The False Claims Act is located in the set of books known as the Untied States Codes at 31 U.S.C. § § 3729-3733. The False Claims Act dates to the Civil War and was enacted to provide the federal government a means of filing suit against anyone who presented a claim for payment to the federal government, when such person did not have a right to payment.

The FCA originally protected the Government from being overcharged or sold shoddy military goods or services, including fraudulent billing for services never performed. With the passage of Medicare in 1965, the Department of Health and Human Services was authorized by Congress to develop rules relating to the Medicare program. HHS delegated to CMS and the OIG to develop additional regulations which must be strictly followed. Today, the FCA not only prohibits over-charging or billing Medicare for shoddy or defective goods and services, but also includes cases in which there is some defect in adherence to the rules, even if the goods or services were life-saving to the patient, and reasonably priced. This is because HHS, CMS and the OIG take the position that full compliance with all federal rules and regulations is a prerequisite to entitlement to submit a claim for payment. This includes not only Stark Law and the Anti-Kickback Statute, (dealing with the rules for referrals between providers who also have some financial relationship) as well as the various laws regarding proper coding and documentation.

If a provider has failed to comply with all regulations, however technical the failure may be, the claim may be deemed False. As the OIG website warns, “It is illegal to submit claims for payment to Medicare or Medicaid that you know or should know are false or fraudulent.” Filing false claims may result in fines of up to three times the programs' loss plus $11,000 per claim filed. Under the civil FCA, each instance of an item or a service billed to Medicare or Medicaid counts as a claim, so fines can add up quickly. The fact that a claim results from a kickback or is made in violation of the Stark law also may render it false or fraudulent, creating liability under the civil FCA as well as the AKS or Stark law.

False Claims Act cases are often highly defensible, because the FCA generally requires a “knowing” violation. Juries are frequently sympathetic to the defense argument that while a defendant has come to recognize his conduct violated some rule, he did not know it at the time of the billing. Nevertheless, under the civil FCA, no specific intent to defraud is required. The civil FCA defines "knowing" to include not only actual knowledge but also instances in which the person acted in deliberate ignorance or reckless disregard of the truth or falsity of the information. The recent PPACA legislation also amended the FCA to include a provision that a person need not know his conduct was unlawful, but instead that he knowingly engaged in the conduct which adds up, or amounts to unlawful conduct.

The civil FCA contains a whistleblower provision that allows a private individual to file a lawsuit on behalf of the United States and entitles that whistleblower to a percentage of any recoveries. Whistleblowers could be current or ex-business partners, hospital or office staff, patients, or competitors.

There also is a criminal FCA (18 U.S.C. § 287). Criminal penalties for submitting false claims include imprisonment and criminal fines. Physicians have gone to prison for submitting false health care claims. OIG also may impose administrative civil monetary penalties for false or fraudulent claims.

The federal government often does not distinguish between behavior which is “purely fraudulent,” such as phony or inflated billing, and billing which is purely technically contrary to regulations. A physician may be subjected to FCA litigation, even if the services were actually necessary, and reasonably priced.

There are a number of defenses to False Claims Act and Whistleblower cases. A defendant must exercise great caution in selecting counsel who is knowledgeable in these defenses. Martin Merritt is recognized as one of the nation’s leading lawyers in the field of False Claims Act Defense tactics, and is a nationally recognized Stark Lawyer located in Dallas, Texas. If you would like to schedule a free consultation, please contact us.