FEDERAL HEALTHCARE FRAUD LAW - The False Claims Act (FCA)
Federal Healthcare Fraud Laws - Criminal & Civil Statutes Concerning Healthcare Fraud
Federal healthcare regulation are complex so that the ordinary physician cannot invest the time to fully understand them. However, any medical practice is presumed to have a full understanding of these laws. It is expensive but often prudent to hire established third party administrators for all but the most simple of practices. If there are violations of federal laws or regulations there is always the threat of criminal fraud charges or expensive civil legal entanglements. There a criminal FCA (18 U.S.C. § 287) but that is a different discussion.
The five main federal fraud laws affecting a medical practice are:
1. False Claims Act (FCA)
2. Stark Law (Physician Self Referral Prohibition)
3. Anti-Kickback Statute (AKS)
4. Exclusion Authorities
5. Civil Monetary Penalties Law (CMPL)
There are many federal agencies that enforce these laws. The main three are:
Department of Justice (meaning the Attorney General, FBI)
Department of Health & Human Services through the Office of Inspector General (OIG)
Centers for Medicare & Medicaid Services (CMS)
The penalties for violating the federal laws include:
Prison and massive fines
Civil fines
Restitution to the government or other payors
Exclusion from federal health care programs
Medical Board or Medical Commission action against a medical license
The False Claims Act is a civil financial tool used against medical practices that may have improperly charged the United States government.
False Claims Act - 31 U.S.C. § § 3729-3733
This is not a criminal statute but an FCA claim is often the tip of the iceberg and criminal charges may be under consideration.
The FCA relates to the United States as the payor. It is illegal to make Medicare or Medicaid claims for work not done, work overcharged or DME or other products that do not meet basic quality standards. These are considered “false claims”.
The penalty is triple the actual loss plus $ 11,000 dollars for each false claim filed. If an orthopedist sells an inferior and barely functioning TENS unit purchased on TEMU for $ 18.00 and resells it for $ 160.00 is this a crime or simply a good “Shark Tank” profit margin? If it is a civil violation the loss is $ 142.00 x 3 or $ 422.00 per unit sold plus $ 11,000.00 ($ 11,422.00)
If the doctor sold 1000 units the civil penalty will be eleven million dollars.
The FCA is also a penalty for conduct in violation of the Stark or AKS laws.
A major negative for doctors is that under the civil FCA the physician does not have to specifically intend to defraud anyone. The civil FCA uses lower standard of intent and requires only that the conduct be "knowing". Knowing includes making a mistake if the person is deliberately avoiding seeing the truth. In other words it is a type of gross negligence. So in the case of the TEMU TENS unit, given the source, should the orthopedist have tested the units before selling? Should the orthopedist suspected that the exceptionally low purchase price was a low quality red flag?
The civil FCA contains a shark provision. The shark provision allows a whistleblower to sue you. The whistleblower can be an individual and she/he sues on behalf of the United States. That person shares in the recovery on a percentage basis. And who is a typical whistleblower? In our experience it is often a disgruntled employee who goes on internet and finds a law firm that will work on percentage basis. It can also be a competitor.
This is not a criminal statute but an FCA claim is often the tip of the iceberg and criminal charges may be under consideration.
The FCA relates to the United States as the payor. It is illegal to make Medicare or Medicaid claims for work not done, work overcharged or DME or other products that do not meet basic quality standards. These are considered “false claims”.
The penalty is triple the actual loss plus $ 11,000 dollars for each false claim filed. If an orthopedist sells an inferior and barely functioning TENS unit purchased on TEMU for $ 18.00 and resells it for $ 160.00 is this a crime or simply a good “Shark Tank” profit margin? If it is a civil violation the loss is $ 142.00 x 3 or $ 422.00 per unit sold plus $ 11,000.00 ($ 11,422.00)
If the doctor sold 1000 units the civil penalty will be eleven million dollars.
The FCA is also a penalty for conduct in violation of the Stark or AKS laws.
A major negative for doctors is that under the civil FCA the physician does not have to specifically intend to defraud anyone. The civil FCA uses lower standard of intent and requires only that the conduct be "knowing". Knowing includes making a mistake if the person is deliberately avoiding seeing the truth. In other words it is a type of gross negligence. So in the case of the TEMU TENS unit, given the source, should the orthopedist have tested the units before selling? Should the orthopedist suspected that the exceptionally low purchase price was a low quality red flag?
The civil FCA contains a shark provision. The shark provision allows a whistleblower to sue you. The whistleblower can be an individual and she/he sues on behalf of the United States. That person shares in the recovery on a percentage basis. And who is a typical whistleblower? In our experience it is often a disgruntled employee who goes on internet and finds a law firm that will work on percentage basis. It can also be a competitor.
Our office defends FCA allegations and at the same time we watch out for other DOJ investigations that may be ongoing. Our medical litigation lawyers are top level trial lawyers and include a physician lawyer, Dr. Mark Ravis.