The Federal False CLaims Act, 31 USC 3729, also known as Mr. Lincoln’s law, provides greater opportunity than “Jeopardy” or any other game show for that matter, for a get rich quick windfall for plaintiffs with knowledge of false claims paid by the government and the resources to sue the malefactors on behalf of the government and the good luck to win. The penalties and potential recoveries are steep as the FCA provides for treble damages and penalties of $5000. to $10,000. for each false submission. In 2010, the federal government brought 138 FCA cases and netted about $620 Million. There were 574 qui tam cases brought by private citizens netting $2.5 Billion of which the plaintiffs were able to share a sizable win fall percentage of recovery with the U.S. There has been a judge made evolution in the scope of exposure under the FCA because of the adoption in certain circuits of the “Implied Certification” Rule that permits the imposition of liability on providers and manufacturers for receiving payment for services actually provided but, where there has been a failure of strict compliance with other statutes and regulations.
In Blackstone Medical Inc. v. United States ex. rel. Hutcheson, U.S. No. 11-269 and U.S. ex rel. Hutcheson v. Blackstone Medical, Inc., 1st Cir., No. 10-1805, Mr. Hutcheson alleged that Blackstone violated provisions of the Medicare and Medicaid by providing kickbacks to doctors for using their surgical products. Blackstone itself provided no claim to the government. The federal circuit and the 1st circuit imposed FCA liability on Blackstone under a theory of implied certification even though Blackstone itself made no express certification of compliance and made no implied certification by applying for payment from the government. The 3rd, 5th, 8th and 10th Circuit Courts of Appeal have declined to extend FCA liability as far under an implied certification theory setting up a dispute among the circuit courts which should be resolved by the U.S. Supreme Court. Certainly no one condones Blackstone’s business practices for which they should be held to account, but the larger question is whether it was the intent of Congress to create a monster liability statute that could exact such Draconian penalties for conduct so far removed from the submission of a claim.