The recent decision in United States v. Regence Blue Cross (10th Cir 12/05/2006) illustrates the power of qui tam, or private, civil lawsuits under the False Claims Act (FCA). Under the FCA, an action can be commenced either by the United States itself, or as a â€œqui tamâ€ action, by a private person acting â€œfor the United States Governmentâ€ against providers â€œin the name of the Government.â€ The false claim may take many forms: overcharging for a product, failing to perform a service, delivering less than the promised amount of goods or services, underpaying money owed to the government, and charging for one thing but delivering another, to list just a few examples. The legal definitions of a false claim can be found in section Â§ 3729 of the Act.
In this case, a former employee sued more than seven years after alleged violations were committed. Specifically, the plaintiff claimed that her former employer, three managers, and a related laboratory presented false Medicare claims to the Government, submitted a false budget payment request to the Health Care Financing Authority (â€œHCFAâ€), fraudulently avoided adverse contract action by HCFA by backdating and falsifying documents to manipulate its contract performance ratings, and retaliated against her under the FCAâ€™s â€œwhistleblowerâ€ protections and in violation of State law.
The employeeâ€™s job included reviewing claims submitted by medical service providers, including laboratories. After complaining internally that a laboratory was presenting false claims for Medicare reimbursement, and that Regence had failed to take appropriate action to stop this â€œfraud,â€ Ms. Sikkenga filed a qui tam suit. While the trial court had dismissed all Ms. Sikkengaâ€™s claims, the 10th Circuit reversed, permitting some of Sikkenga’s fraud claims as well as her state law claim to proceed.
While the final determination on Ms. Sikkengaâ€™s is yet to be made, this case highlights why we continue to see increases in qui tam actions. A company or individual that has made a false claim may be liable for triple damages, a civil fine of $5,500 to $11,000 per false claim, and the attorney’s fees of the citizen whistleblower. Individuals or companies that cause someone else to submit a false claim can also be found liable under the False Claims Act.
The standard of proof in a False Claims Act case is “preponderance of the evidence”, i.e., the claim is more likely true than not. This is the same burden of proof ordinarily applicable in most civil cases, and is easier to meet than the “beyond a reasonable doubt” standard used in criminal cases.
So what should you do? Recognize the new importance of business ethics and corporate compliance policies and training, teach supervisors and staff about ethical obligations, and have clear complaint policies and procedures in place for responding to whistleblowers.