Health Administration Responsibility Project
Federal False Claims Act Violations

The Federal False Claims Act imposes liability on anyone who presents a claim to the US government which he knows to be false, or in deliberate ignorance or reckless disregard of its falsity. Liability can reach triple damages plus $10,000/claim. The government can also bring criminal charges and bar the organization from participation in government programs.

This has been most used against defense contractors and fee-for-service health care providers, but the government has now had 2 cases against managed care providers for billing for poor quality care.

This is of special interest because of the provision which allows Qui Tam suits by private citizens. Here, any person (including a patient) who discovers the dereliction by a Medicare or Medicaid managed care organization may initiate the case, and win 25-30% of the total recovery. If the plaintiff has a really good case, the government may assume the burden of carrying it forward. It is important to find an attorney experienced in such cases.

A place to call would be:
HHS Inspector General
330 Independence Avenue, SW, Room 5259
Washington, D.C., 20026-3489

See Also:
Recent Developments
Mark Kleiman's Qui Tam page
A good Qui Tam page
A Qui Tam Lawyer Referral Site
Nursing Home Abuse page
Taxpayers Against Fraud
Should you file a qui tam suit by Robert L. Vogel
Article by Thomas Grande

The cases reported here were initiated by the government, not the patient.

U.S. v. GMS Management-Tucker Inc.
E.D. Pa. 96-1271
A nursing home provided inadequate nutrition and care of decubiti to 3 patients over a 15 month period, below the quality standard required in the Nursing Home Reform Act of 1996. As a condition of participation in Medicare & Medicaid, Tucker signed a provider agreement acknowledging that submission of claims would be certification that the services were actually provided and that it was in compliance with all relevant regulations.
The government interpreted this to mean that any bills submitted when the facility was not in compliance with a law, such as the NHRA, were fraudulent! The suit was settled for $600,000.
U.S. ex rel Aranda v. CPC
A psychiatric hospital had drafted a plan for each patient, the government paid on that basis, and the plan was not followed, resulting in injury and sexual abuse of patients. The gov't claimed that the bills were fraudulent, because of the poor quality of care delivered. CPC argued that there were no objective standards, and that the existence of comprehensive regulation precluded FCA liability. This opinion dismissed CPC's motion for summary judgment.
Note that neither of these cases involved capitation, nor a qui tam suit. These are areas left to be defined by You! A particularly good case would be one where Medicare had paid capitation for years for a healthy senior, who became ill and had to leave the HMO because of poor care, and where the government then paid for the care in the fee-for-service sector.

Under the Bush Administration, Relator initiated qui tam suits based on illegal kickbacks have become almost impossible to prosecute, according to Mark Kleiman, who says:

Ashcroft and Scully are trying to eliminate qui tams as a vehicle for prosecuting kickbacks and Stark violations, but there are still holdouts in DOJ and the US Attorney's Offices.

1) USDC judges, thanks to the war on drugs, spend 75% or more of their time on criminal matters. Thus, when it comes to civil matters there is an intense interest in docket-clearing devices without regard to a case's merits. One sees this inflicted most brutally, although not exclusively, in employment cases.

2) Approx. 98% of all monies have been recovered in the 22% of cases in which the United States intervenes, in large part because of the aforementioned docket clearing devices. The USDC judges (wrongly) conclude from this that cases which are declined lack merit and initiate one of several docket-clearing devices, establishing a self-perpetuating myth about these cases.

3) 12(b)(6) motions are the Relators' graveyard. FCA cases are held to a rule 9b standard which requires that fraud be plead with particularity. When the Relator's complaint is scrutinized a double standard is often employed. District courts (and appellate courts) often require a much higher degree of particularity (patient names, billing dates and numbers, etc.) from a Relator than would be requested of the government. The most recent nasty example of this from the 11th Circuit is attached.

4) Many of the declined cases involve parties of unequal bargaining power. For example, if I discover a coding violation that leads to $1 million in single damages, I am looking at a case in which the relator's recovery, maximally, will be $750,000-$1.0 mm. Even at 40%, I am looking at a fee of no more than $250,000. (The $5000 per claim penalties are subjected to an 8th amendment excessive fines clause analysis and are tough to maintain.)

5) To me it is a nice fee. To the defendant, it is life and death since a civil conviction under the FCA often leads to voluntary or mandatory exclusion from the federal programs, so the degree of resources they will throw at a case can often overwhelm a sole practitioner or a small firm. I'm doing fine now, but had serious problems about a year ago after a series of nationally traded nursing home chains I sued filed for Chapter 11 protection well into the case.

Moral of Story - I can and will pursue declined cases, but like the guerilla, I pick my fights and the terrain on which I conduct them carefully.

Kickback and Stark Specific

1) The regs are generally complex to begin with.

2) Courts have typically (although not always) imported a 'materiality' requirement into FCA prosecutions which can not be found in the statute.

3) In the context of a Stark or Anti-Kickback Act case materiality often translates into a fight over medical necessity, and a claim-by-claim, patient-by-patient fight is simply not anything a judge will allow time for. It is also difficult to meet the FCA's heightened scienter standard when there are when the defense can trot out an expert saying that a given procedure was necessary.

4) Given Agent Scully's whoredom for the proprietary hospital industry, it is becoming increasingly difficult, if not impossible to find federal officials who will testify that any given kickback represented a loss to the program since "the patient needed the service anyway". Trying one of these cases (absent really flagrant facts) where you instead get government officials saying there was no damage to the program is a major problem.

Other than that, they're a walk in the park.

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