False Claims Act: Enticing Whistleblowers to Report on Practice Improprieties
President Obama’s September 9, 2009 address to both houses of Congress detailed how the federal government is going to fund a new approach to healthcare by revamping the current system and attempting to eliminate waste. One of the ways the administration is attempting to do exactly that is by utilizing the False Claims Act (“FCA”) and enticing individuals working for and familiar with healthcare operations to do their own due diligence and report improprieties.
A perfect example is the recent Pfizer settlement you may have read about last week. Pfizer was recently investigated after a whistleblower reported Pfizer for improper drug-marketing practices; the result: Pfizer is paying out $2.3 billion for a record breaking settlement as a result of a federal criminal probe and civil qui tam litigation.
What is a qui tam action?
FCA’s qui tam provisions permit private individuals (“whistleblowers”) to act in the place of government and enforcement agencies. In fact, whistleblowers receive financial incentives to investigate and bring to the federal government allegations of abuse of public funds; successful whistleblowers may receive windfall compensation (the whistleblowers responsible for the above mentioned Pfizer matter will receive $50 million each). Of course the Pfizer matter is one of the largest settlements ever recorded and certainly not a relative example for smaller scale matters such as a practice consisting of 3 providers submitting incorrect claims to Medicare. I mention the Pfizer action only as a reference point. However, providers should be wary of FCA because potential violations are subject to substantial damages and congnizant of the whistleblower incentives.
What is the False Claims Act?
The FCA, enacted in 1863, combats abuse of federally funded programs. The FCA prohibits the submission of false claims for payment where federal funds are involved. Violations of the FCA are subject to treble damages and penalties between $5,500 to $11,000 per violation.
Why should providers be concerned with FCA?
In May 2009, the Fraud Enforcement and Recovery Act of 2009 (“FERA”) was signed into law, which includes the most extensive amendments to the FCA in 25 years. FERA’s amendments have further refined the FCA as a government tool by removing two key provisions: the first, removing the requirement that the allegedly false claim must actually be presented to the government for payment (now liability may attach to claims that are submitted to a “contractor, grantee, or other recipient” of federal funds); and secondly, removing the requirement that a subcontractor act with the specific intent to get a false claim paid by the government (now there is no longer a requirement that an individual or entity act with specific intent to defraud the government). For example, under FCA as amended by FERA, a provider may be violating the FCA by submitting an incorrect bill for payment to any institution receiving government funding, not just Medicare, without any intent of submitting a false claim; simple mistakes made by practices may now be actionable.
FERA’s implications are that the government has decisively removed specific safeguards that were in place to protect from abusive actions instigated by the government, and instead, is encouraging private individuals to “take matters into their own hands” for financial compensation.
How to Best Protect Your Practice
The best way to protect your practice from incorrect claims submissions and potential liability under FCA is to put in place a comprehensive and appropriate compliance plan for your practice. A compliance plan is worth absolutely nothing if your practice is not going to utilize it. For a successful compliance plan to be effective, the plan must be thoroughly implemented from the owners of the practice and filter to all of the staff.
An efficient compliance plan will be utilized by your staff on a regular basis and determine processes such as claims submissions, regular self-audits, procedure for staff complaints, regular training meetings with the staff, and similar human resource policies to ensure that your staff are up to date on the ever changing current of regulatory compliance and potential liability. The best way to protect your practice is to keep yourself and your staff informed, trained and vigilante.
For additional information on implementing a compliance plan that works for your office, please do not hesitate to contact me. A comprehensive plan does not necessarily mean that such a plan is costly, and in many instances the right compliance plan is worth every penny because it may cost a little on the front end, but it may end up saving you plenty on the back end.
For additional information on this topic, please contact Jennifer Kirschenbaum at (516) 747-6700 ext. 308 or at Jennifer@Kirschenbaumesq.com. This email is for education and discussion purposes only and does not constitute legal advice. To access prior healthcare email newsletters or articles visit: www.kirschenbaumesq.com/healthcarearticles.htm.
