False Claims Act Allegations: Is Your Practice At Risk?

Who reports False Claim Act violations in healthcare, and how can you protect yourself? We shine a light on the risks of billing fraud allegations and the best way to prevent them.

Woman reviewing False Claim Act Allegations.

Violating the federal False Claims Act (FCA), such as billing Medicare or Medicaid for services not rendered, is punishable by heavy financial penalties that can crush your medical practice.  Expect to pay fines that are three times the government’s losses plus an additional $11,000 per claim. Fortunately, understanding the risks of being reported can help keep you out of hot water.  Here are a few facts you need to know.

False Claim Act Whistleblowers (Relators) are Everywhere

In healthcare fraud cases, the people who report fraud are called “relators.” Relators don’t need direct involvement in the fraud — they just need to have first-hand knowledge and a willingness to report the bad behavior. False Claim Act relators are often billing managers, physicians, mid-level practitioners, and former practice employees.

The False Claims Act provides a financial incentive for reporting wrongdoing, allowing relators to collect a sizable percentage of the government’s recovery. When an individual files a complaint on behalf of the government, it’s known as a qui tam case. So, in addition to all the emotional reasons that someone might blow the whistle (moral affront, revenge against an employer), filing a qui tam report can bring a hefty monetary reward.

Meanwhile, the government tries to reduce the downside risks for persons who report fraud. When a relator files a False Claims Act suit under the United States’ name, he or she receives special protections. At first, the case is under seal, and the whistleblower remains anonymous. That anonymity eventually falls away once the case is out of seal. Nonetheless, the False Claims Act protects employees who report violations from discrimination, harassment, suspension, or termination of employment.

Whistleblowers Must Be Close to the Facts

Let’s say that an individual reads about alleged fraudulent activity—such as a friend’s rant on social media, a newspaper article, or an online review. Can he or she file a suit on that basis? The answer is no. Relators must be the original information source. Publicly available information cannot be the sole basis for bringing FCA action against medical practices and cannot be mentioned in the report.

False Claim Act Cases Don’t Always Move Forward

You’ve heard the saying, “You can’t fight City Hall,” implying that defending yourself against government actions is virtually impossible. Take heart: when a relator presents murky theories or unsubstantiated information, an experienced defense attorney can argue that government involvement isn’t necessary. If the U.S. Department of Justice (DOJ) agrees that the allegations lack merit, it will not pursue the case.

Even when the DOJ decides to intervene, the report still requires factual support. There is no guarantee that the government will prosecute the case. But even if the DOJ doesn’t want to get involved, the relator can still proceed with their lawsuit alone. 

If blatant fraud occurs at your practice, that doesn’t mean that every witness to the misconduct can file a qui tam action. The False Claims Act is considered a first-in-time, first-in-right statute. In other words, once an individual or government entity brings FCA action, further actions are barred under the Act. 

The Best Defense against False Claim Act Allegations: Compliance

False Claim Act allegations, if substantiated, can seriously harm or even destroy your business. Anyone with first-hand knowledge about your practice stands to gain if they observe and report violations. And keep in mind that while the FCA says the violations must be made “knowingly,” that includes not just willful flouting of the law. It also includes reimbursement claims that were reckless or deliberately ignorant concerning compliance. Does that make you feel like a sitting duck?

Maintaining compliance—and being systematic and transparent about your efforts—will deter such allegations and render them unlikely to stick. So, where do you start? In this tricky regulatory environment, we recommend competent, experienced legal counsel to help manage risk, keep you compliant in all areas, and protect your practice.

Jackson LLP’s dedicated healthcare attorneys understand the nuances of fraud, waste, and abuse prevention and compliance. Our firm can help identify risks and noncompliant practices, establish your comprehensive compliance program, train your staff, and monitor your ongoing compliance. To schedule your initial complimentary consultation, call our firm’s switchboard at (312) 985-6484 or click the button below to book online.

This blog is made for educational purposes and is not intended to be specific legal advice to any particular person. It does not create an attorney-client relationship between our firm and the reader and should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.

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