The Chamber of Commerce has commenced a well-financed and aggressive lobbying campaign to undermine America’s most effective whistleblower law, the False Claims Act. To justify its anti-whistleblower campaign the Chamber published a report entitled, “Fixing the False Claims Act: the Case For Compliance-Focused Reforms.”

The purpose of this blog series is to combat the Chamber’s misinformation, and explain why the False Claims Act must be protected. Whistleblowers and their supporters are strongly urged to read this blog series and share it with friends.

Fact Number 24:

The Chamber’s claim that “any fine-print regulatory requirement” can result in FCA liability is patently false and misrepresents the FCA.    In the very first case cited to by the Chamber to justify its argument, the court was very careful to “caution” that liability under an implied certification theory cannot be interpreted “expansively and out of context.”  The court explained that the FCA “was not designed for use as a blunt instrument to enforce regulatory compliance,” and that law should not be interpreted in an “expansive fashion” that would “improperly broaden the Act’s reach.”

As the court reasoned, if the theory was to be applied at all, it could only be applied “when the underlying statute or regulation…expressly states that the provider must comply in order to be paid.”  Furthermore, a plaintiff would have to prove knowledge and intent. It is not surprising that the court rejected (at ∗693) the implied certification claim at issue in the case cited to by the Chamber, given the very same standard of proof. The second case cited by the Chamber met the same fate.  The court rejected liability simply because the company violated Medicare marketing regulations.

This holding is consistent with other cases cited to by the Chamber in its parade of horribles.  The 6th Circuit Appeals Court explained that in addition to proving regulatory violations, a whistleblower would also have to prove that the contractor “presented compelling evidence” that the defendant “knew or recklessly disregarded” the risk that the law was intended to prevent.

The theory of liability postulated by the Chamber has been uniformly rejected by every court:  “When a violator of government regulations is ineligible to participate in a government program and that violator persists in presenting claims for payment that the violator knows the government does not owe, that violator is liable under the Act . . . The FCA does not create liability merely for a health care provider’s disregard of Government regulations . . .”

The Chamber’s proposals will have a perverse effect on the markets.  Honest contractors will be placed at a competitive disadvantage to those who are willing to break the rules.

 

In addition, an Action Alert has been issued by the National Whistleblower Center so members of the public inform their representatives that the False Claims Act should not be “reformed” as proposed by the Chamber.