American Journal of Law & Medicine

Fraud and abuse: county subject to punitive damages under the False Claims Act.

United States ex rel. Chandler v. Cook County (1)--The Court of Appeals for the Seventh Circuit held that a county constitutes a "person" under the False Claims Act (2) (FCA), that counties are not immune from punitive damages under the FCA, and that Cook County was entitled to a writ of mandamus vacating a discovery order requiring the county to turn over unredacted drug treatment records. (3) The plaintiff, Janet Chandler, Ph.D., brought this action under the FCA as relator on behalf of the United States. The defendants, Hektoen Institute for Medical Research and Cook County, received a $5 million grant from the National Institute of Drug Abuse to study the treatment of drug-dependent pregnant women. While serving as research project director, Chandler suspected that the defendants were infringing the grant's terms and the assurance of compliance plan, and violating federal regulations governing the treatment of human research subjects. Chandler claimed, inter alia, that the defendants falsely represented the study's success in their reports to the government, failed to obtain the research subjects' informed consent and provided substandard care. Chandler voiced her concerns about the program to the physicians at Cook County Hospital and claims she was fired as a result. (4)

The Seventh Circuit heard two issues on appeal: first, whether Cook County constituted a "person" under the FCA and whether Congress intended to abrogate municipalities' traditional common law immunity from punitive damages, and second, whether the district court correctly required the defendants to hand over unredacted patient records.

The FCA provides in pertinent part that "[a]ny person who ... knowingly presents, or causes to be presented, to an officer or employee of the United States Government ... a false or fraudulent claim for payment or approval [or] conspires to defraud the Government by getting a false or fraudulent claim allowed or paid . …

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