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Medical Error as False Claim

Published online by Cambridge University Press:  24 February 2021

Joan H. Krause*
Affiliation:
University of Houston Law Center, July 2001; Institute for Health Law, Loyola University Chicago School of Law, 1997-2001; Stanford Law School, Yale University

Extract

[I]n appropriate instances, the U.S. Attorney's Office will act to investigate and pursue systemic substandard care issues, notwithstanding a provider's representation of compliance with administrative requirements.

Medical error and health care fraud are hot topics these days. Since the Fall 1999 publication of the Institute of Medicine (“IOM”) Report, To Err is Human, medical errors have received a great deal of attention in the popular and academic press. Error reporting bills have been introduced at both the state and federal levels, and industry and government representatives have undertaken a variety of cooperative error-reduction efforts.

Type
Articles
Copyright
Copyright © American Society of Law, Medicine and Ethics and Boston University 2020

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References

1 HHSIG Says Sales Commission Arrangement By Itself Does Not Violate Anti-kickback Law, 7 Health L. Rep. (BNA) 1443, 1446 (Sept. 17, 1998) (quoting U.S. Attorney Lynne A. Battaglia regarding a civil False Claims Act action filed against a nursing home).

2 Committee on Quality of Health Care in America, Institute of Medicine, To Err is Human: Building A Safer Health System (Linda T. Krohn et al. eds., 2000) [hereinafterTo Err is Human}. The IOM Report defines “medical error” as “the failure of a planned action to be completed as intended … or the use of a wrong plan to achieve an aim,” and defines an “adverse event” as “an injury caused by medical management rather than the underlying condition of the patient.” Id. at 28.

3 See, e.g., Leape, Lucian L., Institute of Medicine Medical Error Figures Are Not Exaggerated, 284 Jama 95, 95-97 (2000)CrossRefGoogle ScholarPubMed (addressing the limitations of data that mortality formed the basis for certain figures within the IOM Report); Liang, Bryan A., Promoting Patient Safety Through Reducing Medical Error: A Paradigm of Cooperation Between Patient, Physician, and Attorney, 24 S. Ill. L.J. 541, 541 (2000)Google Scholar (discussing patients' lack of understanding of medical errors, and how that ignorance contributes to injuries); McDonald, Clement J. et al., Deaths Due to Medical Errors are Exaggerated in Institute of Medicine Report, 284 Jama 93, 93-94 (2000)CrossRefGoogle Scholar (analyzing mortality statistics as applied in the IOM Report); Palmer, Larry I., Patient Safety, Risk Reduction, and the Law, 36 Hous. L. Rev. 1609, 1613-14 (1999)Google Scholar (proposing a new framework for how law can promote patient safety apart from the liability model); Hanna, Janan, Lethal Drugs, Lax Rules a Deadly Mix in Hospitals, Chi. Trib., June 26, 2000Google Scholar, at 1 (calling attention to the lack of regulation concerning how medications are dispensed); Stolberg, Sheryl Gay, Do No Harm: Breaking Down Medicine's Culture of Silence, N.Y. Times, Dec. 5, 1999Google Scholar, § 4, at 1 (discussing medical error within the context of the IOM Report).

4 See, e.g., Medical Errors: Market-Based Reduction Efforts, 6 Health Plan & Provider Rep. (BNA) No. 23, at 675 (June 7, 2000) (describing government and industry efforts to reduce medical errors); Revisions to Joint Commission Standards in Support of Safety and Medical/Health Care Error Reduction, at http://www.jcaho.org/standard/fr_ptsafety.htm (last visited April 27, 2001) (revising accreditation standards for the Joint Commission on the Accreditation of Health Care Organizations to focus more heavily on patient safety, effective July 1, 2001). For government efforts to reduce medical errors, see Medical Error Reduction Act of 2000, S. 2038, 106th Cong. (2000); Patient Safety and Errors Reduction Act, S. 2738, 106th Cong. (2000); Seniors Safety Act of 1999, H.R. 1862, 106th Cong. (2000); Stop All Frequent Errors (SAFE) in Medicare & Medicaid Act of 2000, S. 2378, 106th Cong. (2000); Voluntary Error Reduction and Improvement in Patient Safety Act, S. 2743, 106th Cong. (2000); Medication Error Prevention Act of 2000, H.R. 3672, 106th Cong. (1999).

5 See Janet Reno, 1994 Annual Report of the Attorney General of the United States, available at http://www.usdoj.gov/ag/annualreports/ar94/finalag.txt (last visited Dec. 18, 2000).

6 See, e.g., Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), Pub. L. No. 104-191, tit. II, 110 Stat. 1936,1991 (1996) (increasing funding for anti-fraud efforts and strengthening federal anti-fraud enforcement authority).

7 See Department of Health and Human Services & Department of Justice, Health Care Fraud and Abuse Control Program: Annual Report for FY 1999 2, 5-7, available at http://www.dhhs.gov/progorg/oig/press/hipaa2.htm (last visited Jan. 2000) [hereinafter 1999 Annual Report]. The DOJ has announced that it received $1.5 billion in fraud recoveries in 2000, with $840 million attributable to health care fraud. See Dept. of Justice, Justice Recovers Record $1.5 Billion in Fraud Payments, Highest Ever For One Year Period, available at http://www.usdoj.gov/opa/pr/2000/November/641civ.htm (last visited Nov. 2, 2000) [hereinafter Justice Recovers Record $1.5 Billion in Fraud Payments].

8 See 31 U.S.C. §§ 3729-3733 (1994).

9 See id. § 3729(a)(7) (stating that any person found liable under the Act will suffer “a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the Government sustains because of the act of that person”); 28 C.F.R. § 85.3(a)(9) (1999) (increasing statutory penalties by 10%).

