August 2009 Newsletter
New False Claims Act Amendments Impact Healthcare Entities
If you submit claims to Medicare, you need to be aware that on May 20, 2009, President Obama signed into law the Fraud Enforcement and Recovery Act of 2009 (FERA,) which includes significant amendments to the civil False Claims Act (FCA), the government’s primary tool to recover damages for fraud involving government funds. These are the first major amendments of the FCA since 1986.
The passage of FERA appears to have been motivated by the government’s concern about the potential for fraud by financial institutions and other entities participating in the Troubled Assets Relief Program (TARP). However, these amendments will also have substantial impact on healthcare providers. The FCA is the primary enforcement tool used by the federal government to prosecute and sanction fraud in the healthcare industry. It allows individual “whistleblowers” (qui tam relators) to bring suits on behalf of the United States for allegations that government programs have been defrauded.
The amendments:
- Extend liability for retention of overpayments - Providers are now liable under the FCA if they keep any overpayment of government funds, where in the past the FCA required some affirmative action to conceal, avoid, or decrease a repayment obligation.
- Expand the definition of what constitutes materiality - FCA liability will now depend on whether the false record or statement was “material” to getting a false claim paid or approved.
- Change presentment of claims directly to government - The amendment specifies that liability would attach to any claim submitted to intermediaries (including Medicare and Medicaid contractors) “if the money or property is to be spent or used on the Government’s behalf or to advance a Government program or interest.”
- Extend the government’s statute of limitations - The FCA’s statute of limitations is six years or three years from the date the government learns the material facts, up to 10 years after the date of the alleged fraud. Though these limitations still apply, once a complaint has been filed and is not dismissed, the statute of limitations does not apply to the government.
- Expand the use of Civil Investigative Demands (CID) - The amended FCA allows the attorney general to appoint a designee to issue the CID, and the information gained may be shared with the qui tam relators, their counsel, other government investigators, auditors, consultants, experts, and others.
- Revise anti-retaliation provision - The retaliation prohibition is expanded from employees to include contractors and agents of the company alleged to have defrauded the government.
The enlarged scope of liability under the FCA may cause an increase in FCA claims filed against healthcare entities by qui tam relators and their contractors and directly by the government. These amendments have also improved the government’s investigative powers and ability to establish liability under the FCA.
A healthcare provider’s best defense is to maintain a proactive compliance program to identify and address suspicious claims, promptly correct inadvertently false claims, quickly return overpayments, and listen to the compliance concerns of your employees and your contractors/vendors.