The False Claims Act makes it illegal for anyone or any entity to deliberately make a false record or file a false claim in connection with any federal healthcare program. In addition, the Act imposes liability on any person or entity that knowingly submits, or causes to submit, false claims for payment.
The United States made over $20 billion in recoveries under the False Claims Act since 1986, including $3.7 billion in 2012 alone. Billions of these recoveries can be attributed to healthcare cases under the False Claims Act.
According to Ileana Hernandez of Manatt, while some similarities exist between the federal Anti-Kickback Statute and the FCA, they are not interchangeable. “The federal anti-kickback statute is focused on providing financial incentives to induce referrals, and there’s a lower standard for this. But the False Claims Act is not so much about the referral, but rather whether claims are submitted in knowing violation of the federal program,” she said.
“The FCA has a higher standard in that it’s not enough to simply show that you were paid in violation of the federal program. Instead, you have to show that you submitted a false claim with the intent to defraud,” said Hernandez.
“There are also different civil penalties, which are very important in healthcare cases because they can be applied up to three times the actual damages sustained by the government. So when you take overbilling, double billing, or other improper claims, the civil penalties that apply under the FCA are multiplied by three times what’s owed to the government.”
“A lot of healthcare companies are now doing FCPA-style bookkeeping. For example, they are having their employees sign off on their personal income tax returns concerning any gifts given to doctors with respect to medical equipment or other services,” said Hernandez. “This is because many healthcare companies are aware that if their employees fail to disclose the income properly, the company may be fined up to $10,000 per transaction.”
“What’s also important for employers is that they monitor what type of activities their employees engage in outside of work or on their own time, especially with respect to speaking to doctors because it’s important for employers to establish that they have a compliance program within the company,” said Hernandez.
“The key message for companies is to make sure they are aware of how their actions affect not only them but also the patients they serve and the government programs that provide funding,” said Hernandez. Additionally, companies should ensure they have compliance programs to avoid violations of the federal False Claims Act.
“Employers need to be aware of what type of gifts their employees can give and should monitor any activity outside of work,” said Hernandez. “It’s also important for employers to understand that while many companies may not know about a violation, it’s still going to be a violation for the company if it does find out through any means.”
In some cases, employees may not even realize they are breaching false claims. For example, in one of the first whistleblower lawsuits involving a major hospital chain, the whistleblower alleged that the company was billing for services that were never performed, violating the False Claims Act and Anti-Kickback Statute.
“So it’s important to understand that even if your employees don’t know about it, if they were aware of the violation, then the company still has liability,” said Hernandez.
“It’s also important to stress how broad ‘knowingly’ is under the False Claims Act, especially for healthcare companies. I think hospitals and other healthcare providers have a big challenge in that the standard is so broad,” said Hernandez. “If your employees know, suspect, or have reason to believe that information being provided to the government is misleading, false, or fraudulent, then you’re going to be liable for False Claims Act violations.”