10 See id. § 3730(d) (noting that parties to qui tarn provisions may “receive at least 15 percent but not more than 25 percent of the proceeds of the action or settlement of the claim, depending upon the extent to which the person substantially contributed to the prosecution of the action”).

11 The government recently negotiated a $385 million settlement with Fresenius Medical Care (the largest civil fraud recovery to date), as well as a $170 million settlement with nursing home operator Beverly Enterprises, Inc. See Justice Recovers Record $1.5 Billion in Fraud Payments, supra note 7.

12 See, e.g., Grail, Efrem M., “Qui Tarn” Insurance & False Claims Act Settlements, 11 Health Law. 16, 17 (1998)Google Scholar (“[Q]ui tam provisions have spurned the development of an entire qui tam cottage industry, in which the qui tam plaintiffs' bar, … often made up of former Justice Department lawyers who litigated False Claims Act cases for the government, have become extremely effective in enticing the government to intervene in their cases. This often leads to easier, quicker, and larger recoveries (and thus, a correspondingly larger 'bounty' share for the relator).”).

13 See, e.g., Medical Errors Not False Claims Without Pattern of System Deficiencies, 4 Health Care Fraud Rep. (BNA) 790 (2000) (addressing provider concerns that “the government routinely may begin treating medical errors as false claims”).

14 See S. Rep. No. 99-345, at 8, reprinted in 1986 U.S.C.C.A.N. 5273 (noting that President Lincoln signed the False Claims Act to combat rampant fraud in Civil War defense contracts); see generally John T. Boese, Civil False Claims and Qui Tam Actions 1-1 to 1-38 (Supp. 1999) (providing a historical overview of the Act).

15 “Cause to be presented” liability generally applies where the person responsible for the falsity does not actually submit the claim, but rather directs others (who may not know of the falsity) to submit the claim on his or her behalf. See, e.g.. United States v. Kensington Hospital, 760 F. Supp. 1120, 1125 (E.D. Pa. 1991) (alleging that physicians suspended from the Medicaid program “caused” a hospital to submit improper bills on their behalf).

16 See 31 U.S.C. § 3729(a)(1). See also Boese, supra note 14, at 2-9 (noting that violations of section 3729(a)(1) are the most common cause of liability under the FCA). Other FCA provisions include section 3729(a)(2) (prohibiting the use of false records or statements to get a false or fraudulent claim paid or approved); section 3729(a)(3) (prohibiting conspiracies “to defraud the government by getting a false or fraudulent claim allowed or paid”); and section 3729(a)(7) (prohibiting “reverse false claims,” in which false records or statements are used “to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government”).

17 See 31 U.S.C. § 3729(b).

18 Id. § 3729(c).

19 See id. § 3729(a); 28 C.F.R. § 85.3(a)(9) (1999) (increasing statutory penalties by 10%).

20 See United States v. Krizek, 111 F.3d 934, 939-40 (D.C. Cir. 1997) (noting that the focus is on the defendant's conduct, as “[i]t is the conduct of the medical practitioner, not the disposition of the claims by the government, that creates FCA liability”).

21 See 31 U.S.C. §§ 3730(b), (d) (noting that a private person who brings a civil action may potentially receive fifteen to thirty percent of the proceeds of the suit).

22 By 1998, sixty-one percent of the qui tarn cases filed concerned the federal health care programs, compared to only twelve percent in 1987. See Fried Frank Harris Shriver & Jacobsen, FCA Statistics, available at http://www.ffhsj.com/quitam/fcastas.htm (last visited Mar. 8, 2001).

23 See, e.g., Peterson v. Weinberger, 508 F.2d 45, 47-48 (5th Cir. 1975) (imposing liability on a physician who submitted bills to Medicare for physical therapy services that were not actually performed).

24 See, e.g., United States v. Halper, 490 U.S. 435, 437 (1989), abrogated on other grounds by Hudson v. United States, 522 U.S. 93 (1997) (imposing liability on a defendant who submitted bills for services reimbursed at $12 when the actual services rendered entitled him to only $3); Krizek, 111 F.3d at 936 (discussing a psychiatrist who billed for 40 to 50 minute treatment sessions despite having spent only 20 to 30 minutes with his patients).

25 914 F. Supp. 1507 (M.D. Tenn. 1996).

26 See id. (denying defendants' motion to dismiss); see also 42 U.S.C. §§ 1320a-7b(b) (1998) (Anti-Kickback Statute) & 1395nn (1998) (Stark Law).

27 See Pogue, 914 F. Supp. at 1509. The district court initially rejected Pogue's theory, see United States ex rel. Pogue v. American Healthcorp, Inc., No. 3-94-0515, 1995 WL 626514 (M.D. Tenn. Sept. 14, 1995), but later reconsidered, see Pogue, 914 F. Supp. at 1507 (granting motion to reconsider).

28 These claims have also been described as “legally” rather than “factually” false. See Fabrikant, Robert & Solomon, Glenn E., Application of the Federal False Claims Act to Regulatory Compliance Issues in the Health Care Industry, 51 Ala. L. Rev. 105, 111-12 (1999)Google Scholar (describing “factual falsity” as claims that seek payment for items or services not provided, or misrepresent the nature of those furnished; and describing “legal falsity” as claims that are not factually false, but are “false for an extrinsic legal, regulatory or contractual reason”).

29 As the district court in Pogue originally held, “the patients would have been treated at some hospital, even if it was not [defendants']. As the government pays the same amount for treatment under the Medicare and Medicaid programs regardless of where the treatment is rendered, it has not suffered injury.” Pogue, 1995 Wl 626514, at *6.

