EXPANDED HOSPITAL LIABILITY UNDER THE FEDERAL 
FALSE CLAIMS ACT: AN UNEXPECTED SOLUTION TO THE 

RESIDENT DUTY HOUR CONTROVERSY 

Robert R. Elder • 

TABLE OF CONTENTS 

I. INTRODUCTION ....................................................................................... 55 
A. Medical Residents: Why We Need Them and Why 

They Need Sleep ......................................................................... 55 
B. Duty Hour Restrictions: Attempts to Reduce the 

Risks Posed by Chronically Sleep Deprived 
Medical Residents ...................................................................... 56 

C. A Possible Solution to an Apparently Irresolvable 
Conflict ....................................................................................... 58 

ll. THE MEDICAL RESIDENT DUTY HOUR CONTROVERSY ......................... 59 
A. Arguments Made by Proponents of Traditional 

Resident Duty Hours .................................................................. 59 
1. The Traditional View: No Rest for Weary Residents ............. 59 
2. The Arguments Made by Proponents of Resident 

Duty Hour Reform ............................................................... 59 
B. Why Duty Hour Restrictions are Necessary for Residents .......... 60 

1. Initial Attempts at Reform via Regulation ............................. 61 
2. The ACGME's Comprehensive Approach to 

Oversight: See No Evil, Hear No Evil, and 
Speak No Evil ...................................................................... 62 

C. ACGME Duty Hour Standard Enforcement: 
Why It Doesn't Work .................................................................. 64 
1. A Conglomerate of Agencies: Too Many Doctors 

Jumping on the Bed ............................................................. 64 
2. ACGME Accreditation: A Carrot and a Stick ....................... 65 
3. The Greatest Weakness: A LackofWhistleblower 

Protection ............................................................................ 66 

* J.D. Candidate, 2008, Indiana University School ofLaw- Indianapolis; M.B.A. Can­
didate, 2008, Indiana University Kelley School ofBusiness; B.A., 1996, Saint Vincent College, 
Latrobe, Pennsylvania. I would like to thank Mr. Christopher Campaniolo, J.D., Executive 
Notes Editor of the Indiana Health Law Review, Volume 4, whose friendship and encourage­
ment made the publication of this Note possible. This Note is dedicated to my wife, Catherine, 
and my daughters, Mackenzie and Maggie, in the hope that the doctors who treat them will al­
ways be well rested. Copyright 2008 by Robert R. Elder. 



54 INDIANA HEALTH LAW REVIEW [Vol. 5:53 

D. State and Federal Legislative Attempts to Curtail 
Duty Hour Violations ................................................................. 68 

III. MAKING THE GRADE: CAN GRADUATE MEDICAL EDUCATION 

WITHSTAND THE ASSAULT OF ACTIONS BROUGHT PURSUANT 

TO FEDERAL THE FALSE CLAIMS ACT? ........................................... 71 

A. The Importance of Main & Chapman ......................................... 71 

B. The False Claims Act Generally ................................................. 71 
1. The Applicability of the False Claims Act ............................. 71 

2. Persons Amenable to Suit Under the False Claims 
Act ........................................................................................ 72 

3. Knowing Action Under the False Claims Act ....................... 74 
4. Bringing a Claim Pursuant to the False Claims Act: 

The Qui Tam Suit ................................................................. 74 
5. Damage Liability Under the False Claims Act ..................... 75 
6. Whistleblower Protections Under the False Claims 

Act ........................................................................................ 76 
a. Protection and relief for whistleblowers: Employers 

beware ........................................................................... 76 
b. Federal jurisdiction: Retaliatory discharge and 

whistleblower actions ................................................... 77 

c. Whistleblower actions: Essential elements and 
limitations ..................................................................... 77 

C. Government Funding of Graduate Medical Education: The 
Essential Link ............................................................................. 78 

D. The False Claims Act: Expanding Applicability ......................... 79 
1. One lie begets another: The chain of causation 

grows longer ........................................................................ 79 
2. A chain attenuated does not break: Reaping what 

you sow ................................................................................ 80 
IV. EXPANDED LIABILIIT UNDER THE FALSE CLAIMS ACT: 

IN THE WAKE OF MAIN AND CHAPMAN ............................................. 82 
A. Expanded Liability of Universities Generally: Why 

Hospitals Should Take Note ....................................................... 82 
B. The Expanded Liability of Hospitals with Federally 

Funded Graduate Medical Education Programs ....................... 83 
1. Hospital Liability Under the False Claims Act: 

A Statute Reinterpreted ........................................................ 83 
2. Whistleblower Protections for Sleepy Residents: 

A Dream Come True ............................................................ 84 
V. CONCLUSION .......................................................................................... 85 



2008] EXPANDED HOSPITAL LIABll..lTY UNDER THE FEDERAL FCA 55 

I. INTRODUCTION 

A. Medical Residents: Why We Need Them and Why They Need Sleep 

American doctors are born in premedical undergraduate programs, evolve 
to intellectual adolescence in the crucibles of postgraduate medical schools, and 
achieve mature self-sufficiency through clinical practice in hospital-based med­
ical residency programs. The relationship between hospitals and medical 
schools is not, however, as one sided as this simplistic theorem of physician 
development appears to suggest. Rather, their relationship is a symbiotic one. 
Medical schools need the endless array of experiential opportunities available 
in public hospitals to provide medical students with hands-on practice, while 
public hospitals depend on the faculties of medical schools to educate and su­
pervise their medical residents ("Residents").1 Consequently, in a vast majority 
of America's public hospitals Residents perform most of the on call, emer­
gency, and neo-natal patient care services.2 Residents have similar duties in 
most private hospitals. 3 It is not hyperbole, therefore, to suggest that Residents 
constitute the "lifeblood of most [American hospitals].',.. 

Ironically, however, a hospital's reliance on the unique services rendered 
by Residents may place the very patients they serve at increased risk. Indeed, it 
must not be forgotten that Residents are students. As such, they are typically 
inexperienced and less qualified than more seasoned medical professionals to 
perform the complex and often life sustaining medical services Residents rou­
tinely render. Furthermore, Residents, unlike more experienced doctors, are 
still attempting to "master, both in theory and in application, the subtle intrica­
cies of human medicine and patient care.'.s Moreover, Residents are typically 
required to work grueling schedules that often result in persistent sleep depriva­
tion and fatigue. 6 A medical system that is overly reliant on Residents, to pro-

1. W. Paige Hren, Note, Is it the End of an Era or the Beginning of an Error? The 
American Medico/ Association Finally Approves Work Hour Limits for Overworked and Sleep 
Deprived Medical Residents: Should OSHA Still Step In?, 23 J. NAT'LAss'N ADMIN. L. JUDGES 
457, 461 (2003) ("Medical schools need the public hospitals as sites to educate their medical 
students, and public hospitals need the faculty of medical schools for the education and supervi­
sion of their residents." (quoting Stewart R. Reuter, Professional Liability in Postgraduate Med­
ical Education: Who is Liable for Resident Negligence?, 15 J. LEGAL MEl>. 485,485 (1994))). 

2. Id. at 461-62 ("[I]n most of America's public hospitals, 'residents assume the bnmt of 
'on call' patient care services.'" (quoting Reuter, supra note I, at 517)). 

3. Id. at 462 ("It is also quite common to find residents practicing and learning in pri­
vate hospitals as well."); cf. Reuter. supra note 1, at 517 ("(l]n private hospitals ... senior resi­
dents provide most of the care at night, supervised by the patient's physician on call by 
telephone."). 

4. Hren, supra note 1, at 461 ("Residents and residency programs are the life blood of 
most public hospitals in America."). 

5. Id. at 458. 
6. Dori Page Antonetti, Note, A Dose of Their Own Medicine: Why the Federal Gov­

ernment Must Ensure Healthy Working Conditions for Medical Residents and How Reform 



56 INDIANA HEALTH LAW REVIEW [Vol. 5:53 

vide patient care, creates obvious risks. Indeed, less experienced chronically 
sleep deprived Residents may administer inappropriate or inadequate medical 
services that may result in patient injury or death. 

To minimize the risks posed by Resident inexperience, the solution is ob­
vious if not entirely palatable: Residents must learn, and to learn they must 
practice under the guidance of their more experienced peers in the unique envi­
ronment afforded by America's hospitals. Consequently, the risks posed by 
Resident inexperience must be balanced against the nation's need to constantly 
replenish the supply of highly skilled doctors. Thus, one might argue that the 
reliance of hospitals on inexperienced Residents is unavoidable and, given 
proper oversight protocols, excusable. A system that promotes chronic sleep 
deprivation among Residents, however, is not as easily excused. Such a system 
is especially problematic when Residents are expected to serve as the vanguard 
of patient care in America's hospitals. 

B. Duty Hour Restrictions: Attempts to Reduce the Risks Posed by Chroni­
cally Sleep Deprived Medical Residents 

There have been attempts to improve patient safety by restricting the duty 
hours of Residents. These attempts, however, have only been marginally suc­
cessful. This is due in part to the entrenched medical establishment which firm­
ly opposes any external regulation of medical education.' Ironically, reformers' 
attempts to change Resident duty hours have most often been thwarted by well­
meaning medical educators' intent on preserving the sanctity of the age-old 
master apprentice educational model.8 Indeed, lacking what they consider firm 
"empirical evidence" physicians, teaching in hospitals with residency programs, 
simply refuse to give up their control over the hours worked by Residents.9 As 
a result, a variety of special interest groups petitioned the federal government to 

Should Be Accomplished, 51 CAm U. L. REv. 875, 876 (2002) ("[F]atigue [is] a condition pre­
vfl.).ent among physicians-in-training who commonly work sixty to one hlDldred and thirty hours 
per week, with lDlinterrupted shifts of thirty-six hours or more." (citing HEAL Til REs. GROUP, 
PuBLIC CmzEN, PUBL 'N No. 1570, PEnnON TO TilE OccUPATIONAL SAFETY AND HEALTII 
ADMINISTRATION REQUESTING TIIAT LJMrrs BE PLACED ON HOURS WORKED BY MEDICAL 
REsiDENTS (2001), www.citizen.org/publicationslprint_release.cfin?ID=6771 [hereinafter 
PETITION TO OSHA] (last visited Apr. 9, 2008)). 

7. Jennifer F. Whetsell, Changing the Law, Changing the Culture: Rethinking the 
"Sleepy Resident" Problem, 12 ANNALS HEAL TilL. 23, 63 (2003) (''Some doctors ... vowed not 
to honor regulations from the beginning, purportedly believing in their hearts that the changes 
would lead to detrimental effects on patients, including lost information from the discontinuity 
in care provided to those patients.j. 

8. Id. at 63 ("[Resident] work: hours are what healthcare provider institutions object to 
most voraciously; they still adhere to the master-apprentice model and thus favor the notion of 
adequate supervision, at least in theory, if not in practice.j. 

9. Id. at 64 ("[P]hysicians exercise a great deal of control over healthcare delivery and 
they simply do not want to be told what to do, particularly in the absence of what they deem 
solid empirical findings that contradict their healthcare philosophy."). 



