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A Civil Investigative Demand Issued to You or Your Medical Practice is Serious Business. Understand Your Level of Risk Before Responding to the Government’s Investigation

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(September 17, 2019): The False Claims Act (31 U.S.C. §§ 3729-3733) is the primary civil enforcement tool relied on by the Federal government. It has a long and storied history, going back all the way to the Civil War.[1]  Prior to 1986, the statute was only infrequently utilized by law enforcement. That changed with the enactment of the “False Claims Amendments Act of 1986.”[2]  Among its many changes, the 1986 Amendments Act authorized the Attorney General to issue Civil Investigative Demands in connection with the investigation of False Claims Act cases.  Over the years, Civil Investigative Demands have greatly bolstered the effectiveness of the government’s ability to examine alleged violations of the False Claims Act.[3]

In 2009, Congress further expanded the use of Civil Investigative Demands when it passed the “Fraud Enforcement and Recovery Act of 2009”[4] (FERA).  Among its various provisions, FERA authorized the Attorney General to delegate his authority to issue Civil Investigative Demands to other Department of Justice (DOJ) officials. The Attorney General subsequently issued a directive in 2010 which delegated his authority to issue Civil Investigative Demands to the Assistant Attorney General for the Civil Division.  This directive also permitted the Assistant Attorney General for the Civil Division to redelegate the authority to issue Civil Investigative Demands to other DOJ Officials, including United States Attorneys.[5]

From a practical standpoint, the redelegation of authority to issue Civil Investigative Demands from the Office of the Attorney General to the 94 United States Attorneys Offices has greatly expanded the issuance of Civil Investigative Demands around the country.  This article examines the government’s use of Civil Investigative Demands as an investigative tool and discusses the steps you should take if the government issues one to you or your health care organization.

[For additional guidance on the risks presented when dealing with parallel civil and criminal investigations, you may wish to review our article titled “Have You Received a Civil Investigative Demand (CID)? How Should a Health Care Provider or Supplier Respond When Receiving a Civil Investigative Demand?]

I.  What is a Civil Investigative Demand?

A Civil Investigative Demand is essentially a judicially enforceable administrative subpoena[6] that can be issued by a Federal prosecutor to obtain documentary materials and other information that may be in your possession, custody or control that the government believes may be relevant to an investigation of possible violations of the False Claims Act.  A Civil Investigative Demand is only issued in connection with an ongoing False Claims Act investigation.

When issued to you or your medical practice, this investigative tool can be used to require that the subject (recipient individual or entity) of a Civil Investigative Demand:

  • Produce such documentary material for inspection and copying,
  • Answer in writing written interrogatories with respect to such documentary material or information,
  • Give oral testimony concerning such documentary material or information,[7] or
  • Furnish any combination of such material, answers, or testimony.

II.  Are You or Your Medical Practice the Target of False Claims Act Investigation?

If you are sent a Civil Investigative Demand, it doesn’t necessarily mean that you are believed to have violated the False Claims Act. It’s possible that a Federal prosecutor believes that you are a mere witness or a custodian of the records or other information that is relevant to the government’s False Claims Act investigation.  If you are the subject or target of a False Claims Act investigation, it is quite common for the Assistant U.S. Attorney handing the matter to clearly identify you or your medical practice as such when issuing a Civil Investigative Demand. While the language utilized by the government may vary from case to case, letters sent to physicians and other health care providers / suppliers will typically state something along the lines of:

“This False Claims Act investigation concerns allegations that you, your medical practice, your employees, contractors, and agents, as well as other individuals or entities violated or conspired to violate the False Claims Act by submitting claims to Federal health benefit program for which you were not entitled to receive payment.”

After investigating suspected violations of the False Claims Act, the Attorney General (through his or her designee) may either bring a civil suit for violations of the False Claims Act OR elect to intervene in a qui tam case that has been brought by a private party.   Importantly, once the government either files a False Claims Act complaint or intervenes in a qui tam that has been filed, it loses its authority to issue a Civil Investigative Demand.[8]

III.  Do I have to Comply with the Requirements Set Out in a Civil Investigative Demand?

The evidence sought by a Civil Investigative Demand may be quite extensive and will likely include demands for documentary materials, electronic records and written responses to interrogatories.  Unfortunately, it may be quite costly and time-consuming for you to assemble the information requested and fully comply with the specifications set out in a Civil Investigative Demand.  Should you fail to comply with a Civil Investigative Demand, the government will likely file a petition in Federal District Court seeking judicial enforcement of the request.[9] As the government’s utilization of Civil Investigative Demands has increased, we have seen a number of challenges raised by recipients.

In one recent case, Federal prosecutors issued a Civil Investigative Demand in connection with their investigation of whether a physician had violated the Anti-Kickback Statute and Stark (which, depending on the facts, may also constitute a violation of the civil False Claims Act).[10]  The respondent recipient of the Civil Investigative Demand, a California-based orthopaedic surgeon, refused to comply with the government’s request, arguing that the DOJ lacked the authority to enforce the Civil Investigative Demand due to the fact that the government’s had allegedly entered into settlement communications with a related party.  Essentially, the respondent argued that the government’s settlement discussions with a related party constituted a determination that a basis for the physician respondent’s liability was present.  Therefore, the respondent physician took the position that the government had an obligation to move forward with litigation rather than continue to investigate.  In this case, since the government had not yet initiated a civil action and had not made an election related to actual qui tam litigation, the District Court that the Civil Investigative Demand should be enforced.

IV.  Risks Presented in Parallel Civil and Criminal Investigations of Your Conduct:

Although the issuance of a Civil Investigative Demand is reflective of the fact that a civil False Claims Act investigation is underway, it is important to keep in mind that the government may also have an open, ongoing criminal investigation related to the conduct that is under review. In recent years, this has become quite common, due in large part to more effective coordination efforts between civil litigators and criminal prosecutors in U.S. Attorneys Offices around the country.

It is the policy of the DOJ that its components (including U.S. Attorney’s Offices) employ a coordinated approach to litigating affirmative matters from the initial intake, throughout the investigation and to resolution.[11] DOJ requires “early, effective and regular communication” between all of its litigating components in order that it considers all potential remedies. Consultation between the Department’s civil and criminal attorneys, together with agency attorneys, are promoted to permit consideration of the fullest range of the government’s potential remedies and promotes the most thorough and appropriate resolution in each case. (criminal, civil, regulatory or administrative).

In some instances, concurrent criminal and civil investigations of individual misconduct are pursued. When this occurs, it is DOJ policy for the litigating components to coordinate the investigation and potential resolutions among themselves and with other stakeholders to the extent that the law permits. For example, criminal Assistant U.S. Attorneys are encouraged to use Administrative Investigative Demand (AID) subpoenas instead of Grand Jury subpoenas so that information obtained can be freely shared with their civil counterparts.  Similarly, civil Assistant U.S. Attorneys are required to share the information they obtain in response to Civil Investigative Demands and / or qui tam investigation with their criminal colleagues. Coordination is extended to all aspects of the investigation including consideration as to the apportionment of fines, penalties and/or forfeitures and the avoidance of the duplicative fines, penalties and/or forfeiture in its resolution. Parallel actions are also intended to facilitate the Department’s efforts to hold individuals as well as corporations accountable for malfeasance.