30 See Boese, supra note 14, at 1-32 to 1-32.1 (describing “false negotiation” FCA cases). See also Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 793-94 (4th Cir. 1999) (describing “fraud-in-the-inducement” cases); Lisa Michelle Phelps, Note, Calling Off the Bounty Hunters: Discrediting the Use of Alleged Anti-Kickback Violations to Support Civil False Claims Actions, 51 Vand. L. Rev. 1003, 1005 (1998) (describing “anti-kickback-based tainted claims”). The tainted claims theory has been analogized to the Fourth Amendment exclusionary rule. See Mark Taylor, On the Ropes: Beefed-Up Anti-Kickback Laws, Growing Cohort of Whistleblowers Pound Away at Healthcare Fraud, Mod. Healthcare, June 28, 1999, at 30, 30-31 (quoting D. McCarty “Mac” Thornton, Chief Counsel to Oig, who observed “that claims generated by virtue of illegal referrals [are] the fruit of a poisonous tree and are, as such, false”). See also Segura v. United States, 468 U.S. 796, 803 (1984) (describing the “fruit of the poisonous tree” doctrine in criminal cases).

31 United States ex rel. Wilkins v. North Am. Constr. Corp., 101 F. Supp.2d 500, 518 (S.D. Tex. 2000) (noting that a defendant may be liable for providing false information during contract negotiations).

32 See, e.g., United States ex rel. Marcus v. Hess, 317 U.S. 537, 539 & n.l (1943) (accusing defendants of inflating estimates submitted to the government in electrical contract bids); United States v. Azzarelli, 647 F.2d 757, 758 (7th Cir. 1981) (concerning an alleged bid-rigging conspiracy involving a highway construction project); United States v. Cfw Constr. Co., Inc., 649 F. Supp. 616, 617 (D. S.C. 1986) (involving alleged bid-rigging on federally funded wastewater treatment projects); see also Pamela H. Bucy, Civil Prosecution of Health Care Fraud, 30 Wake Forest L. Rev. 693, 704-05 (1995) (describing the “taint from such collusion”).

33 Marcus, 317 U.S. at 543-44. See also CFW Constr. Co., Inc., 649 F. Supp. at 618 (“It is clear that in bid-rigging cases the proscribed harm does not stop with the execution of the contract. Rather, it extends to each intermediate step along the path to the ultimate goal, payment by the government.”).

34 S. Rep. 99-345, supra note 14, at 9, reprinted in 1986 U.S.C.C.A.N., at 5274.

35 See id. at 10, reprinted in 1986 U.S.C.C.A.N., at 5275 (noting that “all Medicare claims submitted by or on behalf of a physician who is ineligible to participate in the program” are actionable under the FCA).

36 See, e.g., United States ex rel. Lamers v. City of Green Bay, 168 F.3d 1013, 1020 (7th Cir. 1999). The First Circuit has gone even further, acknowledging that full compliance with the terms of many government contracts is virtually impossible. See United States v. Data Translation, Inc., 984 F.2d 1256, 1260, 1261 (1st Cir. 1992) (finding contract requirements to be “virtually unintelligible” and noting “that no reasonable person … could have believed that the Government really wanted the complete and total disclosure for which the language seems to ask”).

37 United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 902 (5th Cir. 1997).

38 31 Fed. CI. 429 (Fed. CI. 1994), aff'd mem., 57 F.3d 1084 (Fed. Cir. 1995).

39 See id. at 433-34.

40 Id. at 434.

41 See Pogue, 914 F. Supp. at 1509.

42 See. e.g., United States ex rel. Mikes v. Straus, 84 F. Supp.2d 427, 435 (S.D.N.Y. 1999) (finding implied certification theory not applicable unless “the claimant's adherence to the statutory or regulatory mandate lies at the core of its agreement with the Government”); Luckey v. Baxter Healthcare Corp., 2 F. Supp.2d 1034, 1045 (N.D. 111. 1998), affd, 183 F.3d 730 (7th Cir.) (finding there to be “no evidence that [defendants] practice violated the heart of its agreement with the government”); United States ex rel. Joslin v. Community Home Health of Maryland, Inc., 984 F. Supp. 374, 384-85 (D. Md. 1997) (finding that a billing form did not function as an implied certification of compliance with state laws). See also Harrison, 176 F.3d at 786 n.8 (noting that implied certification theory is “questionable” in the Fourth Circuit).

43 United States ex rel. Hopper v. Anton, 91 F.3d 1261, 1266 (9th Cir. 1996) (citations omitted). See also Harrison, 176 F.3d at 786-87 (explaining false certification theory); Thompson, 125 F.3d at 902 (noting that “where the government has conditioned payment of a claim upon certification of compliance with, for example, a statute or regulation, a claimant submits a false or fraudulent claim when he or she falsely certifies compliance with that statute or regulation”); United States ex rel. Schwedt v. Planning Resource Corp., 59 F.3d 196, 199 (D.C. Cir. 1995) (finding that false progress reports submitted to the government by the defendant constituted false certifications because the reports were submitted with the intent of securing payment approval); Peterson v. Weinberger, 508 F.2d 45, 52 (5th Cir. 1975) (“[E]ach claim submitted bore Dr. Peterson's purported signature … certifying something that simply was not so.”); Fleming v. United States, 336 F.2d 475, 477-78 (10th Cir. 1964) (holding certified feed dealer liable for executing false certifications in grain purchase orders). See also Bucy, Pamela H., Growing Pains: Using the False Claims Act to Combat Health Care Fraud, 51 Ala. L. Rev. 57, 78-79 (1999)Google Scholar (describing implicit and explicit certification theories); Munich, John R. & Lane, Elizabeth W., When Neglect Becomes Fraud: Quality of Care and False Claims, 43 ST. Louis U. L.J. 27, 42-46 (1999)Google Scholar (describing the debate between implicit and explicit certification).