2008] EXPANDED HOSPITAL LIABJLITY UNDER TIIE FEDERAL FCA 57 

impose Resident duty hour regulations through the agency of the Occupational 
Safety and Health Administration ("OSHA.,).10 

Proponents of Resident duty hour reform believe that federal oversight 
would improve Resident working conditions for two reasons: First, federal 
oversight would dilute the absolute authority that medical educators and hospi­
tal administrators wield over Residents. Second, direct federal oversight could 
provide whistleblower protections that would encourage Residents to report 
duty hour violations themselves. To date, however, OSHA has formally de­
clined to impose federal oversight over Resident duty hour limitations, choos­
ing instead to adopt standards drafted by the Accreditation Counsel for 
Graduate Medical Education ("ACGME.,).11 

Although well intentioned, the ACGME restrictions on Resident duty 
hours have been only marginally successful in curtailing the medical commu­
nity•s habit of requiring Residents to work dangerously long duty hours. 12 The 
limited success of the ACGME is partially due to the intimate relationship be­
tween teaching hospitals and the ACGME. Unlike OSHA, the ACGME is a 
private regulatory agency composed of special interest groups from the medical 
community. 13 As a result, the ACGME mainly consists of career medical pro­
fessionals and educators intent on preserving the status quo. Thus, its supervi­
sory role not withstanding, the ACGME has proven itself a force to be reckoned 
with when attempting to reform the practice of medicine in the United States.14 

Furthermore, the ACGME has a very clear interest in preserving its control 
over Graduate Medical Education ("GME,.) because it acts as the sole agency 
responsible for certifying and accrediting all medical programs in the United 
States. Not surprisingly, therefore, any mention of whistleblowerprotections is 

10. PETITION TO OSHA, supra note 6. 
11. Michael J. Frank, Safeguarding the Consciences of Hospitals and Health Care Per­

sonnel: How the Graduate Medical Education Guidelines Demonstrate a Continued Need for 
Protective Jurisprudence and Legislation, 41 ST. LoUis U. LJ. 311, 321 (1996) 

The ACGME operates as an unincorporated, 'nonprofit, private association 
which surveys. evaluates and accredits medical and surgical residency pro­
grams throughout the United States.' However, its status as a private insti­
tution is somewhat attenuated by the fact that the federal and state 
governments rely on the ACGME 's evaluation of residency programs to de­
termine whether a hospital Dierits public funding. 

(quoting Interfaith Med. Ctr. v. Sabiston. 527 N.Y.S.2d 48,49 (N.Y. App. Div. 1988)); see, 
e.g., Changes in Payment Policy for Direct Graduate Medical Education Costs, 54 Fed. Reg. 
40,286 (Sept. 29,1989) (to be codified at 12 C.F.R. pt. 405, 412-13). 

12. Robert Neil Wilkey, Federal Whistleblower Protection: A Means to Enforcing Max­
imum-Hour Legislation for Medical Residents, 30 WM. MITCHELL L. REv. 331, 342 (2003) 
("Despite the breath and thoroughness of these standards substantial evidence suggests that the 
ACGME has failed to effectively enforce such measures."). 

13. ld. 
14. Laura Lin & Bryan A Liang, Reforming Residency: Modernizing Resident Education 

and Training to Promote Quality and Safety in Healthcare, 38 J.HEALrnL. 203, 208-09 (2005) 
(citing ACCREDITATION COUNCIL FOR Glw>uATEMED. EDUC., THEROLEOF1HEACGME (2007), 
http://www.acgme.orglacWebsite/about/ab _ roleACGME.asp [hereinafter THE ROLE] (last visited 
Apr. 9, 2008)). 



58 INDIANA HEALTH LAW REviEW [Vol. 5:53 

conspicuously absent from the ACGME duty hour standards. As a result, the 
standards are seen as weak and ineffectual and Residents have little motivation 
to report violations of the standards.15 Consequently, many Residents who are 
required to work duty hours, in violation of the guidelines imposed by the 
ACGME, are unwilling to blow the whistle on their employers. 

C. A Possible Solution to an Apparently Irresolvable Conflict 

In response to the ineffectual nature of ACGME oversight and the contin­
ued prevalence of Resident duty hour violations, members of the federal legisla­
ture backed by prominent groups such as the American Medical Student 
Association ("AMSA'') have attempted to pass legislation that federalizing 
oversight ofhospital duty hours.16 Other legislation efforts have sought to pro­
vide the whistleblower protections necessary to ensure compliance with the du­
ty hour limitations ostensibly imposed by the ACGME.17 Unfortunately, all 
such legislation has stalled in committee.18 Recent rulings in the Seventh and 
Ninth Circuits, regarding the applicability of the False Claims Act ("FCA''}, to 
federally funded institutions, however, may make future legislation unneces­
sary. Indeed, it is the contention of this Note that the ruling of the court in 
United States ex rei. Main v. Oakland City University, 19 as interpreted and ex­
panded by the court in United States v. Chapman University, 20 has provided 
proponents of Resident duty hour reform with the legal tools necessary to en­
sure hospital compliance with the current ACGME duty hour standards. 

15. Wilkey, supra note 12, at 343 ("(T]be ACGME guidelines are perceived by 
practitioners as 'weak, voluntary, and different for each specialty' .... [t]bus, the very culture 
of the medical profession promulgates a perception of the standards as superficial, amendable, 
and rarely enforceable.") (quoting Sidney M. Wolfe, Public Citizen Petitions to OSHA to Limit 
Residents' Working Hours, Health Letter, June 1, 2001, http://www.citizen.org/publications/ 
release.cfin?ID=7222 (discussing work hour limits for Residents under ACGME) (last visited 
Apr. 9, 2008)). 

16. Whetsell, supra note 7, at 57. 
17. ld. See, e.g., H.R. 3236, l07th Cong. §3(c)(2001). 
18. Whetsell, supra note 7, at 58 (quoting Damon Adams, Push to Improve Patient Sqfety 

Slowgoing, AM. MED. NEWS, May 7, 2001, at 1). 
19. United States ex rei. Main v. Oakland City Univ., 426 F.3d 914, 916 (7th Cir. 2005), 

cert. denied, 126 S.Ct. 1786 (2006). 
20. United States v. Chapman Univ., No. SACV 04-1256NSRCX, 2006 WL 1562231, 

at *2 (9th Cir. May 23, 2006). 



2008] EXPANDED HOSPITAL LIABILITY UNDER TilE FEDERAL FCA 59 

ll. THE MEDICAL RESIDENT OU1Y HOUR CONTROVERSY 

A. Arguments Made by Proponents of Traditional Resident Duty Hours 

1. The Traditional View: NoRestfor Weary Residents 

Traditionally, medical practitioners and hospital hierarchies have argued 
that Residents must work grueling hours. Indeed, proponents assert that such a 
work schedule is necessary to ensure that Residents observe and participate in 
all aspects of their patients' illness, treatment, and recovery.21 Furthermore, 
these opponents also point out that grueling duty schedules permit Residents to 
remain with a patient throughout the patient's stay in the hospital; thereby, 
avoiding potentially catastrophic gaps in treatment and demonstrating an ade­
quate standard of care. 22 

2. The Arguments Made by Proponents of Resident Duty Hour Reform 

Conversely, proponents of duty hour reform argue that the long duty hours 
imposed upon Residents are counterproductive. Proponents typically propose 
two arguments in favor of reform: First, they assert that working such long 
hours is likely to result in sleep deprivation that hinders the learning process 
and is ultimately counterproductive to the broader goals of GME.23 Second, 
proponents argue that Residents who are required to work ridiculously long 
hours are unlikely to provide care sufficient to meet patients' needs, a deficit 
likely to place both Residents and patients at increased risk. 24 To support these 
arguments, proponents cite studies reporting that Residents working long hours 
frequently suffer from depression and fatigue conditions known to increase in­
cidents of Resident error resulting in personal and patient injury.25 

During the 1990's medical studies and improvements in Resident moni­
toring techniques made it easier for governmental agencies to link iatrogenic 

21. Lindsay Evans, Note, Regulatory and Legislative Attempts at Limiting Medical Resi­
dent Work Hours, 23 J. LEGALMED. 251,252 (2002) ("(L]ong hours are essential to medical 
education in that proper training requires residents to observe a condition from beginning to 
end, whenever possible." (citing DavidA Asch & Ruth M. Parker, The Libby Zion Case: One 
Step Forward or Two Steps Backward?, 318 NEW ENG. J. MED. 771,774 (1988))). 

22. /d. at 252 ("[ A]n adequate standard of care requires a resident to stay with his or her 
patient for the duration of the visit in an effort to preclude dangerous gaps in care and/or infor­
mation created by frequent shift changes. j. 

23. Hren, supra note 1, at 459 ("[T]he long hours and resulting sleep deprivation endured 
by residents are counter productive to the learning process and actually hinder the educational 
goals of residency training programs."). 

24. /d. ("[N]ot only do the long hours prevent residents from providing adequate patient 
care, they also pose serious health and safety risks to residents and patients alike."). 

25. See, e.g •• PETITION TO OSHA. supra note 6. 



60 INDIANA HEALTH LAW REVIEW [Vol. 5:53 

injuries to fatigued Resident care givers, a link long suspected by the public. 26 

This increased awareness sparked a revolution in public thought and action, a 
revolution that persists to this day. As a result, elected officials, patient advo­
cacy groups, and several prominent medical professionals have begun to chal­
lenge the authority traditionally accorded teaching physicians and hospital 
managers who seek to downplay or justify the risks posed by overworked Resi­
dents. 

B. Why Duty Hour Restrictions are Necessary for Residents 

Inarguably, members of the AMSA are uniquely qualified to offer insight 
into the risks created by unreasonable Resident duty hours. The position taken 
by the AMSA is clear: Chronic sleep deprivation unnecessarily increases the 
risk that Residents will make potentially life threatening medical errors. 27 In 
2004, the New England Journal of Medicine published statistical support for 
this position in a study that compared the effects of traditional long duty hour 
and non-traditional short duty hour Resident work schedules.28 

The study conclusively demonstrated that interns and Residents working 
on a traditional schedule exhibited an "increased incidence of attentional fail­
ures [sufficient to] ... impede their ability to care for patients . . .. " 29 Interns 
working traditional extended shifts were thirty-six percent more likely to make 
serious medical errors than were those students working shorter shifts.30 Resi­
dents were also routinely required to remain long after the termination of their 
shift simply because hospitals habitually failed to ensure that other qualified 
caregivers would be available for relief, a situation that only aggravated the ef­
fects of sleep deprivation.31 Finally, scheduling issues aside, the study con­
cluded that nearly a quarter of all Residents might, by natural disposition, be 
uniquely susceptible to the deleterious effects of chronic sleep deprivation.32 

Clearly, the intuition of the AMSA was correct. Reform in Resident's duty 

26. Thomas R. McLean, The 80-Hour Work Week: Why Safer Patient Care Will Mean 
More Health Care is Provided by Physician Extenders, 26 J. LEGAL MED. 339, 346 (2005) 
("During the 1990's, as the public increasingly became empowered to challenge the authority 
traditionally accorded physicians, governmental agencies found it easier to link iatrogenic inju­
ries to fatigued health care providers."). 

27. Press Release, Kim Becker, Dir. ofPub. Relations, Am. Med. Student Ass'n, New 
England Journal Reports Medical Errors Relat [sic] to Work Hours: Validates AMSA'S Call for 
Federal Regulations (Oct. 27, 2004}, http://www.amsa.orglnews/release2.cfx?id= 190 [hereinaf­
ter AMA Reports Errors] (last visited Apr. 9, 2008). 

28. See generally Steven W. Lockley et al., Effect of Reducing Interns· Weekly Work 
HoursonSleepandAttentionalFailures, 351 NEW ENG. J. MED. 1829, 1829-33 (2004)(exam­
ining the differential impact of long and short duty hour rotations on Residents and provides 
empirical support for the AMSA's assertion that long duty hours lead to reduced Resident effi­
ciency and reliability.). 

29. /d. at 1835. 
30. AMA Reports Errors, supra note 27. 
31. Lockley et al., supra note 28, at 1836. 
32. ld. 



2008) EXPANDED HOSPITAL LIABILlTY UNDER THE FEDERAL FCA 61 

hour requirements is necessary to promote the safety and well being of Resi­
dents and patients alike. 

