H ow can you protect yourself against claims of fraud and abuse? Are you engaging in fraudulent behavior and you don’t even know it? What constitutes a false claim? Everyone is against fraud and abuse in the provision of medical care, but policing and prosecuting fraud and abuse remain controversial and complicated. In this article, I’ll answer the questions posed above and give you an all-around better understanding of the False Claims Act and how it applies to healthcare claims. Three Main Laws Before I answer these questions, let me first give you some background on the main laws used for combating fraud and abuse. There are three main federal laws that are used to combat fraud and abuse — the False Claims Act, the Anti-Kick Back Statute and the Stark law. Their provisions are compared in Table 1, and in upcoming columns I will review each law. However, this column will focus mainly on the False Claims Act because it is the oldest act. History of the False Claims Act The False Claims Act (FCA) first passed in 1863 to fight fraud by government contractors. It imposes civil liability on any person or entity that submits a false or fraudulent claim for payment to the United States government (Table 2). The FCA also includes an ancient legal device called a “qui tam” provision that allows private citizens to bring suit (from a Latin phrase meaning “he who brings a case on behalf of our Lord the King, as well as for himself”). It was updated by the False Claims Amendments Act of 1986, which was followed by a large increase in FCA claims, in particular against entities involved with health care. Under the FCA, it is also improper to cause someone else to submit a false claim. For example, if a doctor provides false information to a medical supplier, who in turn bills the government based on that false information, the doctor is liable because his actions resulted in the submission of a false claim. The False Claims Act provides that an individual, often referred to as a “whistleblower,” who has information relating to a person or entity who is submitting false claims to bring a suit on behalf of the government, and to usually a 10% share in the damages recovered as a result of the suit. These are referred to as qui tam suits. The whistleblower who brings the case is called a qui tam plaintiff or qui tam relator. The relator need not have been personally harmed by the defendant’s conduct. High Penalties The False Claims Act can result in very high monetary penalties. A person who violates the act must repay three times the amount of damages suffered by the government plus a mandatory civil penalty (a penalty from $5,500 to $11,000 per claim). The maximum criminal penalty for false or fraudulent claims is a maximum of 10 years of imprisonment. The 1986 amendments imposed civil liability on those criminally guilty under the FCA. The top five FCA settlements were with HCA, the Tennessee-based healthcare corporation — for $731 million in December 2000 and $631 million in June 2003. Rounding out the top five settlements were TAP Pharmaceuticals for $559 million in October 2001, Abbott Labs for $400 million in July 2003, and Fresenius Medical Care for $385 million in January 2000. Considering Intent and Actions It is interesting to note that while the law looks at a defendant’s intent and actions when assessing if a FCA claim is valid, the complexity or ambiguity of Medicare rules — by themselves — generally will not ward off FCA liability. As stated in the Act’s legislative his-tory, “Those doing business with the Government have an obligation to make a limited inquiry to ensure the claims they submit are accurate.” The Supreme Court in Heckler v. Community Health Services 467 U.S. 51, 63 (1984) stressed that a participant in the Medicare program has “a duty to familiarize himself with the legal requirements for cost reimbursement.” Despite the tremendous complexity of Medicare, hospitals are still required to state in their Medicare cost reports that “I further certify that I am familiar with the laws and regulations governing the provision of health care services, and that the services identified in this cost report were provided in compliance with such laws and regulations.” In the Medicare context, false claims combined with a failure to read the rules, or to make sufficient inquiry into the meaning of complicated or unclear rules may suffice to establish a violation. Nevertheless, reasonably relied-upon but erroneous advice provided by authoritative program agency employees (e.g., Health Care Financing Admini-stration personnel) may be relevant to a healthcare provider’s “knowledge” of the falsity of its claims, as well as to “causation” of damages. (For clearer examples of problematic billing practices under the FCA, see table 3.) What Constitutes a Claim? How should dermatologists account for the potential liability the FCA might impose on them? First, dermatologists should assess their practices using a public knowledge test. For example, would a question of fraud arise if the federal authorities knew about a practice? Particular potential problem areas include: nurses and residents performing services a provider bills under his own number, billing for pathology services another provides (for example, getting “wet readings” and then billing as if you read the slides), upcoding, and having surgical services, such as excision and reconstruction, billed separately (based on timing or different providers) just to maximize revenue. Secondly, if a suit arises, then the claim it pertains to must be analyzed based on the following criteria: 1. Did the claim involved federal payments, cost the federal government money, and was false? 2. What federal regulation was transgressed in order to established the claim? 3. Did the provider certify that the claim was true and had fraudulent intent? 4. Was the claim filed within the statute of limitations. For example, was it filed within 6 years of when the false claims were made, or was the claim made within 3 years of when the government learned of the False Claims Act violation, whichever is later (but, in any event, not more than 10 years after the false claims)? Serious Matter The FCA is a matter that the government takes seriously.2,3,4 The average doctor in private practice will likely not be subject to an FCA claim. While the FCA looks daunting, if one’s intent is to help a patient and there is evidence of fraud or egregious attempts at engorgement, the government or “whistleblower” will likely not pursue a provider.
