The good, the bad, and the ugly: the unnecessarily broad impact of qui tam civil False Claims Act cases on rural health care providers.

Abstract

The civil False Claims Act (FCA) imposes harsh penalties against parties who misappropriate federal funds. The statute's qui tam whistle-blower provisions create strong financial incentives for private individuals to bring and pursue FCA cases against health providers on the government's behalf--even where government attorneys decline to intervene. FCA cases where the government declined to intervene account for less than 2 percent of all recoveries in health care FCA cases. Yet the costs of defending such cases may be very high, especially for rural providers with small operating margins. Federal provider self-referral and anti-kickback laws carve out various exceptions to support the financial viability of rural providers. The FCA, however, contains no such exceptions. Although Department of Justice (DOJ) policy directs officials to take into account community access to care in pursuing FCA cases against rural providers, the ability for private whistleblowers to pursue cases where the government declines to intervene undermines the DOJ's ability to achieve that aim. This Article highlights the liability risks rural providers commonly face under the FCA and argues for amending the FCA to allow a whistleblower claim to proceed against providers serving designated underserved areas only where government authorities intervene in the case.