Federal False Claims act uses narrowed, but legislators still want expansion

Things should get interesting in coming months when it comes to the application of the False Claims Act. On the one hand, the U.S. Supreme Court recently narrowed the application of the Act--but meanwhile, legislators continue to look at options for expanding the government's False Claims powers.

In the June decision, the Supremes settled a squabble over whether contractors who don't bill the government directly, but instead go through another entity that contracts with the U.S., can be held liable under the False Claims Act for fraudulently-obtained funds. The court said that contractors could, but only if they intended to defraud the U.S. itself, and that the alleged false statements influenced the government's decision to pay the claim. Some legal analysts argue that the decision makes it harder for physician whistle-blowers to prove cases using the False Claims statute, such as allegations of illegal off-label marketing by pharmaceutical companies. Others note that it will help weed out weak cases and offer extra defense to physicians sued under the statute.

Legislators, meanwhile, had a different outcome in mind. A bill pending on the Hill, the False Claims Correction Act, would remove rules against whistle-blower claims being brought on the basis of publicly-disclosed information or claims lacking specific proof. The government could dismiss such claims, but right now defendants can ask that the judge do so.

To learn more about these trends:
- read this AMNews piece

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