By Russell Paul
Liability under the federal False Claims Act occurs where someone (a person or a corporate entity):
(1) knowingly presents (or causes to be presented) a false or fraudulent claim to the Federal Government for payment;
(2) knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim for payment made on the Federal Government;
(3) conspires with others to commit a violation of the False Claims Act; or
(4) knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay money or transmit property to the Federal Government.
The essence of a False Claim is that someone is attempting to cheat the Government out of its money. There are many different ways this can occur, and False Claims Act violations are particularly, but not exclusively, prevalent in the healthcare field. The following are general categories of False Claims Act violations in the healthcare field:
A. False Billing
- Billing for services that are not medically necessary, including those services that are not justified by the patient’s diagnosis or are more than the patient actually needs.
- Billing for services that were not rendered or for products that were not delivered at all or were delivered of a lesser quality than was promised.
- Upcoding a service provided to a service with a higher reimbursement level, which is a misrepresentation of the service rendered.
- Unbundling services that are automatically performed and billed as a panel, group or set, into claims for individual services because the government will pay more in total that way.
- Billing for the same service more than once (duplicate billing).
- Falsifying patient medical records to support a claim for payment, including adding information after the fact, changing dates and forging required signatures of medical providers.
- Increasing the number of units of service rendered.
- Splitting a bill for a procedure that occurred in a single day over a period of days in order to have the procedure paid.
- Billing Medicare more than other private health insurers are billed.
- Submitting bills to Medicare that are the responsibility of other insurers under the Medicare Secondary Payer rule.
B. False Cost Reports
Not only do Medicare and Medicaid compensate nursing homes, hospitals, and certain other healthcare providers for patient care, they also pay for additional costs, such as overhead, capital improvement, and financing. To be compensated for a percentage of these additional costs, providers submit a claim to the government by filing cost reports at the end of each year.
The amount due to the government pays for these additional costs, and the amount is derived from a formula that is based on the costs incurred in rendering patient care. Providers are instructed to allocate their costs into “cost centers” in order to distinguish patient care costs from other costs.
After allocating costs into cost centers, providers must apportion the patient care costs among Medicare beneficiaries, Medicaid beneficiaries, and other patients with different insurance. If a provider knowingly inflates the overall additional costs incurred, falsifies the types of costs incurred, or apportions the costs among the various health insurers incorrectly, the provider may be liable under the False Claims Act.
The federal Anti-Kickback Statute (“AKS”), 42 U.S.C. § 1320a-7b, makes it a criminal offense to “knowingly and willfully” offer, pay, solicit, or receive any remuneration to induce, or in return for, referrals of items or services paid for by a Federal healthcare program. If any purpose of the remuneration is to induce or reward the referral or recommendation of business payable in whole or in part by a federal healthcare program, the AKS is violated. In 2010, under the Patient Protection and Affordable Care Act, Congress amended the AKS to expressly clarify that a violation of the AKS constitutes a “false or fraudulent” claim under the False Claims Act.
D. Stark Violation
The Stark law, 42 U.S.C. § 1395nn, is also known as the Physician Self-Referral Law. If a physician (or immediate family member) has a direct or indirect financial relationship (ownership or compensation) with an entity that provides any of certain designated health services (“DHS”), the physician cannot refer patients to the entity for DHS and the entity cannot submit a claim to Medicare for such DHS unless the financial arrangement fits in a statutory or regulatory exception.
The Stark law was intended to prohibit physicians from profiting (actually or potentially) from their own referrals. The Stark Law sanctions improper physician referrals by providing penalties for illegal referrals. It is a strict liability statute, i.e. there is no need to show knowledge or intent. For example, a hospital that overpays doctors to serve as hospital medical directors in exchange for those doctors referring patients to the hospital violates the Stark Law. A violation of the Stark law can be the basis for False Claims Act liability if it is found that claims for payment from Medicare or Medicaid arising from these Stark violations were submitted “knowingly.”