As earlier discussed, the fact that you are the recipient of a Civil Investigative Demand does not necessarily mean that you are the target of a government False Claims Act investigation. Instead, you may be considered a subject of the government’s False Claims Act investigation. Finally, you may be a mere witness.  Ultimately, a Federal prosecutor may choose to issue a Civil Investigative Demand if he or she believes that you have documentation or other materials that are relevant to the government’s investigation of possible violations of the False Claims Act.

A Civil Investigative Demand cannot be issued to investigation allegations that are solely criminal in nature (for example, the fraudulent billing of health care services to a private payor).  However, if a bona fide investigation of possible civil false claims is present, this tool can be used to investigation potential False Claims Act violations and other conduct that may constitute a violation of criminal law. In light of the nature of parallel proceedings, there are a number of risks that you should take into account when responding to a Civil Investigative Demand.  Several of these risks include:

  • Federal Anti-Kickback Statute (42 U.S.C. 1320a-7b(b)).  The Federal Anti-Kickback Statute[12] makes it a crime to knowingly and willfully offer, pay, solicit, or receive remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to purposefully induce or reward referrals of items or services payable by a federal health care program. Simply put, it is against the law to pay or provide anything of value in an effort to induce referrals or business related to a federal health care program.  While for many years the Federal Anti-Kickback Statute and the civil False Claims Act were long viewed as separate and distinct enforcement tools, over the past 20 years, the enforcement landscape has slowly changed. Starting in the early 1990’s, whistleblowers began asserting violations of the False Claims Act in cases that would typically be pursued as a criminal anti-kickback violation.  These cases often involved fact patterns where a party was alleged to have violated the Anti-Kickback Statute and, in the process, billed for services that were allegedly medically unnecessary (or, in some instances, worthless) and made a false express and / or implied certification to the Medicare or Medicaid program.  The 2010 passage of the Affordable Care Act (ACA) obviated the need to bootstrap a violation of the Anti-Kickback Statute into a violation of the civil False Claims Act.  Under the ACA, a claim submitted in violation of the Federal Anti-Kickback Statute now automatically constitutes a false claim for purposes of the civil False Claims Act.   Providers need to keep in mind that even though a kickback violation may also be pursued under the False Claims Act, that does not preclude the government from prosecuting individuals and entities for violations of the Anti-Kickback Statute.
  • False Statements Involving Health Care Programs (18 U.S.C. § 1035). Several examples we have seen have involved the (a) the misrepresentation of the provider of a medical service, (b) the misrepresentation of a non-covered service, and / or (c) the billing of services performed by unlicensed staff. Each of these examples may give rise to criminal and / or may also be pursued under the civil False Claims Act:
  • Misrepresentation of the Provider of a Service. This improper billing practice is still commonly found in both medical and dental practices around the country. In the cases we have seen, “fraud” wasn’t the reason for the underlying misrepresentation on the CMS 1500 Claims form. In most instances, it was merely a matter of a credentialing delay.  Although we have not seen a misrepresentation case of this type referred for criminal prosecution, it is important to remember that both CMS 1500s and ADA Dental Claim Forms Claims forms are typically electronically submitted to the health plan for payment.  Depending on the facts, an aggressive prosecutor could argue that such conduct constitutes a criminal false statement under 18 U.S.C. § 1035 or even wire fraud under 18 U.S.C. §1343.
  • Misrepresentation of a Non-Coverage Service. This type of improper billing practices occurs when a medical or dental practice has mischaracterizes a non-covered service as a covered service. Keep in mind, the definition of a non-covered service varies from payor to payor. Additionally, the list of non-covered services under a specific payor’s policy may change from year-to-year.  In any event, it is important that health care providers regularly check to ensure that the services being provided qualify for coverage and payment.
  • Billing for Medical or Dental Services Performed by Unlicensed Staff. Perhaps the quickest way to get into trouble with both law enforcement and your State Medical Board or State Dental Board is to allow non-licensed individuals to provide care that may only be administered by qualified, licensed personnel. Earlier this year, the New York Attorney General’s Office announced the indictment, arrest and arraignment of a health care provider and four unlicensed individuals that the provider was permitting to perform medical related procedures on more than 100 Medicaid patients. From a false claims perspective, the billing of Medicare and / or Medicaid services by unlicensed staff would constitute the misrepresentation of the credentials of the staff member at issue and would not qualify for reimbursement.

These are only a few of the risks that you face when a government investigation of your business arrangements, and billing / coding practices is initiated. When responding to a Civil Investigative Demand, it isn’t merely sufficient to produce the information requested. A careful analysis of your practices needs to be conducted on the front end so that any problematic conduct can be identified and assessed. Experienced health care legal counsel can then more effectively represent you and your practice.

V.  How Should You Respond to a Civil Investigative Demand?

For the reasons set out above, we strongly recommend that you engage counsel as soon as you receive a Civil Investigative Demand.  Your attorney can then take the lead and contact the Assistant U.S. Attorney[13] handling the False Claims Act investigation. Additional steps you should take include, but are not limited to:

  • Determine the nature of your involvement in the government’s investigation. Does the government consider you or your practice to be a target, a subject or a witness?  Are both civil and criminal allegations present?  If the possibility of criminal culpability has been identified, it is essential that your legal counsel advise you on any steps needed to properly safeguard your interests.
  • Don’t turn what may be a civil problem into a criminal case. Steps should immediately be taken to ensure that no documentation (either paper or electronic) is destroyed, deleted or over-written. Your attorney can guide you in this document preservation process. The last thing you want to do is take an action in a civil False Claims Act investigation that might constitute a separate criminal violation (such as obstruction of justice).  Once the proverbial fog lifts, your attorney will likely be able advise you whether it is permissible to resume getting rid of documents that have no bearing on the government’s case.
  • Have experienced health law counsel handle scope and timing negotiations with the government. Civil Investigative Demands are often excessively broad in scope and typically request large numbers of medical or dental records and claims information.  Moreover, under the statute you have very little time to produce the materials being sought by a Civil Investigative Demand. Your attorney will likely try and work with the government attorney handling the investigation to obtain an extension of time in which to submit the requested documents.[14]  Your attorney will also try and work with the government attorney to see if the scope can be narrowed (at least at first).  Finally, your attorney will want to try negotiate for the documents and information to be produced to be submitted on a “rolling” basis.
  • Diligently work to identify and address the government’s concerns. It has been our experience that most Assistant U.S. Attorneys are willing to engage (at least in a limited fashion) in a discussion regarding the nature of the government’s concerns. This information can be crucial in assessing the conduct, responding to the government’s concerns, and, if necessary, preparing your defense(s) in the case. Keep in mind, at this point, the government hasn’t filed a False Claims Act complaint and hasn’t intervened in the whistleblower’s case (to the extent that one exists).  Now is the time to do your very best to analyze the facts and respond to the allegations presented.
  • Take care before “Certifying” your responses under the Civil Investigative Demand. As required under 31 U.S.C. § 3733(f)(1), when you produce documentary materials in response to a Civil Investigative Demand, it must be made under a “Sworn Certificate.”  31 U.S.C. § 3733(f)(1), The Sworn Certificate is required to state that:

“. . . all of the documentary material required by the demand and in the possession, custody, or control of the person to whom the demand is directed has been produced and made available to the false claims law investigator identified in the demand.”[15]

As with any certification made to the government, you must exercise caution when making the representations required under 31 U.S.C. § 3733(f)(1).  Should your responses to the Civil Investigative Demand be false or misleading, the government may assert that you have made a false statement (assuming that the requisite level of intent can be shown).