44 945 F. Supp. 1485 (W.D. Okla. 1996).

45 See id. at 1487 (alleging that environment within the psychiatric center was not “reasonably safe” because patients were in danger of physical injury and sexual abuse from other patients due to understaffing).

46 See id. at 1488. Because the opinion arose on a motion to dismiss, the court did not have occasion to address whether the plaintiff ultimately would have prevailed on the merits.

47 115 F. Supp.2d 1149 (W.D. Mo. 2000).

48 Id. at 1153.

49 Id.

50 See id. at 1156 (finding that the “Aranda case [is] supportive and sufficiently analogous to the case at bar”).

51 See id. at 1153 (explaining that “if the Defendant billed the United States for specific services that it never rendered then that claim would be fraudulent and properly actionable under the FCA”).

52 See 42 U.S.C. § 1396r(b) (1994) (including the obligation to “promote maintenance or enhancement of the quality of life”).

53 Outside the institutional context, however, the quality of care theory has not met with much success. Courts have been particularly inhospitable to allegations that concern the defendant's adherence to specific scientific testing standards. See, e.g., United States ex rel. Mikes v. Straus, 84 F. Supp.2d 427, 428 (S.D.N.Y. 1999) (finding that alleged failure to follow recommended standards for spirometry tests did not render claims false or fraudulent); Luckey v. Baxter Healthcare Corp., 2. F. Supp.2d 1034, 1034 (N.D. 111. 1998) (finding that alleged failure to comply with plasma testing standards did not render claims false or fraudulent).

54 See Hoffman, David R., The Role of the Federal Government in Ensuring Quality of Care in Long-Term Care Facilities, 6 Annals Health L. 147 (1997)Google Scholar (detailing the prosecuting attorney's discussion of United States v. GMS Management-Tucker, Inc., No. 96-1271 (E.D. Pa., settled Feb. 21,1996)). The office has entered into a number of settlements to date. See, e.g., Nursing Home to Upgrade Facility To Settle Federal Claims of Poor Care, 4 Health Care Fraud Rep. (BNA) 800 (2000) (describing settlement with Ashton Hall Nursing and Rehabilitation Center); Nursing Homes to Pay $160,000, Improve Care to Settle Quality Charges, 4 Health Care Fraud Rep. (BNA) 542 (2000) (describing United States v. Mercy Douglass Human Serv. Corp., No, OO-CV-3471 (E.D. Pa., consent orders filed July 10,2000)); Lorraine McCarthy, Pa. Facility to Pay $195,000 to Settle Quality of Care False Claims Issues, 3 Health Care Fraud Rep. (BNA) 473 (1999) (describing settlement with Integrated Health Services at Penn Inc.); Nursing Home to Pay $50,000, Upgrade Care to Settle Quality of Care Lawsuit, 2 Health Care Fraud Rep. (BNA) 713 (1998) (describing United States v. Philadelphia, No. 98-4253 (E.D. Pa. Aug. 14, 1998); United States v. Chester Care Or., No. 98CV-139,1998 U.S. Dist. Lexis 4836 (E.D. Pa., consent order filed Feb. 4,1998). A similar suit was brought by the U.S. Attorney for the District of Maryland in 1998. See Northern Health Facilities, Inc. v. United States, 39 F. Supp.2d 563 (D. Md. 1998). The Maryland case proved to be particularly controversial, because some of the disputed claims appear to have been submitted during a six-month window that had been negotiated to enable the facility to be brought into substantial compliance. See id. at 565-66; see also Kathleen A. Peterson, Note, First Nursing Homes, Next Managed Care?: Limiting Liability in Quality of Care Cases under the False Claims Act, 26 Am. J.L. & Med. 69, 77-78, 84-85 (2000) (describing the Northern Health Facilities, Inc. case); Fabrikant & Solomon, supra note 28, at 142-44 (same).

55 Fabrikant & Solomon, supra note 28, at 160-61. See also Constantinos I. Miskis & William F. Sutton, Jr., Enforcing Quality Standards in Long-Term Care: The False Claims Act and Other Remedies, 73 Fla. Bar J., June 1999, at 108, 111 (arguing that license suspension, medical malpractice suits, or criminal prosecution are better remedies for poor quality of care); Michael M. Mustokoff et al., The Government's Use of the Civil False Claims Act to Enforce Standards of Quality of Care: Ingenuity or the Heavy Hand of the 800-Pound Gorilla?, 6 Annals Health L. 137, 142 (1997) (arguing that there is no legal basis to use the FCA for violations of subjective quality standards).

56 See Office of Inspector General, Publication of the OIG Compliance Program Guidance for Nursing Facilities, 65 Fed. Reg. 14289, 14295 n.49 (2000). See also 1999 Annual Report, supra note 7, at 14-16 (identifying “Focus on the Quality of Care” as one of OIG's accomplishments during Fiscal Year 1999). In the summer of 2000, OIG entered into an unprecedented Corporate Integrity Agreement that required a national nursing home/hospital company to adopt a comprehensive internal quality improvement program. See Office of Inspector General, Inspector General Announces Landmark Corporate Integrity Agreement with Vencor, Inc., available at http://www.dhhs.gov/progorg/oig/medadv/vencore.htm (last modified Aug. 8, 2000).

