Rooting Out Healthcare “Fraud-on/at-FDA” Needs a Precision Scalpel, Not a Chainsaw: The False Claims Act
The Trump administration is aiming to limit fraud, misuse and abuse of taxpayer dollars by the federal administrative state. It has determined that a major source of loss in the federal government is an inefficient and bloated federal bureaucracy. This idea is almost certainly correct in some quarters of the US federal buraeucracy. But a “one-size-fit-all” approach to indiscriminate dismissal of thousands of federal employee is likely to be an inefficient and potentially damaging approach to fixing the problem.
The main source of the problem of waste and abuse caused by the federal administrative state is not intrinsic to the design or original purpose of the federal bureaucracy. Rather, the root cause is that an unacceptably large fraction of our federal government’s administrative state is now captured by industry actors — all the way from elected officials serving in Congress, to appointed bureaucrats in charge of executive branch agencies. The legal and political source of this government capture by industry is the topic of another discourse — but simply put, when large industry, not the people, rules dominantly over US government agencies and personnel, citizens get shortchanged, robbed or harmed. I believe that president Trump’s rise to unprecedented populist influence is directly related to the increasing disenfranchisement of the American democracy from the machinations of the U.S. government and its industry partners and experts. When industry captures the US flag for profit alone, without regard for people’s safety and well-being, the democracy rises in populist outrage — and rightly so.
This ongoing corporate capture of the U.S. administrative state has created a biased, pro-industry, and in many cases anti-citizen, administrative state prone to waste and to perpetuation of fraud for profit’s sake— robbing the U.S. Treasury of taxpayer dollars and exposing unsuspecting American citizens to harm.
No place is this type of federally enabled fraud more rampant than in the healthcare sector today - wherein not only are taxpayers’ Medicare/Medicaid dollars susceptible to abuse, but American patients’ very safety and lives are at stake.
The executive agency with direct control over the U.S. healthcare marketplace is the United States Food and Drug Administration (FDA). This agency is where a sprawling administrative state, staffed by appointed or career federal employees, controls the entry of almost all medical products into the US healthcare marketplace. But the corruption, or negligence, in certain policies and high level offices at FDA, away from that agency’s prime mission of protecting the American public, has put consumer safety and the time-tested principles of evidence-based medicine in the rear seat. Instead, under the guise of “lifesaving innovation” and “expert guidance”, FDA has for decades shifted focus towards efficient collaboration with revenue-seeking industry and professional stakeholders. Missing from the conversation are the harmed and dead patients, sacrificed at the altar of American healthcare industry.
The fuel for this travesty against US public health originates in fraud— committed by a non-negligble proportion of profit seeking American healthcare corporations on the US Treasury, through the massive taxpayer funds allocated to the Centers for Medicare and Medicaid Services (CMS). But the outrage is that in many cases this fraud is enabled or tolerated by the very appointed guardians of the federal administrative state at HHS and FDA.
In general, the anatomy of fraud has three core mechanistic components: 1) corporate profit-seekers intentionally misrepresenting and marketing ineffective, unsafe or over-priced products to consumers, 2) enacted federal and state laws that inadequately restrain the marketing of ineffective, unsafe or over-priced products, and 3) federal regulators negligently or deliberately failing to enforce laws enacted to prevent the marketing of ineffective, unsafe or over-priced products. All three of these components have harmonized in the US healthcare sector for decades — and this harmonization of fraudulent healthcare market activity is posing a real and present national health and economic security threat to the United States in the year 2025.
How can the Trump administration begin to unentangle this complex web of corruption in the healthcare sector? What is the solution to this deep level of administrative state corruption at HHS and FDA?
Certainly, a large number of public servants do good work within the U.S. Department of Health and Human Services. So throwing the baby out with the bathwater is the wrong approach to solving the problem. The corruption has been occurring from the top at our federal agencies — not necessarily in the lower rungs of the agency’s administrative structure, where many patriotic and law abiding Americans have intended to do our republic’s work faithfully. So, it is difficult to see how an indiscriminate chainsaw purge at all levels of the FDA bureaucracy could solve the problem of fraud — in fact, it may be a mistake to gut a massive chunk of this federal bureaucracy, without care or consideration for the parts and people who do work well and patriotically to accomplish our republic’s sacred mission: To protect and to serve!
The truth is that fixing corruption at our federal healthcare agencies is like resecting a complex cancer from a patient’s body. It requires a nuanced understanding of the process and a few precise legal tools — and it requires a reliance on proper and muscular federal law enforcement at DOJ and HHS — not an indiscriminate chainsaw. Sadly, in the recent few decades FDA burauecrats have been more interested in playing ball with profit hungry industry actors, disguised as healthcare saviors, than they have been in proper law enforcement and fighting fraud on/at FDA, on American patients and on the U.S. Treasury.
But the Department of Justice (DOJ) has highly effective legal tools to fight crime and fraud on (and at) FDA. The problem is that the secretary of Health and Human Services and the FDA commissioner need to be willing to properly deploy federal law-enforcement to fight fraud at and on their agencies— and to root out negligent appointed personnel who fail to apply and enforce the mandates of the Food, Drug and Cosmetics Act (FDCA) with fidelity and integrity. So far, the secretaries of HHS and FDA commissioners have been unwilling to do so — instead taking a lenient or protectionist approach and maintaining their industry-favoritism in confronting fraudulent market actors in the healthcare sector. No place is this rampant level of fraud more visible than in the FDA’s medical device section, named the Center for Devices and Radiological Health (CDRH), and most especially when it comes to devices regulated using the agency’s 510(k) clearance mechanism.
On the DOJ side, a very precise and powerful legal fraud-busting tool is the False Claims Act. This law was originally enacted by President Abraham Lincoln to litigate and limit fraud and abuse of taxpayer dollars during the civil war. The law was subsequently resurrected by Senator Chuck Grassley (R-IA). And it remains the US government’s primary legal tool for fighting fraud on the U.S. Treasury. But utilizing it in a muscular way to bust fraud on the US Treasury in the healthcare space requires that secretary of Health and Human Services and FDA commissioner transparently open to the door to prosecution of fraud by the DOJ. In the past, when FDA has acted in a protectionist way to protect its own internal corruption, the DOJ has been muzzled or unable to use the False Claims Act to its maximal potential.
But the RFK Jr. HHS promises to be a different kind of HHS — where protectionism to cover up internal agency errors or negligence and improper execution of the FDCA won’t be tolerated. And attorney general Pam Bondi seems squarely focused on powerful law enforcement to prosecute and prevent fraud on U.S. taxpayers.
During the confirmation hearings of both Attorney General, Pam Bondi, and Secretary of Health and Human Services, Robert F. Kennedy Jr., Senator Grassley directly inquired and confirmed both candidates’ commitment to law enforcement under the False Claims Act. These queries by the Iowa Senator were extremely encouraging, because they highlighted the fact that the Secretary and Health and Human Services will fully and transparently cooperate with the Department of Justice to root out corporate fraud and corruption using the False Claims Act — in the healthcare sector and elsewhere.
Instead of a one-size-fit-all approach to cutting a mostly patriotic and competent federal workforce at the FDA, Mr. Trump would be well-advised to leash the full force of the False Claims Act on well-dressed corporate fraudsters robbing the U.S. Treasury and harming unsuspecting American patients. Let’s hope RFK Jr. and AG Bondi are given full latitude to do so. “fraud-on/at-FDA” ought to be a prime target — and especially in the medical device arena, where Lord of the Flies has reigned supreme for well over a decade.