As reflected by the risks discussed above, if you or your practice are the recipient of a Civil Investigative Demand, you should immediately contact a qualified health lawyer.  The issuance of a Civil Investigative Demand raises a number of complex regulatory questions that must be fully vetted.  Have you received a Civil Investigative Demand?  Give us a call for a free consultation.  1 (800) 475-1906.


Robert W. Liles Healthcare LawyerRobert W. Liles serves as Managing Partner at the health law firm, Liles Parker, Attorneys and Counselors at Law.  Liles Parker attorneys represent health care providers and suppliers in connection with False Claims Act issues and investigations.  Have you received a Civil Investigative Demand?  If so, we can help.  For a free initial consultation regarding your situation, call Robert at: 1 (800) 475-1906.

[1] For additional background information on the False Claims Act, see False Claims Act Matters and Cases — An Overview.”  

[2] Public Law 99-562.  October 27, 1986.  Senator Charles Grassley (R-Iowa) and Representative Howard Berman (C-California) led the drive to have these amendments passed. Several of the significant changes to the statute included, but were not limited to the following:

  • Permitted the government to seek treble damages.
  • Revised the statute’s qui tam provisions by increasing the incentives to whistleblowers disclosing allegations of fraud under the False Claims Act.
  • Conferred authority upon the Attorney General to issue Civil Investigative Demands (CIDs) in connection with the investigation of False Claims Act investigations.

[3] Last Fiscal Year (FY 2018), the Federal government won or negotiated more than $2.8 billion in judgments and settlements under the False Claims Act. Of the $2.8 billion in settlements and judgments recovered by the Department of Justice this past fiscal year, $2.5 billion involved the health care industry.  Although the gross recoveries were almost $600 less than what was collected in FY 2017, it is worth noting that an additional $329 million was collected in health care related cases than last year.  During FY 2018, 645 qui tam (whistleblower) cases were filed. About 87% of all new FCA matters pursued against entities involved in the healthcare industry were brought by relators.

[4] P.L.111-21 (FERA).  FERA also permitted Federal prosecutors to share information obtained under a Civil Investigative Demand with “any person” (most typically a qui tam relator)(See 31 U.S.C. § 3733(a)(1) and with Federal prosecutors conducting criminal investigations if the Attorney General or designee has reason to believe that such person may be in possession, custody, or control of any documentary material or information relevant to a False Claims law investigation.

[5] In 2010, the Attorney General signed Order No. 3134-2010 (January 15, 2010).

[6] See United States v. Markwood, 48 F.3d 969, 975-76 (6th Cir. 1995) (finding FCA CIDs are administrative subpoenas); FTC v. Invention Submission Corp., 965 F.2d 1086, 1087 (D.C. Cir. 1992) (treating FTC CID as administrative subpoena), cert. denied, 507 U.S. 910 (1993); United States v. ASG Solutions Corp., No. 17-cv-1224, 2018 WL 1418023, 2018 U.S. District LEXIS 47716 (S.D. Cal., March 22, 2018) (Report and Recommendation of Magistrate Judge) (enforcement of FCA CID governed by standards for administrative subpoenas), adopted in full, 2018 WL 3471405, 2018 U.S. Dist. LEXIS 121013 (S.D. Cal., July 18, 2018).

[7] Under a Civil Investigative Demand, the government may seek oral testimony concerning the documents and / or information that you are producing. The oral testimony is handled like a deposition, the deponent is placed under oath and a stenographic record of the proceeding is kept.

[8] For example, in the case United States v. Kernan Hospital, No. RDB-11-2961, 2012 WL 5879133, 2012 U.S. Dist. LEXIS 165688 (D. Md., Nov. 20, 2012), the district court denied the government’s Petition for Summary Enforcement based on the fact that the United States had already filed an FCA complaint in the caseThe District Court took this position even though the case had been dismissed (for failure to plead the alleged fraud with particularity) at the time the Civil Investigative Demand was issued.

[9] The scope of judicial review that is conducted by a District Court Judge when the government seeks to enforce a Civil Investigative Demand is very narrow.  As the Ninth Circuit has stated:

 “[t]he scope of the judicial inquiry in . . . any . . . agency subpoena enforcement proceeding is quite narrow. The critical questions are: (1) whether Congress has granted the authority to investigate; (2) whether procedural requirements have been followed; and (3) whether the evidence is relevant and material to the investigation.” EEOC v. Fed. Express Corp., 558 F.3d 842, 848 (9th Cir. 2009) (quoting EEOC v. Karuk Tribe Hous. Auth., 260 F.3d 1071, 1076 (9th Cir. 2001)).

[10] United States v. Picetti, No. 2:19-cv-00049 KJM AC (E.D. California)(April 29, 2019).

[11] Justice Manual Chapter 1-12.000; updated in November 2018, See also, Memorandum entitled “Coordination of Parallel Criminal, Civil, Regulatory and Administrative Proceedings, from the Attorney General to all Litigating Divisions and All Trial Attorneys, dated January 30, 2012, found as Civil Resource Manual 228 and Criminal Resource Manual 2464.

[12] Under the Bipartisan Budget Act of 2018 (effective February 9, 2018), Criminal penalties for acts involving Federal health care programs under 42 U.S.C. § 1320a–7b, including but not limited to the Anti-Kickback Statute, were increased from $25,000 to $100,000. Additionally, the maximum sentences for felonies involving Federal health care program fraud and abuse under 42 U.S.C. § 1320a–7b, including but not limited to the Anti-Kickback Statute, were increased from five to ten years.

[13] Infrequently, we have seen prosecutors from the State Attorney General’s Office issue a CID.

[14] Pursuant to 31 U.S.C. §3733, you will only have twenty days in which to respond to a Civil Instigative Demand, unless an extension is granted by the government.  Additionally, if a request for oral testimony is being sought, you may have as little as seven days within which to respond.

[15]31 U.S.C. § 3733(f)(1)(B).

False Claims Act Penalties Have Almost Doubled!

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(June 21, 2017):  Over the last year, the False Claims Act penalties have almost doubled. This is especially important when you consider the fact that the 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.  False Claims Act Penalties 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.

False Claims Act PenaltiesRobert 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.