57 See, e.g., Sarah A. Klein, New Safe Harbor Rules Won't Slow Anti-Fraud Efforts, Am. Med. News, Dec. 20, 1999, at 5, 7 (quoting attorneys who predict expansion of the quality theory to managed care); Mary DuBois Krohn, Comment, The False Claims Act and Managed Care: Blowing the Whistle on Underutilization, 28 Cumb. L. Rev. 443, 444 (1998) (advocating use of FCA to address underutilization in managed care); Philadelphia Prosecutor Calculates Damages in Quality of Care Cases, 2 Health Care Fraud Rep. (BNA) 928 (1998) (quoting Assistant U.S. Attorney James Sheehan, who noted that in managed care cases, “the government has to show 'not just that the service was denied but how the corporate structure or business structure of the system was set up to deny those services' in the first place”).

58 See, e.g., Increased Focus on Program Exclusions, Quality of Care, Civil Remedies Seen, 4 Health Care Fraud Rep. (BNA) 75, 76 (2000) (citing Kevin G. McAnaney, Chief of OIG Industry Guidance Branch, as emphasizing “that the OIG only will get involved in cases where there is actual patient harm”).

59 See Publication of the OIG Compliance Program Guidance for Nursing Facilities, supra note 56, at 14303 n.108.

60 This focus on actual injury, however, obscures the fact that important medical errors may also take the form of “near misses,” where no harm occurs. If the government ignores these near misses, it may overlook an opportunity to gain crucial knowledge about the full range of circumstances that lead to medical errors. See Palmer, supra note 3, at 1620 (describing lack of formal reporting mechanisms for near misses); see infra Part IV.A.

61 See 31 U.S.C. § 3729(a)(1).

62 Philadelphia Prosecutor Calculates Damages in Quality of Care Cases, supra note 57, at 928-29 (quoting James Sheehan, Assistant U.S. Attorney for the Eastern District of Pennsylvania). To say that some quality of care problems may render claims false in their entirety is not, however, to say that all potential violations (no matter how minimal) do so. At present, the government has offered little guidance as to what quantum of “bad results” will suffice.

63 NHC Healthcare Corp., 115 F. Supp.2d at 1153 (quoting 42 U.S.C. § 1396r(b)).

64 See Aranda, 945 F. Supp. at 1487.

65 42 C.F.R. § 482.13(c)(2), (3). The facility also must be constructed, arranged, and maintained “so as to ensure the safety of the patient.” Id. at § 482.41. The Assistant U.S. Attorney who has negotiated many of the nursing home quality of care settlements has acknowledged “that, at least in theory, this approach could extend to hospitals.” Chad Bowman, Vencor Agreement Signals Increased Quality-of-Care Oversight, Lawyers Say, 9 Health L. Rep. (BNA) 1313, 1314 (Aug. 24, 2000) (quoting David Hoffman, Assistant U.S. Attorney for the Eastern District of Pennsylvania).

66 42 C.F.R. §482.21(c).

67 See id. § 482.25.

68 To Err is Human, supra note 2, at 43.

69 Id. at 65 (emphasis added). For a discussion of the “systems” approach to patient injuries, see Palmer, supra note 3, at 1611-13, 1638-42 (providing a history of the approach and comparing health care to other industries).

70 See To Err is Human, supra note 2, at 155-201 (offering suggestions for creating safety systems in health care organizations); Palmer, supra note 3, at 1617 (“Patient safety means developing processes... in order to decrease the likelihood that the same mistake will be made in the future.”).

71 Leape, supra note 3, at 97.

72 Medical Errors Not False Claims Without Pattern of Systemic Deficiencies, supra note 13, at 790 (quoting Lewis Morris, Assistant Inspector General for Legal Affairs).

73 Id. See also Increased Focus on Program Exclusions, supra note 58, at 76 (citing Kevin G. McAnaney, Chief of OIG Industry Guidance Branch, as emphasizing that OIG will only get involved “where alleged harm is a result of systemic, as opposed to isolated, problems”).

74 See Johnson, Sandra H., Quality-Control Regulation of Home Health Care, 26 Hous. L. Rev. 901, 908-09 (1989)Google Scholar (describing barriers to private quality litigation in long-term care). See also Stiffelman v. Abrams, 655 S.W.2d 522, 529 (Mo. 1983) (internal citations omitted) (explaining why nursing home residents are particularly susceptible to abuse).

75 After more than a decade of hearings, lawsuits, and reports condemning the quality of nursing home care, comprehensive nursing home reform was enacted as part of the Omnibus Budget Reconciliation Act of 1987. See Pub. L. No. 100-203, § 4201-03, 101 Stat. 1330 (1987) (codified as amended at 42 U.S.C. § 1395i & 1396r (1994); 42 C.F.R. § 483.1-483.480 (1999). See generally Angela S. Quinn, Comment, Imposing Federal Criminal Liability on Nursing Homes: A Way of Deterring Inadequate Health Care and Improving the Quality of Care Delivered? 43 St. Louis U. L.J. 653, 656-61 (1999) (describing the evolution of federal standards). Nonetheless, recent evaluations suggest that substantial quality problems continue to exist. See, e.g.. Office of Inspector General, Nursing Home Survey and Certification: Overal l Capacity, at 2, available at http://www.dhhs.gov/progorg/oei/reports/a346.pdf (last modified Mar. 1999) (identifying “significant weaknesses” in nursing home surveys).

76 See. e.g., United States ex rel. Showell v. Philadelphia AFL, CIO Hosp. Assn., Civ. A. No. 98-1916, 2000 U.S. Dist. Lexis 4960 (E.D. Pa. Apr. 18, 2000) (plaintiff alleged that hospital submitted false claims in connection with his mother's care); United States ex rel. Ben-Shlush v. St. Luke's-Roosevelt Hosp., 97 Civ. 3664 (Lap) 2000 U.S. Dist. Lexis 3039 (S.D.N.Y. Mar. 10, 2000) (plaintiff alleged that hospital falsely certified its compliance with regulations requiring written plans of discharge); Boese, John T., When Angry Patients Become Angry Prosecutors: Medical Necessity Determinations, Quality of Care and the Qui Tarn Law, 43 St. Louis U. L.J. 53, 56-60 (1999)Google Scholar (explaining why disgruntled patients are a fruitful source of qui tarn actions) [hereinafter Angry Patients], Of course, it is not clear that patients, family, and friends will have the expertise to know when care falls below acceptable standards, thus raising the spectre of qui tarn suits involving care that might not be sanctioned under state disciplinary systems or malpractice law.

