts to pronounce federal common law, independent of any express grant of Constitutional or statutory authority. See Weinberg, Louise, Federal Common Law, 83 Nw. U. L .REV. 805, 812-13 (1989)Google Scholar.
170 See, e.g., Hinderlider v. La Plata River & Cherry Creek Ditch Co., 304 U.S. 92, 110(1938).
171 See, e.g., D’Oench, Duhme Co. v. FDIC, 315 U.S. 445, 455-469 (1942); but cf. O’Melveny
&Myers v. FDIC, 512 U.S. 79, 88-9(1993) (refusing to create a special federal rule when the agency has not identified a “significant conflict” between the federal interests and the application of state law).
173 See, e.g., Local 174, Teamsters v. Lucas Flour Co., 369 U.S. 95, 102 (1962).
174 To the extent that tort false certification claims involve breaches of standards of care contained in federal statutes or regulations, those cases do not violate Erie’s prohibition against federal general common law. These cases arguably involve the rights and obligations of a federal agency— CMS—to administer a fraud-free Medicare or Medicaid program.
175 See Lund, supra note 165, at 899 (arguing that recent decisions of the Supreme Court have inappropriately limited federal common-lawmaking power: first, by holding that state rather than federal common law governs cases that would, after Erie, have been governed by federal law; and second, by requiring federal courts to incorporate state law rules in federal decisions).
177 Rice, Jon R. Gabel & Thomas H., Reducing Public Expenditures for Physician Services: The Price of Paying Less, 9 J. HEALTH, POL., POL’Y. & L. 595, 597 (1985)Google Scholar.
178 Id. at 597.
179 Press Release, SUBCOMM. ON HEALTH, HOUSE COMM, ON WAYS AND MEANS, Thomas President's Budget, Feb. 3, 1997, available at http://www.house.gov/ways_means/health/105cong/hl-l.htm.
180 See Medicare Reform and Prescription Drugs, Testimony Before the Sen. Budget Comm., 107th Cong. (2001) (statement of Robert D. Reischauer, President, The Urban Institute).
181 Balanced Budget Act of 1997, Pub. L. No. 105-33, 111 Stat. 251 (1997).
182 Medicare Part C, 42 U.S.C. §§ 1395w-21-1395w-28.
183 42 U.S.C.A. § 1397aa (West 2001).
184 Council on Graduate Med. Educ., Tenth Report: Physician Distribution and Health Care Challenges in Rural and Inner-City Areas, at 1 (1998) [hereinafter COGME REP.] (defining geographic maldistribution as the prevalence of healthcare and professionals located and practicing in affluent urban and suburban areas, leaving rural and relatively impoverished urban areas underserved).
185 See H.R. Rep. No. 104-496, at 23, (1996) reprinted at 5 U.S.C.C.A.N. 1865, 1869 (1996). HIPAA established the “National Health Care Fraud and Abuse Control Program.” The stated purpose of the program is to “coordinate Federal, State and local law enforcement to combat health care plan fraud.” In order to accomplish this purpose, HIPAA created a national fraud databank and established guidelines for the government to periodically publish fraud advisory opinions, special fraud alerts, guidelines and interpretive opinions. Moreover, HIPAA granted the government broader investigatory and audit authority and an expanded range of intermediate sanctions and monetary penalties for a wide variety of providers and situations. Overall, the effect of the 1996 statute was to broaden and coordinate the government’s ability to reduce the amount of the public fisc wasted on paying for medical fraud. Id. at 1882-89.
186 See, e.g., Gabel & Rice, supra note 177, at 595.
187 COGME Rep., supra note 184, at 3.
188 Between 1980 and 1996 the number of physicians has approximately doubled every two to four years; the physician to population ratio has rapidly increased during that period as well. Id. at 6-7.
189 Id.
190 Id. at 33 (defining “availability” as health professionals are present, and “accessibility” as doctors and services are “usable” by the members of the underserved community). Those “[rjesearchers [who] have chosen to define access in terms of the use of office-based physician services describe only part of the access equation. The mere presence of health services does not compel the use of those services.” Gabel & Rice, supra note 177, at 598 (emphasis added). The discussion of access herein does not explore all the complex influences that determine whether patients use healthcare available to them. At the same time, by considering whether financing exists for available healthcare, this article defines access in practical, rather than just theoretical, terms.