I. Initial Attempts at Reform via Regulation 

Recognizing that hospitals with medical residency programs typically 
demonstrate a stubborn unwillingness to voluntarily reduce Resident duty 
hours, proponents of Resident duty hour reform initially approached the Ameri­
can Medical Association ("AMA'') and the ACGME for assistance.33 These 
organizations, however, were also initially unwilling to address the issue of 
Resident duty hour restrictions. Consequently, in 2001, proponents ofResident 
work hour reform sought federal intervention by asking OSHA to address the 
issue. 34 Ironically, the threat of possible federal oversight sparked a flurry of 
private regulatory action on the part ofboth the AMA and A COME. 35 Thus, in 
June 2002, "for the first time in history" the AMA adopted policy guidelines 
aimed at changing the working conditions of medical residents. 36 Shortly the­
reafter, the A COME followed suit by creating Resident duty hour guidelines 
mirroring those outlined by the AMA?7 

Ultimately, OSHA declined to adopt a direct role in the creation of Resi­
dent duty hour guidelines, opting instead to ''rely on the work hour guidelines 
and enforcement processes recently drafted by the ACGME.'.38 OSHA ration­
alized its decision to rely on the ACGME's Resident work hour guidelines stat­
ing that "resident work hour issues would be better addressed by entities with 
experience both in patient care and employee health. Thus, because the 
A COME has extensive experience in patient health, employee health, and med­
ical education and training ... the A COME was in a better position to address 
the issue .... '.39 Consequently, in 2003 the A COME became the primary regu­
lator of Resident duty hour reform in American hospitals.40 

33. See generally Hren, supra note 1, at 459 ("Optimistic about future reform, proponents 
more recently shifted their focus on soliciting various regulatory agencies capable of enacting 
and enforcing resident work hour limitations.''). 

34. ld. See, e.g., PETmoN TO OSHA. supra note 6. 
35. Hren, supra note 1, at 460 (noting that after OSHA chose to adopt the guidelines 

promulgated by ACGME "the AMA. stating that resident work conditions are best addressed 
'without regulation by agencies of the government,' announced that it too would rely on the 
guidelines set by the ACGME."). 

36. Id. at 459 ("[F)or the first time in history, the American Medical Association (AMA) 
adopted new policy guidelines detailing specific definitions, hours, and working conditions for 
medical residents.''). 

37. ld. 
38. Id. at 460. See, e.g., Letter from John L. Henshaw, Assistant Sec'y for Occupational 

Safety & Health, U.S. Dep't of Labor, to Sydney M. Wolfe, Dir., Health Res. Group (Oct. 4, 
2002), available at http://www.citizen.org/documents/ACFC2B.pdf [hereinafter Letter). 

39. Hren, supra note 1, at 467 (internal citations omitted). 
40. ld. at 460 ("In February 2003, the ACGME's final standards were approved and be­

came effective for all accredited United States residency programs on July 1, 2003.'') 



62 INDIANA HEALTH LAW REviEW [Vol. 5:53 

2. The ACGME's Comprehensive Approach to Oversight: See No Evil, 
Hear No Evil, and Speak No Evil 

The ACGME was relatively slow in adopting a comprehensive approach 
to limiting Resident duty hours. Indeed, by the time the ACGME adopted its 
duty hour standards "[a] number of other nations, including the United King­
dom, most other European nations, Canada and Australia [had already] limited 
hours for physicians in training by government regulation . . . .'.41 The 
A COME's slow response notwithstanding, however, its adoption of regulatory 
standards did constitute a grudging acknowledgment of the considerable body 
of scientific evidence demonstrating conclusively that "long hours and sleep 
loss have a negative effect on resident performance, learning and well-being.'.42 

Even so, the A COME's regulatory response, a response that imposed duty hour 
standards rather than restrictions, hardly constituted a polar shift in its ap­
proach to the Resident duty hour controversy. Moreover, the scheme employed 
by the ACGME to ensure hospital compliance with the standards has proven 
problematic. 

As a private regulatory agency responsible for the accreditation and over­
sight of more than 7,800 medical programs the "A COME relies on twenty-six 
specialty specific Residency Review Committees (RRCs) to develop its accredi­
tation standards and to review resident programs for compliance with ACGME 
standards. '.43 The ACGME attempts to ensure tliat hospitals employing medical 
residents provide high quality medical care by monitoring the educational qual­
ity of residency programs and the work environment to which Residents are 
exposed.44 

In its current form, the comprehensive approach to regulating Resident 
duty hours adopted by the ACGME seeks to place suitable limits on those duty 
hours, increase institutional oversight of residency programs, and promote edu­
cational practices that enhance patient care.45 In general, the regulations limit 
Resident duty hours to eighty per week. 46 More specifically, in any eighty-hour 

41. ACCREDITATIONCoUNCU.FORGlw>UATBMED. EDUC., TlmACGME'sAPPR.oACHTO 
LIMIT REsiDENT DurY HOURS: Tim CoMMON STANDARDS AND ACI1VITIES TO PROMOTE 
ADHERENCE 1, available at http://www.acgme.orglacWebsite/dutyHours/dh_dhSummary.pdf 
[hereinafter CoMMON STANDARDS]. 

42. Id. 
43. Lin & Liang, supra note 14, at 208-09 ("RRC members are appointed by the Ameri­

can Medical Association (AMA), the member board of the American Board ofMedical Special­
ties, and in many specialties the academic specialty organization. j. 

44. See Interfaith Med. Ctr. v. Sabiston, 527 N.Y.S.2d 48, 49 (N.Y. App. Div. 1988), 
vacated in part, 143 A.D.2d 173 (N.Y. App. Div. 1988). See also Lin & Liang, supra note 14, 
at 209 (''On average, hospitals have site visits every four yeats. and if programs meet the 
ACGME criteria, they may be accredited for up to five years."). 

45. CoMMON STANDARDS, supra note 41, at 1. 
46. ACCREDITATION CoUNCIL FOR GRADUATE MilD. EDUC., ACGME HIGHLIGHTS ITS 

STANDARDS ON REsiDENT DurY HOURS (2001), http://www.acgme.orglacWebsite/reslnfo/ 
ri _ OSHAresp.asp (last visited Apr. 9, 2008). 



2008] EXPANDED HOSPITAL LIABlliTY UNDER TilE FEDERAL FCA 63 

work week, no more than twenty-four continuous duty hours may occur back to 
back, rest periods between duty shifts must be provided, an in-house call must 
be scheduled no more frequently than every third night, and one day in seven 
must be free of program responsibilities. 47 These regulations are not, however, 
inviolable. Indeed, as stated above, they are not restrictions. Rather, they are 
flexible standards permitting Residents to exceed the suggested number of 
weekly duty hours if doing so will enhance their education.48 Logically, the 
unique nature of a Resident's educational experience and the unpredictable na­
ture of medicine require the inclusion of this exception. Its inclusion, however, 
provides hospitals and supervising physicians with the requisite means, oppor­
tunity, and rationale to circumvent the spirit of the ACGME standards at will. 

In recognition of the obvious loophole in the A COME regulations, the 
A COME seeks to promote enhanced adherence to its Resident duty hour stan­
dards by requiring RRCs to routinely collect and monitor Resident duty hour 
scheduling information from accredited hospitals.49 Specifically, RRC's are 
required, through inspections and interviews with residents, to measure compli­
ance with resident duty hour standards. 50 Moreover, the A COME has also es­
tablished a formal process . for investigating allegations of program non­
compliance filed by Residents and others with knowledge .of purported Resi­
dent duty hour scheduling violations. 51 

To ensure the efficacy of its oversight regime, RRCs are themselves sub­
ject to various oversight mechanisms. 52 Thus, in theory, RRCs possess the cre­
dibility and power necessary to monitor residency programs, and may issue 
citations to any programs that fail to substantially comply with its stated stan­
dards. 53 Moreover, if an accredited residency program fails to comply with the 
Resident duty hour standards after receiving such a citation, the RRCs are per­
mitted to terminate the program's A COME accreditation. 54 In practice, how­
ever, both the regulatory powers of the RRCs and the draconian enforcement 
mechanisms at their disposal appear to amount to little more than smoke and 
mirrors. Indeed, despite the fact that Residents continue to report working un-

47. Id. 
48. !d. ("[T)he standards provide for an increase of up to 10 percent beyond the SO-hour 

weekly limit.''). 
49. /d. 
50. Lin & Liang, supra note 14, at 235 ("ACGME measures compliance with these 

standards through on site [sic] inspections, including interviews with residents.'') (citing 
ACCREDITATION COUNCR.FOR GRADUATE MEl>. EDUC., 'lim ACCREDITATION PROCESS AND THE 
RoLE OF THE ACGME SITE VISITOR (2007), http://www.acgme.org/acWebsitelfieldStafl7 
fs_siteRole.asp (last visited Apr. 9, 2008)). 

51. COMMONSTANDARDS,supranote41, at 1-2. 
52. !d. 
53. Lin & Liang, supra note 14, at 235 ("ACGME also issues citations and monitors 

delinquent programs for 'substantial compliance' with its guidelines." 
54. Ann Pomeroy, Medical School Council Urges Limits on Residents, Hours-HRNews­

Accreditation Council for Gradual~ Medical Education, HR. MAGAZINE, Apr. 2003, at 34 ("Re­
sidency programs that fail to comply with the standards can be placed on probation or have their 
accreditation withdrawn. j. 



64 INDIANA HEA.Lrn LAW REVIEW [Vol. 5:53 

reasonably long hours in violation of ACGME standards, no institution has ever 
been relieved even temporarily of its ACGME accreditation. 55 Thus, given that 
RRCs have not used the tools at their disposal to eliminate Resident duty hour 
abuses, the strength of the ACGME's standards themselves must be called into 
question. 

C. ACGME Duty Hour Standard Enforcement: Why It Doesn't Work 

There is ample evidence to suggest that the ACGME's oversight and en­
forcement of Resident duty hour regulations is largely ineffective, notwith­
standing the "thoroughness" of these standards; 56 There are two reasons that 
the ACGME's duty hour standards are not effectively enforced: First, the 
ACGME has been substantially ineffective in enforcing the provisions of the 
regulations. Second, the regulations do not provide Residents with sufficient 
whistleblower protection to inspire widespread reporting of the duty hour viola­
tions to which they are routinely subjected. 

1. A Conglomerate of Agencies: Too Many Doctors Jumping on the Bed 

With regard to the issue of enforcement, advocates of Resident duty hour 
reform unilaterally assert that medical practitioners consider the A COME duty 
hour standards weak and subject to voluntary compliance. 57 This widely held 
belief is supported by the perception that the standards are unevenly enforced 
across medical specialties, an enforcement issue rooted in the very organiza­
tional structure of the A COME. 58 In its current form the ACGME's oversight 
power is effectively diffused among the "American Board of Specialties, the 
American Medical Association, the American Hospital Association, the Asso­
ciation of American Medical Colleges, and the Council of Medical Specialty 
Societies."59 Consequently, even if the constituents of the ACGME were moti­
vated·to curtail Resident duty hour abuses, they would find it difficult, ifnot 
impossible, to act with the requisite unanimity of purpose to effectively regulate 
their own policies.60 

55. Wilkey, supra note 12, at 342-43 ("[P]ast experience demonstrates that the ACGME 
rarely finds violations, and if it does, the likelihood tbat a medical resident program will lose 
accreditation is close to nil."). 

56. /d. at 342. 
57. /d. ("[1]he very culture of the medical profession promulgates a perception of the 

[ACGME] standards as superficial, amendable. and rarely enforceable.j. 
58. /d. 
59. /d. at 342. 
60. !d. ("[1]he oversight power of the A COME is essentially diffused among the partici­

pating organizations. In fact, as one council member expressed. •the A COME needs to act in a 
more independent manner ... the control of the parents inhibits the ACGME from acting in 
areas [it] needs to Act [sic]."' (quoting Frank, supra note 11, at 322)). 



