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The False Claims Act: What Dentists need to know

Posted by Goldin Peiser & Peiser on Mar 3, 2014 10:37:45 AM

March 2014

By Erick Cutler

The False Claims Act is a broad federal law imposing liability on individuals or companies who defraud governmental programs. It was initially signed into law by President Lincoln to combat fraud during the Civil War. The law included provisions known as qui tam, in which the public is given the ability to sue individuals or companies on behalf of the government.

Companies or individuals who are found guilty of attempting to defraud the federal government are subject to paying up to three times the damages in addition to penalties. In qui tam cases, the plaintiff is offered a monetary incentive for being the “whistleblower” in the case.

When the False Claims Act was first signed into law, private citizens in a qui tam case could claim up to 50 percent of the amount recovered by the government. The qui tam provision was revised in the 1940s, significantly reducing the qui tam “reward” before being revived in 1985 to allow qui tam plaintiffs to recover between 15 and 30 percent of the total amount recovered by the government in a False Claims case.

In the last 20 years, the False Claims Act has been used to recover more than $24 billion in healthcare fraud. According to the Department of Justice, the Medicare Fraud Strike Force set a record number of healthcare persecutions in 2013. "In Fiscal Year 2013, the strike force set records in the number of cases filed (137), individuals charged (345), guilty pleas secured (234) and jury trial convictions (46). In addition, the defendants who were charged and sentenced are facing significant time in prison – an average of 52 months in prison for those sentenced in FY 2013, and an average of 47 months in prison for those sentenced since 2007." In healthcare, false claims could fall under one of several categories, including false statements regarding a claim, false information, billing twice for the same procedure, billing kickbacks and Stark law violation.

Why should dentists be concerned?

In a criminal case, intent to commit a crime must be considered. However, in False Claims lawsuits, prosecutors only have to prove that improper claims were submitted “with reckless disregard of the truth,” whether or not the fraud was intentional is irrelevant to the case.

Healthcare professionals can be held responsible for fraud even if they were unaware of the false claim made on their behalf. Because they seemingly failed to properly supervise those who submitted the claim for them, the doctor can be held personally responsible.

If the government unleashes its resources against a dentist in a False Claims Act, it could destroy a healthcare provider’s practice. Even an honest mistake in filing for Medicare or Medicaid reimbursement could result in a lawsuit.

What preventative steps can be taken to protect doctors?

A successful False Claims lawsuit against an individual healthcare provider could essentially ruin a doctor’s reputation. Here are seven steps physicians can take to protect themselves:

  • Carefully select the contractors who will handle your billing, as you will be held responsible for any billing mistakes or scams these contractors may attempt when submitting claims on your behalf.
  • Ensure that all government regulations are being followed by training and supervising employees and contractors.
  • Carefully and adequately document the necessity of medical procedures.
  • Create a working environment that encourages and even offers incentives for in-house “whistleblowing." Do not harass, persecute or punish employees who report a problem. By encouraging reporting issues to in-house managers, you can prevent the whistleblower from filing a lawsuit with the government.
  • If a potential offense is uncovered, act quickly and appropriately to prevent further wrongdoing.
  • Be cautious of accepting any freebies or kickbacks that could be characterized as incentives or rewards for patient referrals.
  • Ensure your assets are protected to the maximum extent.
  • Take extra care in preparing Medicare or Medicaid claims, and keep written evidence you took reasonable care in filing these claims.
  • Maintain a relationship with an attorney who is experienced in handling False Claims cases.

If you discover you have received payments for false claims, you should report the error. Though voluntary disclosure may not release you from liability, in doing so prosecutors will be more likely to settle for fewer penalties than the maximum amount the government is entitled to.

If you have any questions, contact our Dental Practice Leader Erick Cutler at ECutler@GPPcpa.com or 214-635-2541. To learn more about Erick you can visit his bio or Google+ page.

Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.

Topics: Dental