191 Several factors in addition to geographical shortages of health providers affect access, including the lack of insurance coverage, patient income, education, race and underlying health issues. See COGME Rep., supra note 184, at 40.
193 See, e.g., Emergency Health Personnel Act of 1970, Pub. L. No. 91-623, 84 Stat. 1868 (1970).
194 See Health Professionals Educational Assistance Act of 1976, Pub. L. No. 94-484, 90 Stat. 2281-2289 (1976).
195 The MUA designation method was a part of the Health Maintenance Organization Act of 1973, Pub. L. No. 93-222, 87 Stat. 924 (1973), originally intended as a part of a program to promote the formation of HMOs in rural areas.
196 See Emergency Health Personnel Act of 1970, Pub. L. No. 91-623, 84 Stat. 1868 (1970). This program assigned medical personnel to areas with fewer than one physician for every 4,000 people. COGME REP., supra note 184, at 2.
197 For example, Medical Incentive Payments (MIP) instituted in 1989 set bonus payments to induce physicians to locate in underserved areas. Id. at 6.
198 See Health Centers Consolidation Act of 1996, Pub. L. No. 104-299, 110 Stat. 3626 (1996).
199 However, in some rural areas that are located closer to large metropolitan areas, the representation of physicians is adequate. See COGME REP., supra note 184, at 12.
200 Id. at 29.
201 Id. at 6.
202 Id. at 22.
203 Id.
204 Id.
205 See Watson, Sidney D., Health Care in the Inner City: Asking The Right Question, 71 N.C. L. REV. 1647, 1649 (1993)Google Scholar (citing Kindig, David A. et al., Trends in Physician Availability in 10 Urban Areas From 1963 to 1980, 24 INQUIRY 136, 140 (1987)Google ScholarPubMed).
207 Id. at 35-36.
208 Id.
209 Id.
210 Id.
211 Engelman Lado, Marianne L., Breaking the Barriers of Access to Health Care: A Discussion of the Role of Civil Rights Litigation and the Relationship Between Burdens of Proof and the Experience of Denial, 60 Brook. L. REV. 239, 248 (1994)Google Scholar.
212 Id. See also Rice, Mitchell F., Inner City Hospital Closures/Relocations: Race, Income Status and Legal Issues, 24 Soc. Sci. & Med. 889, 891 (1987)CrossRefGoogle ScholarPubMed (discussing the reasons why hospitals close and relocate); Watson, supra note 205, at 1651.
213 Engleman Lado, supra note 211, at 247.
214 COGME Rep., supra note 184, at 36 (describing characteristics of physicians who provide rural healthcare).
215 This discussion excludes the economic effect of doctrinally supportable anti-fraud efforts, including those made by independent government prosecutors employing the FCA to eliminate “raw” fraud such as billing for services never provided and upcoding. To the extent that these enforcement measures reduce access, it is assumed that the healthcare eliminated due to these measures was costly and inferior.
216 See generally Gabel & Rice, supra note 177, at 597.
217 Id. at 598.
218 Id.
219 Id. at 597.
220 Id. at 596.
221 Id. Although the six studies Gabel and Rice summarize are old, the principles their data demonstrate have neither been disproved nor contradicted by more recent research.
222 Id. at 598.
223 Id.
224 Id. at 599.
226 Id.
227 Id.
228 Id.
229 Id. at 599-601.
230 Id. at 599, 601-02. Under Medicare at the tirne of these studies, a participating physician accepting “assignment” agreed to accept the “reasonable charge” Medicare paid,for reimbursements as payment in full. Id.
232 Id.
233 Id.
234 See, e.g., Ayanian, John Z. et al., Unmet Health Needs of Uninsured Adults in the United States, 284 JAMA 2061 (2000)CrossRefGoogle ScholarPubMed (contending that increased access to preventive healthcare services will provide substantial clinical benefits for uninsured adults); Weissman, Joel S. et al., Delayed Access to Health Care: Risk Factors, Reasons, and Consequences, 114 Annals Internal Med. 325 (1991)CrossRefGoogle ScholarPubMed (contending that patients delaying care had 9% longer hospital stays compared with others).