FALSE CLAIMS: THE COORDINATED EXPLOITATION OF THE UNITED STATES GOVERNMENT BY THE HEALTHCARE INDUSTRY.

• Author: McMichen, Grady

TABLE OF CONTENTS I. The American Premium for Healthcare 36 II. The American Healthcare System & the False Claims Act 37 a. Healthcare Landscape 37 b. Health Insurance Coverage in America 39 c. False Claims Act Overview 41 III. Utilizing the False Claims Act to Curtail Healthcare Costs 42 a Large Network Hospitals Leveraging the Market 42 b. Network Hospitals' Record-Setting Prices 44 c. Establishing a Baseline for Healthcare Costs Using the False Claims Act 45 d. Adjudicating Large Hospital Networks for Price-Fixing 46 e. Leveling the Healthcare Market 48 IV. Applying the False Claims Act to Network Hospitals to Reduce Costs 49 a. Overtreatment in America 49 b. Split Decision 50 i. The Eleventh Circuit: Reasonable Difference of Medical Opinions Insufficient to Establish a False Claim 51 ii. The Third Circuit: Difference of Medical Opinions Enough to Create Triable Dispute of Fact Regarding Falsity 52 iii. The Ninth Circuit: Distinguishing False Certification of Medical Necessity Can Establish FCA Claim 53 iv. The Supreme Court Declines to Rule 54 VI. Solidifying Falsity Requirements 55 a. Factual Falsity Challenge 56 b. Establishing a Presumption for Physicians 58 c. Action Arising Under Legal Falsity 59 VII. Reducing Unnecessary Treatments through Adoption of Standards 62 I. THE AMERICAN PREMIUM FOR HEALTHCARE

Healthcare prices in America have been on the continual rise for several years, constantly surpassing prior all-time highs. (1) These soaring costs have led to an increase in individuals filing for bankruptcy due to medical debt. (2) To combat this phenomenon, Americans have turned to their communities to help alleviate their medical costs through crowdsourcing platforms like GoFundMe. (3) These increasing prices have imposed a tremendous financial burden on suffering families who face the possibility of losing a loved one or potentially crippling financial debt.

For the past two years, the world has been engulfed by a global pandemic that has stretched the capabilities of public health systems. (4) The stress placed on the public health system by COVID-19 has awakened the United States to the difficulties of obtaining accessible and affordable healthcare. (5) Throughout the pandemic, hospitals have struggled with sourcing personal protective equipment (PPE), ventilators, and other necessary products to care for patients who have contracted COVID-19. (6) In the second year of the pandemic, hospitals were faced with the new challenge of finding enough staff to attend to the enormous number of patients in need of attention. (7) The nurse and doctor shortage occurred because many medical professionals have elected to leave the profession. Some opted to have children or retire early, and others left the profession due to burnout and low wages. (8)

During the Civil War, the federal government established the False Claims Act (FCA) to protect the Army from being exploited by merchants. (9) Today, the FCA has been applied to multiple pharmaceutical companies for price-fixing and kickback schemes they have employed. (10) These actions have held pharmaceutical companies accountable by levying billion-dollar fines. (11) The FCA has also been applied to large hospital networks for participating in kickback schemes and charging patients for care they did not receive. (12)

On June 26, 2003, the Department of Justice and HCA (a healthcare group), reached a record-setting $1.7 billion settlement for damages arising from the false claims submitted to Medicare and other federal healthcare plans. (13) This was the single largest example of Medicare fraud accounted for, and it was settled under the FCA. (14) HCA plead guilty to keeping two sets of books, one for accurately reporting the services the group provided, and another set that was submitted to the federal government. (15) The set of books provided to the federal government included charges for services not provided to patients, shifted salary costs to increase reimbursement from federal healthcare programs and showed inflated costs for services provided and participation in kickback schemes. (16)

Since the early 2000s, large hospital networks have exponentially increased their leverage over the market. (17) To match the growing price-setting power of large hospital networks, the federal government should expand the current interpretation of the FCA to allow for the review of prices that healthcare networks are charging Medicare, Medicaid, and other insurance plans that receive subsidies from the federal government through the Affordable Care Act. (18)

Promoting accountability of large hospital networks will prevent fraudulent overcharging of patients, which could prevent patients from amassing unnecessary medical debt. Using the FCA to establish a threshold for acceptable payments for treatments and other services provided by large hospital networks would help to level the imbalance of power between private insurance providers and hospital networks. If implemented effectively, this price establishment could have a ripple effect across the healthcare market, reducing the costs of treatments to all patients, regardless of their health insurance provider.

