Conceptual Background

This chapter provides an overview of the two critical building blocks upon which this study is based: agency theory and the civil False Claims Act (FCA). These two conceptual pieces require an introduction because they provide the basis for the data analysis. This chapter charts the basic components of agency theory, and introduces the agency framework designed by Richard Lawlor to apply agency theory specifically to the Medicare program. This establishes the groundwork for applying agency theory to the specific niche that is the focus of this study: Medicare fraud and improper billing prosecuted under the civil FCA.



Subsequently, the civil FCA is presented and its elements are discussed. An understanding of both agency theory and the civil FCA will be critical to interpret the findings of this research. Agency Theory This study is grounded in agency theory. As the following paragraphs will discuss, the agency theory that this study relies upon is the theory that developed from the field of economics, as opposed to the legal theory of agency. The following three subsections of this chapter will: 

1) describe the evolution of aspects of the theory that are most pertinent to this study, and 2) introduce the groundwork laid by Richard Lawlor in applying agency theory to the Medicare program, and 3) outline the implications of Lawlor’s work for this study. Agency theory is vital to this study because it serves as a lens through which to view the empirical data and provides a terminology and an approach to the policy issue that can be used to guide future policymaking. In this study, Lawlor’s proposed theoretical framework is tested in order to determine if it is robust enough to be applied to the niche of FCA cases filed against Medicare providers. Briefly,