77 See, e.g., Mikes, 84 F. Supp.2d at 430 (involving a terminated pulmonologist who alleged that a physician practice submitted fraudulent Medicare claims based on improperly performed spirometry tests); Luckey, 2 F. Supp.2d at 1036 (involving a laboratory technician who alleged that a former employer submitted false claims to the government by misrepresenting the company's blood plasma testing procedures).

78 Given the $5500 to $11,000 per claim statutory penalty, the total award easily can reach astronomical proportions. For example, in Krizek, 111 F.3d at 934, a psychiatrist was accused of submitting 8,002 false claims of $30 each, for total damages of $245,392. Seeking penalties of $10,000 per claim, the government (unsuccessfully) sued him for $81 million dollars.

79 See 42 U.S.C. § 1320a-7(b)(7).

80 Uwe E. Reinhardt, Medicare Can Turn Anyone Into a Crook, Wall St. J., Jan. 21, 2000, at A18. See also Blanchard, Timothy P., Medicare Medical Necessity Determinations Revisited: Abuse of Discretion and Abuse of Process in the War Against Medicare Fraud and Abuse, 43 St. Louis U. L.J. 91, 114 (1999)Google Scholar (arguing that the FCA's “threat of draconian… sanctions coerces providers into settlements regarding issues on which providers would most likely prevail”); Boese, John T. & McClain, Beth C., Why Thompson is Wrong: Misuse of the False Claims Act to Enforce the Anti-Kickback Act, 51 ALA. L. Rev. 1, 18 (1999)Google Scholar (arguing that the FCA penalty structure “places great pressure on defendants to settle even meritless suits”); Robert Salcido, DOJ Must Reevaluate Use of False Claims Act in Medicare Disputes, Health Care Fraud Litig. Rep. (BNA), Apr. 2000, at 15, 15 (“The dirty little secret underlying FCA enforcement is that given the civil penalty provision and the costs and risks associated with litigation, the rational move for any healthcare provider accused of fraud is to settle the action even if the government's likelihood of success is incredibly small”).

81 Klein, supra note 57, at 6.

82 See Aussprung, Leon, Fraud and Abuse: Federal Civil Health Care Litigation and Settlement, 19 J. Leg. Med. 1 (1998)CrossRefGoogle Scholar (describing DOJ fraud settlements as “a de facto body of health care fraud and abuse law”).

83 See W. Page Keeton Et Al., Prosser & Keeton on Torts § 30 (5th ed. 1984) (listing the elements of a negligence action: (1) a duty or obligation to conform to a certain standard of conduct; (2) a breach of that duty; (3) a causal connection between the conduct and the injury; and (4) actual loss or damage). The proof would differ from a medical malpractice case in that the breach would relate to the lack of systems to prevent medical error, rather than to the error itself.

84 See, e.g., Hyman, David A., Medicine in the New Millennium: A Self-Help Guide for the Perplexed, 26 Am. J.L. & Med. 143, 146 (2000)Google Scholar (“Several decades of health services research has made clear that American health care is dogged by persistent quality problems relating to overutilization of certain services, underutilization of other services, unexplained variations in service utilization and errors in health care practice”); Kinney, Eleanor D., Behind the Veil, Where The Action Is: Private Policy Making and American Health Care, 51 Admin. L. Rev. 145, 164-65 (1999)Google Scholar (arguing that health services research revealed geographical practice variations, which in turn stimulated greater attention to the “outcomes” of medical care and more rigorous development of standards of care). Much of this research has been done by John Wennberg and his colleagues. See, e.g., John E. Wennberg et al., Are Hospital Services Rationed in New Haven or Over-Utilized in Boston? 1987 Lancet 1185, 1188 (1987) (arguing that attention to variation is essential to improving clinical practice and understanding cost-containment); Wennberg, John & Gittelsohn, Alan, Small Area Variations in Health Care Delivery: A Population-Based Health Information System Can Guide Planning and Regulatory Decision Making, 182 Sci. 1102, 1107 (1973)CrossRefGoogle Scholar (arguing that variations in health care utilization indicate uncertainty about the effectiveness of different levels of health services).

85 Indeed, there remains a significant definitional debate regarding the basic distinction between “errors” and simple “medical judgments that were, in retrospect, wrong.” Hughes, Christopher M., Letter to the Editor: How Many Deaths Are Due to Medical Errors? 284 Jama 2187 (2000)CrossRefGoogle Scholar (arguing that medical errors are only those errors that are due to the environment and process of care).

86 Palmer, supra note 3, at 1620.

87 See To Err is Human, supra note 2, at 165-82 (identifying broad error-prevention principles, such as providing leadership, respecting human limits in the design of processes, promoting effective team functioning, anticipating the unexpected, and creating a learning environment).

88 See id. at 182-97 (summarizing studies regarding medication errors and identifying specific strategies for improving medication safety); Stolberg, supra note 3, at 1 (describing how anesthesiologist's mix-up of two drugs during surgery led a hospital pharmacist to label the drugs with colored stickers and to place them in separate drawers).

89 Wang v. FMC Corp., 975 F.2d 1412, 1420-21 (9th Cir. 1992) (citations omitted). See also United States ex rel. Milam v. Regents of the Univ. of California, 912 F. Supp. 868, 886 (D. Md. 1995) (“Disagreements over scientific methodology do not give rise to False Claims Act liability.”) (citations omitted).

