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The False Claims Act: A Gold Mine for the Federal Government And Whistleblowers

The Federal False Claims Act (“FCA”) creates civil liability for entities that falsely or fraudulently contract with the government to provide services or goods in exchange of federal funds. Since 1986, the Department of Justice (“DOJ”) has recovered around $34 billion from the healthcare industry under the FCA. In fiscal year 2016 alone, nearly $2.6 billion was recovered in health care cases. The primary reason for the massive recoveries is a provision that allows “whistleblowers” to share as much as 30% of the treble damages and mandatory penalties awarded under the law.

The False Claims Act imposes civil liability on any person who: (i) knowingly presents or causes to be presented a false or fraudulent claim; or (ii) knowingly makes, uses, or causes to be made or used a false record or statement material to a false or fraudulent claim. An entity that violates the FCA is liable to the government for three (3) times the amount of actual damages the government sustains in addition to a civil penalty ranging between $10,957 and $21,916 per claim.

To avoid False Claims Act liability health care providers need to implement compliance programs that monitor areas of risk such as performing unnecessary or excessive services, upcoding, failure to document patient care, worthless services, retention of an overpayment from a government health care program and violations of the Anti-Kickback Statute and Stark Act.

During the past three (3) years, the DOH has been extremely active investigating Hospices and Home Health Agencies for violations of the False Claims Act. Under Medicare Part A payments will be made only if the individual’s attending physician and/or the medical director certify in writing that the services are medically necessary.

Physician certifications must be accompanied by clinical information and other documentation. Under Medicare Part A, a hospice needs to be certain that the physician’s clinical judgment can be supported by clinical information and other documentation that provide a basis for the certification of six (6) months or less if the illness runs its normal course. A signed certification, absent a medically sound basis that supports the clinical judgment, is not sufficient for application of the hospice benefit under Medicare.

In 2016, Evercare Hospice and Palliative care settle for $18 million with the DOH to resolve FCA allegations that it submitted claims to Medicare for patients not eligible for hospice because they were not terminally ill, medical records did not support terminal prognosis and Evercare allegedly discouraged physicians from discharging ineligible patients. In 2014, Amedisys settle for $150 million for allegedly billing Medicare for nursing and therapy services that were medically unnecessary or provided to patients who were not homebound, and otherwise misrepresented patients’ conditions to increase Medicare payments.

Therefore, in order to avoid liability under the FCA hospice and home health providers are obligated to:

  1. comply with applicable regulatory requirements in order to be reimbursed by Medicare;
  2. be knowledgeable of the statutes, regulations, and guidelines for coverage of Medicare services; and
  3. inform its employees and medical directors on the requirements for Medicare coverage of hospice and home health care.

Juan C. Santos is a Senior Associate of CLG. Prior to joining the firm, Juan obtained a Master’s in Healthcare Law from Loyola University of Chicago. Juan practices in the areas of business organization, compliance, physician agreements, personal service agreements, non-competition agreements, non-disclosure agreements, mergers, acquisitions, and joint ventures, corporate and business counseling, professional licensing, Medicare/Medicaid issues, False Claims Act, AKS/Stark, medical management and virtually all issues facing the modern healthcare professional.