Defending False Claims Act/Qui Tam Actions: Neither Scientific Disagreements Nor Mistakes Can Serve as the Basis for a FCA Violation

Two of the most straightforward defenses to an action under the False Claims Act, 31 U.S.C. §§ 3729 et seq. (“FCA”), are frequently overlooked. “Disagreements over scientific methodology do not give rise to False Claims Act liability.” United States ex rel. Anderson v. Northern Telecom, Inc., 52 F.3d 810, 815-16 (9th Cir. 1995). Moreover, the FCA “is concerned with ferreting out ‘wrongdoing,’ not scientific errors.” Wang v. FMC Corp., 975 F.2d 1412, 1421 (9th Cir. 1992). Or as the Seventh Circuit has succinctly put it, the statement must be a lie. Hindo v. University of Health Sciences/The Chicago Medical School, 65 F.3d 608, 613 (7th Cir. 1995). As one district court has noted, “Furthermore, the legal process is not suited to resolving scientific disputes or identifying scientific misconduct.” United States ex rel. Milam v. Regents of the Univ. of Calif. 912 F. Supp. 868, 886 (D. Md. 1995).

The decision in Luckey v. Baxter Healthcare Corp., 2 F. Supp. 2d 1034, 1047 (N.D. Ill. 1998), aff’d, 183 F.3d 730 (7th Cir. 1999), is particularly pertinent, since it dealt with the issue of contested medical judgments. The court there held that the exercise of legitimate scientific judgment did not allow a finding of falsity. “Courts have consistently declined to find that a contractor’s exercise of scientific or professional judgment as to an applicable standard of care falls within the scope of the FCA.” Therefore where professional judgment brings to bear the specialized expertise of the professional involved, there has not been a proper claim asserted under the FCA.

Similarly, it is well established that mistake cannot serve as the foundation for a violation of the FCA. “The Act is concerned with ferreting out ‘wrongdoing’, not scientific errors.” Wang, 975 F.2d at 1421. See also United States ex rel. Hagood v. Sonoma County Water Agency, 929 F.2d 1416, 1421 (9th Cir. 1991) (“innocent mistake” is a defense). “Innocent mistakes or negligence are not actionable.” Hindo, 65 F.3d 608, 613 (7th Cir. 1995). Moreover, a defendant’s good faith reliance upon his interpretation of complex government regulations and guidelines, such as CPT documentation guidelines, does not constitute a breach of the FCA even if his interpretation is mistaken. See, e.g., United States ex rel. Hochman v. Nackman, 145 F.3d 1069, 1075-1076 (9th Cir. 1998) (good faith reliance by defendants on their interpretation of Department of Veterans Affairs contract provision vitiated “knowing” submission of claims under the False Claims Act [“FCA”]). See also, United States ex rel Oliver v. Parsons Co., 195 F.3d 457, 463 (9th Cir. 1999) (reasonableness of interpretation of “technical and complex” federal regulations may be relevant to determining “knowing” submission of false claim).

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