90 See David A. Hyman, Health Care Fraud and Abuse: Market Change, Social Norms, and the Trust Reposed in the Workmen, J. Leg. Stud, (forthcoming 2001) (arguing that health care providers, regulators, and the general public operate under different social norms in addressing health care fraud and abuse).

91 See supra notes 58-60.

92 See To Err is Human, supra note 2, at 177 (recommending that both errors and near misses be tracked and reported to improve access to accurate and timely information), 190 (recommending tracking and analysis of both errors and near misses “to modify processes to prevent further occurrences” of medication errors). As an example of such a system in another high-risk industry, the IOM Report profiles how E.I. du Pont de Nemours & Company instituted a non-punitive system to encourage employees to report near-miss incidents, which has helped to create an “all-pervasive, ever-present awareness of the need to do things safely.” Id. at 159-60.

93 Johnson, Sandra H., Disciplinary Actions and Pain Relief: Analysis of the Pain Relief Act, 24 J.L. Med. & Ethics 319, 320 (1996)CrossRefGoogle Scholar. See generally Alpers, Ann, Criminal Act or Palliative Care? Prosecutions Involving the Care of the Dying, 26 J.L. Med. & Ethics 308 (1998)CrossRefGoogle ScholarPubMed (discussing criminal actions against physicians for end-of-life pain control); Jonathan D. Fleece, A New Prescription for Pain, i. Health & Hosp. L., Mar. 1997, at 57, 57 (describing “the pervasive fear of legal sanctions that may potentially be lodged against providers by state medical boards or criminal prosecutors”); Hyman, Chris Stem, Pain Management and Disciplinary Action: How Medical Boards Can Remove Barriers to Effective Treatment, 24 J.L. Med. & Ethics 338 (1996)CrossRefGoogle Scholar (noting that “[o]ne of the significant impediments is physicians' fear that prescribing an adequate quantity of opioids will result in an investigation by the state medical board, the Drug Enforcement Administration (“DEA”), or the state agency responsible for regulating controlled substance”). For a discussion of fraud and abuse issues in the treatment of pain, see Jost, Timothy S., Public Financing of Pain Management: Leaky Umbrellas and Ragged Safety Nets, 26 J.L. Med. & Ethics 290, 300-02 (1998)Google Scholar.

94 See, e.g., Johnson, supra note 93, at 326 (stating that “[n]ew models must be developed to shift oversight of pain management from a quasi-criminal context to another context more conducive to patient protection”).

95 See Bucy, Pamela H., Fraud By Fright: White Collar Crime By Health Care Providers, 67 N.C. L. Rev. 855, 920-24 (1989)Google Scholar (describing the difficulty of proving FCA violations involving unnecessary or substandard care).

96 See 31 U.S.C. § 3729(a)(1), (b).

97 See, e.g., Krizek, 859 F. Supp. at 8 (holding that the government was unable to prove the defendant psychiatrist billed for services that were not medically necessary).

98 Id. at 8 (comparing the government expert's “cold review” of patient notes to the defendant's credible and persuasive testimony “as to the basis for the course of treatment for each” patient at issue).

99 See supra Part III.E.

100 See, e.g., Blumstein, James F., The Fraud and Abuse Statute in an Evolving Health Care Marketplace: Life in the Health Care Speakeasy, 22 Am. J.L. & Med. 205, 218 (1996)Google Scholar (arguing that the health care system is “akin to a speakeasy,” with prosecutorial discretion substituting for clear, timely, and relevant regulatory guidance); Angry Patients, supra note 76, at 77 (“[Cjases like Thompson ignore the fact that administrative agencies accept varying degrees of non-compliance as a matter of course, sometimes even as a tacit admission that a regulation is unworkable or bad policy.”).

101 Blanchard, supra note 80, at 92.

102 As Professor Tom Tyler has explained, “People obey the law because they believe that it is proper to do so, they react to their experiences by evaluating their justice or injustice, and in evaluating the justice of their experiences they consider factors unrelated to outcome, such as whether they have had a chance to state their case and been treated with dignity and respect.” Tom R. Tyler, Why People Obey The Law 178 (1990). See also Robinson, Paul H. & Darley, John M., Justice, Liability & Blame: Community Views & The Criminal Law 7 (1995)Google Scholar (noting the importance of the community's perception of the law's moral correctness); Tyler, Tom R. & Darley, John M., Building a Law-Abiding Society: Taking Public Views About Morality and The Legitimacy of Legal Authorities into Account When Formulating Substantive Law, 28 Hofstra L. Rev. 707, 723 (2000)Google Scholar (arguing that legitimacy is linked to the fairness of procedures used by authorities). Thus, to the extent that the health care provider “community” comes to believe that the FCA is being used unfairly, the perceived legitimacy of the government's anti-fraud efforts maybe in jeopardy.

103 See Medical Errors: Market-Based Reduction Efforts, supra note 4, at 675 (describing collaborative error-reduction efforts between public and private sectors).

104 See 31 U.S.C. § 3730(d) (discussing the range of awards given to qui tam plaintiffs).

105 See 42 U.S.C. § 1395i(k)(2)(C)(iv) (2000) (authorizing the transfer of penalties and damages obtained in health care FCA cases to the Trust Fund).

