[Congressional Record Volume 144, Number 48 (Monday, April 27, 1998)]
[Senate]
[Pages S3648-S3649]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     DEFENDING THE FALSE CLAIMS ACT

  Mr. GRASSLEY. Mr. President, on Friday, a new audit report was 
released by the Health Care Financing Administration. It is the Chief 
Financial Officer's report. It shows that a staggering $20 billion of 
tax dollars were improperly paid through Medicare last year. That is 20 
billion reasons to defend the False Claims Act and oppose the bill 
percolating in the House that's being pushed by the American Hospital 
Association, and sponsored by Congressman Bill McCollum--H.R. 3523.
  The audit is only the latest reminder of why the False Claims Act is 
the law of the land. Whether it is the derivation of the law signed by 
Abraham Lincoln in 1863, or the amendments that I sponsored, which 
passed in 1986, the reason the law exists is to protect the public's 
vital interests.
  In the case of health care, those vital interests are clear. The 
False Claims Act helps maintain the integrity of Medicare so that 
senior citizens won't have to fear the possibility that the program 
won't be there for them in the future. It helps maintain the standards 
we want for our seniors with respect to the quality of health care. The 
False Claims Act is beginning to be used successfully by U.S. Attorneys 
to improve the quality of care in the health care industry, such as 
nursing home care.
  Finally, the False Claims Act is the final yet most effective line of 
defense to protect the taxpayers' hard-earned money. Since my 
amendments in 1986, the Act has been used to return more than $4 
billion, fraudulantly taken, back to the taxpayers. Nearly $2 billion 
of that is from the health care industry. And somewhere between $150 
and $300 billion-worth of potential fraud has been deterred.
  There is a critical and obvious need for the False Claims Act to 
safeguard the public interest. The Act is also highly successful. It 
has built up a track record for accomplishing exactly what it was 
designed to do--to promote integrity in taxpayer-funded programs.
  Suddenly, integrity in such programs is under a fierce attack. The 
attack is the McCollum bill, which would gut the False Claims Act. 
What's wrong with this picture?
  The McCollum bill is a misguided missile in the war against fraud. If 
it passes, perpetrators of fraud will be celebrating in the streets. It 
is ill-founded, and would send the wrong message both to the public and 
to those who would commit fraud.
  The bill is the product of the American Hospital Association. The AHA 
came to me earlier this year and reported what they claim are examples 
of the Justice Department going after hospitals with heavy-handed 
tactics, and using the False Claims Act to prosecute innocent mistakes. 
I also visited with the Iowa Hospital Association, from my home State.
  After listening to their concerns, it seemed to me that the examples 
the AHA provided spoke more to problems in the implementation of the 
law, rather than to problems with the law itself. I agreed to approach 
the Justice Department and help begin a dialogue between DOJ, the AHA, 
and myself and other members of Congress. The goal was to examine the 
evidence and see where the problems were occurring and why. And then to 
fix any real problems.
  After much examination and discussion, I and others determined that 
the AHA had some legitimate concerns involving the way some U.S. 
Attorneys were communicating with some hospitals around the country.
  To its credit, the Justice Department has reevaluated its process and 
made changes. It has changed its approach, and has taken steps to 
ensure higher standards prior to any investigation for fraud. It is not 
often that the Justice Department willingly reexamines its process, 
admits changes are needed, and then makes them. Because it did so in 
this case, I believe that the Justice Department should be commended 
for its responsiveness.
  As a case in point, let me refer to a letter I received this month 
from the president of a medical center in Iowa. Next year, he will be 
in the leadership of the Iowa Hospital Association. He is one of those 
who had expressed concerns to me months ago about how the Justice 
Department was implementing

