A Fair Competition Theory of the Civil False Claims Act

Whistleblowers are helping to recover more than $5 billion a year for fraud against the federal government, but reliance on whistleblowers and prosecutorial discretion raises problems when fraud allegations stem from undisclosed regulatory violations. Courts have created a series of opaque, formalistic “false certification” doctrines that provide little principled guidance as to why, for example, knowingly naming the wrong physician supervisor does not constitute Medicare fraud under the False Claims Act, but naming the wrong physician provider does constitute fraud. I suggest that the principle of fair competition can distinguish between regulatory violations that should result in civil liability and those better handled within a preexisting regulatory regime. This clear, principled rule for liability can aid development of a fair, competitive marketplace not dominated by entities improperly profiting from regulatory violations.