Compliance Programs:
II. Alleged Violations of the False Claims Act
The Government stated that Merck-Medco violated the False Claims Act by (A) presenting or causing to present to an agent of the United States a claim for payment; (B) the claim was false or fraudulent; and (C) Merck-Medco knew the claim was false or fraudulent. 31 U.S.C. 3729(a)(1). The Government also stated that Merck-Medco (D) made, used, or caused to be made or used, a record or statement to get a claim against the Government paid or approved; (E) the record or statement and the claim were false or fraudulent; (F) Merck-Medco knew that the record or statement and the claim were false or fraudulent; and (G) the United States suffered damages as a result. 31 U.S.C. 3729(a)(2).
Under subsection (a)(1) above, the Government was not required to prove that the false claims at issue actually harmed the Government, merely that the statements would have and could have. Under Subsection (a)(2) above, the Government must prove that the United States actually suffered harm. The Court stated that the False Claims reaches all fraudulent attempts to cause
the Government to pay out sums of money.
In order to prove its case, the Government had to allege that Merck-Medco, at the time it submitted its false or fraudulent claim, (A) had actual knowledge of the information; or (B) acted in reckless disregard or deliberate ignorance of the truth or the falsity of the information. 31 U.S.C. 3729(b).
In this case, the Government claimed that Merck-Medco's compliance programs were either non-existent or insufficient, in satisfaction of the “reckless” requirements stated above. The decision does not explain the extent of the Merck-Medco compliance program, but the Court clearly ruled that the company submitted false claims in reckless disregard of their falsity. The decision does not state that upper management had any actual knowledge that the claims submitted by Merck-Medco were false, but it infers that the compliance program that was in place at Merck-Medco clearly was not sufficient to detect and prevent the false claims. Evidently, the Government was not able to conclusively prove that executives and directors of the company had (A) actual knowledge of the alleged false invoicing, or (B) sufficient involvement in the billing process to have “reckless disregard” or “deliberate ignorance” of the false claims submitted to Blue Cross Blue Shield.
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