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False Claims Act Penalties: Civil and Criminal Penalties

The United States Government is making a strong commitment to investigate and target fraud within federal programs.There has been a significant financial investment by the federal government to strength the law enforcement agencies that are tasked with fighting fraud and waste in the Medicare and Medicaid programs. The government has made it clear that they would rather spend funds tracking down violators than paying fraudulent claims. One of the tools in the government’s arsenal is the False Claims Act. Although the False Claims Act is not new, its enforcement and penalties have increased in recent years. The False Claims Act protects the federal government against people and entities that submit false or fraudulent claims for payment under federal programs.

Investigations and prosecutions for violations of health care fraud are among the most prevalent actions taken by the federal government under the False Claims Act. The False Claims Act provides that “any person who knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval” violates the act. Also, “any person who knowingly makes, uses, or causes to be made a false record or statement that is material to a false or fraudulent claim” violates the act. (31 USC § 3729) In addition, any medical provider that retains money paid by the federal government that amounts to an overpayment or an error in payment can be found to have violated the False Claims Act.

Federal False Claims Act Penalties

Civil Monetary Penalties, Damages, and Expenses

The penalties for violating the federal False Claims Act can be financially devastating to a medical provider or a health care entity. The penalties are assessed on a per claim basis. Each false claim carries its own penalty. First, each violation or false claim carries a civil monetary penalty (CMP) of no less than $10,781 and not more than $21,563. In addition to CMP, damages are calculated by taking the amount the medical provider received from the federal government for the false claim and multiplying that amount by three. In addition to the civil monetary penalties (CMP) and the damages, the medical provider is also liable for the costs to the federal government for bringing the civil action. Because these civil monetary penalties, damages and costs are assessed on each false claim it is possible that the final tally can run into the millions, if not billions, of dollars.

Exclusion from CMS

In addition to the civil monetary penalties, damages, and expenses, a medical provider may be excluded permanently from the Medicare and Medicaid programs. Being excluded from government programs or forced into a Corporate Integrity Agreement (CIA) can cripple, if not wipe out, a health care provider. Without the ability to treat the 55 million Medicare and Medicaid beneficiaries, it is difficult for a medical provider to survive. The Office of Inspector General (OIG) publishes the excluded individuals and entities names on their website. If an individual is excluded from the Medicare program, no other health care entity is able to hire and/or bill for services rendered by the individual provider. This punishment can be career ending. Sometimes, as part of a settlement with the government, a provider or healthcare entity can avoid permanent exclusion by agreeing to pay fines and by agreeing to continuous monitoring by the federal government for a period of years.

Criminal Penalties Against Individuals

Finally, violations of the False Claim Act can bring criminal penalties to the individuals involved in the violation. Because a corporation cannot be put in prison, the federal government will go after the individuals that control the organization. Examples of individuals can be criminally prosecuted include the CEO, CFO and Medical Director of the healthcare entity. The criminal penalties for submitting false claims to the federal healthcare program can be up to five years in prison plus a fine of $25,000. (42 USC 1320a-7b)

Given the extreme nature of the penalties, fines, damages, and punishments, it is imperative that a medical provider who knows or suspects they are under investigation for a False Claims Act violation retain an attorney to help protect and guide them through this process. There is no room for error and the federal government’s resources for prosecution are plentiful. It is important to choose an attorney that is familiar with the False Claim Act and the government’s methods of prosecuting and settling actions brought for violations. Chapman Law Group is experienced in defending against actions brought for violations of the False Claims Act. We can help medical providers identify possible violations and can help providers explore their options if an action has been filed against them.

Chart: Health Care Fraud Comparison

Chapman Law Group  is a professional health care law litigation firm, with offices in Michigan and Florida (Sarasota & Miami). For over 25 years Chapman Law Group has defended the rights of health care professionals, providers and corporations involved in the delivery of health care at all levels. Chapman Law Group handles claims involving False Claims; Anti-kickback; Stark; Civil Monetary Penalty; DEA Controlled Substance Act violations; Compliance related issues including Medicare, Medicaid and private pay; OIG investigations; Audits of all types; Professional Licensing, State and Federal Criminal Charges; Civil and Administrative actions; Peer Review and Credentialing issues; HIPAA compliance; and much more involving health care professionals. We believe the dedicated men and women who provide health care deserve an exceptional defense when their integrity and actions are called into question.