Combating Fraud and Abuse
H ow can you protect yourself against claims of fraud and abuse? Are you engaging in fraudulent behavior and you don’t even know it? What constitutes a false claim? Everyone is against fraud and abuse in the provision of medical care, but policing and prosecuting fraud and abuse remain controversial and complicated. In this article, I’ll answer the questions posed above and give you an all-around better understanding of the False Claims Act and how it applies to healthcare claims. Three Main Laws Before I answer these questions, let me first give you some background on the main laws used for combating fraud and abuse. There are three main federal laws that are used to combat fraud and abuse — the False Claims Act, the Anti-Kick Back Statute and the Stark law. Their provisions are compared in Table 1, and in upcoming columns I will review each law. However, this column will focus mainly on the False Claims Act because it is the oldest act. History of the False Claims Act The False Claims Act (FCA) first passed in 1863 to fight fraud by government contractors. It imposes civil liability on any person or entity that submits a false or fraudulent claim for payment to the United States government (Table 2). The FCA also includes an ancient legal device called a “qui tam” provision that allows private citizens to bring suit (from a Latin phrase meaning “he who brings a case on behalf of our Lord the King, as well as for himself”). It was updated by the False Claims Amendments Act of 1986, which was followed by a large increase in FCA claims, in particular against entities involved with health care. Under the FCA, it is also improper to cause someone else to submit a false claim. For example, if a doctor provides false information to a medical supplier, who in turn bills the government based on that false information, the doctor is liable because his actions resulted in the submission of a false claim. The False Claims Act provides that an individual, often referred to as a “whistleblower,” who has information relating to a person or entity who is submitting false claims to bring a suit on behalf of the government, and to usually a 10% share in the damages recovered as a result of the suit. These are referred to as qui tam suits. The whistleblower who brings the case is called a qui tam plaintiff or qui tam relator. The relator need not have been personally harmed by the defendant’s conduct. High Penalties The False Claims Act can result in very high monetary penalties. A person who violates the act must repay three times the amount of damages suffered by the government plus a mandatory civil penalty (a penalty from $5,500 to $11,000 per claim). The maximum criminal penalty for false or fraudulent claims is a maximum of 10 years of imprisonment. The 1986 amendments imposed civil liability on those criminally guilty under the FCA. The top five FCA settlements were with HCA, the Tennessee-based healthcare corporation — for $731 million in December 2000 and $631 million in June 2003. Rounding out the top five settlements were TAP Pharmaceuticals for $559 million in October 2001, Abbott Labs for $400 million in July 2003, and Fresenius Medical Care for $385 million in January 2000. Considering Intent and Actions It is interesting to note that while the law looks at a defendant’s intent and actions when assessing if a FCA claim is valid, the complexity or ambiguity of Medicare rules — by themselves — generally will not ward off FCA liability. As stated in the Act’s legislative his-tory, “Those doing business with the Government have an obligation to make a limited inquiry to ensure the claims they submit are accurate.” The Supreme Court in Heckler v. Community Health Services 467 U.S. 51, 63 (1984) stressed that a participant in the Medicare program has “a duty to familiarize himself with the legal requirements for cost reimbursement.” Despite the tremendous complexity of Medicare, hospitals are still required to state in their Medicare cost reports that “I further certify that I am familiar with the laws and regulations governing the provision of health care services, and that the services identified in this cost report were provided in compliance with such laws and regulations.” In the Medicare context, false claims combined with a failure to read the rules, or to make sufficient inquiry into the meaning of complicated or unclear rules may suffice to establish a violation. Nevertheless, reasonably relied-upon but erroneous advice provided by authoritative program agency employees (e.g., Health Care Financing Admini-stration personnel) may be relevant to a healthcare provider’s “knowledge” of the falsity of its claims, as well as to “causation” of damages. (For clearer examples of problematic billing practices under the FCA, see table 3.) What Constitutes a Claim? How should dermatologists account for the potential liability the FCA might impose on them? First, dermatologists should assess their practices using a public knowledge test. For example, would a question of fraud arise if the federal authorities knew about a practice? Particular potential problem areas include: nurses and residents performing services a provider bills under his own number, billing for pathology services another provides (for example, getting “wet readings” and then billing as if you read the slides), upcoding, and having surgical services, such as excision and reconstruction, billed separately (based on timing or different providers) just to maximize revenue. Secondly, if a suit arises, then the claim it pertains to must be analyzed based on the following criteria: 1. Did the claim involved federal payments, cost the federal government money, and was false? 2. What federal regulation was transgressed in order to established the claim? 3. Did the provider certify that the claim was true and had fraudulent intent? 4. Was the claim filed within the statute of limitations. For example, was it filed within 6 years of when the false claims were made, or was the claim made within 3 years of when the government learned of the False Claims Act violation, whichever is later (but, in any event, not more than 10 years after the false claims)? Serious Matter The FCA is a matter that the government takes seriously.2,3,4 The average doctor in private practice will likely not be subject to an FCA claim. While the FCA looks daunting, if one’s intent is to help a patient and there is evidence of fraud or egregious attempts at engorgement, the government or “whistleblower” will likely not pursue a provider.
