Defensive Medicine: Protecting Against the False Claims Act

Andrew L. Schlafly, Esq.
Article Type: 
Medicine and the Law
Winter 1997
Volume Number: 
Issue Number: 

In 1863, the federal government passed the False Claims Act in order to combat overcharging practices during the Civil War. The perception was that government suppliers were submitting false claims for reimbursement by the Union, and this Act authorized the government to bring civil actions for refunds and penalties against such suppliers.

What does the supply of bluecoat uniforms have to do with Medicare claims? As with all legislation, the initial motivation or intent of the drafters has little bearing on how the government will ultimately implement the statute. This Civil War statute was recently used by the Department of Justice to assert an $80 million claim against a prominent physician.

The Act authorizes fines of $10,000 for each false claim which was filed in a reckless manner with the government. This substantial penalty was tailored for large projects of government contractors, such as the construction of aircraft carriers. For such large government projects, the penalty needs to be commensurate with the project cost.

The Act provides fodder for self-described whistleblowers, who are often disgruntled employees seeking to inflict some pain on their former employer. Between 1986 and 1995, the government extracted about one billion dollars in settlements from government contractors based on actions brought under the False Claims Act, and the number of these actions increases each year. Indeed, promoters even have a Web site devoted to the Act, which claims 100 to 200 “hits” per day.(1)


Are Medicare Claims Like Charges for Civil War Cannons?


Most physicians who submit Medicare claims to insurance carriers would never imagine being sued under the False Claims Act. The Act primarily applies to claims submitted to the government for goods or products actually supplied to the government. In recent enforcement efforts taken against physicians, however, government attorneys are invoking the False Claims Act in order to ratchet up the potential penalties. A $10,000 fine for a mere $48.00 Medicare claim may seem unconscionable to the victim, but it looks very attractive to prosecutors in the Department of Justice.

Government prosecutorial strategy generally consists of pursuing the maximum penalty available. For example, most common law crimes were traditionally handled under state law, in state courts. In 1986, the federal courts adopted the Mandatory Minimum Sentencing Act, which imposed substantially harsher penalties for crimes prosecuted in federal court rather than state court. Immediately, prosecutors flocked to the federal courts with actions that were normally handled in state courts. Despite bitter complaints by defendants and an occasional federal judge, prosecutors have adhered to this strategy in order to maximize the resultant penalties. The Department of Justice even adopted a formal program, dubbed “Operation Triggerlock,” to review state law cases involving firearms in order to prosecute such cases under federal law with the express goal of imposing harsher sentences.(2) The use of the False Claims Act against physicians epitomizes such strategy.


Criminal or Civil?


The False Claims Act, strictly speaking, authorizes only a civil remedy for the government, and does not purport to impose criminal sanctions. In reality, the Supreme Court was forced to depart from a long line of precedents in holding that the penalties under this Act are so onerous, and so disproportionate to the damage to the government, that the Act does implicate criminal defense rights of the targeted medical practitioner.(3)

The Court examined its precedents on this issue and concluded that:

Although, taken together, these cases establish that proceedings and penalties under the civil False Claims Act are indeed civil in nature, and that a civil remedy does not rise to the level of ‘punishment’ merely because Congress provided for civil recovery in excess of the Government’s actual damages, they do not foreclose the possibility that in a particular case a civil penalty authorized by the Act may be so extreme and so divorced from the Government’s damages and expenses as to constitute punishment.

The Court then held that the penalties under the False Claims Act for Medicare violations were indeed “so extreme” as to constitute criminal-like punishment.(4)

One might have expected the government to curtail its use of the False Claims Act for alleged Medicare abuses after this decision was promulgated in 1989. Instead, the government subsequently embarked on an ambitious and expensive persecution of a prominent psychiatrist in the Washington, D.C. area. The case has been vigorously contested and is currently before the Court of Appeals for the D.C. Circuit. AAPS has filed an elaborate amicus curiae memorandum of law in defense of the physician, who is an AAPS member.


Defensive Strategies


The first line of defense is collective. AAPS monitors these actions nationwide, and assists AAPS members who have been improperly harassed. By vigorously defending against the unwarranted actions, AAPS discourages the government from carelessly prosecuting physicians under this dangerous Act. The more first-hand information which AAPS can obtain — and the earlier it can obtain it — the more effective its assistance.

Individual physicians can take personal steps to protect themselves as well. First, all physicians should ensure that their assets are protected to the maximum extent possible. A civil suit brought by the government is no different from a suit brought by a malcontent patient or by a visitor who slipped in the waiting room. If the government thinks that the defendant has substantial assets, then the government will pursue and pursue such defendant in litigation; if the defendant’s assets are properly and demonstrably protected, then not even the government is going to waste its money in litigation.

Several simple steps can be taken by physicians to protect their assets against future actions by the government or private litigants. Interested physicians can contact the author to consider such precautionary measures.

As to actions specifically instituted under the False Claims Act, the best legal defense is written evidence of reasonable care in filing Medicare and Medicaid claims. The Act only imposes liability if the physician’s methodology reflects a “reckless disregard” of the information submitted, and thus, a primary defense is written evidence of careful preparation of such claims. Mistakes are inevitable, as are disputes over coding rules; the ability to prove reasonable care in the filing process will help frustrate any effort by the government to convert a mistake into a fraudulent claim.

When the government amasses its unlimited resources against a physician, he or she will greatly benefit from having taken precautions. Proper preparation will minimize the injury inflicted on the physician, both personally and professionally. Vigorous defense of unjustified prosecutions also helps discourage these unwarranted governmental actions.




1. Woody T. Blowing the whistle on the Web. The Recorder (American Lawyer Media, L.P.) 1996; August 8: 4. The False Claims Act Web site is located at “”.

2. Raven RD. Don’t wage war on crime in federal courts. Texas Lawyer 1992; August 31: 12.

3. United States v. Halper, 490 U.S. 435 (1989).

4. Id. at 441-42.


 Andrew Schlafly, Esq., is a litigator in New York City who frequently advises AAPS and its members on legal matters. He has been an Adjunct Professor at Seton Hall Law School. His address is 17th Floor, 521 Fifth Avenue, New York, NY 10175. Tel. (212) 292-4510, or e-mail at

Originally published in the Medical Sentinel 1997;2(1):37-38. Copyright ©1997 Association of American Physicians and Surgeons.


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