2008] EXPAND ED HOSPITAL LIABILITY UNDER THE FEDERAL FCA 65 

2. ACGME Accreditation: A Carrot and a Stick 

Organizational diversity is not, however, the only weakness in the 
ACGME's approach to enforcing Resident duty hour standards. Indeed, the 
necessity of maintaining ACGME program accreditation also undermines the 
effectiveness of the ACGME's primary oversight tool: Resident self­
reporting.61 Resident self-reporting presupposes that Residents will actively 
report duty hour violations, and it is a key tool in the regulatory arsenal of the 
ACGME. Resident self-reporting has, however, proven to be an unreliable 
source of information, because Residents are reluctant to provide the ACGME 
with notice of duty hour violations. 62 The reluctance of Residents to report a 
duty hour violation is rooted in the fact that medical residency programs require 
ACGME certification in order to receive the Medicare based GME funding on 
which they depend. 63 Therefore, the loss of ACGME accreditation would have 
the effect of virtually shutting down a hospital's residency program. 

Moreover, in order to be eligible for medical board certification, Residents 
must successfully complete an ACGME accredited program.64 Consequently, if 
a Resident report had the effect of shutting down a residency program, the ca­
reers of every Resident in the program would be put in jeopardy. Clearly, GME 
program funding and board certification are directly related to and flow from 
ACGME accreditation.65 Not surprisingly, both Residents and medical staff 
members usually refrain from reporting regulatory violations. Indeed, even 
though Residents "are fiduciaries to their patients"66 they are also directly "ac­
countable to their superiors for their future careers and would rather endure a 
few years of grueling working conditions than do anything which might com­
promise their careers.'o67 

Unfortunately, therefore, the possibility that Resident self reporting might 
force a hospital to forfeit ACGME accreditation and GME funding has done 
little to motivate change with regard to the resident duty hour issue. Indeed, 
hospitals do not fear the loss of ACGME accreditation since they know that 

61. Wilkey, supra note 12, at 342 ("[D]etennining violations based on self-reporting 
methods such as surveys or questionnaires is problematic because medical staff and residents are 
reluctant to report the hospitals where they work for fear that their programs would lose accredi­
tation."). 

62. Id. 
63. Lin & Liang, supra note 14, at 235. 
64. /d. at 208-09 ("More than ninety percent of U.S. medical school graduates participate 

in postgraduate residency training and seek certification. Board certification significantly influ­
ences hospital privileges, peer and patient recognition, economic compensation, and the stan­
dard of care." (citing 1HE RoLE, supra note 14.)). 

65. Lin & Liang, supra note 14, at 235 ("Programs that lose accreditation are virtually 
shut down because programs must be ACGME-accredited in order to receive Medicare GME 
funding that supports new residents."). 

66. Sarah L. Geiger, The Ailing Labor Rights of Medical Residents: Curable Ill or a Lost 
Cause?, 8 U. PA. J. LAB. & EMP. L. 523, 540 (2006). 

67. Geiger, supra note 66, at 539. 



66 INDIANA HEALTH LAW REVIEW [Vol. 5:53 

Residents have little motivation to self-report duty hour violations; thus, hospi­
tals enforce Resident duty hour standards at will, if at all. One might argue that 
hospitals in violation of the ACGME standards should forfeit their accredited 
status simply because they continue to place Residents and patients at risk. An 
obvious solution to the problem created by the reluctance ofResidents and oth­
er well-intentioned medical professionals to report duty hour violations would 
be to permit Residents and others to file anonymous complaints regarding the 
violation of duty hour standards. The ACGME, however, pointedly refuses 
either to consider anonymously filed complaints68 or to provide whistleblower 
protections to those who file formal complaints. 69 Consequently, in spite of 
ACGME Resident duty hour standards, many chronically sleep-deprived Resi­
dents continue to practice medicine in America's hospitals. 

3. The Greatest Weakness: A Lack ofWhistleblower Protection 

In a very real sense, Residents rely on the benevolence and professional 
acumen of their medical peers for career advancement 70 Therefore, few Resi­
dents are willing to complain to the ACGME, or to anyone else, when they are 
required to work irrationally long hours because they fear retaliatory dis­
charge. 71 Furthermore, those Residents that do raise allegations of regulatory 
violation, in the hope of improving working conditions and enhancing the qual­
ity of care, risk having their programs terminated; thereby, inspiring the ire of 
their contemporaries and discrediting the academic reputations of the v~ insti­
tutions and superiors to which they are looking for career advancement 7 Con­
sequently, "the question of ... whether or not whistleblower protections would 
result in more favorable working conditions for medical residents .... "is cen­
tral to the issue of duty hour enforcement 73 Indeed, many observers believe 
that federal enforcement of Resident duty hour limitations is necessary to en­
sure that hospitals with Graduate Medical Programs comply with ACGME reg­
ulations. 74 

68. Lin & Liang, supra note 14, at 235 ("Anonymous complaints are not considered by 
ACGME, the complainant must provide [a] name and mailing address." (citingACCREDITATION 
COUNCIL FOR GRADuATE MEl>. Eouc.,ACGMEPROCEDURESADDRESSINGCoMPLAINTSAGAINST 
RESIDENCY PROGRAMS (2007), http://www.acgme.org/acWebsitelresinfo/ri_ complaintasp (last 
visited Apr. 9, 2008)). 

69. Pomeroy, supra note 54, at 34 ("Residents are beholden to their supervisors, and 
whistleblower protection is inadequate.''). 

70. Geiger, supra note 66, at 539. 
71. Wilkey, supra note 12, at 342 ("[D)etermining violations based on self-reporting 

methods such as surveys or questionnaires is problematic because medical staff and residents are 
reluctant to report the hospitals where they work for fear that their programs would lose accredi­
tation."). 

72. Pomeroy, supra note 54, at 34. 
73. Wilkey, supra note 12, at 346. 
74. Pomeroy. supra note 54, at 34 ("[The Committee of Interns and Residents J believes 

that federal enforcement of work hour restrictions is necessary .... "). 



2008) EXPANDED HOSPITAL LIABUJTY UNDER THE FEDERAL FCA 67 

The intimate relationship between retaliatory discharge and whistleblower 
protection is well documented in the United States. 75 Moreover, whistleblower 
protections have been used to enforce labor statutes, laws, and legislative man­
dates, 76 and have also been routinely applied to individuals working in the 
healthcare industry. 77 Thus, the fact that Residents are constrained by custom 
and socioeconomic reality from raising allegations of hospital non-compliance 
with the A COME duty hour regulations adopted by OSHA raises issues unique­
ly suited to the application of whistleblower protections. 78 

Proponents of Resident duty hour limitations assert that whistleblower 
protections should be extended to Residents because they are uniquely situated 
to determine when violations of A COME duty hour limitations are occurring; 79 

conversely, most "hospitals vehemently oppose extending whistleblower pro­
tection to medical residents.'.so Hospital administrators and the AMA have 
raised managerial concerns, arguing that providing Residents such protections 
might increase pending litigation against their hospitals; thereby, reducing the 
hospital's ability to deliver effective health care, 81 and impeding the effective 
management of their organizations' internal affairs. 82 Medical educators, on the 
other han~ are less concerned with the potential loss of managerial efficiency 
and more concerned about the potential loss of academic freedom. 83 They ar­
gue that extending whistleblower protections should remain a discretionary is­
sue. so that residency programs are not faced with the necessity of reducing 
educational efficiency so as to satisfy an arbitrary "maximum-hour regime. "84 

75. Wilkey, supra note 12, at 346 ("(W]ithin the United States, the relationship between 
whistleblower protection and retaliatory discharge is well documented."). 

76. /d. ("The use ofwbistleblower protection as a means to enforce particular labor stat­
utes, laws, or legislative mandates is not new."). 

77. /d. ("The application ofwbistleblower protection to health professionals is not a new 
concept either."). 

78. /d. ("Integral to the conceptual framework embodied in whistleblower protection is 
the probability that employers will retaliate against employees in the form ofbarassment, demo­
tion, or termination."). 

79. See generally Virginia U. Collier et al, Stress in Medical Residency: Status Quo qfter 
a Decade of Reform, 136 ANNALS INTERNALMED. 384, 384 (2002) (providing factual accounts 
of residents observing and experiencing violations of maximum-hour guidelines). 

80. Wilkey, supra note 12, at 352 (citing AM. MED. STIJDENT Ass'N, REsiDENT WoRK 
HOUR ISSUE DEBATE SHEET 1 (2007), http://www.amsa.org/rwh/952debate.c:fm (suggesting that 
hospitals do not think that the extension ofwbistleblower protection will be an adequate incen­
tive for self-reporting among Residents) (last visited Apr. 9. 2008)). 

81. /d. ("[T]here is concern that both physicians and patients may be deterred from dis­
closing specific information in reports, records, and charts in the fear that it may be subpoenaed 
at a future date." (citing Statement for the Record Submitted by the American Academy ofFam­
ily Physicians, House Comm., Ways and Means, Subcommittee on Health (Sept. 10, 2002))). 

82. /d. ("[O]rganizations such as the AMA view the extension ofwbistleblower protec­
tion as an impediment to the management and internal affirirs ofhospitals."). 

83. Seeid. 
84. /d. ("Another concern with extending whistleblower protection is the issue of discre­

tion: medical residency programs have educational requirements that may necessitate time 
commitments that cannot be met under a maximum-hour regime.''). 



68 INDIANA HEALTH LAW REviEW [Vol. 5:53 

Other critics simply contend that extending whistleblower protections to Resi­
dents will exacerbate the systemic problems posed by ever-rising healthcare 
costs, growing malpractice insurance premiums, and shrinking education budg­
ets.85 Thus, the Resident duty hour regulations promulgated by the ACGME 
and adopted by OSHA are neither widely accepted, nor adequately enforced by 
most influential participants in the American medical community. 

D. State and Federal Legislative Attempts to Curtail Duty Hour Violations 

In stark contrast to the positions taken by hospital administrators, medical 
academics, and professional organizations like the AMA, patients rights, groups, 
Residents, and the AMSA all support both the equitable enforcement of the 
ACGME's duty hour regulations, and legislative efforts to enhance the effec­
tiveness of those regulations by providing Residents with whistleblowerprotec­
tions. Moreover, the apparent unwillingness and inability of medical 
professionals to establish and enforce reasonable duty hour standards has 
prompted many government actors to promulgate legislation aimed at ensuring 
hospital compliance with duty hour standards. 

The Bell Regulations constituted an initial attempt by a state government 
to reform the healthcare polices and duty hour standards of American hospi­
tals. 86 These regulations were established in 1998 by way of an amendment to 
the New York State health code, after a report revealed that Residents were 
working dangerously long hours. 87 The Bell Regulations were similar in scope 
to the 2003 ACGME standards in that they attempted to impose explicit limits 
on the number of hours Residents were permitted to work.88 Unfortunately, 
they also met with similar difficulties. 89 The Bell Regulations lack of whistle­
blower protections notwithstanding, they also failed to consider that members 
of the medical community "are most supportive of steep hierarchies in which ju­
nior staff do not question senior staff."90 As such, healthcare providers ob­
jected ''voraciously'' to being saddled with externally imposed work hour 

85. ld. ("[I]n an era of rising healthcare costs, shrinking funds at teaching facilities and 
increasing legal malpractice premiums, critics contend that whistleblower protection would 
aggravate an ailing health care system.j. 

86. Whetsell, supra note 7, at 63 ("[T]he Bell Regulations ... purpose was to regulate 
residents' work hours and supervision of their patient care.''). 

87. See generally Lin & Liang, supra note 14, at 240 (discussing how the investigation 
into the death of a patient at the hands of an exhausted Resident prompted New York to rethink 
the Resident duty hour controversy). 

88. I d. {"The Bell Regulations now limit resident hours to eighty hours per week. aver­
aged over a four week period, and no more than twenty-four consecutive hours.''). 

89. Id. (''Noncompliance was ••• noted by ... the New York State Health Department, 
which cited fifty-four out of the state's eighty-two teaching hospitals for resident work hour 
violations during the period from November 1, 2001, through June 21, 2002."). 

