According to the latest False Claims Act (FCA) statistics, the Obama Administration is making good on the President’s campaign promise to crack down on fraud against the government, and, more specifically, against federal health care programs. The Department of Justice (DOJ) collected more than $3 billion in civil settlements and judgments in all cases involving fraud against the government, making it the second largest collection year. The DOJ said that the vast majority of that amount came from health care fraud recoveries – a record of $2.5 billion for fiscal year 2010. The two-year total recovery for health care fraud enforcement efforts comes to $4.6 billion.

Under the FCA, a whistle blowing qui tam relator can receive 15-30% of the total proceeds from a successful case. The government reported that for the fiscal year 2010 it awarded a total of $385 million to individual whistleblowers pursuant to the qui tam provision of the FCA. The largest FCA recoveries came from the pharmaceutical and medical device industries, which accounted for $1.6 billion in settlements reported by the DOJ. However, health care providers were not immune from whistleblower activity.  For example, the Health Alliance of Greater Cincinnati and a former member hospital reached a settlements with the government for $108 million.

These large recoveries resulting from health care fraud enforcement follow closely upon major changes in the law. Since 2009, the FCA has undergone sweeping amendments that significantly broadened the scope of the Act and made it far easier for qui tam relators to bring whistleblower lawsuits. In 2009, the Fraud Enforcement and Recovery Act (FERA) broadly expanded the number and types of companies and businesses that are subject to FCA liability and greatly increased the penalties for failing to return an overpayment to the government – codifying the reverse false claim action.

In addition, and of particular note to physicians, physician-owned group practices, hospitals and other providers of health care services, passage of the Patient Protection and Affordable Care Act (PPACA) in April of 2010 amended the federal Anti-Kickback Act to make a violation of the anti-kickback laws also a per se false or fraudulent claim under the FCA. The PPACA also added section 1128J(d) to the Social Security Act’s Medicare/Medicaid Program Integrity Provisions, which imports the reverse false claim cause of action under FCA and FERA to alleged “overpayments” of Medicare and Medicaid reimbursements. The PPACA amendments require reporting and return of “overpayments” to the “Secretary or the State Medicaid Agency,” impose a 60-day window to make such a report and return “overpayments,” and provide that any “overpayment” retained past the 60-day deadline is an “obligation” as defined in the reverse false claims provisions of the FCA and the FERA –  thus giving rise to potential FCA liability, and potential qui tam whistleblower interest and activity, for such retention of an overpayment beyond 60 days. Finally, PPACA greatly limited traditional defenses to FCA whistleblower qui tam claims by removing jurisdictional barriers and substantially narrowing the FCA’s “public disclosure” provision.

Finally, FERA authorized  the U.S. Attorney General to delegate authority to issue Civil Investigative Demands (CIDs). In 2010, Attorney General Holder delegated authority to the Assistant Attorney General for the Civil Division, who promptly promulgated a rule published in final form on March 24, 2010, that delegated CID authority to the various U.S. Attorneys throughout the country. The new rule permits the U.S. Attorneys to issue a CID to any person believed to have possession, custody or control over documents or documentary information relevant to an investigation of false claims prior to government intervention into a qui tam whistleblower’s claims. A CID may require the person to:

• Produce relevant documents with sworn certification that all responsive documents have been produced.
• Answer in writing and under oath interrogatories regarding the subject documents or information.
• Provide oral testimony under oath regarding the subject documents or information.

FERA also authorized the government to share information collected through the CID process with other federal and state law enforcement authorities, as well as with private qui tam whistleblowers and their attorneys!

These significant changes in the law complicate and increase the exposure to whistleblowers and the risk of government investigation and liability for physicians, physician practice groups, hospitals and other health care providers receiving payment or reimbursement from federal grants or programs. It is therefore particularly important for healthcare employers to have and maintain effective compliance and ethics policies and to train employees in ethical business and management practices. Knowing how and when to internally investigate potential fraud, improper accounting, potential wrong-doing, and errors of judgment, as well as how to appropriately correct, disclose and report errors and potential wrong-doing, and discipline potential wrong-doers may be complicated. Continuing to work with a whistleblower or potential whistleblower in the workplace, protecting the whistleblower’s rights, the rights of the employer and the rights of the whistleblower’s coworkers create even more complex issues for health care employers. An attorney skilled and experienced in these matters can help employers to navigate the legal requirements, reduce exposure to potential claims, and  respond quickly and appropriately if a claim arises.

This entry was written by Robert Drake.