Using the civil False Claims Act against Medicare providers in federal courts: A content analysis based on agency theory

Legal scholars and the Medicare provider community contend that the civil False Claims Act (FCA) is used overzealously against Medicare providers. They argue that many suspected fraud and improper billing cases result from misunderstanding Medicare's complex program rules or the program's unclear guidelines and definitions. Likewise, dissatisfaction has been expressed over Congress's 1986 amendments to the FCA, which provided private citizens, or whistleblowers, with potentially enormous financial incentives to file cases against Medicare providers.;Very little empirical research has been conducted on this policy issue. This study employs a content analysis methodology to code every FCA opinion that has been written by a federal court from July 1, 1966 through December 31, 2006. This study also applies the lens of Richard Lawlor's agency framework to four principal-agent relationships within the Medicare program. The use of Lawlor's principal-agent interpretation of the Medicare program helps to explain and anticipate the roles, incentives, and actions of the players within the arena of Medicare FCA cases. This research provides a never-before quantified assessment of this issue.;This study's results provide empirical evidence that documents the growth in civil FCA cases against Medicare providers. Key findings include evidence that the use of the FCA against Medicare providers is expanding to include new types of accusations---including, most recently, complaints about quality of care. In addition, the data show an overwhelming growth in cases filed by whistleblowers following the 1986 amendments. The majority of these whistleblower-filed cases were procedural in nature and often did not proceed beyond a motion to dismiss. In merit-based cases, the cases filed by the government were overwhelmingly more successful than cases filed by whistleblowers. Further, the data presented here provide evidence that Lawlor's framework should be expanded to include two new principal-agent relationships that exist within the arena of Medicare FCA cases: the Congress-courts relationship and the Medicare-whistleblower relationship. This study concludes that reliance on the FCA is an inefficient substitute for adequate program oversight. The FCA's rewards for whistleblowers should be adjusted in order to reduce the number of unsuccessful whistleblower cases that are filed against Medicare providers.