Dental Claims False Claims Act Liability

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Dental Claim(March 6, 2015): As we have seen in recent years, Medicaid audits resulting in dental claims False Claims Act liability are increasing around the country.  Earlier this week, the U.S. Attorney’s Office, the U.S. Department of Health and Human Services. Office of Inspector General (HHS-OIG), and the Maine Attorney General’s Office announced the settlement of a civil lawsuit filed against a Maine dentist for violations of the federal False Claims Act. According to the government, the dentist paid $484,744.80 to settle allegations that he had improperly billed MaineCare (Maine’s Medicaid program) for dental services that were not medically necessary and lacked the proper documentation to support the claim. The government also alleged that the dentist billed the MaineCare program for “unsubstantiated tooth extractions” and for “narcotics prescribed without proper justification.”  This case is merely the latest case brought by federal and state prosecutors against dentists and other dental professionals for violations of the federal False Claims Act. The purpose of this article is to briefly examine the background of the federal False Claims Act and to discuss a number of risks currently facing dental practices and dental professionals participating in Medicaid and other federal health care programs.

I.  Background of the False Claims Act:

Sometimes referred to as “Lincoln’s Law,” the federal False Claims Act was first passed in 1863 in response to war profiteering. Among its provisions were measures intended to encourage the disclosure of fraud by private persons through the filing of a qui tam suit. The term qui tam is taken from a Latin phrase meaning “he who brings a case on behalf of our lord the King, as well as for himself.”[1] Under the qui tam (also commonly referred to as “whistleblower”) provisions of the statute, a private person (often referred to as a “relator”) can bring a False Claims Act lawsuit on behalf of, and in the name of, the United States, and possibly share in any recovery made by the government.

II.  Damages Under the False Claims Act:

A person found to have violated this statute is liable for civil penalties in an amount between $5,500 and not more than $11,000 per false claim, as well as up to three times the amount of damages sustained by the government.[2]

The issue of how false claims are to be counted has resulted in considerable litigation over the years. While decisions vary, most courts have held that each submission constitutes a separate claim. Prior to the emergence of electronic filing, it was not uncommon for providers to bundle a set of claims together and send them in to their state Medicaid contractor for processing and payment. This “bundle” would likely constitute a single “claim” for purposes of the False Claims Act. Today, most dentists send in individual claims as they are entered into the dental practice’s electronic billing system. As a result, each time that a dentist (in most instances, an administrative staff member working for, or on behalf of, the dentist) hits “ENTER” to transmit a single claim to the Medicaid contractor for processing and payment, this action would constitute a single claim for purposes of the statute. As one can easily imagine, even a small number of false claims could result in extensive civil penalties and damages.

III.  Recoveries Under the False Claims Act:

In Fiscal Year 2014 (FY 2014), the U.S. Department of Justice (DOJ) recovered an all-time high record $5.69 billion in settlements and judgments from civil cases brought under the federal False Claims Act (31 U.S.C. §3729 et seq.). Notably, FY 2014 was the first time that False Claims Act recoveries in a single year have exceeded $5 billion. From January 2009 through the end of the FY 2014, the government has recovered more than $22.75 billion. While most False Claims Act cases brought in connection with health care have focused on hospitals and other medical providers, a growing number of dental claims False Claims Act cases have been brought against dental practices and dental professionals.

As in previous years, much of this success has been due (in large part) to the coordinated efforts of the DOJ, HHS-OIG and their state law enforcement counterparts through the Health Care Fraud Prevention & Enforcement Action Team (HEAT). The HEAT program was created in 2009 and was designed to “prevent fraud, waste, and abuse in the Medicare and Medicaid programs, and to crack down on the fraud perpetrators who are abusing the system.”[3] Importantly, dentists and dental practices participating in the Medicaid program should expect both federal and state law enforcements’ efforts to increase, not decrease or remain stable. Notably, the discretionary funding for program integrity activities has continued to rise. The ongoing solvency of the Medicaid program depends on the ability of law enforcement agencies to successfully address the improper, and sometimes fraudulent, conduct committed by individuals and entities participating in this joint federal and state funded programs.

IV.  Statute of Limitations Under the False Claims Act:

The federal False Claims Act’s statute of limitation provisions have been extensively litigated. As a result, it is important that you work with your legal counsel to determine if the dental claims at issue in your case are likely to fall outside of the actionable period. Generally, the False Claims Act has a 6-year statute of limitations. However, this 6-year period can be tolled (under certain circumstances) up to a maximum of 10 years from when the government knew, or reasonably should have known, that the violation occurred. The statute of limitations provisions are found in 31 U.S.C. § 3731(b).

A civil action under section 3730 may not be brought —

(1) more than 6 years after the date on which the violation of section 3729 is committed, or

(2) 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, but in no event more than 10 years after the date on which the violation is committed, whichever occurs last.

In assessing when the period of limitations runs, a court will look at the time at which either the relator or the government became aware or knew of the violation. In light of the long statute of limitations associated with the False Claims Act, dental practices and other health care providers responding a False Claims Act case have sometimes faced the difficult prospect of locating supporting documentation, x-rays and molds in an effort to defend claims billed to the Medicaid program over a 10-year period.

V.  Final Remarks:

What steps can you take to reduce your potential liability for dental False Claims Act violations, you should ensure that Compliance Plan (tailored to address your dental practice’s specific risks and needs) has been put into place. A Compliance Plan can greatly assist your dental practice in meeting its statutory and regulatory obligations under federal and state law. Developing and implementing an effective Compliance Plan can greatly reduce the likelihood of a False Claims Act violation taking place. Using an effective Compliance Plan as a road map can assist in streamlining your dental practice’s business operations, reduce the possibility of a statutory violation and help to mitigate any damages that might result from a problem you were previously unaware of. Finally, a Compliance Plan can serve as evidence that your dental practice is doing its best to fully comply with applicable laws, rules and regulations. Ultimately, regulatory compliance should be an essential element of your dental office’s corporate culture.

Robert W. Liles represents dentists and dental practices in Medicaid audits and dental claim False Claims Act casesRobert W. Liles serves as Managing Partner at Liles Parker PLLC. Liles Parker attorneys represent dentists and other health care providers around the country in connection allegations of overpayments and violations of the False Claims Act. For a free consultation, call Robert W. Liles at: 1 (800) 475-1906.

 [1] False Claims Act Cases: Government Intervention in Qui Tam (Whistleblower) Suits, U.S. Department of Justice, available at  (last accessed March 2015).

[2] For example, if a dentist improperly submits a false claim to Medicaid for payment in the amount of $100 and is subsequently paid $100, the dentist would be liable under the False Claims Act for both damages and penalties. Under the False Claims Act, the government may recover up to three times the amount of damages it suffers, which in this example would be $300, plus penalties of between $5,500 and $11,000 per false claim. Collectively, the dentist’s liability would range from $5,800 to $11,300 for a $100 claim.

[3] News Release, Dep’t. of Health & Human Servs., Health Care Fraud Prevention and Enforcement Efforts Result in Record-Breaking Recoveries Totaling Nearly $4.1 Billion (Feb. 14, 2012), available at http://


Dental Fraud Investigation Results in $5.05 Million Recovery

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Dental Fraud Investigations are Increasing Around the Country.

