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. Additionally, the civil monetary penalties increased to $250,00 and $500,000 if convicted of a felony false 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.

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 inadvertently 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.
    • 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.
    • 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.
    • 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; Healthcare Common Procedure Coding System (“HCPCS”) codes; and International Classification of Disease (“ICD-9 or ICD-10”) codes. State and Federal governments scale payments based off these codes. Assigning a higher code for treatment rendered can be a violation.
    • 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. Therefore, providers must always consult with the on-line 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 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.

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