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44 St. Louis U. L.J. 133 (2000)
The Federal False Claims Act: Can Whistle Blowers Reach State and Local Tax Dollars

handle is hein.journals/stlulj44 and id is 147 raw text is: THE FEDERAL FALSE CLAIMS ACT: CAN WHISTLE BLOWERS REACH STATE AND LOCAL TAX DOLLARS? JOHN R. HELLOW* STACIE K. NERONI** I. INTRODUCTION The increasing use of the False Claims Act (FCA or Act)1 by both whistle blowers and federal officials extracts hundreds of millions of dollars from health care providers owned by states and local governments.2 In most instances, these cases cost health care providers many times what they collected through Medicare and Medicaid billings.3 These recoveries can * John Hellow is a partner at the law firm of Hooper, Lundy & Bookman and has a Masters in health care administration. He has been representing health care clients in government payment disputes since 1982. Additionally, Mr. Hellow has represented clients in some of the largest civil and criminal fraud investigations in the industry's history. ** Stacie Neroni is an associate at the law firm of Hooper, Lundy & Bookman. She has been assisting health care providers to resolve various legal difficulties including Medicare and Medicaid reimbursement and other regulatory and compliance issues. Both authors would like to thank Julie Schollenberger, who is an associate at Hooper, Lundy & Bookman for her generous and invaluable comments on the early drafts of this article. 1. 31 U.S.C. §§ 3729-3733 (1994). 2. The anecdotal evidence suggests that some institutions now forego Federal payments from Medicare, Medicaid and Civil Health and Medical Program for the Uniformed Services (CHAMPUS) for some health services because the complexity of billing and documentation requirements pose a significant risk of exposure to extreme liability under the FCA. 3. During a recent initiative, the United States Attorney's Office for the Middle District of Pennsylvania contacted a majority of Pennsylvania hospitals concerning alleged improper Medicare billings of outpatient hospital services provided within seventy-two hours of an admission. The government contended that such outpatient services were not separately billable because of the subsequent inpatient stay. One small Pennsylvania hospital was advised that if it chose to litigate the alleged false claims violation, it could be liable for almost $5 million in damage multiples and penalties, but that it could avoid such devastating consequences by paying multiple damages in the amount of $50,000. While this is an extreme example of the initiative, ultimately over 4,600 hospitals were the target of that effort and fines and penalties, if calculated under the FCA, in many instances were in excess of ten times actual damages. See, e.g., Jeff McGaw, Hospitals Bemoan the Use of False Claims Act, PATRIOT NEWS-HARRISBURG, Oct. 4. 1998 at D03, available in 1998 WL 6481692; Jack Sherzer, Crackdown on Hospital Overbilling is City-based: Feds Here Orchestrate $130 Million Effort, PATRIOT NEWS-HARRISBURG, Dec. 8,

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