2. THE AMERICAN HEALTHCARE SYSTEM & THE FALSE CLAIMS ACT

   a. Healthcare Landscape

   Healthcare spending in America has increased "thirty-one times over the span of the last four decades." (19) According to the Center for Medicare and Medicaid Services, national healthcare expenditures "grew [by] 4.6% [increasing spending to] $3.8 trillion" in 2019. (20) This astronomical increase in the cost of healthcare coverage led many patients to make tough decisions involving whether they can undergo a test or treatment. According to the Kaiser Family Foundation (KFF), "21% of adults ages 18-64 reported they have not undergone a medical test or treatment that was recommended by a doctor because of cost, [and] 32% of adults have postponed receiving medical care because of the cost." (21)

   As the COVID-19 pandemic continued to burden health care systems, the pandemic also heavily impacted Americans' finances. A KFF study analyzing how the pandemic impacted Americans found "half of U.S. adults say they put off or skipped some sort of health care or dental care in the past year because of the cost." (22) The same study found that high health care costs "disproportionately affect uninsured adults," resulting in uninsured patients delaying or foregoing prescribed medical procedures. (23) Rising health care prices also affected Americans who were covered by health insurance. "Nearly half - 46% - of insured adults reported difficulty affording their out-of-pocket costs and about one in four - 27% - reported difficulty affording their deductible." (24)

   The cost of healthcare is a major factor patients weigh when determining whether they will undergo a procedure. (25) As the health care system currently operates, consumers do not have access to healthcare providers' negotiated prices for treatments. Enabling customers to understand the billing process, prices for treatment, and how much of the treatment their insurance will cover could increase transparency. This will allow patients to make more informed decisions while also inspiring competition between healthcare providers.

   Transparency in healthcare pricing was recently addressed by the federal government. In 2019, a rule was promulgated by the Department of Health and Human Services requiring hospitals to publish gross charges for treatments, payer-specific negotiated prices, and other information, or be subject to a fine and audit. (26) This rule faced tremendous pushback from hospitals refusing to comply with its' disclosure requirements. A study found that 83% of hospitals are not complying with the finalized rule, citing that the fine of $300 a day is minimal, while the potential cost and loss from disclosure is far greater. (27)

   b. Health Insurance Coverage in America

   Historically, Americans have primarily relied on their employers for their health insurance. (28) With an aging population in need of health care coverage, President Lyndon B. Johnson signed Medicare into law in 1965. (29) Medicare was founded to provide health insurance for older Americans who were no longer in the workforce and who otherwise would not have healthcare coverage. (30) Those eligible for Medicare are "age 65 or older, younger people with disabilities and people with End Stage Renal Disease." (31) Medicare is made up of four parts: Part A, Part B, Part C, and Part D. Part A covers inpatient care in hospitals, nursing facility care, hospice care, and home health care. (32) Patients are eligible for premium-free Medicare Part A at age 65 or older if they or their spouse have paid Medicare taxes for a minimum of 10 years. (33) Part B's coverage includes ambulance services, mental health services, and limited prescription drugs. (34) Medicare Part C is also referred to as Medicare Advantage plans. These plans are offered by private companies who have their plans approved by Medicare. (35) Medicare Advantage Plans offer the same coverage provided by Part A and B but also include extra coverage such as "vision, hearing, dental, and/or health and wellness programs. Most also include prescription drug coverage." (36) Medicare does not cover long-term (custodial) care, dental care, or eye exams. (37) Lastly, Medicare Part D covers a wide range of prescription drugs for people on Medicare. (38) Part D covers generic prescription drugs for a low copayment and name-brand drugs for higher copayment. (39) Part D is accessible only to patients enrolled in Part A and Part B or patients enrolled in a Medicare Advantage Plan. (40)

   Like Medicare, Medicaid was signed into law in 1965 by President Johnson in the Social Security Act. (41) Medicaid requires states to provide coverage for low-income families, pregnant women, people with disabilities, and people who need long-term care. (42) Specific Medicaid...