 (November 10, 2014):  Has your dental practice been the subject of a dental fraud investigation?  Medicaid dental audits are becoming increasingly prevalent throughout the United States.  An Oklahoma-based dental practice has recently agreed to pay $5.05 million in civil claims stemming from allegations that the practice committed Medicaid dental fraud, submitting false claims to Medicaid from January 2005 through September 2010. The Oklahoma practice provides dental care to Medicaid-eligible children through multiple clinics located in a number of states. Each dentist draft visit notes that outlines the services performed on each individual patient. The practice then submits claims for reimbursement to the Oklahoma Health Care Authority (OHCA) based on dentists’ documentation. After OHCA reimburses the practice for those claims, the dentists are then reimbursed a certain percentage.

I.  Dental Practice Submits Claims For Work Never Performed or Coded at Higher Levels:

According to a practice spokesperson, the allegations arose with respect to a dentist who last worked at a dental office in September 2010. Specifically, this dentist has been accused of submitting treatments notes for services that were never performed, which is a clear example of Medicaid dental fraud.  Notably, this individual has already been sentenced to 18 months in Federal prison for fraud in a separate matter. She was released earlier this year but must still pay more than $375,000 in restitution.

II.  Effect of the Dental Fraud Settlement Agreement:

This settlement agreement resolves allegations that the dental practice violated the Federal and State False Claims Acts by submitting false Medicaid claims for dental restorations that were never performed or were billed at a higher rate than allowed. The agreement also releases the practice and its owner from any civil liability in the underlying case. Nevertheless, the practice must still adhere to additional record-keeping, reporting, and compliance requirements.

Settlement agreements such as this have become a useful tool in False Claims Act cases. They allow the government and individual parties to avoid the expense and uncertainty involved in actually litigating a case. Moreover, as seen in this case, prosecuting authorities do not generally make any concessions about the legitimacy of the alleged Medicaid dental fraud.

III.  Conclusion:

Identifying and combating fraud in both the federal Medicare and joint State/Federal Medicaid program has been a high priority for government health care enforcement agencies. Effective enforcement measures help ensure that instance Medicare and Medicaid dental fraud are identified, ensuring that the dollars are provided to care for individuals who truly need assistance.

We continually strive to protect government programs, such as Medicaid, from fraud and abuse by ensuring they are used properly and only by those who are in need and are eligible,” U.S. Attorney Sanford C. Coats said. “This case is a good example of the value of coordination between state and federal law enforcement, as well as the coordinated use of parallel proceedings, to achieve a successful civil and criminal resolution.”

Dental practices can help avoid allegations of fraud, waste, and abuse through the development, implementation and adherence to an effective compliance program. A compliance program can go a long way towards enabling a dental practice to identify potential improper or fraudulent practices before they occur. It is a strategic and vital tool that will assist you in following recognized best practices in the dental industry. Have you implemented a compliance program for your dental practice? If not, you may be placing your organization at significant risk. Give us a call today at and we would be more than happy to assist you in developing an effective compliance program for your dental practice.

Saltaformaggio, RobertRobert Saltaformaggio, Esq., serves as an Associate at Liles Parker, Attorneys & Counselors at Law.  Liles Parker attorneys represent health care providers around the country in connection with Medicare, Medicaid and private payor audits.  The firm also represents health care providers in connection with HIPAA Omnibus Rule risk assessments, privacy breach matters, State Licensure Board inquiries and regulatory compliance reviews.  For a free consultation, call Robert at:  1 (800) 475-1906

Record FCA Recoveries Were Collected by the Government in 2012

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FCA Recoveries in 2012 Were a New Record.(February 12, 2013): The civil False Claims Act is the primary civil enforcement tool used by the U.S. Department of Justice.  As discussed below, the False Claims Act is an extraordinarily useful statute for government prosecutors, both in terms of ease of use and in terms of the damages which may be recovered by the government



I.   Overview of the False Claims Act:

As set out below, the civil False Claims Act imposes civil monetary penalties and will expose a person to civil liability under the circumstances below:

Sec. 3729.  False claims 

(a) Liability for Certain Acts—any person who: 

(1) Knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval; 

(2) Knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government; 

(3) Conspires to defraud the Government by getting a false or fraudulent claim allowed or paid; 

(4) Has possession, custody, or control of property or money used, or to be used, by the Government and, intending to defraud the Government or willfully to conceal the property, delivers, or causes to be delivered, less property than the amount for which the person receives a certificate or receipt; 

(5)  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; 

(6) 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 the property; or 

(7) Knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government, 

. . . is liable to the United States Government…  

II.  What is Not Covered Under the False Claims Act:

It is essential to keep in mind that the civil False Claims Act does not cover mistakes, accidents, or mere negligence.  Unfortunately, the line separating a billing “mistake” from a non-intentional wrongful billing, which could give rise to an action under the False Claims Act, is not always easy to discern.  In an effort to provide additional guidance to DOJ attorneys on the judicial use of the False Claims Act, guidance setting out a number of factors to be considered when pursuing a False Claims Act case.

III.  Damages Under the Civil False Claims Act:

A “person” (which would covers individuals, physician practices, home health agencies, hospice agencies, third-party billing companies, ambulance companies, hospitals, skilled nursing facilities and other health care providers)   found to have violated this statute is liable for civil penalties in an amount between $5,500 and not more than $11,000 per false claim, as well as up to three times the amount of damages sustained by the government.

IV.   What is the Involvement of the U.S. Department of Justice?

While attorneys in DOJ’s Civil Division in Washington, D.C. are likely to be involved in most of the larger, more complex cases under the False Claims Act, it is important to remember that a “Civil Health Care Fraud Coordinator” has been appointed in each of the 94 U.S. Attorney’s Offices around the country. Assistant U.S. Attorneys are highly trained and experienced in handling False Claims Act cases and will readily file a case against a health care provider in the event that improper conduct can be shown.

V.  Whistleblower or “Qui Tam” Provisions of the False Claims Act:

One of the most unique elements of the False Claims Act is that it authorizes private parties having direct knowledge of fraudulent conduct to bring a civil suit against the violator on behalf of the government.  These civil suits are known as qui tam actions, and the private parties who initiate such actions are called “relators.”  Relators may share in any monies recovered as a result of their qui tam action.[1] A qui tam action is initiated when a relator files a complaint – along with supporting documentation – “under seal” in federal court.  When a case is filed under seal, it means that all records associated with the whistleblower are maintained on a non-public docket by the Clerk of the Court.  A copy of the complaint is given to the judge assigned to the case.  The relator’s attorney also serves a copy of the complaint on the Attorney General in Washington, D.C. and on the U.S. Attorney in the federal judicial district in which the case was filed.[2]  Initially, the government will have 60 days to evaluate whether to proceed against the defendant.  In almost all cases, the government will seek an extension to allow it an opportunity to investigate the allegations.  After showing “good cause” for an extension, most federal courts will readily grant the request for an extension.  It is not at all uncommon for a qui tam to remain under seal for over a year (and often much longer) while the government reviews the allegations.  The seal is important for several reasons:

  • The government can quietly investigate the allegations without the defendant knowing that their company is under investigation.
  • The mere existence of a government investigation can be devastating on the public’s view of a company.  Moreover, if a company is publicly-traded, the publicity surrounding a government investigation can severely affect the price of a company’s stock—despite the fact that the allegations at issue have not been investigated or proven at this point in the process. 