[[Page S3649]]

the False Claims Act. After the dialogue, and after DOJ changed its 
process, this official wrote to me and said he was satisfied that the 
law doesn't need to be changed. This official further says that after 
meeting with the local U.S. Attorney, he is confident in DOJ's 
intentions to not use the False Claims Act to go after honest mistakes.
  In this case, the dialogue seems to have worked. Reason prevailed. 
Where reason has not prevailed is with those supporters of the McCollum 
bill who believe that the False Claims Act should be gutted anyway. 
There is a logical disconnect between the problems identified by the 
hospital industry, and the solution they now advocate.
  Pure and simple, the False Claim Act is a tool against fraud. It is 
not to be used, and is not used, against innocent mistakes. There is 
clearly an agenda behind this bill. It is to remove the taxpayers' most 
effective weapon in its arsenal against fraud. And it is being pushed 
by some in an industry that has been clearly ravaged by those who have 
committed fraud.
  There is no question that the vast majority of hospitals and hospital 
employees in this country are honest, civic-minded, and true public 
servants. Many are absolute heroes. Those in industry who get caught 
committing fraud threaten to give the industry a tarnished reputation.
  If that is so, can't we also say that those who are pushing to gut 
the law also threaten to give the industry a tarnished reputation? 
After all, given the changes made by DOJ, there is no empirical basis 
for this bill. Just as changes were demanded of the Justice Department 
to refrain from taking action without a legal or factual predicate, 
shouldn't there be a legal and factual predicate for advancing this 
bill. There is none.
  The McCollum bill is not designed to stop the prosecution of innocent 
mistakes. Rather, it would make fraud easier to accomplish more often. 
And, it would establish new ``look-the-other-way'' loopholes, including 
for on-going cases such as Columbia/HCA. And remember, this bill would 
do all that at a time when there's $20 billion of potential fraud out 
there, fraud in the medical industry has been rampant, and the public 
has had it up to their keesters.
  Is this what the supporters of the McCollum bill really think the 
public wants and needs? Do you really thing the public wants a white 
flag of surrender in the war against fraud?
  Specifically, the McCollum bill would do the following:
  First, it would create a ``fraud-free zone.'' No false claims case 
could be brought unless the taxpayers' damages are a ``material 
amount.'' That ``material amount'' is unclear but it could be as much 
as ten percent. In other words, we will write off the first 10 percent 
of fraud. In effect, it legalizes or legitimizes up to ten percent of 
what is now illegal. For a company like Columbia/HCA, for example, 
which pulled in more than $6 billion from the taxpayers last year, the 
first $600 million would be okay. For the entire Medicare program, 
which was $210 billion last year, we could write off the first $21 
billion. That is a $21 billion loophole. A real whopper.
  Second, let us say a false claims case involved a ``material 
amount.'' there are still three more ways a company could get off the 
book anyway. The McCollum bill would open up three more whoppers to 
raise that $21 billion--``free fraud zone'' to substantially more. 
Companies would be able to better insulate themselves from liability 
simply by, among other things, showing a commitment to setting up 
better procedures in the future despite defrauding Medicare today.
  Finally, the bill would make it much harder to provide that claims 
were wrongfully submitted. The normal standard for civil statutes is 
``a preponderance of the evidence.'' The McCollum bill would raise it 
to ``clear and convincing evidence.'' That is basically a criminal 
standard, not a civil one. Once again, reason has not prevailed in the 
formulation of this bill.
  The McCollum bill would establish a fortress around the medical 
industry. It would prevent legitimate efforts on behalf of the 
taxpayers to punish those bad apples that undermine the integrity of 
health care programs and raid the treasury. The solution is not to gut 
the law. The solution was and is to take the steps DOJ has already 
taken, and to ensure DOJ stays on that rack in the future. We have 
addressed the process dealing with innocent mistakes.
  At the same time, we need the toughest possible law to go after 
mistakes that aren't innocent. Those who continue down the road of 
supporting this bill pose a clear and present danger to the public's 
vital interests--to the highest quality of health care for our senior 
citizens, and to the integrity of how our tax dollars are spent.
  The PRESIDING OFFICER. The Senator from Wisconsin.
  Mr. FEINGOLD. Mr. President, I ask unanimous consent to speak as in 
morning business for up to 15 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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