H ow can you protect yourself against claims of fraud and abuse? Are you engaging in fraudulent behavior and you don’t even know it? What constitutes a false claim? Everyone is against fraud and abuse in the provision of medical care, but policing and prosecuting fraud and abuse remain controversial and complicated. In this article, I’ll answer the questions posed above and give you an all-around better understanding of the False Claims Act and how it applies to healthcare claims. Three Main Laws Before I answer these questions, let me first give you some background on the main laws used for combating fraud and abuse. There are three main federal laws that are used to combat fraud and abuse — the False Claims Act, the Anti-Kick Back Statute and the Stark law. Their provisions are compared in Table 1, and in upcoming columns I will review each law. However, this column will focus mainly on the False Claims Act because it is the oldest act. History of the False Claims Act The False Claims Act (FCA) first passed in 1863 to fight fraud by government contractors. It imposes civil liability on any person or entity that submits a false or fraudulent claim for payment to the United States government (Table 2). The FCA also includes an ancient legal device called a “qui tam” provision that allows private citizens to bring suit (from a Latin phrase meaning “he who brings a case on behalf of our Lord the King, as well as for himself”). It was updated by the False Claims Amendments Act of 1986, which was followed by a large increase in FCA claims, in particular against entities involved with health care. Under the FCA, it is also improper to cause someone else to submit a false claim. For example, if a doctor provides false information to a medical supplier, who in turn bills the government based on that false information, the doctor is liable because his actions resulted in the submission of a false claim. The False Claims Act provides that an individual, often referred to as a “whistleblower,” who has information relating to a person or entity who is submitting false claims to bring a suit on behalf of the government, and to usually a 10% share in the damages recovered as a result of the suit. These are referred to as qui tam suits. The whistleblower who brings the case is called a qui tam plaintiff or qui tam relator. The relator need not have been personally harmed by the defendant’s conduct. High Penalties The False Claims Act can result in very high monetary penalties. A person who violates the act must repay three times the amount of damages suffered by the government plus a mandatory civil penalty (a penalty from $5,500 to $11,000 per claim). The maximum criminal penalty for false or fraudulent claims is a maximum of 10 years of imprisonment. The 1986 amendments imposed civil liability on those criminally guilty under the FCA. The top five FCA settlements were with HCA, the Tennessee-based healthcare corporation — for $731 million in December 2000 and $631 million in June 2003. Rounding out the top five settlements were TAP Pharmaceuticals for $559 million in October 2001, Abbott Labs for $400 million in July 2003, and Fresenius Medical Care for $385 million in January 2000. Considering Intent and Actions It is interesting to note that while the law looks at a defendant’s intent and actions when assessing if a FCA claim is valid, the complexity or ambiguity of Medicare rules — by themselves — generally will not ward off FCA liability. As stated in the Act’s legislative his-tory, “Those doing business with the Government have an obligation to make a limited inquiry to ensure the claims they submit are accurate.” The Supreme Court in Heckler v. Community Health Services 467 U.S. 51, 63 (1984) stressed that a participant in the Medicare program has “a duty to familiarize himself with the legal requirements for cost reimbursement.” Despite the tremendous complexity of Medicare, hospitals are still required to state in their Medicare cost reports that “I further certify that I am familiar with the laws and regulations governing the provision of health care services, and that the services identified in this cost report were provided in compliance with such laws and regulations.” In the Medicare context, false claims combined with a failure to read the rules, or to make sufficient inquiry into the meaning of complicated or unclear rules may suffice to establish a violation. Nevertheless, reasonably relied-upon but erroneous advice provided by authoritative program agency employees (e.g., Health Care Financing Admini-stration personnel) may be relevant to a healthcare provider’s “knowledge” of the falsity of its claims, as well as to “causation” of damages. (For clearer examples of problematic billing practices under the FCA, see table 3.) What Constitutes a Claim? How should dermatologists account for the potential liability the FCA might impose on them? First, dermatologists should assess their practices using a public knowledge test. For example, would a question of fraud arise if the federal authorities knew about a practice? Particular potential problem areas include: nurses and residents performing services a provider bills under his own number, billing for pathology services another provides (for example, getting “wet readings” and then billing as if you read the slides), upcoding, and having surgical services, such as excision and reconstruction, billed separately (based on timing or different providers) just to maximize revenue. Secondly, if a suit arises, then the claim it pertains to must be analyzed based on the following criteria: 1. Did the claim involved federal payments, cost the federal government money, and was false? 2. What federal regulation was transgressed in order to established the claim? 3. Did the provider certify that the claim was true and had fraudulent intent? 4. Was the claim filed within the statute of limitations. For example, was it filed within 6 years of when the false claims were made, or was the claim made within 3 years of when the government learned of the False Claims Act violation, whichever is later (but, in any event, not more than 10 years after the false claims)? Serious Matter The FCA is a matter that the government takes seriously.2,3,4 The average doctor in private practice will likely not be subject to an FCA claim. While the FCA looks daunting, if one’s intent is to help a patient and there is evidence of fraud or egregious attempts at engorgement, the government or “whistleblower” will likely not pursue a provider.