After concluding its evaluation, the government may elect to proceed with the complaint and intervene in the case or it may decline to intervene.  If the government decides to intervene in the action, then the relator has the right to remain a party to the action.  If the government decides not to intervene in the case, the qui tam relator may elect to proceed on his or her own against the defendant.  Notably, the government always retains the ability to intervene in the case at a later time.  From a practical standpoint, if the government decides not to intervene in a case, in all likelihood the relator will seek to dismiss the suit.  Unlike the government, the relator’s ability to investigate a False Claims Act case is quite limited, both in terms of resources and in terms of investigative tools.  As a result, the government’s decision to decline to intervene severely impacts a relator’s ability to move forward with the case.  The government often asks the court to partially lift the seal solely for the purpose of advising the defendant of the existence of the case and to seek their cooperation in resolving the allegations.

Should the government choose not, to intervene, it will often ask that the Court remove the seal to the case.  Once the seal is removed, the case (and its allegations) will be part of the public record.  In cases where the government chooses to intervene, the case is often kept under seal until a settlement is worked out with the defendant.  There are a number of limitations placed on the filing of qui tam cases.  Two of the more commonly seen limitations include:

  • When the government has already initiated an action against a party for the same allegations that would form the basis of a qui tam suit; or
  • When the action is based on publicly-disclosed information[3] that was contained in an official hearing, report, investigation, audit, or information disseminated by the news media. 

VI.  Record Recoveries in 2012 Under the False Claims Act:

In recent years, False Claims Act recoveries resulting from whistleblower suits have exceeded most observers’ expectations.  Issues related to the False Claims Act should be at the top of the list of ongoing concerns for most health care Compliance Officers.  The potential damages a provider may face for violations of the False Claims Act cannot be understated.

In Fiscal Year 2012, the U.S. Department of Justice secured settlements and judgments in civil False Claims Act of $4.9 billion.  Notably, this includes a “record recovery for a single year” by more than $1.7 billion.  Over the last four years, $13.3 billion has been recoveries.  Notably, this represents more than a third of the total recoveries achieved since the False Claims Act was amended over 26 years ago.[4]

VII.  Are Physicians Being Targeted Under the False Claims Act:

While large pharmaceutical, durable medical equipment and hospital chain cases continue to dominate the press, physicians, dentists and other solo health care providers are increasingly finding themselves and their practices subject to whistleblower suits under the False Claims Act by former employees, competitors and others who believe that false claims are being submitted to the government for payment.

Notably, a recent whistleblower case pursued by the U.S. Department of Justice against an individual physician (a dermatologist) resulted in a $26.1 million settlement.  In this case, the physician was alleged to have accepted kickbacks from a pathology laboratory.  The physician was also accused of billing Medicare for medically unnecessary services. The whistleblower reportedly collected $4 million as part of the settlement.

VIII.  How Can You Prevent a False Claim Act from Being Filed Against You?

Ultimately, your ability to avoid the filing of a False Claims Act case against you or your practice rests on your ability to comply with state and federal laws, regulations and rules governing the provision, coding and billing of health care services. Without a doubt, the single most important step you can take in this regard is to develop, implement and adhere to the provisions and guidelines set out in an effective Compliance Plan.  While most hospitals and other institutional providers have had Compliance Plans in place for many years, very few physicians have taken this necessary preventative step.

Will a Compliance Plan prevent you from having a False Claims Act case brought against you or your practice?  No, not necessarily.  Instead, you should look at a Compliance Plan as being akin to a flu shot.  Just because you have received a flu shot does not mean that you will never catch the flu.  However, if you do come down with the flu, chances are that it won’t be as serious and it might otherwise have.  All of us make mistakes, and physicians are not immune to this risk.  Nevertheless, having an effective Compliance Plan in place is likely to greatly assist you in your efforts to stay within the four corners of the law.

Healthcare LawyerRobert W. Liles serves as Managing Partner at Liles Parker.  Robert and other attorneys at Liles Parker have extensive experience working on False Claims Act matters and case.  For a free consultation, please call Robert at:  1 (800) 475-1906.   


[1] Whistleblowers (also known as “Relators”) can receive between 15% and 25% of any recovery in a qui tam action where the government has intervened in the case.  In a non-intervened case, a relator may recover up to 30%.  Consequently, there is a tremendous financial incentive to file and pursue these types of actions.

[2] The relator must also serve a “disclosure statement” on DOJ (normally, it is provided to the U.S. Attorney’s Office) which sets out the evidence that the relator has in support of the allegations set out in his/her Complaint.  This statement is not filed with the Complaint and is not given to the defendant.

[3] This rule is known as the “public disclosure bar.” The Affordable Care Act modifies this rule in several respects.  First, a qui tam action will not be dismissed under the public disclosure rule if the government opposes dismissal.  Second, fraud disclosed in private legal actions will not activate the public disclosure bar; the government must have been a party to the action in order for the public disclosure rule to apply.  Third, information obtained from state proceedings or hearings likewise will not qualify under the public disclosure bar.  Finally, the public disclosure bar will not operate where the relator was the “original source” (e.g., has independent knowledge) of the fraud or false claim allegation.



FCA Express Certification Liability Theory

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(September 24, 2012): There are 3 recognized legal theories under which False Claims Act (FCA) liability may be established – the FCA Express Certification, Implied Certification, and Worthless Services theories. As you may know, the FCA is the government’s primary fraud fighting tool, and prohibits the presentation of false claims for payment by the government. It is used most often, but not exclusively, in health care fraud matters. Recently, the FCA was amended to prohibit the holding of identified overpayments as well.

I.  FCA Express Certification:

In any regard, the most common theory relied upon by the government and relators in FCA cases is known as “Express Certification.” Specifically, an “expressly” false claim occurs when a provider falsely certifies compliance with a law or contractual term that is a prerequisite to payment. As you know, all health care providers submit claims on the CMS-1500 form, and as part of that form, the provider must certify that the service or supply provided was “medically indicated and necessary to the health of [the] patient.” Therefore, if a provider submits a claim for payment for a service or supply that does not end up being “medically indicated and necessary,” they have falsely certified compliance and have likely violated the FCA. Additionally, this also includes claims when services were not provided as billed, or not provided at all.

FCA express certification is the most obvious type of false claim. For instance, when a provider performs a stent procedure to open up a patient’s blocked artery, but the patient’s occlusion level (the percentage of blockage) was not significant, the procedure was most likely medically unnecessary. But by the provider signing the CMS-1500 (usually electronically), they have formally stated to the government that the service was medically necessary, making the claim false.

