The FCA is the Department of Justice’s Key Tool in Combating Health Care Fraud and Abuse
The False Claims Act (“FCA”) provides a remedy of civil damages when a party 1) makes a false statement or engages in a fraudulent course of conduct that is done with 2) knowledge that was 3) material and 4) caused the government to pay out money or forfeit money it was due.[1] In fiscal year 2020, the Department of Justice (“DOJ”) recovered $2.2 billion in FCA settlements and judgments with $1.8 billion of those dollars involving the health care industry.[2]
A unique aspect of the FCA is the statute “allow[s] a private party to bring an FCA lawsuit on behalf and in the name of the government.”[3] These private parties are more commonly known as whistleblowers. The FCA provides motivation for whistleblowers to root out fraud because the whistleblower stands to personally recover anywhere from 15% to 30% of the damages and penalties or settlement that stems from the claim.[4]
The FCA establishes a remedy of trebled actual damages meaning the health care provider will be required to pay three times the amount of reimbursement on each claim that is found to be false. Additionally, each falsely submitted claim is subject to civil penalties ranging from $11,665 to $23,607.
Nursing Homes will Remain a Focus of the DOJ’s Enforcement Efforts in 2021
In a December 2020 speech, Senior DOJ Official Michael Granston acknowledged past efforts to pursue health care providers who delivered substandard quality of care to the elderly by referencing the DOJ’s March 2020 launch of the National Nursing Home Initiative.[5] Granston further alluded to the fact that these types of efforts were likely to continue in 2021.[6]
Under the National Nursing Home Initiative, the DOJ’s intent was to pursue nursing homes that provide grossly substandard care. During its launch, the Department pointed to several issues of concern: adequate staffing, hygiene and infection control protocols, adequate nourishment of residents, failure to provide pain medication, and use of physical or chemical restraints.[7]
Nursing homes could incur FCA liability for these types of issues by way of the FCA’s false certifications theory.[8] The Nursing Home Reform Act requires nursing homes to “provide services to attain or maintain the highest practicable physical, mental, and psychosocial well-being of each resident.”[9] When a nursing home submits payment to the Government (Medicare, Medicaid, Tricare) for reimbursement of a claim, it certifies compliances with all applicable statutes, regulations, and rules.[10] As such, if the nursing home fails to meet its obligation regarding the appropriate standard of care, then the claim for reimbursement is considered false and subject to FCA enforcement.[11]
The DOJ will also be pursuing providers billing for medically unnecessary treatment and upcoded billing for services. Similar to last year, whistleblowers will play a key role in FCA enforcement. On June 2, 2021, the U.S. Attorney’s Office for the Southern District of New York announced it would intervene in a FCA action filed against 11 skilled nursing facilities by a whistleblower. [12] The Complaint alleges patients were kept in the facilities longer than necessary to maximize Medicare reimbursement.[13] Additionally, during the course of those stays, patients were systematically put at higher levels of rehabilitation therapy than their actual clinical needs demonstrated in order to increase Medicare reimbursement.[14]
Compliance Programs are Essential to Mitigating FCA Risk
A robust compliance program will be integral to mitigating potential FCA liability. Nursing Home providers should review policies and procedures to ensure any changes that stemmed from the COVID-19 Pandemic are reflected in those documents. Completing internal audits can be a way for a provider to glean a sense of areas that require improvement and change. A robust compliance program demonstrates that quality of care and regulatory compliance is a priority for a health care organization. A Health Care Attorney can advise health care providers on ways to implement and improve compliance programs as well as ways to mitigate FCA risk. Additionally, should a provider receive a Civil Investigative Demand from a Government enforcement entity, a Health Care Attorney can advise the provider on the appropriate way to respond to that request.
[1] 31 U.S.C. § 3729 (2009).
[2] U.S. Dep’t of Justice Press Release, Justice Department Recovers over $2.2 Billion from False Claims Act Cases in Fiscal Year 2020 (Jan. 14, 2021).
[3] John T. Boese & Douglas W. Baruch, Civil False Claims and Qui Tam Actions § 4.0, (Wolters Kluwer Law & Business, 5th ed. 2020).
[4] Id.
[5] Remarks of Deputy Assistant Attorney General Michael D. Granston at the ABA Civil False Claims Act and Qui Tam Enforcement Institute, U. S. Dep’t of Justice, (Dec. 2, 2020), Remarks of Deputy Assistant Attorney General Michael D. Granston at the ABA Civil False Claims Act and Qui Tam Enforcement Institute | OPA | Department of Justice.
[6] Id.
[7] U.S. Dep’t of Justice Press Release, Department of Justice Launches a National Nursing Home Initiative (March 3, 2020) Department of Justice Launches a National Nursing Home Initiative | OPA | Department of Justice.
[8] Todd Yoder, DOJ Announces Initiative to Combat Substandard Care in Nursing Homes; Emphasizes Importance of Whistleblowers, National L. Rev. Vol. X, No. 70 (2020).
[9] Id.
[10] Id.
[11] Id.
[12] U.S. Dep’t of Justice Press Release, Manhattan U.S. Attorney Files Suit Against Eleven Skilled Nursing Facilities and Their Management Company, Owner, and a Senior Employee for Fraudulently Billing Medicare for Unnecessary Services (June 2, 2021) Manhattan U.S. Attorney Files Suit Against Eleven Skilled Nursing Facilities And Their Management Company, Owner, And A Senior Employee For Fraudulently Billing Medicare For Unnecessary Services | USAO-SDNY | Department of Justice.
[13] Id.
[14] Id.