Amendments to the False Claims Act
A few days ago Robert Pear of the New York Times told us about recent amendments to the False Claims Act (FCA) that will take effect next week. Pear’s story is here. Healthcare providers need to be aware of these changes to the False Claims Act. The FCA is also referred to as the whistleblower statute or the qui tam statute. A great website to inform people about how the FCA works is sponsored by The False Claims Act Legal Center and can be accessed here.
I’ve handled a number of FCA claims in the last few years. The idea behind the FCA is to provide financial incentives to individuals who are aware of government fraud to come forward, blow the whistle on the fraudster, and put an end to government ripoffs. Properly used, it’s a great tool to reduce scams on the government.
Given the amount of taxpayer funds paid out in Medicare and Medicaid alone, a frequent target of FCA violations is healthcare providers. For the fiscal year ending September 30, 2006, the federal government recovered over $3 billion dollars under the FCA. Of that amount, 72% of the funds came from healthcare fraud.
Earlier this year Congress passed the Deficit Reduction Act which, among other things, amended the FCA. You can find here a press release issued by Senator Grassley about the the changes to the FCA which take effect January 1, 2007. They require healthcare providers who receive $5 million or more in Medicaid payments to discuss with their employees the rights and obligations employees have under the federal and state false claims act statutes to disclose fraud they become aware of in their capacity working for the healthcare provider. As an attorney quoted in the Times article says: “healthcare provider are putting all their Medicaid money at risk if they do not comply [with the new amendments] . . . compliance is a prerequisite to receiving Medicaid reimbursement.”
This amendment to the FCA will certainly educate employees about the financial opportunities for them personally if they uncover and report fraud by their employers. Prudent employers will also renew their efforts to make sure there are not activities being carried out within the organization that effect fraud on the government. The penalties for FCA violations are stiff–treble damages and payment of the whistleblower’s attorney fees and costs. It is not a statute any healthcare provider wants personal experience defending against.