Legal Alerts

The False Claims Act & Why It Matters to Healthcare Providers

(October 23, 2019) - The False Claims Act (FCA) is designed to deter abuse and fraud of government benefits or contracts by private parties. Whenever a person or company contracts to provide services to the government or government beneficiaries, the FCA imposes liability on any contractor or business that knowingly presents or causes to be presented a false or fraudulent claim for payment or approval, or that knowingly makes or uses a false statement or record to support a false or fraudulent claim. 31 USC § 3729(a)(1).

When a healthcare provider contracts with the federal and state governments to treat Medicaid and Medicare patients for reimbursement, the healthcare provider’s billing practice is governed by the FCA and its state law counterparts. When a healthcare provider or the provider’s practice submits claims to Medicaid or Medicare for reimbursement, the healthcare provider is liable for potential criminal and civil penalties to ensure that the billing submissions are true, accurate, and in compliance with the applicable service limits.

In plain language, this means accurately and truly reporting the services performed for a patient on the date of service they were performed and ensuring that those services were actually performed, properly performed (i.e. supported by medical necessity), and supported by documentation (i.e. medical records, diagnostic imaging studies, invoices for anesthetic or analgesic supplies, and practice calendars and day sheets).

Importantly, a healthcare provider does not have to intentionally defraud the government to be punished by the FCA. Instead, a healthcare provide can be liable if the provider knew or should have known that the claim was false.

Examples of “should have known” liability include such situations as: (1) a healthcare provider completely ignorant of his billings practice, whether the ignorance was negligent or intentional; (2) a healthcare provider who notices inaccurate billing but fails to take action to correct past and future claims (for example, if a provider notices his practice is billing more anesthesia time than is possible for his practice to actually perform in a day, but fails to adjust the billings practice or adjust prior claims to reflect the time accurately); or (3) a healthcare provider who observes consistent trends in billing submissions, such as up-coding or unbundling, but fails to take action.

Notably the absence of any type of compliance program may also be considered in determining whether a violation of the FCA has occurred.

Healthcare providers should also know that they cannot insulate themselves from liability by hiring third parties to administer their billings practice. A healthcare provider does not actually have to submit the claim to be liable; instead, as the contracting party to provide services to government beneficiaries, a healthcare provider is liable for the submitted claim even if the claim is submitted by third parties, such as staff or a billing contractor.

For each violation (i.e. a billing claim determined to be false), a healthcare provider is subject to a $5,000 to $10,000 fine, and must pay back all sums received as a result of improperly submitted claims with an added multiplier which may be as much as three times the principle sum. Further, providers may be excluded from participation in Medicare and Medicaid or may be required to enter into a Corporate Integrity Agreement.

The civil liability for healthcare providers under the FCA can be incredibly costly. To ensure your practice is compliant, you should engage competent legal counsel to review your billing processes. Visit our Healthcare Law Practice page to find an attorney in your area. 

You can also read our earlier alert "Why Every Healthcare Provider Should Be Concerned About Potential Healthcare Fraud Allegations." Look out for our next Healthcare Law client alert "Common Billing Patterns That Result in FCA Investigation & Litigation."


Justin May, Associate

Carrie E. Meigs, Partner

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