Maintaining compliance with laws and regulations is of paramount importance for those working in the health care industry and for the overall success of health care organizations. The consequences of non-compliance can be severe, leading to legal repercussions, financial penalties, reputational damage, and compromised patient care. One critical piece of legislation that plays a significant role in ensuring health care compliance is the False Claims Act (FCA).
In this post, we will explore the intricacies of the FCA, and cover strategies health care compliance professionals can implement to prevent FCA violations at their organizations.
What is the False Claims Act?
The False Claims Act, originally enacted in 1863 during the American Civil War, is a federal law aimed at combating fraud against the government.1 Initially, the primary purpose of the FCA was to address fraudulent claims made by contractors who supplied goods and services to the Union Army. Today, the FCA covers any industry that submits claims for payment to the government. In the fiscal year ending on September 30, 2022, the Department of Justice obtained over $2.2 billion1 in judgments and settlements of civil cases centered around fraud and false claims—over $1.7 billion of these were in health care.2
The FCA is designed to deter and penalize individuals and organizations that submit false or fraudulent claims for payment to the government. Under the FCA, no intent to defraud is required, meaning that actual knowledge of the fraud and “deliberate ignorance or reckless disregard of the truth or falsity of information” can lead to a lawsuit.3 A person or organization that violates the FCA is liable for three times the government’s damages and a per-claim penalty that is adjusted over time for inflation In July 2023, this penalty can be as high as $27,018 per claim.4
Qui Tam Lawsuits
A key provision of the FCA includes the ability to bring “qui tam” lawsuits (whistleblower lawsuits) against violators. “Qui tam” lawsuits allow private citizens to sue on behalf of the government.1 Whistleblowers are incentivized by the possibility of receiving a portion of the damages recovered by the government.
Statute of Limitations on the FCA
Timeliness when filing a lawsuit related to the FCA is important. However, the government wants to ensure that citizens have the necessary time to ensure claims are legitimate.5
The FCA statute of limitations states that an action may be bought:3
- Six years from the date the violation occurred
- Three years from the date an individual (U.S. Official) responsible for acting should have known about the violation
- In this instance, action can be brought no later than 10 years from the violation date
Why Is the False Claims Act Important in Health Care?
In the realm of health care, the FCA serves as a critical safeguard against fraud and abuse. Health care providers, including hospitals, physicians, pharmaceutical companies, and medical device manufacturers, must adhere to strict compliance standards to ensure the integrity of health care programs and protect patients’ well-being.
Examples of FCA Violations in Health Care
With so much at stake, it’s important to understand what can lead to violation of the FCA. False claims are those claims that the provider knew or should have known are false. “Should have known” means that organizations can’t bury their heads in the sand or ignore details. Some examples of false claims are:6
- Billing for services not provided
- Submitting claims for medically unnecessary procedures
- Submitting claims for services that violate another statute or rule, such as the Anti-Kickback Statute or the Stark Law
- Upcoding services
- Unbundling services
- Failure to return an overpayment
- Billing for substandard care
Consequences of FCA Violations
FCA violations in health care can have wide-ranging consequences. Providers found in violation may face financial penalties, exclusion from government programs, and reputational damage that can impact patient trust and relationships with other stakeholders. Perhaps the most severe consequence, ethically speaking, is that patients may suffer harm due to unnecessary medical procedures or substandard care resulting from fraudulent practices.
It is important to note that, regarding the financial penalties covered above, in health care, every instance of an item or service billed to Medicare or Medicaid can be counted as a claim.2 Fines can add up rapidly. For example, a physicians group recently settled a false claims case against it for $24.5 million in part for ordering certain tests without determining if they were medically necessary.7 While the tests themselves may not have been very not expensive, each test would have been a separate claim, and therefore would result in damages three times its value along with a penalty of up to $27,018 per test.
FCA violations also have a profound impact on government resources and taxpayers. When fraudulent claims are paid, funds are diverted from legitimate health care needs, affecting the availability and quality of care for the general population, especially as programs like Medicare serve a growing number of beneficiaries. Therefore, enforcing the FCA is crucial in preserving the integrity of health care programs and ensuring taxpayer dollars are used appropriately.
Health Care Compliance Professionals and the False Claims Act
How can health care compliance professionals ensure compliance with the False Claims Act? This role is essential to helping organizations prevent and detect FCA violations.
Unfortunately, there are many examples of organizations violating the FCA. To prevent becoming part of this list, it’s important to implement practices that will maintain compliance. Key strategies to consider include:
- Implementing robust compliance programs: Establish comprehensive compliance programs that include policies, procedures, and training to educate employees on FCA requirements and promote ethical behavior
- Conducting regular internal audits and monitoring: Routine audits and monitoring activities help identify potential compliance gaps and enable proactive measures to address them promptly
- Encouraging reporting through whistleblower protection: Create a culture that encourages employees to report potential violations without fear of retaliation—promoting open lines of communication via anonymous reporting mechanisms is one way to encourage employees to report potential violations
- Staying updated on FCA regulations: Compliance professionals should stay abreast of evolving FCA regulations, guidance, and enforcement actions to ensure their organizations remain compliant
- Fostering a culture of compliance: Promote ethical behavior and accountability throughout the organization by consistently reinforcing compliance standards from top leadership down
Become a Leader in Health Care Compliance
This will only take a moment.
Robust health care compliance is a critical tool to help organizations avoid FCA liability, ensure the integrity of health care programs, and protect patients and taxpayers from fraud and abuse. Compliance professionals play a crucial role in implementing effective compliance programs to prevent FCA violations and uphold ethical standards to foster a culture of compliance within health care organizations. Earning a Master of Studies in Law (MSL) with a Health Care Compliance specialization from Pitt Law will help you master the ins and outs of health care compliance that you need to gain more authority and responsibility in your career. And, if you are not interested in earning a full master’s degree, you can check out the Health Care Compliance Certificate program.
Step up to be a leader in health care compliance. Graduates of Pitt Law's Health Care Compliance Certificate or MSL program who have fulfilled the applicable requirements may be eligible to sit for industry exams, including:
- Certified in Healthcare Compliance (CHC)®
- Certified in Healthcare Research Compliance (CHRC)®
- Certified in Healthcare Privacy Compliance (CHPC)®
- Certified Compliance & Ethics Professional (CCEP)®
- Certified Compliance & Ethics Professional–International (CCEP-I)®
- Retrieved on July 18, 2023, from justice.gov/civil/false-claims-act
- Retrieved on July 27, 2023, from justice.gov/opa/pr/false-claims-act-settlements-and-judgments-exceed-2-billion-fiscal-year-2022
- Retrieved on July 18, 2023, from oig.hhs.gov/compliance/physician-education/fraud-abuse-laws/
- Retrieved on July 27, 2023, from ecfr.gov/current/title-28/chapter-I/part-85/section-85.5
- Retrieved on July 18, 2023, from fentonlawgroup.com/news/false-claims-act-healthcare-cases/
- Retrieved on July 18, 2023, from eastridgenursing.org/careers/compliance-training/fca/
- Retrieved on July 27, 2023, from justice.gov/opa/pr/physician-partners-america-pay-245-million-settle-allegations-unnecessary-testing-improper
- Retrieved on July 18, 2023, from cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/Downloads/Fraud-Abuse-MLN4649244.pdf
- Retrieved on July 18, 2023, from aap.org/en/practice-management/liability-and-regulation/preventing-health-care-fraud-and-abuse/