by Charles Siegel
We are barely two months into the second Trump administration, and already certain themes are beginning to feel stale. One of them is that “it’s impossible to keep up with everything.” “The jaw-dropping outrages just keep coming, day after day.” The idea that it’s all a deliberate effort to bludgeon us – political opponents, nonprofits, lawyers who represent political opponents or nonprofits, judges, us – into a feeling of helplessness and thus submission. Everything everywhere all at once. Even the feeling of being bludgeoned is beginning to curdle.
There are indeed outrages every day. But the main thing now happening every day is the wrecking of the federal government. Another few thousand federal workers are fired, or another federal agency is shuttered, all in the name of ending “waste, fraud, and abuse.” It’s virtually impossible now for any administration spokesperson to say anything without intoning these four magic words.
When the government, or DOGE, or some combination of the two began firing tens of thousands of “probationary” workers in February, White House spokeswoman Anna Kelly said that “President Trump is rooting out the vast waste, fraud and abuse across the Executive Branch. He will deliver on the American people’s mandate to effectively steward taxpayer dollars, which includes removing probationary employees who are not mission–critical.” On February 11th, with Elon Musk and his son looking on in the Oval Office, Trump said that “we” have already found “billions and billions of dollars in waste, fraud and abuse.” Even the Voice of America has gotten the treatment: the new director of the United States Agency for Global Media (which oversees VOA), Kari Lake, apparently appointed to oversee the near-total destruction of her own agency, stated last weekend that “waste, fraud and abuse run rampant in this agency and American taxpayers shouldn’t have to fund it.”
As mantras go, it’s undeniably an effective one. Who doesn’t want to eliminate wasteful spending? Or spending driven by fraudulent conduct? Or spending resulting from “abuse,” whatever that means exactly? And who doesn’t believe, or really just know in their bones, that “government” is inefficient, bureaucratic, sclerotic?
There is indeed a vast amount of fraud on the federal government. Every single day, the government pays hundreds of millions of dollars’ worth of fraudulent invoices. It does so in almost every area of the economy. It pays for weapons parts that haven’t been tested properly. It pays funds to “small business” owners who fudge the requirements for receiving such loans. It pays money to companies that won contracts under the “Buy American Act” to supply products, but falsely certified them as made in America when they were made overseas. It pays grants to educational institutions that violate the terms of their contracts by using incentive-based compensation for student recruiters. Most of all, though, it pays fraudulent healthcare bills.
For the last 20 years, a large part of my legal work has involved the representation of whistleblowers. There are many kinds of “whistleblowers,” and many legal contexts in which they need representation to mount a defense or to file claims of their own. My practice has entailed the representation of whistleblowers who wish to file claims under the federal False Claims Act, and/or its various state analogues.
At its most basic level, a suit by a whistleblower – or a “relator,” to use the legal term of art – alleges that the federal government is being defrauded in some way. That is, it is paying out money that it shouldn’t pay out, due to some type of fraudulent misconduct or misrepresentation. (A suit may often involve payments by state governments as well, but for simplicity, I’ll focus on federal claims.) The False Claims Act, a statute originally enacted during the Civil War, is designed to enable the government to recover monies it paid out due to fraud. A claim for payment presented to the government, that is fraudulent in some way, is a “false” claim. To bring a False Claims Act suit, the relator must have independent, firsthand knowledge of the fraud.
The substantial majority of my clients report fraud in the healthcare industry. They come from every sector: I have represented doctors, nurses, therapists, pharmaceutical and medical device sales representatives, corporate managers, billing personnel, state and federal auditors, and others. For example, one of my first clients was a pharmaceutical sales representative in Los Angeles. His job was to induce doctors to prescribe his company’s products as opposed to those of competitors.
The company gave the doctors many inducements: six-figure “honoraria,” free trips to plush resorts, etc. One thing my client was frequently instructed to do was to invite doctors to give talks about “current developments” to sales reps. These “talks” took place in the company’s suite at the Staples Center before Lakers games. In practice, the “talks” almost never happened; the doctors simply mingled with the sales reps. Then, hopefully, the doctors would start prescribing the new drug in great numbers. This tended to happen, and federal healthcare programs such as Medicaid, Medicare or Tricare (which covers uniformed servicemembers, retirees and their families) paid for many of those prescriptions, to the tune of tens of millions of dollars.
By statute, however, such programs cannot pay for procedures or prescriptions driven by “kickbacks.” A claim for payment for such prescriptions is thus “false” within the meaning of the False Claims Act. The honoraria, the free resort trips and the Lakers tickets were all kickbacks, and the resulting prescriptions, when presented to, say, Medicare for reimbursement, were “false” claims. We taxpayers should not be paying for prescriptions driven by bribes.
No one knows better than me, then, that fraud on the federal fisc is widespread and costly. This case is just one of hundreds of examples that might be given. Estimates vary widely, but tens, perhaps hundreds of billions of dollars in healthcare costs every year are “fraudulent,” in both the legal and everyday senses.
But this is fraud on the government, not in it or by it. It is fraud practiced on the government by companies and citizens. It is not fraud being committed by government employees.
Until two months ago, the machinery of the federal government worked diligently to combat this fraud. I have worked with U.S. Attorneys’ offices from Boston to Los Angeles, and have known them without fail to be diligent, dedicated and efficient. The assistant U.S. attorneys, and their paralegals and investigators, work doggedly to prosecute FCA cases. The same is true for in-house attorneys, paralegals and investigators at the agencies involved (for example, for Tricare this would be the Defense Health Agency Office of the Inspector General). They work under constraints that don’t burden the large law firms that represent their corporate adversaries: they’re understaffed and underpaid and they work with ancient IT systems. Yet their efforts, together with the work of whistleblowers and the bar that represents them, recover billions of dollars a year in improper healthcare payments.