90. Whetsell, supra note 7, at 63-64. 



2008] EXPANDED HOSPITAL LIABILTIY UNDER THE FEDERAL FCA 69 

restrictions that undermined the near absolute authority traditionally granted 
them by the age-old master-apprentice model of medical instruction. 91 

In 2000, in the wake of OSHA's adoption of the ACGME's Resident duty 
hour standards and enforcement regime, there was strong bipartisan support for 
federal legislation intended to promote the safety and well being of patients and 
Residents alike.92 Specifically, two bills introduced in the United States Senate 
(referred to collectively herein as the "2000 Acts") sought to impose the "vol­
untary (but not mandatory) reporting of medical errors'' and provided various 
protections for medical professionals and their patients. 93 Similar in form to the 
Bell Regulations, the 2000 Acts sought to impose explicit Resident work hour 
limitations.94 Unfortunately, despite strong support from major players in the 
health care industry, neither proposition ever received a floor vote.95 

More recently, the Patient and Physician Safety and Protection Acts of 
2001 ("House Bill 3236"),96 the Patient and Physician Safety and Protection 
Act of2003 ("House Bill 1228"),97 and the Patient and Physician Safety and 
Protection Act of 2005 ("House Bill 1297")98 were introduced in the United 
States House ofRepresentatives. Like the Bell Amendments and the 2000 Act, 
each of these bills attempted to impose strict limitations on the number ofhours 
that a Resident could permissibly be required to remain on duty.99 Unlike the 
Bell Amendments, however, these bills included provisions intended to func­
tion as enforcement mechanisms.10° For example, under House Bill3236, Res-

91. !d. at 64 
There is great reluctance to abide by government standards for two addi­
tional reasons. First, hospitals traditionally have set their own standards, or 
theoretically follow the guidelines set by the accrediting organization and 
are generally suspicious of federal or state interference. The concern here 
is that regulations may be crafted by legislators who lack intimate knowl­
edge of the heath care system and fail to understand the heterogeneity 
within America's health care system. Second, such regulatious put in place 
yet another blame system, which violates the very idea of the patient safety 
movement. Aside from the possible citations and monetary penalties for 
failure to comply, an overwhelming fear of malpractice liability makes hos­
pitals very defensive. 

!d. (citation omitted). 
92. !d. at 57 ("The past few years have seen some attempts at patient safety legislation."). 
93. !d. at 57-58 (citing Linda 0. Prager, Safety Bills Take Voluntary Tack on Reporting 

Errors, AM. MED. NEWS, July 2000, at 6). 
94. David Abel, Bill Eyes Guidelines on Work Hours for Medical Residents, BosTON 

GLOBE, Nov. 10, 2001, at B 1 (noting that the bills effectively limited total Resident duty hours 
to eighty per week, Resident shift lengths to twenty-four consecutive hours, and guaranteed that 
Residents would receive at least one day off per week and one full weekend off per month.). 

95. Adams, supra note 18, at 1 (noting that despite strong support "[n]either proposal 
reached a vote."). 

96. See H.R. 3236, 107th Cong. (2001). 
97. See H.R. 1228, 108th Cong. (2003). 
98. See H.R. 1297, 109th Cong. (2005). 
99. Abel, supra note 94, at B 1. 

100. Cf., Whetsell, supra note 7, at 58 (reviewing the regulatory provisions ofH.R. 3236). 



70 INDIANA HEALTH LAW REVIEW [Vol. 5:53 

idents would be required to complete anonymous surveys to ensure hospital 
compliance, 101 a committee would be required to conduct annual on site inspec­
tions to assess the validity of the survey results, 102 and a substantial pool of fed­
eral funds would be made available to hospitals that incurred reasonable 
additional costs in achieving substantial compliance with the terms of House 
Bill 3236.103 

More importantly, however, House Bil13236 and its progeny also permit­
ted Residents to report duty hour violations directly to the Secretary of Health 
and Human Services, 104 provided reporting Residents with whistleblower pro­
tections,105 and proposed stiff fines ofup to $100,000.00 for hospitals found 
guilty of violating the statute. 106 Ultimately, in each of its incarnations, the Pa­
tient and Physician Safety and Protection Act proposed amendments intended to 
reduce Resident duty hours and enhance the supervision of Residents; thereby, 
ensuring the safety of both the Residents and their patients.107 Unfortunately, 
like the 2000 Acts all of these subsequent acts also stalled in committee.108 

Despite the best efforts of the AMSA, patient advocacy groups, and legis­
latures on both the state and national levels, hospital administrators, medical 
educators, and professional medical organizations have, to date, successfully 
rebuffed all attempts at Resident duty hour reform. Recent decisions in the Se­
venth and Ninth Circuits may, however, provide the tools necessary to breach 
the ivory tower of medical education, provide Residents with the whistleblower 

101. H.R. 3236 at§ 3(b)(4)(A)(statingthatanindividual withintheDepartmentofHealth 
and Human Services shall ''provide for annual anonymous surveys of postgraduate trainees to 
determine compliance with such requirements [designated herein] and for disclosure of the re­
sults of such surveys to the public on a residency-program specific basis."). 

102. /d. at§ 3(b)(4)(B) {stating that based on the contents ofthe annual anonymous sur­
veys completed by residents in accordance with section 3(b X 4)(A) of the H.R. 3236, an individ­
ual within the Department of Health and Human Services shall in accordance with H.R. 3236 
3(b)(4)(B) "conduct appropriate on-site investigations.''). 

/d. 

103. /d. at§ 4 
There are hereby appropriated to the Secretary of Health and Human Ser­
vices such [funds] as may be required to provide for additional payments to 
hospitals for their reasonable additional, incremental costs incurred in order 
to comply with the requirements imposed by [this] Act (and the amend­
ments made by this Act). 

104. /d. at § 3(b )(2) {"A post graduate trainee or physician resident may file a complaint 
with the Secretary of Health and Human Services ... [ s ]uch a complaint may be filed anony­
mously. The Secretary may conduct an investigation and take such corrective action with re­
spect to such a violation.''). 

105. /d. at§ 3(c) ("A hospital ... shall not penalize, discriminate, or retaliate ... against 
an employee ... who in good faith .... reports a violation or suspected violation of such re-
quirements to a public regulatory agency, a private accreditation body, or management person­
nel of the hospital."). 

106. /d. at§ 3(b)(3) {"Any hospital that violates such requirement is subject to a civil 
money penalty not to exceed $100,000 for each resident training program in any 6-month pe­
riod."). 

107. Compare H.R. 3236 with H.R. 1228 andH.R. 1297. 
108. Whetsell, supra note 7, at 58. 



2008] EXPANDED HOSPITAL LIABll..ITY UNDER THE FEDERAL FCA 71 

protections proposed in the House Bil13236 and its progeny, and promote hos­
pital compliance with the ACGME's Resident duty hour standards. 

ill. MAKING THE GRADE: CAN GRADUATE MEDICAL EDUCATION 
WITHSTAND THE ASSAULT OF ACTIONS BROUGHT PuRsUANT To FEDERAL 

THE FALSE CLAIMS Acr? 

A. The Importance of Main & Chapman 

The reluctance and apparent inability of the ACGME to ensure broad 
hospital compliance with its Resident duty hour standards notwithstanding, re­
cent decisions in the federal courts have exposed non-compliant hospitals with 
federally funded GME programs to liability under the FCA. Specifically, the 
recent decisions in United States ex rei. Main v. Oakland City University and 
United States v. Chapman University have endorsed a legal theory that in­
creases the liability exposure, under the FCA, of federally subsidized institu­
tions of higher education.109 

B. The False Claims Act Generally 

1. The Applicability of the False Claims Act 

The FCA, originally enacted in 1863,110 grants private individuals stand­
ing to file suit in federal court in the name of the federal government.111 As 
amended in 1986, .. the FCA imposes civil liability upon ' [a ]ny person' who, 
inter alia, 'knowingly presents, or causes to be presented, to an officer or em­
ployee of the United States Government ... a false or fraudulent claim for 
payment or approval. "'112 Thus, actionable claims filed pursuant to the FCA 
must first establish that the defendant is a person within the meaning of the 

109. See generally United States v. Chapman Univ., No. SACV 04-1256NSRCX, 2006 
WL 1562231, at *2 (C.D. Cal. May 23, 2006); United States et rei. Main v. Oakland City Univ., 
426 F.3d 914, 916 (7th Cir. 2005). 

110. Vt. Agency ofNatural Res. v. United States et rei. Stevens, 529 U.S. 765, 768 (2000) 
(''Originally enacted in 1863, the False Claims Act (FCA) is the most :frequently used of a hand­
ful of extant laws creating a form of civil action known as qui tam."). 

!d. 

Ill. 31 u.s.c. § 3730(bX1)(2007) 
A person may bring a civil action for ... the person and for the United 
States Government. The action shall be brought in the name of the Gov­
ernment. The action may be dismissed only if the court and the Attorney 
General give written consent to the dismissal and their reasons for consent-
ing. 

112. Vt. Agency, 529 U.S. at 769 (citing 31 U.S.C. § 3729(aXI) (2007)). 



72 INDIANA HEALTH LAW REVIEW [Vol. 5:53 

Act, 113 and second, that the defendant acted knowingly to defraud the United 
States Government of federal funds. 114 

2. Persons Amenable to Suit Under the False Claims Act 

The United States Supreme Court (the "Court") has held that the FCA ap­
plies to any "person" who makes a knowingly false claim on the United States 
Government for federal funds. 115 Ironically, however, the FCA does not explic­
itly defme the term "person."116 Historically, there has been confusion regard­
ing the general applicability of the FCA to state actors. 

This dilemma was resolved in Vermont Agency of Natural Resources v. 
United States ex rei. Stevens, where the Court stated unequivocallythat the 
term person as used in the FCA "does not include the sovereign."117 Moreover, 
the Seventh Circuit extended the protections afforded to the sovereign in Ver­
mont Agency to officials of a state or state agency acting in their professional 
capacities. 118 

States and state agencies are not, however, entirely immune to prosecution 
under the FCA. If an action is brought pursuant to the Civil Investigative De­
mand ("CID") provisions of the FCA, which apply only to government actors, 
such as the Attorney General of the United States (the "Attorney General''), 
states are defined as persons. 119 Thus, under the FCA, private individuals have 
the requisite standing to bring suit in federal court on behalf of the United 
States so long as the party subject to suit is not a state, state agency, or a state 
actor. 120 If one of those entities is implicated, however, only a representative of 

113. 31 U.S.C. § 3729(a)(l)(indicating that the Act applies to "[a] ny person."). 
114. United States ex rei. Nudelman v.lnt'l Rehab. Assocs., Inc., No. 00-1837, 2006 WL 

925035, 13 (E.D. Pa. April4, 2006) ("[NJot all false statements made to the federal government 
are claims within the meaning of the False Claims Act; only actions which have the purpose and 
effect of causing the government to pay out money are clearly 'claims' within the purpose of the 
Act."). 

115. 31 U.S.C. § 3729(a)(l). 
116. See generally 31 U.S.C. §§ 3729-3733 (2007). 
117. Vt. Agency, 529 U.S. at 780; see also United States ex rei. Krahel v. Regents Univ. of 

Cal., No. C-96-1703 WHO, C-01-1893, 2001 WL 1548786, at *2-3 (N.D. Cal. Sept. 13,2001), 
aff d, 329 F .3d 1040 (9th Cir. 2003) (stating that States and State agencies are not persons sub­
ject to being sued in a Qui tam action under the FCA). 

118. Pond v. Bd. of Trs .• Ball State Univ., No. 1:03-CV-00755-UM-VS, 2004 WL 
2538645, at *11 (S.D. Ind. Sept. 9, 2004) ("A lawsuit against an official of the state, or of an 
agency of the state, in his 'official capacity' is a suit against the state entity itself" (quoting 
Kentuckyv. Graham, 473 U.S. 159, 166 (1985))). 

