Revisions to False Claims Act urged by former deputy AG

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A panel of witnesses debated the merits of the False Claims Act before a Judiciary subcommittee meeting Wednesday, with one former attorney general arguing current policy provokes unfair litigation and “coercive” settlements.

Litigator David W. Ogden, a former U.S. deputy attorney general, proposed revising the False Claims Act by creating incentives for compliance programs to reduce the amount of “weak” whistleblower cases.

Ogden offered suggestions such as reducing penalties for self-reported violations; removing the threat of future qui tam, or civil, cases; and requiring whistleblowers to make internal reports of potential FCA violations at least 180 days before filing a qui tam case, the Bloomberg Bureau of National Affairs reported.

Such incentives would give employers “sufficient time” to investigate violations before they take corrective action or report them to the government, Ogden said.

“We can and must reduce the perverse incentives for non-meritorious claims to clog our courts and burden the Department of Justice, replace the irrational penalty structure that in some cases coerces unjust settlements, and provide greater protections for true whistleblowers in the workplace,” he said.

However, those who opposed the revision of the FCA argued that whistleblowers and threat of suspension or debarment from federal programs could be more effective than compliance certification programs.  

“Whistleblowers using the False Claims Act have played a key role in checking fraud and wasteful spending,” Sen. Chuck Grassley (R-IA) said. “Annual recoveries under the False Claims Act have increased dramatically in the last five years.”

Notable lawsuits under the False Claims Act have led to, among others, a $120 million settlement with pharmacy company Omnicare and a $30 million settlement with therapy providers involving 60 nursing Missouri nursing homes.

The hearing was directed by Congressman Trent Franks (R-AZ), chairman of the Subcommittee on the Constitution and Civil Justice.

Other panelists were Rachakonda D. Prabhu, M.D., founder of Red Rock Medical Group; Dr. Patricia J. Harned, Ph.D., president of Ethics Resource Center; and John E. Clark, a Texas attorney and board member of Taxpayers Against Fraud.

To listen to the hearing, click here.

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