Short presentation alerting physicians as to how the False Claims Act can affect their medical practice, including fines and exclusion from medicare and medicaid programs.

1. FALSE
CLAIMS ACT
The law that can sneak
up and blow the whistle
on your practice…

2. $80,000,000,000 PER YEAR
 Cost to taxpayers in fraud against the government as estimated by the FBI*
 Perpetrated by thousands of fraudsters setting up fake clinics and medical
equipment stores, buying patient lists, submitting false claims, getting paid and
closing down shop before being investigated**
 One south Florida convicted fraudster on 60 Minutes acknowledged that he received $20,000,000 from
Medicare over 6 years
 He submitted 10 claims on one day for a “gas powered prosthetic” worth $15,000 each and made
$150,000 in 15 days
 Watched his “bank account grow with direct deposits from Medicare of $30-$40,000 every day”
 FBI considers healthcare fraud bigger than illegal drug business in southern Florida – over 3,000
fraudsters in southern Florida alone
 This is the continuing backdrop against which the US government has passed a
plethora of confusing, complex and critical laws in an attempt to fight fraud
 This may not be your practice, but the laws apply to everyone
 Your practice can join the fight
*http://www.fbi.gov/about-us/investigate/white_collar/health-care-fraud
**http://www.cbsnews.com/video/watch/?id=6837797n

3. FEDS WILL FINE YOUR PRACTICE
 Your practice, and you personally, can be fined, imprisoned or otherwise held
liable - including losing your license to practice medicine - for various bad actions
under various intertwined and complex federal statutes
 Significant Federal Fraud and Abuse Laws include:
 Anti-Kickback Statute – 42 USC § 1320a-7b
 HIPAA – 29 USC § 1181
 Civil Monetary Policies Act – 42 USC § 1320
 Physician Self Referral Law (aka Stark) – 42 USC § 1395
 Obstruction of Criminal Investigation of Health Care Offenses – 18 USC § 1518
 The False Claims Act – 31 USC § 3729-3733
 Get the knowledge and tools to comply with the laws
 Lack of knowledge of the law is not a defense – although it might be to liablity
 Today we’ll focus on the FCA and its broad reaching power to impose fines

4. SCARED YET? YOU SHOULD BE…
 The False Claims Act is a civil law
empowering the OIG to seek fines
against ANY person who conducts
business with the US Government
 Imprisonment possible under other laws
 A “claim” includes HCFA 1500
 Basically, the FCA imposes liability for
anyone “knowingly” making claims for
payment to which they are not entitled*⌘
 Affects “obligations” that include keeping
any overpayment by the government⌘
*31 USC 3729(a)(1)
⌘31 USC § 3729(b)(1) & (3)

5. WHAT DOES FCA FRAUD LOOK LIKE IN
YOUR PRACTICE?
 “upcoding” – using billing codes with higher payment rates than the billing code for
the service ACTUALLY PERFORMED*
 “duplicate claims” – hospital claims for same service as physician claim (outpatient
vs. inpatient) *
 “patient referrals” – potential for FCA liability if Stark or AKS violated
 “not necessary” – claiming for service you know isn’t reasonable or necessary*
 “unbundling” – fragmenting services that should be billed together to receive a
higher reimbursement*
 “fictitious” – claiming for a service or equipment that was never provided*
 “retaining overpayment” – received too much from Medicare? send it back
 There are many other ways to violate the FCA, however, “honest mistakes” may
be forgivable – you have to “KNOW” you did it!
*Department of Health & Human Services, Office of Inspector General, Publication of the OIG
Compliance Program Guidance for Hospitals, Federal Register, Vol 63, No 35 2.23.1998

6. SO, WHAT DID YOU KNOW?
 You’re on the hook under the FCA if you “knowingly” file the false claim --
which means you acted:
1. with actual knowledge of the information; or
2. with deliberate ignorance; or
3. with reckless disregard.*
 Enough legal stuff - what does that really mean?
 Your knowledge is reviewed on the facts on a case-by-case basis.
 Liability Example: One physician and his bookkeeper wife found liable for false claims
because she completed the Form 1500s with “no factual basis” and her husband acted
with “reckless disregard” because he “failed utterly” to review his wife’s Form 1500
filings**
 No Liability Example: Physician not ignorant or reckless in his certification regarding
written interpretation of DVT technician’s worksheets; found not liable for false claim,
even if physician didn’t review underlying video data and “plagiarized” worksheet⌘
 Honest Mistake: To find liability, the court required facts which adduced “more than mere
innocent mistakes or negligence” ⌘
 However keep in mind the “strict liability” under Stark for underlying referrals – you
didn’t have to know you did it, you just had to have done it
* 31 USC § 3729(b)(1)(A)
** US v Krizek, 111 F.3d 934 (DC. Cir. 1997)
⌘ Swafford v Borgess Medical Center, 98 F.Supp.2d 822 (W.D. Mich. 2000)

7. WHAT IF YOU SEE SOMETHING
WRONG?
 Don’t waste the opportunity to work with the government
for reduced damages:
1. before any investigation or action by the government
commences, by giving the government ALL information about
the violation within 30 days of when you find out about it; and
2. by fully cooperating with the investigation.*
 Fines may still be imposed, but damage award could be
reduced by one-third!*
 Stay on top of things, because your employees and
contracted administrators can report violations!
*31 USC § 3729(2)

8. YOUR EMPLOYEES CAN FINK ON YOU
 The FCA provides protections for “whistleblowers” to encourage
individuals to come forward and report alleged violations of the
FCA
 Their motivation = $284,539,872 paid to whistleblowers in 2012*
 You cannot retaliate! The FCA prohibits employers from:
1. discharging, demoting, threatening or harassing employees who blow the whistle
2. this includes contractors and agents – not just your employees
 if you do, the FCA grants relief to the employee including 2 times the amount
of back pay including interest, reinstatement, special damages AND their
attorneys’ fees and costs**
* The Department of Health and Human Services and
The Department of Justice Health Care Fraud and Abuse Control Program
Annual Report for Fiscal Year 2012, page 5
** 31 USC §3730 (h). Civil actions for false claims; Relief from Retaliatory Actions

9. DON’T WORRY - GET YOUR DUCKS IN A ROW
 Take action to protect your practice, including:
 Get specific billing and compliance training – you and your employees
 Take a certification course at Seton Hall Law School
 Review federal and state documents regarding billing updates
 sign up for OIG Fraud Alerts
 Interview your employees confidentially
 Conduct independent audits – get a baseline if you don’t have one
 Review current practices in light of your new knowledge
 Retain professionally insured and experienced contractors
 Seek indemnities from contractors
 Attend industry conferences
 Review insurance policies for legal violation coverage
 Have written policies and educate your staff
 Be proactive - if a violation occurs do the right thing and report it
 Remember, punishing mistakes is not the thrust of this law, but if “referrals”
are involved, Stark liability may be imposed

10. PROTECT YOURSELF WITH AN
EXPERIENCED TEAM
 You want to practice medicine, not law
 But, you are responsible for practicing
compliance with the law
 Retain healthcare counsel and give them
your headaches
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