119. See31 U.S.C.A § 3733(a)(l),(4)(West2007); see also Vt.Agency, 529U.S. at 783-
84 ("[T]he FCA ... enables the Attorney General to issue civil investigative demands to 'any 
person ... possessi[ng] information relevant to a false claims law investigation' ... expressly 
defining 'person,' '[f]orpurposes ofthis section,' to include States .... "). 

120. See Vt. Agency, 529 U.S. at 787 ("In sum, we believe that various features of the 
FCA, both as originally enacted and as amended, far from providing the requisite affirmative 
indications that the term 'person' included States for purposes of qui tam liability, indicate quite 
the contrary."). 



2008] EXPANDED HOSPITAL LIABn:JTY UNDER THE FEDERAL FCA 73 

the federal government may file suit pursuant to the CID provisions of the 
FCA.t2t 

The question of whether or not a state actor can be considered a person 
within the meaning of the FCA is particularly important when considering the 
application of the FCA to medical facilities with GME programs. Although it 
is clear that both private for-profit and public not-for-profit hospitals would 
constitute persons within the meaning of the FCA, prior to the Court's ruling in 
Vermont Agency, it was unclear whether state-run hospitals and hospitals affili­
ated with state institutions of higher learning would be amenable to suit under 
the FCA. Given the Court's ruling in Vermont Agency, as interpreted by the 
Seventh Circuit, however, such hospitals would clearly be amenable to suits 
filed under the CID provisions of the FCA. 

The attentive reader may, at this point, be wondering how the FCA can so 
neatly sidestep the doctrine of sovereign immunity established by the Eleventh 
Amendment. In fact, the Court has held that no Eleventh Amendment issue 
arises when considering whether or not a state may be sued under the FCA.122 

In pertinent part, the Eleventh Amendment states that "[t]he Judicial power of 
the United States shall not be construed to extend to any suit in law or equity, 
commenced or prosecuted against one of the United States by [its] Citizens ... 
.. 123 

In Vermont Agency, the Court considered once more the legal tension ex­
isting between the Eleventh Amendment and statutory law.124 With regard to 
actions against the state, the Court noted that the "statutory question [is] 'logi­
cally antecedent to the existence or the Eleventh Amendment question," when 
questions regarding an Eleventh Amendment prescription against enforcing a 
statutory cause of action against a state must be balanced against a statute's 
own prescription prohibiting enforcement of such a cause of action.125 The 
Court concluded that by addressing the statutory question first, there was no 
''realistic possibility'' of expanding the Court's power beyond judicial limita­
tions imposed by the Constitution.126 Moreover, the Court determined that the 
"combination of logical priority and virtual coincidence of scope [made] it pos­
sible, and indeed appropriate, to decide the statutory issue first."127 

According to the Court, "longstanding interpretive presumption" sug­
gested that states were not ''persons" within the meaning of the FCA and that 

121. See 31 U.S.C.A. §§ 3730, 3733 (West 2007). 
122. Cf., Vt. Agency, 529 U.S. at 779. 
123. U.S. CONST. amend. XI. 
124. 529 U.S. at 779 ("We nonetheless have routinely addressed before the question 

whether the Eleventh Amendment forbids a particular statutory cause of action to be asserted 
against States .... "). 

125. /d. at 779 (quoting Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 612 (1997)). 
126. !d. at 779 ("[T]here is no realistic possibility that addressing the statutory question 

will expand the Court's power beyond the limits that the jurisdictional restriction has im­
posed."). 

127. /d. at 779-80. 



74 INDIANA HEALTH LAw REviEW [Vol. 5:53 

private individuals did not have standing to sue states under the FCA.128 There­
fore, when balancing the prescriptions of the Eleventh Amendment against the 
implied statutory limitations ofthe FCA, the Court determined that the FCA 
itself precluded private individuals from instituting legal action against the state 
and saw no need to address the Eleventh Amendment issue at all.129 

3. Knowing Action Under the False Claims Act 

With regard to the FCA's knowledge requirement, the text of the FCA 
states that the knowledge requirement is satisfied when a defendant "has actual 
knowledge of ... information ... [but] acts in deliberate ignorance ... [or] 
reckless disregard of the truth or falsity of the information."130 This prescrip­
tion applies equally to claims filed by both private citizens and government ac­
tors bringing suit under the FCA's CID provisions. 131 Moreover, because a 
claim brought pursuant to the FCA constitutes an averment of fraud, the claim 
will only be actionable if all allegations against the person who is the subject of 
the claim are pled with a particularity sufficient to satisfy the heightened plead­
ing requirements of Federal Rule of Civil Procedure 9(b). 132 

4. Bringing a Claim Pursuant to the False Claims Act: The Qui Tam Suit 

An action brought pursuant to the FCA can be commenced by either the 
United States Department of Justice, in the person of the Attorney General, or 
by a private individual known as a qui tam relator.133 If the qui tam relator 
commences the action on behalf of the United States it is referred to as a qui 
tam action.134 Regardless of who initiates the action, however, the "real party 
in interest in a qui tam action is the United States. "135 

128. /d. at 780. 
129. /d. 
130. 31 u.s.c. § 3729(b)(l)-(3) (2007). 
131. See 31 U.S.C. §§ 3730(a), 3733(a)(1) (2007). 
132. United States ex rei. Smith v. Boeing Co., No. 05-1073-WEB, 2006 WL 542851, at 

*3 (D. Kan. Feb. 27, 2006) ("'At a minimum, Rule 9(b) requires that a plaintiff set forth the 
who, what, when, where, and how of the alleged fraud."' (quoting United States ex. rei. 
Schwartzv. Coastal Healthcare Group, No. 99-3105,2000 WL 1595976, at *3 (lOth Cir. Oct. 
26, 2000))); see also United States ex rei. Donaldson v. Conservation Res. Alliance, No. 03-
1 0141-BC, 2006 WL 695674, at *3 (B.D. Mich. Mar. 14, 2006)("[C]onclusory allegations that 
the defendants' conduct was fraudulent do not satisfY Rule 9(b ).''). 

133. UnitedStatesexre/. Careyv.Brock,No. 3:04-CV-131,2006WL 1195887,at*2n.2 
(E.D. Tenn. May 2, 2006) (''This matter is pursued as a qui tam action. In a qui tam action, the 
plaintiff sues on behalf of and in the name of the government and invokes the standing of the 
government resulting from the fraud injury."). 

134. BlACK'S LAW DICTIONARY 1251 (8th ed. 2004)(stating that qui tam is an abbrevia­
tion of the Latin phrase "qui tam pro domino rege quam pro se ipso in hac parte sequitur, " 
meaning ''who as well as for the king as for himself sues in this matter"). 

135. Carey, 2006 WL 1195887, at *2. 



2008] EXPAND ED HOSPITAL LIABILITY UNDER THE FEDERAL FCA 75 

The government may elect to intervene in a qui tam suit by a relator. 136 If 
the government chooses to intervene and proceed with the qui tam action, it has 
"the primary responsibility for prosecuting the action and shall not be bound by 
any act of the private individual bringing the action."137 Even after the gov­
ernment's intervention, however, the relator has the right to continue as a party 
to the action, subject to certain limitations.138 Thus, the qui tam plaintiff retains 
a private right of action under the FCA and is not merely a "statutorily desig­
nated agent of the United States!'139 The government, in the person of the At­
torney General, may also choose to proceed independently in an action brought 
pursuant to the CID provisions of the FCA. 140 

5. Damage Liability Under the False Claims Act 

Defendants in actions brought pursuant to the FCA are liable for up to 
treble damages and a civil penalty of up to $10,000.00 per claim.141 Generally, 
if the qui tam suit is successful the relator is eligible to receive a percentage of 
the funds recovered.142 The government may, however, choose to dismiss or 
settle the action at will. 143 

I d. 

136. Cf, Nudelman, 2006 WL 925035, at *13 
An action under the False Claims Acts can be commenced in one of two 
ways. The United States Department of Justice (or the states' attorneys 
general under the state Acts) can file suit, or, alternatively, a private plain­
tiff can institute a qui tam action on behalf of the United States (or the indi­
vidual State) to recover damages incurred due to fraudulent claims. 

137. Id. (citing 31 U.S.C. § 3730(c)(l)). 
138. 31 U.S.C. § 3730(c)(l)("IftheGovernmentproceedswith the action, itshallhavethe 

primary responsibility for prosecuting the action, and shall not be bound by an act of the person 
bringing the action. Such person shall have the right to continue as a party to the action, subject 
to ... limitation .... "). 

I d. 

139. Vt. Agency, 529 U.S. at 772. 
140. See generally 31 U.S.C. §§ 3730, 3732(a) (2007). 
141. 31 U.S.C. § 3729(a)(l)-(7) 

Any person who ... knowingly makes, uses, or causes to be made or used, 
a false record or statement to conceal, avoid, or decrease an obligation to 
pay or transmit money or property to the Government, is liable to the Unit­
ed States Government for a civil penalty of not less than $5,000 and not 
more than $10,000, plus 3 times the amount of damages which the Gov­
ernment sustains because of the act of that person .... 

142. See 31 U.S.C. § 3730(d) 
If the Government proceeds with an action brought by a person ... such 
person shall, subject to the second sentence of this paragraph, receive at 
least 15 percent but not more than 25 percent of the proceeds of the action 
or settlement of the claim, depending upon the extent to which the person 
substantially contributed to the prosecution of the action."). But see Carey, 
2006 WL 1195887, at *2 (discussing qui tam relator's share in the damages 
recovered in an action commenced under the FCA and holding that "there-



76 INDIANA HEAL Til LAW REVIEW [Vol. 5:53 

6. Whistleblower Protections Under the False Claims Act 

The FCA includes protections for whistleblowers that reflect the obvious 
federal interest in protecting informants who play an integral and necessary role 
in exposing fraud against the government.144 For example, the FCA protects 
employees from retaliatory action, including harassment, suspension, and dis­
charge, resulting from their participation in or initiation of a qui tam action 
brought pursuant to the FCA.145 

a. Protection and relief for whistleblowers: Employers beware 

Once a qui tam action is filed, whistleblowers are eligible for protection 
and relief, including reinstatement and an award of damages.146 Moreover, as 
long as the government and employer are on notice that an employee is engag­
ing in a protected activity, the fact that the Attorney General settles a claim does 
not limit the protections offered by the Act. 147 Such a settlement will also not 
bar a whistleblower's independent suit for retaliatory discharge. 148 Further­
more, persons discharged from employment for participating in a protected ac­
tivity may bring suit to recover damages. Whistleblower retaliation claims 
brought pursuant to the FCA must, however, be commenced "within the time 
allowed by the most closely analogous state law limitations period."149 

I d. 

/d. 

/d. 

lator has no personal stake in the damages sought by the government. 

143. 31 u.s.c. § 3730(cX2)(A)-(B) 
The Government may dismiss the action notwithstanding the objections of 
the person initiating the action .... The Government may [also] settle the 
action with the defendant notwithstanding the objections of the person ini­
tiating the action if the court determines, after a hearing, that the proposed 
settlement is fair, adequate, and reasonable under all the circumstances. 

144. See Campbell v. Aerospace Corp., 123 F.3d 1308, 1315 (9th Cir. 1997). 
145. 31 u.s.c. § 3730(h) 

Any employee who is discharged, demoted, suspended, threatened, har­
assed, or in any other manner discriminated against in the terms and condi­
tions of employment by his or her employer because oflawful acts done by 
the employee on behalf of the employee or others in furtherance of an ac­
tion under this section, including investigation for, initiation ot: testimony 
for, or assistance in an action filed or to be filed under this section, shall be 
entitled to all relief necessary to make the employee whole ... [including] 
reinstatement ... 2 times the amount ofback pay, interest on the back pay, 
and compensation for any special damages sustained as a result of the dis­
crimination, including litigation costs and reasonable attorneys' fees. 

