Liability under the federal False Claims Act occurs when a defendant (1) knowingly presents (or causes to be presented) a false or fraudulent claim for payment; (2) knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim; (3) conspires with others to commit a violation of the False Claims Act; (4) knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay money or transmit property to the Federal Government.

A broad array of scenarios can constitute FCA (False Claims Act) violations. Healthcare Fraud cases include: coding false claims, DRG false claims, PPS false claims,  Medicare kickbacks, outpatient PPS false claims fraud, Stark law violations, DME fraud, and DRG fraud. The cases are brought by whistleblowers, who typically have previously attempted to call attention to the problem within their company. Qui tam, which is a feature of the False Claims Act, is a unique mechanism that allows individuals and entities with evidence of fraud against federal programs to sue the wrongdoer on behalf of the government. Currently, qui tam provisions include strong financial incentives to file a lawsuit on behalf of the federal government.

Healthcare Fraud cases including coding false claims, DRG false claims, PPS false claims, outpatient PPS false claims, kickbacks, Stark law violations, DME fraud, and DRG fraud now comprise the majority of all False Claims Act cases. As a percentage of the total False Claims Act lawsuits filed each year, qui tam lawsuits have steadily increased from 12% in fiscal year 1987 to over 45% in 2007, to the overwhelming majority percentage in the last decade.

Below is a more detailed explanation of Healthcare Fraud scenarios under the False Claims Act.

Submitting bills to Medicare that are the responsibility of other insurers under the Medicare Secondary Payer rule.

Involves Medicare Part A providers, such as hospitals, nursing homes, and home health agencies; also involves Medicare Advantage Plans and Medicaid Managed Care Plans.Such fraud falls into several general categories:

Usually involves the following two different types of payment:

The Stark law, 42 U.S.C. § 1395nn, is also known as the Physician Self-Referral Law. If a physician (or immediate family member) has a direct or indirect financial relationship (ownership or compensation) with an entity that provides any of the certain designated health services (“DHS”), the physician cannot refer patients to the entity for DHS. The entity likewise cannot submit a claim to Medicare for such DHS unless the financial arrangement fits in a statutory or regulatory exception.

The Stark law was intended to prohibit physicians from profiting (actually or potentially) from their own referrals. The Stark Law sanctions improper physician referrals, doing so by providing penalties for illegal referrals prospectively. Its effect is to prohibit relationships that have been demonstrated to encourage over-utilization. It is a strict liability statute, i.e. there is no need to show knowledge or intent.

The Medicare and Medicaid programs depend on physicians and other healthcare professionals to exercise independent judgment in the best interests of patients. Financial incentives tied to referrals have a tendency to corrupt the healthcare delivery system in ways that harm federal programs and their beneficiaries. Corruption of medical decision-making can result when a physician refers a patient to a provider on the basis of the physician’s financial self-interest, instead of the patient’s best interests.

Overpaid medical directorships, interest-free loans/forgiveness of debts, illegal recruitment arrangements, and improper discounts may represent financial windfalls to physicians resulting in hospital referrals in violation of the Stark Law. Examples also include sham contracts that provide for “backdoor” benefits furnished by hospitals to the referring physicians, which amount to physician benefits for free or less than fair market value.

A violation of the Stark Law can be the basis for False Claims Act liability.

We have all heard the term “false.”  It is something that is ‘not true,’ right?  The False Claims Act, however, does not apply to all falsehoods.

A claim to Medicare may be false under the False Claims Act when the provider falsely certifies that it has complied with all relevant statutes and regulations related to the claim for payment. The certification in question must be a prerequisite to qualifying for the government reimbursement. That means that if a provider makes a false certification, but that certification has no bearing on whether the government would pay the Medicare benefit or not, then it is not actionable fraud under the False Claims Act.  The false certification has to be the qualifying factor behind the provider obtaining the reimbursement.

That, then, brings us to the difference between false claims under the False Claims Act that are “factually false” compared to ones that are “legally false,” based on false certifications.