False Claims Act Cases and Investigations
The False Claims Act is the primary tool used by the Department of Justice to fight healthcare fraud. It provides civil and criminal penalties when the DOJ proves a health care provider “knowingly” filed a “false” claim for payment under Medicare, Medicaid, or another government healthcare program.
No doubt there is plenty of fraud against these programs – in fiscal year 2021, FCA recoveries topped $5.6 billion, with over $5 billion coming from healthcare cases.
FCA penalties can add up to a great deal of money – three times the amount the government paid, plus a fine that could be $25,000 per claim (a “claim” might be each line item or each day of services), quickly sending the total at stake into the stratosphere. The FCA also has strong incentives for private citizens (known as “relators”) who alert the government to fraud – these whistleblowers stand to recover as much as 30% of any award, along with their attorneys’ fees.
The potential for paying out nine-figure damages plus attorney fees for both sides surprisingly isn’t the biggest thing at stake – if found guilty of an FCA violation, a healthcare provider can be excluded from participation in Medicare or Medicaid, which would immediately put most providers out of business.
Because the FCA is such a big hammer, even providers who maintain appropriately rigorous compliance programs and strive to keep a clean conscience can and do get caught up in FCA investigations and cases. The law’s whistleblower reward provisions and the prospect of recovering attorney fees create incentives to find mistakes that can be alleged as fraud even where no fraud exists. Even if a case only reflects the relator’s misunderstanding of the complex rules of Medicare and DOJ does not take up the matter, the suit still may go forward - and even a mistaken lawsuit that is eventually dismissed can impose crippling costs in money and in reputation.
Another reason compliant providers get involved in FCA cases is because DOJ increasingly seeks to ground these challenges on subjective issues – e.g., did an elderly stroke patient need the therapy provided or would less have been enough; did a doctor err when she said in good faith the beneficiary was eligible for hospice services; was the nursing home that got passing marks on its regulatory inspections nonetheless not providing what DOJ believes was the appropriate level of care – so that no amount of proactive compliance can guarantee that a provider will not face a false claims investigation.
While serving as chief legal officer of large providers, I handled several FCA matters. This involved informing the Board and management of the investigation or suit, dealing with subpoenas, selecting and retaining defense counsel, coordinating strategy and tactics, crafting and approving internal and external communications about the case, conducting settlement negotiations and mediations, and serving as party representative at jury and judge trials. One of these matters ended in a complete defense victory by summary judgment. Another was tried for several weeks to a federal judge who ruled for the defense. Yet another was tried to a jury with the ultimate ruling in favor of the provider being upheld after DOJ unsuccessfully appealed to the 11th Circuit. Other FCA matters I handled each were dropped by DOJ or ended in settlements favorable to the provider.
Based on my experience, in-house counsel can significantly raise the odds of success when responding to FCA investigations and defending against FCA suits. I would be happy to share my expertise with you if your company finds itself in the crosshairs. Services I can offer include advising on strategy, tactics, and process, reviewing and editing pleadings, and acting as a panelist for mock arguments. Let’s talk about whether you could benefit from any of these, or any other ways I can help with your FCA matter.