146. Seeid. 
147. Id. 
148. See generally Neal v. Honeywell, Inc., 33 F.3d 860 (7th Cir. 1994). 
149. United States ex rei. Smith v. Yale Univ., No. 3:02CV1205, 2006 WL 1168446, at *3 

n.3 (D. Conn. April28, 2006). 



2008] EXPANDED HOSPITAL LIABILITY UNDER THE FEDERAL FCA 

b. Federal jurisdiction: Retaliatory discharge and whistleblower 
actions 

77 

In order to establish federal court jurisdiction over the retaliatory dis­
charge claim, a plaintiff must prove that he placed his employer on notice that 
he was participating in an activity protected by the FCA.150 The plaintiff may 
establish notice if: (1) actions were taken in furtherance of a qui tam suit; (2) 
the employer knew of the actions; and (3) discharge occurred because of the 
actions.151 

With regard to the extension of federal jurisdiction to wrongful termina­
tion actions brought in state courts, both the Sixth and Ninth Circuits have re­
jected the notion that the FCA ''justified the exercise of federal jurisdiction over 
a state wrongful termination action."152 The courts held that: 

[T]he FCA's procedures augured against finding a sub­
stantial federal question in a state action relying on the 
FCA . . . because a state-law tort claim so grounded 
would circumvent the procedures and limitations of the 
FCA, and a contrary finding would open a "[sic] back 
door'' into federal court for what essentially was a state 
tort action.153 

Thus, the whistleblower provisions of the FCA apply only to qui tam actions 
commenced in the federal courts. 

c. Whistleblower actions: Essential elements and limitations 

The prior commencement of a qui tam action is the essential element in 
establishing a right of action in a whistleblower claim brought pursuant to the 
FCA. Qui tam actions may not, however, be commenced against a state or a 
state agency by a private individual. Therefore, because qui tam actions cannot 
generally be commenced against the state, and without a qui tam action no right 
of action in a whistleblower claim exists against the state, an arm of the state 
cannot be sued in a whistleblower action. 

The Sixth and Ninth Circuits have held that the FCA does not extend fed­
eral jurisdiction over wrongful termination actions initiated in state courts. 
Thus, although the Court did not address the issue of retaliatory discharge in 

150. See generally Robertson v. Bell Helicopter Textron, Inc., 32 F.3d 948 (5th Cir. 1994) 
(holding that failure to establish a nexus between the filing of a qui tam action and discharge 
may result in a determination by the court that the employee was not engaged in a protected 
activity and therefore not amenable to the protections of the FCA). 

151. Id. 
152. Eastman v. Marine Mech. Corp., 438 F.3d 544, 552 (6th Cir. 2006) (construing 

Campbell v. Aerospace Corp., 123 F.3d 1308, 1315 (9th Cir. 1997)). 
153. Eastman, 438 F.3d at 553 (quoting Campbell, 123 F.3d at 1315). 



78 INDIANA HEALTH LAW REviEW [Vol. 5:53 

Vermont Agency, it can be presumed that states and state agencies are not ame­
nable to suit by private individuals bringing whistleblower'Claims pursuant to 
the FCA. States and state agencies may, however, be amenable to such suits if 
third party federal actors commence them. In such situations, whistleblower 
protections may well apply to adversely-affected private parties. 

C. Government Funding of Graduate Medical Education: 
The Essential Link 

The FCA is ''broadly phrased" to reach "'any person' who violates its 
provisions" by knowingly defrauding the federal treasury.154 As such, hospitals 
that rely on federal funds to pay their Residents, medical educators, and support 
staffs, would seem to be subject to liability under the FCA. Moreover, Resi­
dents working in GME programs would seem to have the standing required to 
bring qui tam suits, subject to the whistleblower protections, if those programs 
forced them to work dangerously long hours. Indeed, even in cases where such 
violations are carried out by state actors in state hospitals, the Attorney General 
would likely have standing to file suit pursuant to the FCA's CID provisions. 

Assuming arguendo that proponents ofResident duty hour reform are cor­
rect in their assertion that knowing violations of the A COME's duty hour stan­
dards occur routinely in America's teaching hospitals, can the FCA be applied 
to the problem? Prior to OSHA's adoption of the ACGME's Resident duty 
hour standards and enforcement regime, the answer to this question would 
probably have been: No. Indeed, despite the fact that the federal government 
has long served as the largest single source of funding for GME programs in 
public, private, and state run hospitals, prior to OSHA's adoption of the 
A COME standards, compliance with those standards did not form a link in the 
chain of causation leading to the release of funds from the federal treasury.155 

Moreover, even after the federal government adopted the ACGME's stan­
dards, the ACGME monitored compliance with those standards. As a result, 
knowingly non-compliant hospitals seeking the ACGME accreditation neces­
sary to serve as centers ofGME could apply for federal funding without making 
a knowingly false claim regarding compliance to the federal government. In­
deed, if a false claim regarding compliance with A COME standards was made 
at all, it was made to the A COME, a private accreditation group unrelated to the 
federal government and free from federal oversight In such cases, the knowing 
falsehood formed a link in the chain of causation leading to the release of fed-

154. United States~ rei. Garberv. CityofNewYork, 8 F. Supp. 2d 343,352 (2nd Cir. 
1998) (construing United States v. McNinch. 356 U.S. 595, 599 (1958)). 

155. Press Release, Ctrs. for Medicare & Medicade Servs., Office of Pub. Affairs, FY 
2007 Hosp. IPPS Proposed Rule- Graduate Med. Educ. (Apr. 12, 2006) (on file with author), 
http://www.cms.hhs.gov/apps/medialpress/release.asp?Counter-1835("Financingofgraduate 
medical education (GME)-the period of training fuUowing graduation from medical school-is 
provided predominantly through inpatient revenues (both hospital payments and faculty physi­
cian fees) and a mix of Federal and State government funds.''). 



2008] EXPANDED HOSPITAL LIABn.ITY UNDER THE FEDERAL FCA 79 

eral funds, but it was too attenuated to trigger liability under the FCA. Thus, 
despite OSHA's adoption of the ACGME standards, hospitals could, without 
fear of prosecuqon under the FCA, knowingly violate those standards. After 
the Main and Chapman decisions, however, hospitals no longer enjoy such 
freedom of action. 

D.' , The False Claims Act: Expanding Applicability 

Recent federal court decisions in the Seventh and Ninth Circuits have en­
dorsed a legal theory that extends the scope ofFCA liability to false certifica­
tions of compliance made in the first phase of a multi-phase certification 
process.1S6 Under this theory, false certifications of compliance no longer need 
to be made directly to the federal government in order to incur liability under 
the FCA. 157 Rather, to establish an actionable claim a plaintiff need only estab­
lish that the defendant knowingly made a false or fraudulent certification of 
compliance, 158 and that the false certification of compliance formed a link in a 
chain of causation ultimately leading to a demand on the federal treasury.159 

1. One lie begets another: The chain of causation grows longer 

In Main, a private individual brought a qui tam action under the FCA 
against his former employer alleging that his employer, a private university, 
made fraudulent assertions regarding its eligibility to receive subsidies :from the 
federal treasury through the United States Department of Education.160 The 
Department of Justice did not choose to intervene in the action.161 Specifically, 

156. See generally Main, 426 F.3d at 914; Chapman, 2006 WL 1562231, at *1. 
157. Id. . 
158. United States ex rei. Hopper v. Anton, 91 F.3d 1261, 1266 (9th Cir. 1996) ("In fur. 

thering this goal, the Act attaches liability, not to underlying fraudulent activity, but to the 
'claim for payment' What constitutes the FCA offense is the knowing presentation of a claim 
that is either fraudulent or simply false." (quoting United States ex rei. Hagood v. Sonoma 
County Water Agency, 929 F.2d 1416, 1421 (9th Cir. 1991))). 

159. Main,426 F.3d at916 ("The [FCA] requires a causal rather thana temporal connec­
tion between fraud and payment."). 

I d. 

160. Id. 
Oakland City University assured the Department ofEducation on its phase­
one application that it complies with the rule against contingent fees .••• 
[T]he relator in this qui tam action under the False Claims Act ••. contends 
that the University's representation was fraudulent. According to the com­
plaint, Main himself received contingent fees as a recruiter and later as the 
University's Director of Admissions. Initially Main thought the compensa­
tion system proper, but when he learned of the federal statute and rule he 
filed this suit. · 

161. Id. at 917 ("The Department of Justice, though it elected not to take over the litigation 
... has filed a brief as amicus curiae in this court contending that the allegations of the com­
plaint, if true, demonstrate a right to recover under the False Claims Act"). 



80 INDIANA HEALTH LAw REVIEW [Vol. 5:53 

the qui tam relator contended that the university asserted willful falsehoods re­
garding its compliance with federal regulations during the first phase of the ap­
plication process, and as a result, the university was amenable to suit under the 
FCA. 162 The district court dismissed the action on the grounds that ''willful 
falsehoods in phase-one applications [did] not violate the Act, because the 
phase-one application request[ ed] a declaration of eligibility rather than an im­
mediate payment from the treasury." 163 The district court also noted that the 
willful falsehood was not repeated in the phase-two application, the application 
that directly preceded the demand on the treasury of the United States.164 

On appeal the Seventh Circuit reversed, a.rgQ.ing that but for the willful 
falsehood asserted in the phase-one application the phase-two application for 
payment could not have been made.165 Specifically, the appellate court rea­
soned that the fraudulent statement made by the university in the phase-one 
application "caused" the phase-two applications to be submitted.166 The frau­
dulent statement in the phase-one application was, therefore, an integral ele­
ment in the "causal chain leading to paymenf' by the federal government.167 

Thus, Main expanded the FCA to encompass fraudulent claims made by a pri­
vate university, in the first phase of a two-phase application process for federal 
subsidies, even though the first phase did not include an immediate demand for 
payment from the United States Treasury. 

2. A chain attenuated does not break: Reaping what you sow 

In Chapman University, the court elaborated on the ruling in Main, fur­
ther extending the scope ofFCA liability. In Chapman University, private in­
dividuals brought a qui tam action under the FCA alleging that their former 
employer, Chapman University, made fraudulent assertions regarding its eligi-

162. !d. at 916. 
163. !d. 
164. !d. (''The University 'uses' its phaSe-one application [containing the fhlsehood] (and 

the resulting certification of eligibility) when it makes (or 'causes' a student to make or use) a 
[falsehood free] phase-two application for payment."). 

!d. 

165. !d. 
Given the posture of the litigation, we must assume (as the complaint al­
leges) that the University (a) knew of the prohibition against paying contin­
gent fees to recruiters, and (b) lied to the Department of Education in order 
to obtain a certification of eligibility that it could not have obtained had it 
revealed the truth. These facts imply that the phase-two applications 
[though truthful] would not have been granted had the truth been told ear­
lier, for all disbursements depended on the phase-one finding that the Uni­
versity was an eligible institution. 

166. !d. 
167. !d. ("If a false statement is integral to a causal chain leading to payment, it is irrele­

vant how the federal bureaucracy has apportioned the statements among layers of paperwork.''). 



2008] EXPAND ED HOSPITAL LIABILITY UNDER THE FEDERAL FCA 81 

bility to receive federal subsidies under the Higher Education Act ("HEA").168 

In Chapman University, however, the "causal chain leading to payment"169 was 
even more attenuated. 170 Indeed, the qui tam relator in Chapman asserted that 
the university "lied to the Western Association of Schools and Colleges ... 
about meeting accreditation" requirements for certain programs.171 Relying on 
the logic of the Main decision, the relators in Chapman argued that, because 
Chapman University could not operate certain programs without the accredita­
tion of the Western Association of Schools and Colleges ("W ASC"), and be­
cause Chapman University enrolled students who received federal subsidies in 
W ASC accredited programs, the knowingly false statements made by Chapman 
University to W ASC constituted the basis for a claim actionable under the 
FCA.172 

Chapman University argued that because W ASC was a third party private 
accreditation organization, entirely unrelated to the United States Government, 
any fraudulent or false statement made to obtain accreditation from the organi­
zation could not constitute a link in the chain necessary to establish an action­
able claim under the FCA.173 Chapman University reasoned that any such 
statement could not by defmition constitute a claim for payment directed to the 
federal treasury. 174 

!d. 