II. Government Intervention in FCA Cases:

When a whistleblower or relator alleges a simple “express certification” theory in their complaint, the government may very well take the case if the facts are clearly set out and show on their face that a violation has occurred. It is also more enticing to the government if the dollar amounts at issue are high (greater than a million dollars). Regardless, the government ends up taking (it is formally known as “intervening”) many fewer cases than it receives – only around 25%. Many of the cases in which the government decides not to intervene may likely be legitimate matters, but the resources of the Department of Justice are limited.

In any regard, as Medicare and Medicaid fraud prevention efforts continue to expand, there will likely continue to be a rise in the number of FCA cases filed. This area of the law has become increasingly important as the Justice Department looks to stem the rising tide of fraud and abuse in the nation’s healthcare system, and providers should ensure that their compliance programs are effective to identifying and deterring potential violations of the FCA and other laws.

Healthcare LawyerRobert W. Liles is the managing member of Liles Parker PLLC, located in our Washington D.C. office. Robert was the first National Health Care Fraud Coordinator for the Department of Justice, and has extensive experience in litigation cases under the False Claims Act. He is a talented advocate and has practiced with and before many of the Assistant United States Attorneys (AUSAs) that handle these cases on a daily basis. For more information or for a free 30 minute consultation, call today at:  1 (800) 475-1906.

FCA Statute of Limitations Issues

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FCA statute of limitations issues can be quite complex.(August 10, 2012):  The False Claims Act (FCA) is the primary civil enforcement used by the government to address the improper submission of false or fraudulent claims to the government for payment.  Under the FCA, a defendant can be held liable for significant penalties and treble damages, per false claim.  Moreover, under the FCA, a whistleblower can bring an action on behalf of the government and may be eligible to receive a share of any recoveries.  How long does a defendant have to bring an FCA case?  As discussed below, FCA statute of limitations issues can be somewhat complex.  If your are facing a potential FCA case, it is imperative that you retain experienced legal counsel to advise you of your rights.

I.  FCA Statute of Limitations:

The statute of limitations for False Claims Act (FCA) cases is quite long and presents several complex issues to be considered. The basic FCA statute of limitations is 6 years, or 3 years after the government knew or should have known about the fraud, up to a maximum of 10 years. This often raises questions including when “should” the government know about a certain fraud, especially if it long standing and continuous? What if the government should have known about the case 4 years ago, but the 6 year timeframe has not yet run?

II.  Impact of the Wartime Suspension of Limitations on FCA Cases:

A little known statute was recently used in a case in Texas to completely toll the statute of limitations. The court in U.S. v. BNP Paribas SA employed the “Wartime Suspension of Limitations” statute to toll the statute of limitations beyond what it would have normally been. The Wartime Suspension of Limitations provides that, “the running of any statute of limitations applicable to . . . fraud or attempted fraud against the United States or . . . connected with or related to the prosecution of the war . . . shall be suspended until 5 years after the termination of hostilities as proclaimed by a Presidential proclamation . . . or concurrent resolution of Congress.” 18 U.S.C. 3287.

Importantly, the suspended statute of limitations must be “connected with or related to the prosecution of the war.” In the Paribas case, the court in the Southern District of Texas (which includes Houston) held that a major French bank whose subsidiary was involved in exporting was sufficiently related to the prosecution of a war to toll the FCA statute of limitations, despite the fact that the company is not specifically a contractor for the Department of Defense or otherwise involved in war efforts. The Paribas decision raises many questions:

  • What constitutes a “war”? The United States’ last official declaration of war occurred on June 5, 1942 against Romania , Hungary, and Bulgaria during WWII. But as you know, the United States has been, and currently is, frequently engaged in military conflicts around the globe. What about NATO peacekeeping missions, or limited interventions? Under Paribas, it appears that “war” is construed broadly, and any military intervention funded by Congress could be sufficient to activate the statute.
  • What is the connection or relation of the war to the specific fraud?  In Paribas, the defendant was an exporter of grain dealing with the Department of Agriculture. While not specifically related to the war, an argument can be made that the exportation of food supplies, especially by a major international company, could have a sufficient effect on our military, its ability to obtain food and other supplies, and international relations. But what about healthcare? Certainly claims made under the TriCare program that were found to be false could be tolled by the Wartime Suspension of Limitations. But what about standard Medicare and Medicaid claims? Is the health of the nation sufficiently connected to war efforts to justify completely tolling the statute of limitations?

Obviously, this decision raises important concerns for anyone involved in FCA litigation, or anyone thinking about engaging in FCA litigation. On both sides, whistleblowers and FCA accused alike, this should be a major issue that your legal counsel must consider.

Healthcare Lawyer

Healthcare Lawyer

Robert Liles and Paul Weidenfeld are experienced in counseling clients on FCA statute of limitation and other litigation related matters.  Moreover, they have handled a variety of FCA cases. For a free consultation to discuss the FCA statute of limitations issues raised in Paribas or for other questions regarding the FCA, please call today at: 1 (800) 475-1906.

Liles Parker Welcomes Paul Weidenfeld to the Firm

June 21, 2011 by  
Filed under Firm News

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Paul Weidenfeld Healthcare Attorney(June 15, 2011):   Liles Parker is pleased to announce that attorney Paul Weidenfeld has joined the Firm as “Counsel” at the Firm.  In joining the Firm, Mr. Weidenfeld has further broadened the scope of Liles Parker’s litigation expertise. Prior to entering private practice, Mr. Weidenfeld served as “National Health Care Fraud Coordinator” at the Executive Office for U.S. Attorneys (EOUSA), an agency of the U.S. Department of Justice.  Notably, Robert W. Liles, Managing Partner at the Firm had previously served as the very first “Health Care Fraud Coordinator” at EOUSA.  Mr. Liles was appointed to this position shortly after the passage of HIPAA.  With the recruitment of Mr. Weidenfeld, Liles Parker is the only law firm in the country with two senior attorneys who served in this prestigious position at the U.S. Department of Justice.  Mr. Weidenfeld has extensive experience representing health care providers in administrative, civil and criminal cases around the country.  Additionally, Mr. Weidenfeld has more than 15 years of experience working with False Claims Act cases.

Prior to being detailed to EOUSA, Mr. Weidenfeld served as an Assistant United States Attorney (AUSA) in the  Eastern District of Louisiana (EDLA).  While working as an AUSA, Mr. Weidenfeld served in a number of prestigious positions at the EDLA.  These positions included serving as Deputy Chief of the Civil Division,  Affirmative Civil Enforcement Coordinator and the office’s Health Care Fraud Coordinator.

Mr. Weidenfeld’s litigation experience is quite extensive.  He has tried more than 50 cases and handled more than 25 appellate arguments before virtually every Federal and State Court to include the United States Supreme Court.  Commenting on Mr. Weidenfeld’s anticipated contributions, the Firm’s “Litigation Practice Leader,” Leonard Schneider commented:

“We are thrilled to have Paul at our side.  His extensive litigation experience will greatly expand our litigation capabilities.  Paul has a stellar reputation as a litigator and as a tactician.  We are looking forward to working with him.”

Mr. Weindenfeld holds a B.A. from Tulane University and J.D. from Loyola University in New Orleans. He is admitted to practice in the State of Louisiana.  His application for admission in the District of Columbia is pending.

