A word to the wise on avoiding claims fraud

Attorney Adam Falcone delivered an essential update on a difficult topic:  corporate compliance under new and tighter HHS rules governing fraud and abuse.

Falcone, a partner at Feldesman Tucker Leifer Fideli LLP said that every dollar the federal government invests in fighting health care fraud generates a remarkable 14:1 return, either in the form of returned payments or penalties. With revenue potential like this on the table, the government’s fraud-fighting efforts can only be expected to grow.

Under the Federal False Claims Act (FFCA), it can be surprisingly easy to commit fraud, Falcone warned.  The standard has little to do with intent to commit fraud, but instead focuses on whether an individual knew should have known, or recklessly disregarded (i.e. failed to personally review) elements of claims, grant applications or the like.

“Do you personally review every claim that is filed by your agency?” Falcone asked. But he knew the answer:  “Reviewing all of them isn’t possible.”  Under federal rules for grant applications—applications often completed by external consultants—misstatements of material information, factual errors about the agency or the program, or course-changes in programs covered by the grants can all be hit with allegations of fraud, , he warned.

Harking back to English common law, the FFCA is based on a long-held legal practice that allows individual citizens to “stand in the shoes of the king” (or the government) when it comes to protecting the interest of how the king’s (or government’s) money is spent.  The FFCA allows whistleblowers to file lawsuits using a “qui tam” provision—a provision that unites their interests with those of the government.  This provision also provides a financial incentive for both, since the whistleblower who files the complaint, subject to certain requirements, is entitled to a split of the total funds recovered.

Within 60 days, the government must review the lawsuits and decide whether it wishes to participate.  If so, the government takes over the legal battle and its costs, though the original plaintiff retains a right to a share in the proceeds.

Falcone noted that because so many whistleblower suits are brought by disgruntled employees, agencies are advised to 1) control the level of awareness of any internal investigations underway, and 2) ensure that employees always have a open and reliable place to go—a place to bring their concerns so that they feel respected.  Any employee concerns about misconduct should be followed up by a corporate compliance officer, with an appropriate reply or demonstration of action to show the employee that their concern was heard and action taken.   A full report of findings to the employee is not necessary, said Falcone.

Individuals who file or participate in whistleblower lawsuits are protected by federal law from retaliation.  However, he added, many employers keep inadequate records about employees so demonstrating a long-term pattern of poor performance—and demonstrating cause for termination—can be very difficult.

Later legislation, the Fraud Enforcement Recovery Act of 2009, extends whistleblower protections beyond the employees of provider organizations that receive federal health care dollars to include subcontractors to these organizations.   It also imposes a liability for service providers to return incorrectly obtained funds to the government, a requirement that was revised and strengthened in the Affordable Care Act.