106 See id. § 1395i(k)(3) (describing appropriations to the Fraud and Abuse Control Program account).

107 See id. § 1395i(k)(3)(A)(i) (setting out the maximum amounts available to HHS and the DOJ). In fiscal year 1999, the Secretary and the Attorney General certified $137.5 million as necessary for their health care anti-fraud efforts; HHS received approximately $106.5 million, and DOJ received almost $31 million. See 1999 Annual Report, supra note 7, at 6-7. A similar result occurs under the Affirmative Civil Enforcement (“ACE”) program, under which a percentage of the civil fraud recoveries obtained by the U.S. Attorneys Offices are available to fund future collection efforts. See, e.g., Civil Division, at http://www.usdoj.gov:80/usao/okn/civil.htm (describing the ACE program in the U.S. Attorneys Office for the Northern District of Oklahoma) (last visited Apr. 27, 2001).

108 See Keeton Et Al., supra note 83, § 1 at 5-6 (describing tort law as “a body of law which is directed toward the compensation of individuals, rather than the public, for losses which they have suffered within the scope of their legally recognized interests”). Similarly, allegations of misrepresentations and unfair business practices by health care providers often fall under consumer protection laws. See, e.g., Bundren, Lee Ann, State Consumer Fraud Legislation Applied to the Health Care Industry: Are Health Care Professionals Being “Consumed"?, 16 J. Leg. Med. 133, 145-53 (1995)CrossRefGoogle ScholarPubMed (discussing use of consumer fraud laws in the health care context).

109 Of course, it is by no means clear that the Trust Fund needs to be “replenished” to the tune of three times the money it paid out in such cases (not to mention the per-claim statutory penalties). A full examination of this issue, however, is beyond the scope of this Article.

110 Federal prosecutors have argued that “the threat of hefty settlements and/or exclusion from government programs helps keep providers honest” and provides '"a financial reason not to cheat."' Katherine E. Harris, More Qui Tam Lawsuits Will Be Successful Without Government Help, Prosecutor Says, 4 Health Care Fraud Rep. (BNA) 848 (2000) (quoting Peter A. Winn, Assistant U.S. Attorney for the Northern District of Texas).

111 See, e.g., Medical Errors Not False Claims Without Pattern of System Deficiencies, supra note 13, at 790.

112 See, e.g., National Ass'N of Attorneys General, Multistate Settlement With The Tobacco Industry, Parts I (recitals), III (permanent relief, including bans on advertising, lobbying, and corporate sponsorships), and VI (establishment of national foundation and National Public Education Fund), available at http://www.tobacco.neu.edu/Extra/multistate_settlement.htm (last visited Jan. 19, 2001) (providing the actual settlement agreement in a tobacco case). For a discussion of the public health aspirations of the tobacco litigation, see Jacobson, Peter D. & Warner, Kenneth E., Litigation and Public Policy Making: The Case of Tobacco Control, 24 J. Health Pol. Pol'Y & L. 769 (1999)CrossRefGoogle Scholar.

113 The doctrine of cy pres developed as a way to avoid invalidating charitable trusts when not all of the testator's conditions could be met. As the California Supreme Court has explained, “[w]here compliance with the literal terms of a charitable trust became impossible, the funds would be put to “the next best use,” in accord with the dominant charitable purposes of the donor.” California v. Levi Strauss & Co., 715 P.2d 564, 570 (Cal. 1986). For a discussion of the cy pres doctrine in the antitrust and consumer protection contexts, see Farmer, Susan Beth, More Lessons from the Laboratories: Cy Pres Distributions in Parens Patriae Antitrust Actions Brought By State Attorneys General, 68 Ford. L. Rev. 361 (1999)Google Scholar; DeJarlais, Natalie A., Note, The Consumer Trust Fund: A Cy Pres Solution to Undistributed Funds in Consumer Class Actions, 38 Hastings L.J. 729 (1987)Google Scholar.

114 See Superior Beverage Co., Inc. v. Owens-Illinois, Inc., 827 F. Supp. 477, 482-83 (N.D. 111. 1993). Similarly, a footwear company settled price-fixing allegations by creating a fund for distribution to the states, to be used for the purchase and improvement of athletic equipment and facilities. See New York v. Reebok Int'l Ltd., 96 F.3d 44 (2d Cir. 1996).

115 Compare Superior Beverage Co., 827 F. Supp. at 482-83 (distributing the remainder) with Reebok Int'l, 96 F.3d at 49 (approving broader distribution “[bjecause of the unlikelihood of there being any significant “net monetary relief for individual claimants if an attempt were made to distribute the settlement proceeds among them,” due to the large number of claimants and the minimal injury suffered per purchase). See also Farmer, supra note 113, at 403-405 (advocating broad use of cypres approaches rather than “direct restitution” under certain circumstances).

116 See, e.g., Press Release; Novo Nordisk, Novo Nordisk and Massachusetts Extend NovoPen 1.5 Delivery System Promotion to Medicaid Patients (Mar. 19, 1997) (announcing company's agreement to provide hundreds of free insulin delivery systems to indigent and Medicaid patients at certain hospitals in the state) (copy on file with Author); Press Release, Commonwealth of Massachusetts Office of the Attorney General, N.J. Pharmaceutical Corporation Settles with Attorney General: 21,000 Nitroglycerin Patches to be Distributed Free to Public (May 21, 1995) (describing settlement with Schering Corporation, which agreed to distribute free Nitro-Dur patches to public hospitals in the state) (copy on file with Author).

117 W.S. Gilbert, The Best Known Works of W.S. Gilbert 144 (1932).

118 Palmer, supra note 3, at 1661.

119 See Boese & McClain, supra note 80, at 49-50 (arguing that qui tarn relators are allowed to “trump” the government's decision not to prosecute); Meador, Patricia & Warren, Elizabeth S., The False Claims Act: A Civil War Relic Evolves Into a Modern Weapon, 65 Tenn. L. Rev. 455, 474 (1998)Google Scholar (noting that relators “do not have to abide by prosecutorial discretion”).

120 Hughes, supra note 85, at 2187.