Please join us in welcoming Paul to the Firm.  He can be reached at: His cell phone number is: (703) 258-5075.

Liles Parker attorneys represent health care providers around the country in connection with audits and investigations by Medicare contractors and law enforcement.  Need assistance?  Please give us a call for a complimentary initial consultation.  Paul Weidenfeld can be reached by cell at: (703) 285-5075 or at the office: (202) 298-8750.


The AHA Expresses its Concerns with Recent False Claims Act Kyphoplasty Cases

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The AHA is Concerned with DOJ's Use of the False Claims Act in Kyphoplasty Cases(September 11, 2010):  The American Hospital Association (AHA) has expressed its concern that the Department of Justice (DOJ) and its law enforcement partner, the Department of Health and Human Services, Office of Inspector General (HHS-OIG) may be overreaching in its use of the False Claims Act in kyphoplasty cases. As set out in the AHA’s letter dated September 7, 2010:


  “The AHA is concerned that aggressive FCA investigations are being initiated upon the discovery of evidence of a mistake or overutilization, making FCA enforcement through negotiated “settlement” a self-fulfilling prophecy.”

 Citing a “kyphoplasty” initiative current being pursued by at least one U.S. Attorney’s Office, the AHA stated:

 “. . . notwithstanding the fact that kyphoplasty claims have long been subject to changing and ambiguous regulations and guidelines, the kyphoplasty initiative appears to observers to rely on data mining to establish a presumption that hospitals are liable for “knowing” violations of the civil FCA and subject to treble damages and penalties. Targets of the initiative have received letters disconcertingly similar to letters written prior to the issuance of the original “Holder Memo” in 1998 (Guidance on the Use of False Claims Act in Civil Health Care Matters).” (emphasis added).

As the AHA noted, the threat of an FCA action, and its accompanying liability, forces hospitals to incur specialized legal counsel and outside forensic accountants in order to defend the hospital’s interests.  As a result, some hospitals elect to settle the allegations rather than litigate the issues.  In recent years, our law firm has noted a significant shift in the government’s reliance on data-mining in its development of administrative, civil and even criminal cases.  We share the AHA’s concerns in the regard.  The over-reliance on data mining in the targeting of defendants may lead to a presumption of guilt before any examination of the medical records and association documentation has occurred.  Notably, Robert W. Liles, a Managing Partner at Liles Parker was instrumental in the drafting and implementation of the “Holder Memo.”  A number of our attorneys have extensive experience working on False Claims Act cases.

Healthcare LawyerA number of Liles Parker attorneys have extensive experience handling False Claims Act cases, including those brought under the Act’s Qui Tam provisions (commonly referred to as its “whistleblower”provisions).  Should you have questions regarding the False Claims Act, give us a call for a complimentary consultation.  We can be reached at: 1 (800) 475-1906.

Providers Should Exercise Caution When Handling Overpayments — More Than Likely, You Can’t Keep It, Even if the Payor Doesn’t Want it Back!

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Providers Must Exercise Caution When Handling Medicare overpayments(July 15, 2010): When handling Medicare overpayments, providers must exercise caution.  Since the May 2009 passage of the Fraud Enforcement and Recovery Act (FERA) and subsequent enactment of the Affordable Care Act (ACA), we’ve heard a lot about how the government looks at Medicare overpayments and how providers should handle them.  Prior to the clarification and statutory reinforcement of the “overpayment” issue provided under the ACA, a number of providers have mistakenly believed that in the absence of a direct demand for repayment, an identified overpayment would belong to the provider.  Notably, this issue is not new.  In fact, the recent enacted provisions have merely reinforced the government’s long-standing position that a provider has a responsibility to voluntarily refund Medicare overpayments without an overpayment determination being made by the government.

I. The Rules on Handling Medicare Overpayments Have Been in Place a Long Time:

As you will recall, the agreement to return any overpayments is fundamental to a provider’s eligibility to participate in the Medicare program.  Section 1866(a)(1)(C) of the Social Security Act (42 U.S.C. § 1395cc) requires participating providers to furnish information about payments made to them and to refund any monies incorrectly paid.  Implemented in 2006, the Medicare Credit Balance Report (CMS-838) is designed to ensure timely compliance with this obligation.

Secondly, ACA Section 6402 echoes the requirements of CMS’ 2002 proposed rule that providers “must, within 60 days of identifying or learning of the excess payment, return the overpayment to the appropriate intermediary and carrier, at the correct address, and notify the intermediary and carrier, in writing, of the reason for the overpayment.”  (67 Fed. Reg. 3662 (January 25, 2002)).  A conservative reading of that proposed rule arguably suggested that HHS-OIG’s voluntary disclosure protocol may not be “voluntary” after all but a mandatory repayment may be required.  Thus, the government has long sought to clarify when, not if, overpayment refunds would be required.

Despite the publicity resulting from PPACA and its FCA implications, it is important to remember that this issue was addressed over a decade ago.  As set out in the 1998 holding in United States v. Yale University School of Medicine, Civil Action No. 3:97CV02023 (D.Conn.), the government intervened in a qui tam and obtained $1.2 million settlement based on alleged FCA violations for failing to return credit balances.  In summary, providers who fail to promptly (within 60 days of identification) return an overpayment to the government do so at their own peril.

II.  Handling Non-Federal Overpayments:

As an aside, even if the overpayment at issue is not owed to a Federal payor (such as Medicare or Medicaid), it is imperative to remember that virtually no overpayments belong to a provider.  In the case of non-Federal payors (such as a private insurance company), we are aware of numerous instances where the non-Federal payor has notified the provider that due to the administrative burden of applying an overpayment to a beneficiary’s account (typically due to the complexity of the payment history), the non-Federal payor has chosen to either “waive” collection of an overpayment or not to cash a check sent by the provider.  This also regularly occurs when the identified overpayment is under a certain amount (such as $25.00).  When faced with such a situation, a provider must review applicable State law to ascertain how an overpayment must be handled.  For instance, in Texas, Title 6 of the Property Code requires businesses and other entities holding unclaimed property to turn the property over to the Texas Comptroller’s Office after the appropriate abandonment period has expired.  As in most States, violation of these escheat laws can subject a provider to various penalties.

III. Conclusion:

The lesson to be learned here is quite clear – regardless of who the payor is, an overpayment can rarely, if ever, properly be retained by a provider, regardless of the amount in controversy.  A provider must carefully examine both Federal and State statutes when faced with this issue.  The best practice is to return an overpayment to the payor (Federal, State, or private patient), regardless of the amount, upon identification.  Should a provider be unable to identify who is owed an overpayment or cannot locate a valid address to return the overpayment (due to a variety of factors), your State’s escheat law must be considered.

This can be a complicated issue, especially when a large overpayment has been identified and it is owed to a Federal payor.  While time is of the essence, it is strongly recommended that you contact your legal counsel as soon as it appears that a potential large or complicated Federal overpayment has been found.  Your attorney can help guide you through this complex process.

Read more on Medicare Overpayments

Health Care AttorneyShould you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one our other attorneys at 1 (800) 475-1906.

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