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False Claims Act Penalties Have Almost Doubled Over the Last Year

June 20, 2017 by  
Filed under False Claims Act

(June 21, 2017):  The federal False Claims Act is the primary civil enforcement tool used by the U.S. Department of Justice to fight fraud committed against government programs by individuals and entities.  Often referred to as “Lincoln’s Law,” the statute was first enacted in 1863, in the midst of the Civil War, to combat the wrongful conduct of government contractors.  Under the whistleblower provisions of the False Claims Act, an individual (also known as a “relator”) with knowledge of a fraud against the government, can essentially step into the shoes of the government and file a case, under seal, on behalf of the government, in the name of, the United States.  After a False Claims Act case is filed, if the government elects to intervene in the case and a recovery is made, the relator may be eligible to receive between 15% and 30% of the monies.  If the government decides not to intervene in the case and the relator moves forward, if a recovery is made, the relator can collect up to 30% of the monies.

I.  Recoveries Under the False Claims Act in 2016 Were Substantial:

Most of the False Claims Act cases brought against health care providers are filed by whistleblowers. As set out in a December 2016 DOJ Press Release, during Fiscal Year 2016 the federal government obtained more than $4.7 billion in False Claims Act settlements and judgments. Of this total, $2.5 billion came from individuals and entities in the health care industry.

II.  Penalties Under the False Claims Act Will Vary By When a False Claim Was Made:

Violations of the False Claims Act can occur in a variety of ways.[1] Simply stated, if you “knowingly”[2] present or cause to be presented, a false claim to the government for payment, you may be liable for both penalties and treble damage.  An individual or entity found to have violated the False Claims Act may be liable for both civil penalties and treble damages. Under the 1986 amendments to the False Claims Act the range of civil penalties for violations of the False Claims Act from $5,000 to $10,000.  Since that time, a number of additional adjustments have been made:

  • For false claims or statement made after October 23, 1996, but before August 1, 2016, the minimum penalty which may be assessed under 31 U.S.C. 3729 is $5,500 and the maximum penalty is $11,000, per false claim or statement.

  • For false claims or statements made on or after August 1, 2016, but before February 3, 2017, the minimum penalty which may be assessed under 31 U.S.C. 3729 is $10,781 and the maximum penalty is $21,563, per false claim or statement. 81 Fed. Reg. 26127, 26129 (May 2, 2016).

  • For false claims or statements made on or after February 3, 2017, the minimum penalty which may be assessed under 31 U.S.C. 3729 is $10,957 and the maximum penalty is $21,916, per false claim or statement. 82 Fed. Reg. 9131, 9133 (February 3, 2017).

As the above adjustments reflect, since August 1, 2016, the amount of penalties that may be assessed under the False Claims Act has nearly doubled.

III. Statute of Limitations to Bring a Claim Under the False Claims Act:

As set out under 31 U.S.C. 3731(b)(1) and (2), a civil action under 31 U.S.C. 3730 may not be brought more than more than 6 years after the date on which the false claim violation occurred, OR more than 3 years after the date when facts material to the right of action are known or reasonably should have been known by the official of the United States charged with responsibility to act in the circumstances.  However, in no event can a civil action be brought more than 10 years after the date on which the violation is committed.  From a practical standpoint, this means that a defendant may be held liable for false claims knowing submitted to the government over as much as a 10 year period.

IV.  Conclusion:

As outlined above, the potential penalties that may now be assessed for each violation of the False Claims Act add up quickly.  Coupled with the fact that the government may be able to seek penalties and damages for up to 10 years of wrongful billing could easily mean the financial demise of your health care company.   It is therefore essential that you take appropriate steps to reduce your level of risk.  The development and implementation of an effective Compliance Program will be a key component of your risk reduction strategy.

Liles Parker Attorneys Have Extensive Experience Handling False Claims Act Cases.Robert W. Liles, J.D., M.B.A., M.S., serves as Managing Partner at the health law firm, Liles Parker, Attorneys & Counselors at Law.  A number of our attorneys have served as Assistant U.S. Attorneys and in management positions at the Department of Justice.  Our attorneys understand the False Claims Act and can represent you in False Claims Act matters and cases. If you have questions regarding the False Claims Act, give us a call.  For a free consultation, call Robert W. Liles.  He may be reached at:  (202) 298-8750.

[1] Effective for false claims made on or after February 3, 2017, under 31 U.S.C. 3929(a)(1), any person who:

(A) Knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval;

(B) Knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim;

(C) Conspires to commit a violation of subparagraph (A), (B), (D), (E), (F), or (G);

(D) Has possession, custody, or control of property or money used, or to be used, by the Government and knowingly delivers, or causes to be delivered, less than all of that money or property;

(E) Is authorized to make or deliver a document certifying receipt of property used, or to be used, by the Government and, intending to defraud the Government, makes or delivers the receipt without completely knowing that the information on the receipt is true;

(F) Knowingly buys, or receives as a pledge of an obligation or debt, public property from an officer or employee of the Government, or a member of the Armed Forces, who lawfully may not sell or pledge property; or

(G) Knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government;

Is liable to the United States government for a civil penalty of not less than $10,957 and not more than $21,916, plus 3 times the amount of damages which the government sustains because of the act of that person.

[2] Under 31 U.S.C. 3729(b), the terms “knowing” and “knowingly” mean that a person, with respect to information:

(i) Has actual knowledge of the information;

(ii) Acts in deliberate ignorance of the truth or falsity of the information; or

(iii) Acts in reckless disregard of the truth or falsity of the information; an

Importantly, the government does not have to show proof of specific intent to defraud in order for a violation of the False Claims Act to be found.

 

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