168. Chapman, 2006 WL 1562231, at *1. 
[R]elators allege that ... [Chapman], incidentto requesting and receiving 
hundreds of millions of dollars in federal ... funding annually [pursuant to 
the FCA], falsely certified to the United States of America ... that they are 
in compliance with federal provisions requiring that instruction meet cer­
tain minimum clock-hour requirements. 

169. Main, 426 F .3d at 916 (7th Cir. 2005) (''If a false statement is integral to a causal 
chain leading to payment, it is irrelevant how the federal bureaucracy has apportioned the state­
ments among layers of paperwork."). 

170. Chapman, 2006 WL 1562231, at *2. 
171. !d. 
172. !d. ("Relators contend that Chapman's false certification of the number of hours 

worked by its faculty and false certification that it provides supervised clinical instructions ... 
are material and fundamental conditions of payment of government funds for tuition loan and 
grants ... " from the federal government.). 

!d. 

173. Jd. 
Chapman contends that ... the documents to which Relators refer are gov­
ernment forms or government contracts that either directly or indirectly re­
quire Chapman to follow applicable statutory and regulatory schemes, 
which require that Chapman is accredited by a regional accreditation au­
thority, such as W ASC. Chapman avers that Relators claims fail because 
state and federal financial tuition assistance does not depend on complete 
compliance with the guidelines of an accreditation agency, such as W ASC, 
but rather depends only on being accredited by an accreditation agency. 

174. See !d. at *4 (contending that "Relators fail to allege any payment of public money 
that was supposedly conditioned on a particular report from Chapman to WASC."). 



82 INDIANA HEALTH LAw REVIEW [Vol. 5:53 

Chapman University also distinguished Main by pointing out that in 
Main, the university's receipt of federal subsidies was conditioned upon a statu­
tory regulatory requirement; whereas, Chapman University was subject to no 
such requirement.175 Chapman University's arguments notwithstanding, the 
district court ruled that under the analytical fratitework established in Main, 
Chapman University's "allegedly false certifications to WSAC" constituted the 
first step in a ''two-step fraud purportedly accomplished" by Chapman Univer­
sity.176 Thus, in Chapman the FCA was expanded to encompass fraudulent 
claims made by a private university to a private non-governmental accreditation 
agency whose accreditation program made it possible for students receiving 
federal subsidies to attend university classes. 

N. EXPANDED LIABILITY UNDER THE FALSE CLAIMS ACT: IN THE WAKE OF 

MAIN AND CHAPMAN 

A. Expanded Liability of Universities Generally: 
Why Hospitals Should Take Note 

In Main and Chapman, the Seventh and Ninth Circuits indicated their wil­
lingness to impose liability under the FCA for false certifications of compliance 
made at any stage of a multi-stage certification process. In Main, false certifica­
tion of compliance in the first-phase of a statutorily prescribed two-phase ac­
creditation process was sufficient to create a cause of action under the FCA. 
The court in Chapman expanded the Main decision. Broadly construed, the 
court in Chapman held that, even if a false certification was not made directly 
to the federal government or in response to a statutory regulation specifically 
requiring accreditation by a particular agency, it would be sufficient to create a 
cause of action under the FCA, as long as it formed a link in a chain of causa­
tion ultimately leading to a demand on the federal treasury. 

The willingness on the part of the federal courts to extend the scope of 
FCA liability to false certifications of compliance made in the first phase of a 
multi-phase certification process will undoubtedly make private colleges and 
universities more amenable to suit by qui tam relators. However, because the 
Court in Vermont Agency ruled that private individuals do not have standing to 
bring qui tam actions against states or state agencies, state universities are really 
no more vulnerable to qui tam actions in the wake of the Main and Chapman 
decisions than they were before the cases were decided. 

That is not to say, however, that the rulings in Main and Chapman will 
not increase the vulnerability of state universities to suit under the FCA. V er­
mont Agency merely stated that private individuals lack standing to sue states 

175. Chapman, 2006 WL 1562231, at *3. 
176. Id. at *5. 



2008] EXPANDED HOSPITAL LIABILITY UNDER THE FEDERAL FCA 83 

and their agencies under the FCA. It did not eliminate the power of the Attor­
ney General to file actions pursuant to the CID provisions of the FCA against 
state universities. Therefore, even though private individuals are precluded 
under the FCA from pursuing qui tam actions against state universities, the At­
torney General is still free to file equivalent actions under the CID provisions of 
the FCA as long as the complaint meets the knowledge and pleading require­
ments prescribed by the Act. Moreover, because the rulings in Main and 
Chapman broadened the scope of false claims actionable under the FCA, the 
liability of state institutions to such claims has clearly been increased. Conse­
quently, in the wake of Main and Chapman state universities should make a 
concerted effort to ensure that they avoid making knowingly false certifications 
of compliance in any phase of an accreditation process aimed at securing fed­
eral subsidies under the HEA. 

B. The Expanded Liability of Hospitals with Federally Funded Graduate 
Medical Education Programs 

The rulings in Main and Chapman were clearly tailored to curtail the abil­
ity of state and private universities to receive federal funding if they fail to 
comply fully with the requirements of any accreditation agency permitted to 
determine a university's eligibility to receive federal funds at any stage of an 
accreditation process. As such, the rulings would also seem to dramatically 
expand the applicability of the FCA to claims brought pursuant to the Act 
against any teaching hospital that receives federal funding. 

Hospitals employing the services of graduate medical residents receive a 
majority of the funding for their residency programs from the federal govern­
ment through the Medicare program. Moreover, to receive such funding, hospi­
tals with GME programs must be accredited by the ACGME. Accreditation by 
the ACGME is premised upon compliance with, among other things, the duty 
hour limitations imposed on Residents by the ACGME. Prior to the holdings in 
Main and Chapman, it could be persuasively argued that a hospital's failure to 
comply with the duty hour limitations of the ACGME, a private accreditation 
agency, did not constitute behavior implying liability under the FCA. Under 
the logic of the holdings in Main and Chapman, however, hospitals that know-

. ingly fail to comply with the ACGME 's duty hour limitations would probably 
be liable under the FCA for defrauding the federal treasury. 

1. Hospital Liability Under the False Claims Act: A Statute Reinterpreted 

Hospital liability under the FCA for violations of resident duty hour stan­
dard violations would be premised upon existing federal law as interpreted by 
the federal courts.177 As such, federal legislation governing the duty hours of 

177. United States ex rei. Raymer v. Univ. of Chi. Hosp., No. 03 C 806, 2006 U.S. Dist. 



84 INDIANA HEALTII LAW REVIEW [Vol. 5:53 

medical residents is no longer necessary. Under the federal judiciaries rulings 
in Main and Chapman, strict compliance with the A COME duty hour standards 
adopted by OSHA is required of any hospital receiving federal funding for its 
GME program. Furthermore, given the applicability of the FCA, enforcement 
of the ACGME' s duty hour standards in hospitals that refuse to comply is no 
longer problematic. Residents, acting as qui tam relators, are free to bring 
claims against any public or private hospital that knowingly fails to enforce the 
duty hour standards. Even hospitals associated with state universities would be 
amenable to suit brought by the Attorney General pursuant to the CID provi­
sions of the FCA. 

2. Whistleblower Protections for Sleepy Residents: A Dream Come True 

In addition to facilitating enforcement of the ACGME duty hour stan­
dards, the federal judiciary's expansion of the FCA's applicability in Main and 
Chapman also ensures that Residents, acting as qui tam relators, could enjoy all 
of the whistleblower protections afforded by the FCA. In the wake of these 
rulings, many of the practical impediments that formerly curtailed the efforts of 
Resident duty hour reformers and patient advocacy groups have theoretically 
ceased to exist. 

Residents, though still subject to the challenges imposed by the traditional 
master-apprentice paradigm of medical education, may now engage in the self­
reporting essential to the enforcement of the ACGME's Resident duty hour 
standards. If Residents report duty hour violations, file a qui tam action seek~ 
ing enforcement of the duty hour standards, and are discharged or harassed as a 
result; they are free under the FCA to bring suit in federal court for retaliatory 
action. Moreover, assuming that the FCA is applicable to ACGME duty hour 
violations, self-reporting Residents can retain relative anonymity; thereby, 
avoiding the need to face a no win situation in which compelling hospital com­
pliance with duty hour standards will most likely result in injury to their nascent 
careers. 

Furthermore, hospitals with GME programs found guilty of violating the 
ACGME Resident duty hour standards, while receiving federal subsidies, 
would likely be found guilty of defrauding the federal treasury. Theoretically, 
Resident whistleblowers, patient advocacy groups, and members of the AMSA, 
acting as qui tam relators, would be eligible to receive a sizable percentage of 
the treble damages and civil penalties likely to be levied against any hospital 
found guilty of violating the standards.178 Moreover, the Attorney General 
would be independently eligible to prosecute offending hospitals under the 
FCA. 

LEXIS 7943 (7th Cir. Feb. 28, 2006) (demonstrating the willingness of the federal courts to 
apply the Main standard of enhanced liability to claims filed against federally funded hospitals 
generally). 

178. 31 U.S.C. § 3729(aX1)-(7). 



2008] ExPANDED HOSPITAL LIABll.JTY UNDER THE FEDERAL FCA 85 

V. CONCLUSION 

The Resident duty hour controversy has long been a polarizing issue in 
the American medical community. Rooted as it is in the very bedrock of the 
master-apprentice paradigm of medical education, the Resident duty hour ques­
tion has effectively defied intervention by legislatures, Residents, the AMSA, 
and private individuals. The obdurate stance adopted by medical educators and 
medical professionals within the AMA and ACGME has rendered ineffective 
the Resident duty hour standards adopted by OSHA. It would seem, therefore, 
that Resident duty hour reform is unlikely to take root naturally in the United 
States, despite the will of the general population. 

Recent decisions in the Seventh and Ninth Circuits, however, have dra­
matically altered the landscape of the Resident duty hour controversy. By mak­
ing the FCA applicable in any situation where federal funding is procured 
through knowingly fraudulent means, regardless of attenuation in the chain of 
causation leading to the procurement, the precedent set by the courts in Main 
and Chapman changed the very nature of the debate. Prior to these decisions, 
proponents of Resident duty hour reform had few tools suited to the task of 
bringing about change in the medical community's perception oflimited Resi­
dent duty hours. In effect reformers efforts were largely ignored or marginal­
ized by medical practitioners' intent on preserving the stasis quo. The 
precedent set by Main and Chapman has provided Residents and other inter­
ested parties with the leverage necessary to effectively challenge hospitals and 
supervising medical practitioners who refuse to adhere to the Resident duty 
hour standards promulgated by the ACGME. These standards, if enforced, 
would ensure that Residents are not required to provide potentially life saving 
medical care while suffering from chronic sleep deprivation. 

Thus, given the precedent set in Main and Chapman, the question is no 
longer if private and state run hospitals will comply with the ACGME •s Resi­
dent duty hour standards, but when they elect will do so. Indeed, if hospital 
managers, medical educators, and representatives of the ACGME choose not to 
comply with the standards, they may face large financial penalties under the 
treble damages provision of the FCA. Thus, it can be presumed that, even 
though the American medical community has been slower than its counterparts 
in other nations to adopt Resident duty hour reforms likely to benefit Residents 
and patients, it will find ample reason to adopt such reforms if doing so will 
avoid stiff financial penalties. The motivation behind the compliance notwith­
standing, it is the Residents and patients who will reap the greatest reward from 
the application of the FCA to the Resident duty hour controversy. 



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