Is it possible to know what happens in the fog of war? Should combatants be held to account for their conduct during battle? During the first months of the Covid-19 pandemic, the country (indeed, the world) was essentially at war against a little-understood, lethal adversary. These often-asked questions are just as relevant as they would be to armed conflict. How our soldiers conformed themselves on the battlefield during the crisis – in this case, first responders, hospitals, pharma companies, labs, insurers, and others – will be evaluated for years to come. Those that comported themselves well have been rightly hailed as heroes. Those that took advantage of crisis to enrich themselves at the expense of the government, patients and taxpayers will continue to pay the price through law enforcement and civil actions.
Since its passage during the Civil War, the False Claims Act and courts applying it have answered “fog of war” questions unequivocally: even during a national emergency, especially during a national emergency, recipients of government funds must act honestly, take reasonable steps to avoid over-charging the government, and return government funds when they are wrongly received. The fog of war does not excuse fraud on the government.
One recently unsealed qui tam case under the False Claims Act calls into question a New Jersey hospital system’s conduct during the chaotic first months of the pandemic. In United States ex rel. Singh v. Hudson Hospital OPCO, LLC (D.N.J. 2021), the complaint alleges that the hospitals deliberately misrepresented the number of Covid patients treated so as to receive millions more in Provider Relief Funds under the CARES Act (the Coronavirus Aid, Relief, and Economic Security Act) than they qualified for, then failed to return the excess funds once the emergency was over.
Government funds during the pandemic flowed like never before – trillions were dispensed on an emergency basis to help the strained healthcare system, to stabilize the economy, and to develop treatments and vaccines. Fraud was also rampant. This was an anticipated, unfortunate consequence of the massive, emergency government effort. In the years that followed, the government, on its own and with the help of qui tam relators suing on behalf of the government under the False Claims Act, has been engaged in identifying and, where possible, clawing back government funds that were wrongly applied for and retained. PPP loans to swindlers. Payments to Covid testing centers and labs that did no actual testing or did far less than reported. Vaccine funds to companies with no legitimate research activities.
The Hudson Hospital case challenges a different category of participants in the battle against Covid – hospitals who were at the front lines of providing emergency medical care to sick patients but may have done so while deliberately over-charging the government’s emergency program (in this case, the Provider Relief Fund). Following the letter of the False Claims Act and the cases applying it, the complaint seeks to hold the defendant hospitals responsible for deliberate submission of false data giving rise to government over-payments during the Covid emergency. The potential legal significance of the case is its invocation of the False Claims Act to deliberate or reckless misconduct by front-line hospitals. Providers who bilked the government during the Covid crisis should not be permitted to hide behind the “fog of war” as an excuse; they are responsible to meet reasonable expectations of honesty, both during and certainly after the battle.
Hospitals that received PRF funds will be watching this case to see if they might be vulnerable under the False Claims Act – including the statute’s imposition of treble damages plus penalties – if the funds they applied for and received from the government on an emergency basis during Covid were over-stated. Will the government second-guess their computations? Will courts and juries? What if a hospital did it deliberately, taking advantage of the fog of war to overstate its numbers, hoping that no one would notice? Cases decided under the False Claims Act have regularly rejected such defenses, quite rightly.
In Kellogg Brown & Root Services, Inc. v. U.S., ex rel. Carter, 575 U.S. 650 (2015), the Supreme Court specifically noted that “[w]ars have often provided ‘exceptional opportunities’ for fraud on the United States Government.” But “‘[t]he False Claims Act was adopted in 1863 and signed into law by President Abraham Lincoln in order to combat rampant fraud in Civil War defense contracts.'” (citations omitted). These auspicious beginnings eventually spawned amendments to the False Claims Act that strengthened its fraud-fighting capabilities, including the incentives offered to qui tam relators to pursue claims on behalf of the government.
Taxpayers and patients want assurance that funds flowing to providers during a health crisis are well-targeted, at least on a good faith, reasonable basis, so that care is available equitably and efficiently. Hospitals and other front-line providers engaged in the battle want access to government resources quickly, without having to worry, perhaps, about adhering to the usual standards of reasonableness and honesty. At stake is whether the False Claims Act – which has always been applied strictly against government recipients of funds who cut corners – will be applied as usual in the Covid crisis, just as it has been during past wars, health emergencies and other moments of national crisis. Providers owe a duty of reasonable adherence to government standards. Deliberate or reckless over-charging of the government will not be sanctioned, even (or especially) during an emergency.
It remains unclear whether the Hudson Hospital case will be a good test of these larger issues. The defendants have challenged the complaint on a motion to dismiss, asserting that the relator has not actually alleged that the hospitals presented false data or wrongfully failed to return government over-payments. It is also unclear whether this case will remain unique for very long, or instead will be joined by many others challenging CARES Act disbursements (and disbursements of many other kinds) as more FCA cases come out from under seal in the months and years to come.
Whether through this case or others, during this round of FCA litigation arising from the pandemic, we’re likely to see how courts, litigants, and the government address “fog of war” defenses in the Age of Covid. From the perspective of relators and their counsel, the hope and expectation is that these sorts of defenses will once again be rejected in cases where the “fog of war” is merely an excuse for fraud.
Roger Lewis
Roger Lewis is a Principal in Goldberg Kohn’s Litigation Group. He focuses his practice on False Claims Act litigation, representing whistleblowers of all kinds in investigating, evaluating and filing claims against persons or entities that defraud the United States government, state government, or other public and private entities.
