When the Ends Do Not Justify the Means: The Application of Statistical Sampling to Determine Liability in False Claims Act Cases

By Vlahos, Christina | St. John's Law Review, October 1, 2016 | Go to article overview

When the Ends Do Not Justify the Means: The Application of Statistical Sampling to Determine Liability in False Claims Act Cases


Vlahos, Christina, St. John's Law Review


INTRODUCTION

The False Claims Act serves as the primary tool for the federal government's recovery of funds that were fraudulently disbursed under national security and defense contracts, entitlement programs, federally insured loans and mortgages, transportation and research grants, and agricultural supports.1 In 2013, the Department of Justice recovered $3.8 billion under the False Claims Act,2 and in 2014, that number soared to almost $6 billion.3

For the last five years, the federal government has recovered $2 billion a year under health care fraud claims alone.4 These cases originate when health care companies submit false claims to the federal government for reimbursement under such programs as Medicare, Medicaid, and TRICARE.5 Defendants include major corporations like Johnson & Johnson, Omnicare, and Community Health Systems, Inc.6 For example, in September of 2015, KMART Corp. was compelled to pay $1.4 million to the federal government when it unlawfully incentivized Medicare and Medicaid beneficiaries to fill their prescriptions at KMART pharmacies.7

Along with enabling the federal government to recover billions of dollars from major corporations and government contractors, the False Claims Act has enabled the federal government to prosecute individuals like Farid Fata, a hematologist-oncologist who administered chemotherapy and cancer treatments to hundreds of healthy patients whom he intentionally misdiagnosed.8 Not only did he administer those treatments to perfectly healthy individuals, but he also had those patients undergo many more sessions of treatment than even a cancer-afflicted patient would need.9 His intention was to submit claims for those treatments for reimbursement from government programs.10

The False Claims Act is clearly a useful and important tool for the federal government to recover funds that were, essentially, wrongfully disbursed to meritless claimants. The Justice Department should enforce the False Claims Act even more extensively against companies and individuals like Dr. Fata who engage in unlawful practices in the interest of accumulating more wealth at the expense of the federal government and American taxpayers. Citizens would be better protected from further exploitation, both monetary-as their tax dollars are first spent on false claims, then further expended by the government through its attempts to recover those stolen tax dollars, thereby multiplying the adverse effect by diverting those funds from other uses-and personal, like Dr. Fata's patients, whose collective health was exploited for his gain.

Several courts have recently made it easier to successfully bring claims under the False Claims Act. In cases where defendants have allegedly submitted thousands of false claims to the federal government for reimbursement, rather than presenting proof of each claim's falsity, as is typically required,11 a court in the Eastern District of Tennessee recently permitted, instead, the submission of a sampling of claims.12 Based on the analysis of liability in that sample, that court extrapolated liability to the remainder of the alleged false claims.13

While the federal government has a compelling interest in recovering as much of those fraudulently disbursed funds as possible, especially in cases where the defendants are acting with such ignoble intent as Dr. Fata, the federal government's recovery should not come at the price of the defendants' Due Process rights under the Fifth Amendment. By permitting statistical sampling to determine liability, the courts lower the burden of proof for liability in False Claims Act cases, essentially bypassing pleading requirements and finding fraud without granting the defendants an opportunity to defend themselves.

Thus, this Note argues that the use of statistical sampling to determine liability in False Claims Act cases constitutes a violation of a defendant's constitutional right to Due Process under the Fifth Amendment. …

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