The Federal False Claims Act

Doctor Reviewing Information on a Laptop Computer

The False Claims Act provides that a person shall not present a fraudulent claim for a government payment, conspire to do so, or receive funds in connection with fraudulent activity. Therefore, physicians and other health providers who submit false claims to Medicare / CMS may be liable under the False Claims Act. 

However, providers are not liable under the False Claims Act for simply submitting a false claim to the government. Providers are only liable under the False Claims Act if they submit false claims with knowledge of the falsity. Knowledge of false information is defined as:

    1. Actual knowledge
    2. Deliberate ignorance of the truth or falsity of the information
    3. Reckless disregard for the truth or falsity of the information

What Are the Federal False Claims Act Penalties?

As of August 1, 2016, the penalty for violating the federal false claims act has increased to $10,781-$21,563, plus triple the government’s damages and reimbursement of attorney’s fees and costs. The new penalty applies to claims submitted after November 2, 2015. Penalties are assessed on a per claim basis and each false claim carries its own penalty. 

Damages are calculated by taking the amount the provider received from the government for the false claim and multiplying that amount by three. In addition to treble damages and steep penalty fees, the government can also recover the cost of bringing the false claim action against the provider.

Violation of the false claims act is a felony, punishable up to 5 years in prison per claim. Providers can face both criminal charges and civil action for false claims act violations. If a provider is convicted of a False Claims Act violation, the OIG may exclude the provider from participating in federal programs. The provider may also face suspension or revocation of their medical license by the state medical board.

What Are the Types of False Claims Act Violations?

There are numerous ways in which a health care provider could be subject to fines, penalties, and even criminal prosecution under the Federal and State False Claims Act. Providers who are unaware of the pitfalls of the Federal and State False Claims Act statutes can find themselves inadventently subject to large civil monetary penalties and possibly criminal prosecution.

Potential violations include:

    • Services Not Rendered: Billing for services that were not performed on a patient is a violation of the False Claims Act.
    • Ghost Patients: Submitting claims for services, tests or medical devices to a patient who does not exist or who the provider has no physician-patient relationship with is a violation of the False Claims Act.
    • Kickbacks 42 U.S.C. §1328-7b(b): Receiving money, property or remuneration to induce or reward the referral of patients or health care services payable by the government including Medicare and Medicaid can be a violation of the False Claims Act.
    • Unbundling: Billing tests or treatment separately where there is a procedure code (ICD-9 or ICD-10) that covers the service in order to receive increased reimbursement.
    • Up-Coding Services: This includes AMA Current Procedural Terminology (“CPT”) codes; Evaluation and Management (“E&M”) codes; and International Classification of Disease (“ICD-9 or ICD-10”) codes. States and Federal governments scale payments based off of these codes. Assigning a higher code for treatment rendered can be a violation of the False Claims Act.
    • Lack of Medical Necessity: This includes performing additional treatments or tests which are not clinically necessary in order to bill government programs more.
    • Research Grant Fraud: This includes falsifying research data and results, falsifying a research grant application in order to secure a grant, over-billing costs and other expenses associated with the grant, using grant money for other unrelated research, and improper conflicts of interest by the principal investigators.
    • Stark and Anti-Kickback 42 U.S.C. §1395nn and §1396b: Generally a physician is prohibited from making any referral to a person or entity in which the physician has a financial interest. This is generally referred to as physician self-referral. CMS is responsible for implementing a vast array of Stark rules and regulations. There are exceptions to Stark and an attorney skilled in Stark law can assist you in determining if you or your practice is engaging in prohibited conduct.
    • Utilization of Excluded Providers: When a provider submits a claim on behalf of a provider that is ineligible to bill Medicare and Medicaid, this can be a violation of the False Claims Act. This is why providers must always consult with the online HHS database of excluded persons and entities.
    • Insufficient Physician Supervision: Performing procedures without the required physician supervision pursuant to Medicaid, TriCare, and the Federal Employees Health Benefit Program conditions of participation.
    • Duplicate Billing
    • Accepting Money or Gifts From a Drug or Device Company

Health care providers need to be vigilant that their billing practices conform to CMS and other federal guidelines. An inadvertent error or procedural issue could lead to crippling fines and criminal penalties. Therefore, providers should seek guidance from a false claims act attorney to ensure that they are compliant with Federal and State regulations, including the False Claims Act.

What Are Some of the More Recent Examples of False Claims Act Violations?

