This article critically analyses the prospects for introducing United States anti-fraud (or anti-false claims) laws in the Australian health care setting.
Australian governments spend billions of dollars each year on medicines and health care. A recent report estimates that the money lost to corporate fraud in Australia is growing at an annual rate of 7%, but that only a third of the losses are currently being detected.
In the US, qui tam provisions — the component of anti-fraud or anti-false claims laws involving payments to whistleblowers — have been particularly successful in providing critical evidence allowing public prosecutors to recover damages for fraud and false claims made by corporations in relation to federal and state health care programs.
The US continues to strengthen such anti-fraud measures and to successfully apply them to a widening range of areas involving large public investment.
Australia still suffers from the absence of any comprehensive scheme that not only allows treble damages recovery for fraud on the public purse, but crucially supports such actions by providing financial encouragement for whistleblowing corporate insiders to expose evidence of fraud. Potential areas of application could include direct and indirect government expenditure on health care service provision, pharmaceuticals, medical devices, defence, carbon emissions compensation and tobacco-related illness.
The creation in Australia of an equivalent to US anti-false claims legislation should be a policy priority, particularly in a period of financial stringency.
- 1. Australian Government Department of Innovation, Industry, Science and Research. Australian pharmaceuticals industry fact sheet. 26 Oct 2010. Canberra: Commonwealth of Australia, 2010.
- 2. Australian Institute of Health and Welfare. Health expenditure Australia 2007–08. Canberra: AIHW, 2009. (Cat No. HWE 46; Health and Welfare Expenditure Series No. 37.)
- 3. Business Monitor International. Australia pharmaceuticals and healthcare report Q4 2010. London: BMI, 2010.
- 4. World Health Organization. World health statistics 2010. Geneva: WHO, 2010. http://www.who.int/whosis/whostat/EN_WHSIO_Full.pdf (accessed Apr 2011).
- 5. Kesselheim AS, Studdert DM. Whistleblower-initiated enforcement actions against health care fraud and abuse in the United States, 1996 to 2005. Ann Intern Med 2008; 149: 342-349.
- 6. Faunce TA, Townsend R McEwan A. The Vioxx pharmaceutical scandal. J Law Med 2010; 18: 38-49.
- 7. KPMG Forensic. Fraud and misconduct survey 2010, Australia and New Zealand. KPMG, 2010.
- 8. Medicare Australia. Fraud. http://www.medicareaustralia.gov.au/provider/business/audits/fraud.jsp (accessed Nov 2010).
- 9. Vitamin firm price-fixers face record court fines [editorial]. Australian Financial Review 2000; 6 Dec.
- 10. US ex rel Kelly v The Boeing Company  9 F.3d 743.
- 11. Boese JT, Anderson D. Fundamentals of the civil False Claims Act and qui tam enforcement. Proceedings of the Eighth Annual National Institute on the Civil False Claims Act and Qui Tam Enforcement; 2010 Jun 2-4; Washington, DC.
- 12. Getnick NV, Skillen LA. City False Claims Act: next chapter in anti-fraud crusade. N Y Law J 2005; 13 Oct: 4-12.
- 13. US Department of Justice. Department of Justice recovers $3 billion in false claims cases in fiscal year 2010 [media release]. 22 Nov 2010. http://www.justice.gov/opa/pr/2010/November/10-civ-1335.html (accessed Nov 2010).
- 14. Mello MM, Studdert DM, Brennan TA. Shifting terrain in the regulation of off-label promotion of pharmaceuticals. N Engl J Med 2009; 360: 1557-1566.
- 15. Cook County v US ex rel Chandler (2003) 123 S Ct 1239; 30 TAF QR 1.
- 16. Kesselheim AS, Studdert DM. Whistle-blowers’ experiences in fraud litigation against pharmaceutical companies. N Engl J Med 2010; 362: 1832-1839.
- 17. United States v Neifert-White (1968) 390 US 228: 232.
- 18. Meyer JA. Fighting Medicare fraud: more bang for the federal buck. Prepared for Taxpayers Against Fraud Education Fund. Jul 2006. http://www.taf.org/publications.htm (accessed Nov 2010).
- 19. Stewart BR, Sunstein CR. Public programs and private rights. Harvard Law Rev 1982; 95: 1193.
- 20. Blomquist FR. Rethinking the citizen as prosecutor model of environmental enforcement under the Clean Water Act: some overlooked problems of outcome-independent values. Georgia Law Rev 1988; 22: 337-338.
- 21. US ex rel Duxbury v Ortho Biotech Products LP  WL 2450716 (1st Circuit Court of Appeals, 12 Aug 2009).
- 22. Faunce TA, Bolsin SNC. Three Australian whistleblowing sagas: lessons for internal and external regulation. Med J Aust 2004; 181: 44-47. <MJA full text>
- 23. House of Representatives Standing Committee on Legal and Constitutional Affairs. Fair shares for all: insider trading in Australia. Canberra: Australian Government Publishing Service, 1989.
- 24. House of Representatives Standing Committee on Legal and Constitutional Affairs. Whistleblower protection: a comprehensive scheme for the Commonwealth public sector. Canberra: Commonwealth of Australia, 2009. http://www.aph.gov.au/house/committee/laca/whistleblowing/report/fullreport.pdf (accessed Apr 2011).
- 25. Standing Committee of Attorneys General. Litigation funding in Australia. Canberra: Commonwealth of Australia, 2005.
- 26. Phelps v Western Mining Corporation Ltd (1978) 20 ALR 183.
- 27. Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 200 CLR 591.
- 28. Commonwealth Bank of Australia v Gargan (2004) 140 FCR 1.
- 29. Blatt RL, Hammesfahr RW, Nugent LS. Punitive damages: a state-by-state guide to law and practice. Eagan, Minn: West, 2003.
- 30. Law Council of Australia. Second submission to the Negligence Review Panel on the review of the law of negligence. 2 Sep 2002. Canberra: LCA, 2002.
- 31. Tomasic R, Pentony B. Insider trading in Australia. Part I: regulation and law enforcement. Canberra: Corporate Law Research Group, 1988. http://www.criminologyresearchcouncil.gov.au/reports/7-87-1.pdf (accessed Nov 2010).
Publication of your online response is subject to the Medical Journal of Australia's editorial discretion. You will be notified by email within five working days should your response be accepted.