Common Issues in False Claims Act Investigations

Physician-owned entities, pharmacies, hospices and other providers need to know about the False Claims Act.

Common Issues in False Claims Act Investigations

Under the False Claims Act (FCA), health care providers can face steep penalties for violating the Medicare and Tricare billing guidelines. Federal agencies have substantial resources for pursuing FCA investigations, and the FCA provides several ways for the government to establish civil and criminal culpability.

The False Claims Act is a federal statute that serves as one of the government’s primary tools for prosecuting health care providers suspected of Medicare fraud. The False Claims Act (FCA) prohibits government benefit program participants, such as health care providers who bill Medicare, from submitting any “false or fraudulent claim” for payment, and it imposes both civil and criminal penalties for violations. With monetary penalties including up to $21,500 per false claim as of 2017 (in addition to recoupment, treble damages, and other forms of financial recovery for the government), an FCA investigation can quickly lead to substantial liability even for providers that did not knowingly or intentionally violate the law. In criminal cases involving fraud, health care providers can face substantial financial penalties and federal imprisonment.

When Does the Government Pursue FCA Investigations Against Health Care Providers?

Under the False Claims Act, the federal government has two ways to initiate an investigation. The first is direct agency action. The Centers for Medicare and Medicaid Services (CMS), the Department of Health and Human Services’ Office of Inspector General (OIG), the Department of Defense (DOD), the Department of Justice (DOJ), the Drug Enforcement Administration (DEA), the Federal Bureau of Investigation (FBI) and other agencies all have jurisdiction to pursue investigations against health care providers suspected of submitting false claims to Medicare, Tricare and other benefit programs. These agencies rely on vast resources – and increasingly on data analysis – to identify targets for federal investigations.

Second, the government can pursue investigations of health care providers based upon private citizens’ claims filed under the FCA’s whistleblower provisions. When the government receives a valid whistleblower claim, it is required to conduct an inquiry, and these inquiries will often lead to full-blown investigations and civil or criminal prosecutions.

What Constitutes a “False or Fraudulent Claim” Under the FCA?

In the health care context, the scope of actions that can constitute false and fraudulent claims is extraordinarily broad. Some of the most common allegations in FCA investigations include:

• Billing for services, equipment or medications that were not medically-necessary
• Coding errors and violations, including upcoding, double-billing and billing for services that were not provided
• Falsifying patient records or failing to submit accurate treatment records
• Paying and receiving bribes, kickbacks and other unlawful referral fees
• Relying on false or fraudulent physician certifications

Since evidence of intent is not required to establish a civil violation of the FCA, even providers that are doing their best to comply with the complex Medicare or Tricare regulations can face liability under the FCA. In order to minimize the consequences of an FCA investigation, any health care provider that is facing an investigation should seek experienced legal representation as soon as possible.

Jeffrey H. Sloman is an experienced health care lawyer, former federal prosecutor and a Partner in the Miami, FL law firm of Stumphauzer & Sloman, P.L.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.

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