So I know, more than most, that “waste, fraud and abuse” is a pervasive problem – one that the government works hard, with significant results, to address. That is why the endless invocation of “waste, fraud and abuse” to justify the decimation of the federal workforce is so Orwellian (to use another theme that has been stale for some time now). How will firing fraud inspectors decrease the amount of fraud? How will firing tens of thousands of Social Security Agency employees decrease the amount of disability claim fraud? How will firing 50,000 IRS employees decrease the amount of tax revenue lost to tax fraud?
They won’t. Curbing fraud, or recovering fraudulently-induced payments isn’t the point. Eliminating waste, fraud and abuse can’t be the point, because exactly the opposite will happen.
Take the Department of Education, for example. President Trump announced on March 20 that he was eliminating it. He can’t do that, of course – only Congress can – yet he still ordered its new secretary, the wrestling executive Linda McMahon, to “take all necessary steps to facilitate the closure” of her own department. But he had already abruptly fired over 1300 employees. Roughly 160 of them worked for the School Eligibility and Oversight Service Group, which is “responsible for administering a program of eligibility, certification, financial analysis, and oversight of schools participating in Federal Student Aid programs.” (As of March 20, Department of Education websites were still up.)
In a LinkedIn post, an experienced review specialist in this office described his work as “overseeing the compliance and performance of various student funding programs and institutions” by evaluating “signs of fraud, gross mismanagement, or widespread noncompliance with federal regulations that could jeopardize student aid funds.” When fraud is detected, he “documents evidence to support the allegations and prepares recommendations for appropriate administrative actions, such as limitation, suspension, termination, or fines.” In other words, this dedicated federal employee – the kind of person who Garrett Graff, in his review of the recent book by Michael Lewis, John Lanchester and others, “ Who is Government?,” describes as “people painfully aware that they’re stewarding government resources, doing so artfully under tight constraints, all of whom could be doing something for more money elsewhere” – works to detect and remedy fraud related to federal student aid funds. He now says that with the number of employees in his office slashed by 80%, thousands of institutions and foreign schools “have been given the green light to waste, abuse, and create fraud with federal financial aid funds with zero oversight.”
Another obvious example, with vastly more money at stake, is the ransacking of the IRS. So far, 11,000 employees have been fired, but the administration (or Musk, or DOGE – again, it is never exactly clear) has announced plans to fire up to half of the Service’s current workforce of 100,000 employees. Tax cheats no doubt approve.
One of the fired IRS employees had started there six months ago. According to the Wall Street Journal, he had been hired “to streamline spending on IT.” Now that spending won’t be streamlined, which of course means it will revert to being wasteful. And when the IRS eventually has half the staff it currently has, how will it fulfill its basic duties of collecting taxes, auditing returns, and pursuing tax evaders?
It won’t, of course. It can’t. Already the effects are being felt. The New York Times interviewed a recently fired employee who had “joined a team that had started an audit of a company earning roughly $3 billion a year.” The IRS had never examined the firm before, because it never had enough employees qualified for such a complex audit; by hiring this person “and thousands of other experienced tax professionals like her last year, the IRS was trying to fill those gaps and rebuild its ability to enforce tax laws after years of decay. The effort was expected to help the United States recoup billions in additional tax revenue.” But many of the 11,000 people laid off so far worked in her division too, and now what she characterized as a “slam dunk” case may not be finished.
On March 22nd, the Washington Post reported that the IRS’s “head of compliance” had resigned the previous day. The Post also reported that the agency now predicts a decrease of more than ten percent in tax receipts by the April 15 deadline. This decrease is “directly tied to changing taxpayer behavior” and the “rapid demolition of parts of the IRS.” Agency officials have “noticed an upstick in online chatter from individuals declaring their intention to not pay taxes this year or to aggressively claim credits and deductions for which they are ineligible – wagering that auditors will not examine their accounts.”
The lost tax revenue will likely exceed $500 billion. If Congress does not reduce spending by the same amount, the government would need to borrow more money to meet its needs, thus increasing the national debt.
All of this, of course, is to say nothing of the economic consequences of these mass layoffs – the hundreds of thousands of persons suddenly without a job and a paycheck, and the knock-on economic effects to follow. And the noneconomic consequences as well: the millions of visits to national parks that will be canceled or curtailed due to deep staffing cuts at the National Park Service; the inevitable increase in suicides among veterans, now around 20 a day, as cuts at the Department of Veterans Affairs mean fewer staff to help them get treatment for mental health conditions; chaos in the nation’s organ transplant system, as cuts at the Department of Health and Human Services eliminate a new program recently implemented to address problems in the system. Fewer food inspections, fewer airplane inspections, dirtier water. A smaller, meaner, more dangerous, hollowed-out society.
In any event, there certainly won’t be less waste; the government will waste more money. There won’t be less fraud, because fewer people will be fighting to address it. And there won’t be any less abuse. If you want to abuse your right to Social Security benefits by claiming a higher level of disability than you really have, there will be far fewer personnel around to catch you.
“Waste, fraud and abuse” is a lie, if a very effective one. Orwell would have recognized it at once. After all, he wrote in “Politics and the English Language,” it is always euphemism and vagueness that must be deployed in “the defense of the indefensible.”