    • A Miami-based developer of electronic health records software products and related services will pay $3.8 million to resolve allegations that it paid unlawful kickbacks to generate sales of its EHR products. The FCA is involved here, because the kickback payments rendered the claims, which were submitted by the developer for federal incentive payments under the Medicare and Medicaid Electronic Health Records Incentive Programs (a.k.a. the Meaningful Use Programs) and the Merit-Based Incentive Payment System (MIPS), false.
    • Two Orlando, Florida surgery centers are paying $3.4 million for FCA violations after being accused of submitting claims for kidney stone procedures that were not medically justified and for engaging in an illegal kickback arrangement.
    • Two men from Gulf Stream, Florida and Fort Lauderdale, Florida agreed collectively to pay at least $4 million to resolve FCA allegations of engaging in schemes to generate prescriptions for compounded drugs, then referring those prescriptions to pharmacies in exchange for illegal kickbacks.
    • In May 2021, the University of Miami agreed to pay $22 million on allegations that it violated the FCA, by ordering medically unnecessary laboratory tests (for patients who received kidney transplants at the Miami Transplant Institute, which is operated by UM), then submitting false claims through both its lab and off-campus hospital-based facilities.

How Does the Standard of Care Play Into False Claims?

Violations of standard of care can be the basis for a false claim or false statement allegations, and the defense of these allegations proves more difficult. The concept of standard of care can be vague and left to interpretation; what constitutes the correct standard of care may vary from medical provider to medical provider. The difference between not providing a service and providing exceptional service may seem obvious, yet what about the levels of care in between?

Standard of Care is the level of care at which the average, prudent medical provider or health care entity in a community would practice; it is how similar practitioners and facilities would have managed the patient’s care under similar circumstances. Yet, this definition leaves much to interpretation. Who is an “average, prudent provider”? How is “community” defined? What is a “similar circumstance”?

Also, the correct level of care or treatment varies among medical providers, and because of rapid innovation, it changes over time. Experienced healthcare-based criminal law defense attorneys must be able to understand the law that applies in addition to understanding how the medical industry operates and how medical care is delivered to patients. Traditional criminal defense attorneys, meanwhile, may not possess the knowledge and experience required to drill down to the root of the allegations and to explain the intention of the health care provider.

Many times, the delivery of health care is a collective effort on behalf of several, if not many, providers. Some medical services require a prescription or referral from another medical provider in order to show medical necessity. During health care fraud investigations, federal agents can probe into the different levels and layers of a patient’s care, and it is possible that criminal charges can be waged against several individual medical providers during the same investigation.

In order to provide quality defense against criminal health care fraud charges, it is imperative that the health law attorney understand how medical care is delivered. An experienced health care defense lawyer must be able to untangle the individual providers in a patient’s care and understand the dynamics of how they all fit together. Sometimes services that are considered “medically necessary” by one medical provider, may not be considered medically necessary to another, which is why medical expert testimony is crucial. Discretion is an important part of being a treating provider, and an experienced health care law defense attorney can help medical providers craft a criminal defense that is grounded in medical theory and practice. 

How Can Medical Coding Constitute a False Claim?

Sometimes, false claim and false statement allegations can be based on specific medical coding used for billing in the federal health care program. Without knowledge of CPT and ICD9/ICD10 coding guidelines, a criminal defense attorney cannot provide the highest level of quality representation needed to defend against health care fraud charges.

Sometimes, routinely upcoding certain procedures or not correctly bundling charges can lead to a false claim. The difference between one CPT and another can be obvious on the surface, but in reality it may not be so exact. Criminal violations normally require an intention to defraud. This intention can be found in knowingly committing fraud or reckless disregard for the truth.

With the many levels of health care delivery from patient care to billing to referrals among providers, there is much room for miscommunication and error. Just as medical practice is not an exact science, the billing of medical service is not always exact.

Criminal defense attorneys that specialize in health care fraud can make the difference between a sound defense and one that is lacking in detail and foundation. A traditional criminal defense attorney, on the other hand, may never have seen a claim form or an explanation of benefits (EOB), or may not know what an LCD (local coverage determination) or what Medicare Learning Network (MLN) matters contain.

Chapman Law Group: All the Experience You Expect from National False Claims Defense Attorneys

Our team of national healthcare-based criminal law attorneys includes a former Medicare attorney, a former Medicaid fraud prosecutor, and several attorneys with a master of laws degrees in health care law. Our false claims attorneys are exceptionally experienced in handling criminal and civil false claims act matters. Our False Claims Act attorneys can assist you in analyzing your policies and procedures to ensure that you avoid criminal and civil liabilities for False Claims Act violations.

If you find yourself under investigation for alleged false claims act violations, our False Claims Act attorneys will work aggressively to prevent the filling of charges, or defend you if charges have already been filed. While there may be no validity to the charges, the false claims act penalties and collateral consequences can be significant. Therefore, you need an experienced attorney who can handle all matters related to false claims allegations.

For 35 years, we have defended health care professionals accused of False Claim Act violations for health care providers across the U.S. Our False Claims Act attorneys are experienced in both civil and criminal False Claims Act violation, as well as state and DEA licensing, Medicare exclusions, and NPDB appeals

We serve physicians, pain management specialists, pharmacists, chiropractors, and other healthcare professionals accused of False Claim Act violations. Our four national offices are in:

We serve healthcare providers nationwide, from Chicago to Philadelphia, and from Houston to San Francisco. Contact us today and let us put our knowledge to work for you. 

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